www.ft.com/cms/s/0/49681f6a-f942-11d...

"In a global environment where there is an increasing question mark over the status of the dollar, gold is likely to become more attractive [to central banks]," says Giles Conway-Gordon of Cogo Wolf, a California-based fund of hedge funds. He cites China, Taiwan, South Korea and Japan as countries that all have very low levels of gold in their reserves. "Russia has bought a tonne of gold a month for the last several months, and Qatar is doing the same. The era of the dollar hegemony is over."

I wish I could get the ear of someone with the power to make decisions down in Ecuador, because I could tell them exactly what they should do with their new found wealth.

All tax and royalty proceeds from their new mining industry should be receivable in gold bullion, which should go straight into their national treasury. Furthermore, they should open a national mint to coin silver for public savings along the lines of Hugo Salinas Price's Libertad project.

In hitching their wagon to the US dollar, Ecuador left itself open to the same problem now facing the USA; specifically a decline in purchasing power which undermines national savings. They need to consider gold and silver as the basis for a new Ecuadorian currency.

I expect that in the long run, there is enough gold and silver to do this on a national scale. The transition would have to be gradual so as not to disrupt existing financial relationships, but Ecuador is small enough that they could pull it off. The essential feature of this currency is that it would be denominated in ounces or grams of gold and silver, which could be converted into other currencies on the basis of the spot price, which anyone anywhere could obtain via a Transact terminal or a simple phone call.

This is just a bare bones outline of a solution to the currency crisis they're going to face in the not too distant future. There's a lot to consider obviously, but the first step is to retain as much gold and silver as possible within the framework of equitable tax and mining laws.

They have such a great opportunity in front of them, it amazes me that more of them don't get it. They aren't dragging a legacy mining industry behind them with all the attendant social and environmental ills that you find in say, Brazil or Peru. This is a brand new start - a chance to get it right from the get-go and establish themselves as key players in Latin America.

Somebody down there needs to pound the table loudly on this theme. Stop looking at gold and silver as something you sell for dollars and recognize it for what it is: MONEY. The foundation of a new prosperity based on honest weights and measures that everyone can believe in and support.

Starting to sound like Ron Paul here...heh!

ebear