The recent 382 ton gold swap by the Bank of International Settlements is an  indication that gold has re-entered the international monetary system after an absence of almost 40 years.

The swap was undoubtedly between Portugal and the BIS which allowed Portugal to refinance its debt using its gold reserves (382 tons) as collateral. CDS spreads on sovereign debt has forced borrowing costs higher and to lower those costs, Portugal used its gold to get lower rates.

The problem is that many nations with the same need to refinance do not have sufficient gold reserves to qualify for lower rates, e.g. the UK, the US, Japan etc.

The sovereign debt crisis is not over. The reappearance of gold is an indication that IOUs alone are no longer sufficient. What the consequences will be remains to be seen.

Keep your eye on the bond markets.

Good luck,

Darryl Robert Schoon

www.survivethecrisis.com

www.drschoon.com