Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Will the G-7 Nations Impose Capital Controls?

Commodities / Credit Crisis 2008 Feb 23, 2008 - 08:07 AM GMT

By: Julian_DW_Phillips

Commodities Best Financial Markets Analysis ArticleFinance leaders from the Group of Seven, industrialized nations discussed collective action “to calm markets, if price moves become irrational .Finance ministers and central bankers from the G7 –the United States, Canada, Japan, Britain, France, Germany, and Italy—said that financial market turmoil was serious and persisting. They also said more work was needed to restore markets to good working order and safeguard global growth. The European Central Bank believes that turbulence on financial markets could continue for months.

Consequently the €-group have agreed that if there are “irrational” price movements in the markets, “we will collectively take suitable measures to calm the financial markets”. The markets will not be forewarned of such action, “otherwise it will lose its effect if it is explained."

No action has been seen yet so no-one is too perturbed it seems. But we are, very perturbed! Could there be a more dramatic warning from the richest nations of the world for us? It may seem easy to assume that all they are going to do is to manipulate the froth out of the market. But they did not say that. How can one “calm” markets? And why will such action “lose its effect if it is explained?” Such statements are so strong they need to weighed carefully.

The succinct admission that turbulent markets will continue being turbulent for some time to come, while stating the obvious, is a warning from the entire body of major financial nations Finance Ministers [not warning from mere newsletter writers]. They are clearly concerned about the veritable Tsunami of Capital that is ready to rush from weak markets to strong, or the disappearence of such that is happening in the credit markets [like the pullback of the sea before the wave hits] and is being replaced by freshly issued money from the Central Banks. They are fully aware that volatility is here, as a market feature, to stay. They realize that such swings destroy the stability of world markets and make the markets malfunction, badly. The situation certainly has to be dire for them to issue such a warning? 

What tools are in their hands to “collectively take suitable measures to calm the financial markets”? They are several and of different dimensions. We look at those that would be the first assumed points of action: 

Exchange Rate or Interest Rate Management: It is unlikely they are referring to exchange rate or interest rate management as these tools are already in use by separate national Central Banks; however, if these nations want to manage exchange rates ‘in concert' the game changes somewhat. We presently believe that the G-7 have agreed trading bands within which currencies will move. Outside those bands we expect the G-7 to act to ‘smooth' them out. They would only contemplate such action if they exepected the volumes of capital are so large that they will make currencies move “irrationally”. History has shown that Central Banks –no matter how important in the global money system—can be defeated by speculators. The potential flows of capital that could flow at the moment are far larger than any speculator has imagined before.

If they succeed in holding exchange rates within specified trading bands, then it will be like making a four-laned highway for the capital to travel down. The markets from which they come from and those they go to will bear the full brunt of the tsunami and will show “irrational moves”. Bear in mind it will be the movement of capital that will show any irrationality, not normal international trade. Consequnetly such moves must be prevented from destabilizing international trade and the exchange rates that affect them. The separation of capital flows from trade flows has usually been the first point of action by Central Banks often making a separate currency for capital movements. This can be through Capital Controls or Exchange Controls , subject to the severity of the “irrationality” of the markets affected.

Credit Markets : We have seen action from several Central Banks now—in particular, the Federal Reserve and the European Central Bank—to the tune of hundreds of billions of $ and €s (a figure expected to rise to over $450 billion). By the end of March we should know what this figure is headed towards in the next year as well as the last one. We have no doubt they will continue to act to save the banking systems of the G-7 group of nations through the replacement of lost values [capital] by the issue of much more as we have seen to date. We are led to believe that the subsidence of confidence in the banking system and amongst bankers themselves is spreading up from the poor end of the housing market to the more expensive end of the market.

Thereafter, it is hitting the bond insurance market, likely to hit the credit card market and could push over into the car finance market. Thereafter, who knows where? There is no reason why this disease should stop at one point and not the next. The entire system is like an inverted pyramid with the world banks being the tiny point at the bottom. They will have to focus their attention the most on the capital side of the global banking system! The role of the Central Bankers as lenders of last resort has been amply demonstrated over the last few months and will continue to be so. Unfortunately, the money issued has not been taken by those who really need it, but has often been taken by banks funding other aspects of their operations leaving the crisis relatively intact. The sheer volume of newly issued capital adds to the mighty volumes of capital that can move and cause “irrational movements” in markets.

The G-7 nations are giving us warnings of their coordinated action. Therefore, it has to be action to ‘calm' international movements of capital. As has been the case in the past and will be in the future, such action will attempt to leave international trade untouched and unhindered to go its merry way of keeping the system going amongst a regime of stable [relatively] exchange rates. Hence, the chief tool has to be Capital Controls or exchange Controls. These measures will be far more than punitive simple “Witholding Taxes” that penalized the export of capital seen in the States in the past. They will have to be immediate and effectively halt “irrational movements”. Only Capital and Exchange Controls fit the bill.

In the Gold Forecaster we have highlighted the probabilty of Capital Controls and Exchange Controls for some time now, but this warning tells us that they are imminent and will arrive without warning as the G-7 have said themselves.

What does this mean for you and for me and for all those financial institutions out there across the globe? It means if we want to protect ourselves from the pernicious effects of these we must act NOW! The time for adjusting one's affairs, not only to protect one's wealth, but to re-structure it beyond the reach of these authorities is running out. It would be extremely unwise to wait until the authorities have acted because you might find yourself listening to the sound of the trap of Controls snapping shut over you? 

Storing bullion in Switzerland [as the Bullion Vault does for its clients] is a way to go and we would happily recommend working with them as we will do, as it is out of the reach of the G-7. The only drawback to that is that it remains in the name of the owners, who will be resident most likely inside the nations of the G-7. As such they are faced with a dilemma when they declare to their authorities that they own gold in foreign lands. It is no small step for those authorities to tell them to bring the gold home? That is where we can help too.

This article is not the forum to discuss ways and means of protecting oneself from such controls, but after 25 years of practical experience in successfully structuring people from such controls in a manner satisfactory to the monetary authorities of three lands, we know of successful ways to protect one's wealth and would be happy to assist any searching for such protection. 

As a final thought, when such controls are imposed they produce remarkable opportunities to increase and create wealth, so not only benefitting one, but adding to one's wealth.

For subscribers who wish to know more on these subjects and who would like to understand more about Capital and Exchange Controls, please contact us for more information and articles on this subject.

For the entire report, please visit .

Please subscribe to: for the entire report.

By Julian D. W. Phillips
Gold-Authentic Money

Copyright 2008 Authentic Money. All Rights Reserved.
Julian Phillips - was receiving his qualifications to join the London Stock Exchange. He was already deeply immersed in the currency turmoil engulfing world in 1970 and the Institutional Gold Markets, and writing for magazines such as "Accountancy" and the "International Currency Review" He still writes for the ICR.

What is Gold-Authentic Money all about ? Our business is GOLD! Whether it be trends, charts, reports or other factors that have bearing on the price of gold, our aim is to enable you to understand and profit from the Gold Market.

Disclaimer - This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold-Authentic Money / Julian D. W. Phillips, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold-Authentic Money / Julian D. W. Phillips make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold-Authentic Money / Julian D. W. Phillips only and are subject to change without notice.

Julian DW Phillips Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in