KARACHI, Oct 14 - Pakistan, a Muslim country, recently exploded an atomic bomb following the same action by its Hindu neighbor, India. These bombs everyone has heard about and the potential for these and other countries end the existence of mankind on earth certainly is frightening to everyone except perhaps stock market crazed westerners who are simply not sober enough to care. Frightening as the atomic bomb is, another kind of bomb, namely The Islamic Dinar could pose an even bigger threat to our existing financial system which I believe would be enormously bullish for gold. Although I believe the Islamic Bomb may be a threat to the status quo, almost no one has yet caught on to this very recent development.
The Islamic Dinar is a newly created 100% gold currency that its backers hope and believe will become the currency of more than one billion Muslims. The organizers of this currency not only see the Islamic Dinar as an eventual rival to the U.S. Dollar as a reserve currency, and are hopeful it will usher in the demise of the U.S. Dollar. So far, I have learned most of what I know about this movement from the Internet. The Internet is very often used to spread misinformation as well as truth. So, it may be possible that this movement is not all that it is cracked up to be on its web site (www.users.dircon.co.uk/~netking/murabitn.htm). However, I believe the movement is real and for reasons noted below, I think it could indeed pose a threat of devastation to the U.S. Dollar and existing world order. Following are a couple of the reasons I think this could be true.
Enormous Carnage to Asian Muslims
Resulting from our Floating Rate System
One of the reasons given for the continued insane rise in Wall Street has been the flow of money out of the Asian countries into the U.S. markets in search of a safe haven. But this makes no sense to the tens of millions of Muslims in Indonesia who are now suffering through a fate worse than we faced in the 1930's. Indonesia, which is comprised virtually 100% of Muslims, contains the 4th largest population in the world. Those people blame Suharto but they also blame the U.S. because Suharto was financially tied into the U.S. and our internationally dominant fractional reserve banking system. This underlying anger, which has been caused by enormous devastation suffered by hundreds of millions of Muslims throughout Asia, is likely to provide a powerful incentive for Muslims to "stick it to the Great Satan" by selling dollars and buying Islamic Dinars. At the same time, these people see this as a way to protect themselves by holding real money rather than the fake paper IOU's which has, overnight lost up to 70% of its purchasing power overnight. The dominant theme of the sponsors of the Islamic Dinar is the liability aspects of paper money and that as a result it is dishonest money. Moreover, as recently seen in Asia, when the promise to pay fails dollars fails the system collapses and human misery is compounded. This may be little more than theory to most of us in the U.S., but it is a harsh reality for hundreds of millions of Muslims who live in Indonesia and elsewhere in Asia. It may be safe to say these people are mad as hell and they may not take it much longer.
Islamic Religious Beliefs - Not unlike Christians who have forgotten the basics of their faith founded on biblical teachings, so too have many, if not most Muslims forgotten the basics of their faith based on the Qur'an. One of the main pillars of the Islamic faith is the observance of Zakat, which dictates that Muslims must give at least 2 ? % of their income to the poor. Wealthy people are encouraged to give more. The important factor to keep in mind as far as gold is concerned is that these gifts are to be paid only with tangible merchandise and that it cannot be paid with a promise to pay, which is in fact, all that paper money is. The Zakat is to be paid with honest money or actual substance, not a promise to pay. The Islamic Dinar, which is A 100% gold coin and unit of currency, fits this Islamic requirement.
HOW SUBSTANTIAL IS THIS MOVEMENT ?
At this stage, the movement to convert from paper money to real money in the Muslim world is small, but if information I have is accurate, it could be about to explode in size driven by the reasons noted above. Here are some of the recent developments which suggest the movement may be well on its way to becoming a monetary force to be reckoned with.
The State Government of Kelantan, the northeast Sultanate of Malaysia has a week ago officially adopted the ISLAMIC DINAR its economic policy. This means that the ISLAMIC DINAR will circulate through the hands of hundreds of thousands of people in a physical form. It seems possible that as word of this movement travels among Muslims, demand to open accounts and begin using this medium of exchange could grow very rapidly in the Muslim world.
