GOLD HAS ALWAYS BEEN AN ESCAPE ANIMAL

Thomas Bachheimer is president of the European Gold Standard Institute and chief economist of Gold Provision (GVS) in Vienna.

The financial expert is pulling up stakes in Austria and moving to Dubai. The background of his temporary “emigration” is purely economic. In an interview with PANGAEA, he also explains why an investment in gold is more worthwhile than in real estate.

PANGAEA: You are moving to Du bai in the United Arab Emirates these days because the gold stream would flow there. What does that mean?

Bachheimer: Let’s put it this way, the gold stream flows through there. Dubai has always been one of the big trading centres in the Arab world. You have to know that gold always flows to where productivity is. One notices that there are now outflows in the previous trading centres in America, London and Switzerland. One reason for this is politically or chestrated outflows because a lot of gold is flowing to Dubai from sanctioned Russia, where private individuals have gold at their disposal. For the gold provision, it was only a question of time, after we had already expanded strongly in Europe, that we as a global player could also participate in Dubai and contribute to bringing the European gold culture to the Orient. Because there the gold culture is different, it already starts with the degree of purity: due to technical progress we work with 99.99 and in India, which is one of the main markets for Dubai, 99.5 is traded. There, it’s all about acceptance. And nobody there has heard of coins at all.

PANGAEA: Do you plan to enter the coin business there?

Bachheimer: Coin culture is important to us because we have a long tradition in this field in Austria. I only have to remind you of the Joachimstaler, which was struck in Bohemia in what was then Austria and gave its name to the US dollar. But I also remember the silver mine in Schwaz in Tyrol, once one of the largest silver mines in the world, until the Spanish imported shiploads of gold and silver from South America. And we are very well known in Africa because of the Maria Theresa thaler. This was partly real money in use in Africa and is still accepted in trade today. For me, it is only logical to bring the gold and silver culture to countries where it is not yet so pronounced.

PANGAEA: Is there more business to be done with the gold trade in Dubai than currently in Europe?

Bachheimer: Absolutely. Europe is suicidal in a different way. Where there is no more economic power, there is no need for gold. In my opinion, the gold heart of the world will soon be beating in Dubai. As a person working in the gold business, you simply have to be there, just as a surfer has to have seen Hawaii once.

PANGAEA: You said that there are “outflows” of gold from London and Switzerland. Does that mean that the gold is being sold or stored elsewhere?

Bachheimer: Different. It is being sold, but there are also people who no longer consider Europe so safe from a geostrategic point of view and place the gold in other secure storage facilities. The fact that this is now happening in the Arab world, of all places, is a staircase joke in his tory. Many people are already leaving Frankfurt with their gold.

PANGAEA: Do I understand you correctly: Rich gold owners are more afraid of storing gold in Austria, Frankfurt or London, for example, than in a country ruled by rulers like the United Arab Emirates?

Bachheimer: Yes, some are afraid that the geopolitical situation will change in such a way that they will no longer be able to get their gold. But one thing must be said right away, the fear is not of a gold ban. That did happen once before under US President Franklin Roosevelt, but if you look at the real estate holdings here now, which are hundreds of times larger than the gold holdings, the Secretary of the Treasury is more likely to tax the real estate than the gold if the worst comes to the worst. It is not that everyone is afraid. However, there is a tendency to spread gold ownership. Of course, that only makes sense for big gold owners.

PANGAEA: So is gold the greater crisis protection than real estate?

Bachheimer: In terms of assets, it is the case that the states have leaned out too far and can no longer cover the deficit with tax revenues at all. They are also slowly running out of financial tricks. They are now trying inflation. But at some point, it will come to the next stage - expropriation. These will not be called expropriations, but they could be called burden-sharing laws, which are being discussed in the German Bundestag. I can well imagine that in the next five to ten years the state will also have access to private real estate. You can also mortgage them, which is not expropriation in the conventional sense, but taxes are always expropriation. Burden-sharing laws make real estate uninteresting. In today’s world, you need unregistered assets. Registered assets are real estate or shares, re-registered assets are gold, nobody knows about this purchase and I can store it where I want.

PANGAEA: You can do that with works of art and diamonds, too.

Bachheimer: But there is a problem: If I want to sell the gold because I need money, I have a worldwide standardized gold price and I can sell it anywhere. If I have diamonds or works of art, I have to go to a third person who values them so that I can make a deal with a second person. In other words, the speed of liquidating the existing assets has slowed down a lot.

PANGAEA: Do you have the impression that more gold is bought in times of crisis like now?

Bachheimer: The overall demand is already increasing. The smart people have already sensed that inflation is coming.

PANGAEA: So it is not only you who are fleeing to Dubai but also gold - and to a ruling country and not to a democratic country as we know it?

Bachheimer: Gold is an escape animal like big capital in general. Before a crisis arises, the capital has usually already left. Russian capital was overlooked because the financial politicians could not know that Vladimir Putin was attacking Ukraine. In a democracy, the people tell those in power what to do. But now those in power are saying “We can do it”, “Put on a mask”, and “Get what’s coming to you”. These are things that are supposedly pro-citizen, but in reality, it’s a command revolution. From a libertarian point of view, of course, this is an ideological pattern, because I am now moving to a country ruled by a ruling family and where there is not even the parliamentary possibility to depose these rulers. Why am I doing this anyway? I have been to Dubai a few times and looked at it. There, according to my observation, there are no unhappy citizens, the wealth does belong to the ruling families, but they give so much to the citizens that they can all lead a contented life. There are no tendencies there for people to want to get rid of this ruling family. Only eight percent of the people living in Dubai are locals, i.e. people who were born there. 92 percent are foreigners.

And the foreigners who moved there before me are not all complete idiots. You don’t have this liberalism, which not everyone needs, but you do have a high degree of economic liberalism in Dubai.

Styrian-born Thomas Bachheimer has been called a commodity guru by several media since he predicted an oil price of $150 at $30 and is a welcome guest analyst at OPEC events and on CNBC, Blomberg TV, DAF and n-tv. In numerous publications and lectures, he has dealt with the existing monetary system, the influence of politics in economic life, the USD and Euro, but also with the precious metal and energy markets and tried to make the complicated interrelationships in these areas more understandable to the so-called normal consumer. As European President of the Gold Standard Institute www.goldstandardinstitute.net, founded by Philip Barton and Antal Fekete, he is fully committed to the task of informing the “currency users” - i.e. end consumers as well as business people - about the advantages of non-political, covered currencies and to promote the establishment of a new way of thinking in the field of currency.