It has become an annual ritual to follow the non-progress of Malaysia’s plan to monetize its trade in Gold Dinars. Three years on the project is still just rhetorical fluff and it seems to be losing momentum the further Dr Mahathir Mohamad gets into retirement.
Indeed, Malaysia’s former Prime Minister has been more industrious in donating timber to Zimbabwean crackpot president, Robert Mugabe, for the latter’s latest mansion. A $45,500 gift to a despot would hardly be enough to kickstart the moribund dollar alternative, but surely it could be a helpful gesture.
First mooted in 2001 as Mahatir wallowed in indignation over Malaysia’s earlier currency woes, the world was promised a functioning Gold Dinar bloc by 2003. Iran was supposed to be on the verge of signing up in late 2002 for the bilateral trade settlement scheme, as were a few other countries.
Evidently not and there is no reason to believe it can ever take off according to plan.
Mahatir’s stated purpose, insulation from Western perfidy, is entirely at odds with the design of the arrangement. And as we pointed out two years ago, trade balances denominated and settled in gold are anathema if you run a deficit on the current account. Export powered Malaysia would have gobbled up most of its putative partners’ gold in short order.
Commentators suggested the Gold Dinar was a pilot scheme for a greater Asian trade treaty based on gold backed currencies. This was all supposed to trigger a paradigm shattering power shift from West to East. The Chinese Communist Party was supposed to discover the joy of subordinating its absolute, capricious power to the rule of a gold standard. This was all alleged to be “imminent” more than a year ago.
Alas for Malaysia, its potential Arab Islamic partners have informally snubbed it by pursuing the “Arab Dinar.” Saudi Arabia, Oman, United Arab Emirates, Qatar, Kuwait and Bahrain have been discussing a common market arrangement that would rely on an Arab Dinar pegged to . . . the euro. You can argue that the euro has been a great proxy for gold recently, but it’s still a fiat currency underwritten by 35-hour work weeks and so on; isn’t it?
Even Mahatir has fallen in love with the euro because calculating Malaysia’s oil revenues in that currency shows a higher value than in dollars. He’s satisfied as long as the currency used shows a big number. So much for the stability and probity of gold he advocated previously.
The Gold Dinar grand plan was supposed to be matched to a digital formulation what with the pesky age of resistance to carrying your monetary gold about with you. A derivative of that, but one aimed at the man-on-the-street, lies in humiliating disrepair. www.e-dinar.com dolefully warns users that it has suffered a “serious hardware failure” that has resulted in the transaction system going offline indefinitely.
Not even the Royal Mint of Malaysia is all that proud of its recently minted Gold Dinar’s. The mint Web site’s latest presige coin celebrates the “10th Men’s Hockey World Cup” – held in 2002. Search the site for the Dinar and you’ll get coin cards celebrating Christmas and Chinese New Year. Oh well, at least you can pay for your quasi dinar coin cards with Visa and Mastercard.
Still waiting for the Malaysian moneyquake? So are we.