The ISLAMIC DINAR is now being privately used in more than 22 countries and is currently being minted in four countries. Eventually, the list of countries where it is traded is likely to grow to a much larger number given the large number of Islamic Countries who are members in the Islamic Development Bank, which includes some 51 countries. During 1982, the Islamic Development Bank was prescribed by the IMF as a holder of Special Drawing Rights (SDR's). SDR's are a unit of IMF currency tied to gold. The Islamic Dinar. The Islamic Dinar, which is the unit of account at the Islamic Development Bank, is equal in value to one SDR. Member countries of the Islamic Development Bank are Afghanistan, Albania, Algeria, Azerbaijan, Bahrain, Bangladesh, Benin, Brunei Darussalam, Burkina Faso, Cameroon, Chad, Comoros, Djibouti, Egypt, Gabon, Gambia, Guinea, Guinea-Bissau, Indonesia, Iran, Iraq, Jordan, Kazakhstan, Kuwait, Kyrgyz Republic, Lebanon, Libya, Malaysia, Maldives, Mali, Mauritania, Morocco, Mozambique, Niger, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Senegal, Sierra Leonne, Somalia, Sudan, Syria, Tajikistan, Tunisia, Turkey, Turkmenistan, Uganda, United Arab Emirates and Yemen. With a total Muslim population of 1.1 billion (19.2% of the world's population), if even a small percentage of Muslims begin to demand Islamic Dianars as their medium of exchange instead of paper, it could have a dramatic effect on the price of gold.
An Islamic Agency has been set up to handle accounts and payments between accounts in the city of Dubai. This will allow the use of Islamic Dinars to spread in the Muslim world as a medium of exchange. At present, this undertaking is quite modest, with only $200,000 worth of gold deposited in Dubai. Dubai is viewed as an attractive place to keep money away from the taxation authorities since there are not taxes on individuals, corporation or merchandise sales there. This spokesman for the Islamic Dinar mint also claims his organization has a good relationship with the Royal Family in Dubai, which should help the group's efforts. After the summer a campaign aimed to the Muslim world to open accounts in dinars is anticipated and the goal is to open 10,000 accounts within the first year of operation.
The organization may link up with another new and exciting development in the modern world as far as gold is concerned. They may soon be trading gold Islamic Dinars globally on the Internet through an organization located at www.e-gold.com . Readers are encouraged to visit this web site for more information, but essentially, the technology now exists to enable you to buy and sell gold right from your computer. It will be quite easy to make compatible our Islamic Agency, which will be operated by a Web Site to your e-gold Web Site.
The sponsors of the Islamic Dinar will suggest to Muslims that they convert their paper currency denominated accounts into Islamic Dinar in Dubai. In addition to tax aspects, Dubai is an appropriate place from which to launch this new banking enterprise because it is forbidden for Muslims to deposit their money with non-Muslims. In the Qur'an itself, Allah makes this prohibition (which is a command for us) clear precisely when referring to the Islamic Dinar.
On May 22 through May 24, directors of the Islamic Mint Directors from all over the world were scheduled to meet in Dubai to move this project forward. Stay tuned. I plan to tell you more about this story as it unfolds and how you may be able to begin buying gold by way of e-gold.
At this juncture, the western world could care less about gold because it has convinced itself that man can control his own destiny. Life has been so grand for us in the U.S. and most of the western world over the past 50+ years that we have given ourselves the credit for our prosperity rather than giving God the credit. Given this delusional thinking, we are convinced there is nothing, including matters of money that we cannot fix. This of course is pure rubbish especially when you consider that the depression now faced by Asia was created by excessive international liquidity made possible by the post-Bretton Woods floating rate exchange system. Even as the west experiences a moral decline that will inevitably lead to its destruction, Muslims acknowledge man's true need to live by a higher order. Accordingly, they detonate bombs and build their economies on real money rather than IOU's. Timing is difficult to figure here, but 1 billion+ Muslims beginning to opt for real money rather than the fake stuff, could portend well for the price of gold in the near future.
What is the role of the gold dinar?