For a bright future, Gold Patrimony

Demand for gold rises by 176% in the first quarter of 2023, according to the World Gold Council. Against a backdrop of widespread economic fears, the rise in physical gold indicates that it is one of the most sought-after safe-haven assets. Will you be the last one to protect your savings?

 

As 11Onze anticipated almost a year and a half ago, physical gold is becoming an indispensable tool for protecting long-term savings. That is why Preciosos 11Onze offers several tools to enable the community to use gold to better withstand the period of economic turbulence we are experiencing. On the one hand, there is Gold Seed, which allows short-term gains to be made by taking advantage of the constant revaluation of gold. On the other hand, there is Gold Patrimony, where the idea is to buy physical gold with the long term in mind.

 

Gold Patrimony

This is what we have called the gold that we have been selling from day one at Preciosos 11Onze, to differentiate it from Gold Seed. They are gold bars of various sizes, with a minimum purchase of 3,000 euros. And the gold is delivered to your home or can be kept in safe custody in a vault.

Why can gold be considered an asset like a house? Because it is an asset that tends to appreciate in value and is highly liquid. In recent years, gold has appreciated by 40% and, during 2022 alone, its price increased by 9.5%. It should be remembered that in 2022 average inflation in Spain was 8.4%. Therefore, people who had their savings in gold gained a little purchasing power, while those who had them in euros lost it.

But Gold Patrimony has to be seen in perspective. So we should remember that in January 2008 an ounce cost $883, while today it is around $1,960 – $2,000, an increase of more than 100% in 15 years. The outlook, however, remains bullish. Why? Because central banks are making record purchases of gold, probably looking for a safe and tangible asset on which to support huge public debts. The World Gold Council noted that central banks had bought 4,741 tonnes of gold during 2022, a figure not seen for 55 years.

Turbulence and indicators

The banking crises of the last few months have generated doubts among depositors. From Silicon Valley Bank to Credit Suisse, via First Republic Bank, history is repeating itself. Add to this the FDIC’s view last November that the volume of debt is not sustainable, and it is only natural that many people are looking for safe options for their money. Withdrawals from bank accounts are very high in Spain, the UK and the US. The trend indicates, as also noted by the FDIC, that people with more money and information are somehow protecting their savings by taking them out of banks, a behaviour that may accelerate further collapses.

 

What now?

One of the questions to be answered is what to do with the money once it is out of the bank. In complicated scenarios, you have to look for safe options. These can be bonds, property or products with insurance (such as Guaranteed Funds or Litigation Funding). But if there is one product that stands out for its historical security, it is always Gold Patrimony.

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The European Union is facing political, economic and military decline in the world. The special interests of individual states deprive it of a strong voice on the international stage, where it usually acts at the beck and call of the United States. In this context, Europe’s real sovereignty is almost a utopia.

 

Turbulent times lie ahead in Europe. The war in Ukraine has heightened tensions with Russia, which is increasingly tightening its ties with China. The conflict has led European governments to strengthen their alliance with the United States and rethink their defence and energy policies. Moreover, the war has provoked tensions within the EU itself, which are likely to grow.

Where can we go from here? It is hard to say. Europe has come a long way since the 1950 Schuman plan and the 1957 Treaty of Rome, which has made it the world’s second-largest democracy and third-largest economy. But after the dream of European union and prosperity brought about by the fall of the communist bloc in 1989, European idealism has melted like a sugar cube. It has done so in an “international disorder” under US tutelage and marked by economic crises, pandemics, a process of partial deglobalisation and conflicts between the great powers. 

Never before has the EU had to face an international situation that is moving towards multipolarity and is plagued by crises that pose numerous threats and challenges. And it has not even been able to develop the long-awaited Common Foreign and Security Policy (CFSP). 

One certainty: foreign policy remains one of the least integrated elements of the EU. This was demonstrated, for example, by German Chancellor Olaf Scholz on a trip to China in early November 2022. This visit was met with a barrage of criticism from European partners for denoting unbridled unilateralism, as Germany’s interests clashed with those of the other EU members. 

 

European disunity

 

It is no secret that each country defends its own interests. As Martin Wolf, economics editor of the Financial Times, recently warned, some of the main problems facing the EU stem from the fact that it is not a state but a confederation of states. From this stems the difficulties of managing divergent economies within a monetary union in which the European Central Bank plays an essentially political role to avoid insurmountable imbalances between the different economies. 

True integration is lacking. The reality is that the European single market is not integrated in the same way as the American market, for example. The lack of dynamism in a crucial sector today, such as information and communication technologies, is largely explained by this fact. It is symptomatic that only one European company, ASML, is among the ten most valuable technology companies in the world. 

There is nothing to be optimistic about. In a more fragmented international context with greater nationalist impulses, even Germany, the real engine of Europe, is finding it increasingly difficult to find markets to absorb its production. High energy costs are a threat to its heavy industry. And then there is the push from China and the United States’ move towards an interventionist and protectionist policy. 

This situation means that there is a lack of a real common European policy, weighed down by individual national interests, which even threaten the existence of the single market. 

Europe’s role in the world

 

A vital question for Europe, as Wolf points out, is to define what role it wants to play in the world, whether it wishes to remain a ‘servile’ ally of the United States, become a bridge between blocs or regain the status of a power. The first option seems the most plausible since to become a power again it would need a much deeper political and fiscal union, as well as overcoming internal mistrust.

The rise of China, India, Russia and others as economic and military powers forces the EU to be a single actor with a single voice in matters of global importance if it aspires to be one of the relevant ‘poles’ in the multipolar future. But the more active and independent the EU wants to be, the more crucial it will be to deepen its federalism, a process plagued by nationalist reluctance.

 

The rise of populism

 

The rise of populist movements in Europe since the financial crisis of 2008 and the migration crisis of 2016 poses a threat in this regard. Most of them are characterised by Euroscepticism, believing that the root of Europe’s socio-economic problems lies in European integration and Brussels’ decision-making. 

This is not a marginal movement: a study by the Pew Research Center shows that Eurosceptic parties already hold 29% of the seats in the European Parliament, the highest figure in history. Thus, a significant proportion of those who make the big decisions on the future of the European Union are also those who oppose further integration. And without such integration, it is difficult for Europe to regain a leading role on the international stage.

 

Little progress

 

The EU has set a number of priorities for the period 2019-2024, including the protection and freedom of citizens, the development of a strong economy, sustainability in Europe and the promotion of European values and interests on a global scale. Unfortunately, little progress has been made in these areas.

We live in a world characterised by disorder, growing protectionism and conflicts between great powers. It is certainly not the world of which the founders of the European Union dreamed. But if its current leaders wish to preserve something of the original spirit, they should strengthen the foundations of the project and move towards real European sovereignty. This would require halting deindustrialisation, driving digital transformation, deepening integration and establishing a single voice in the world.

 

11Onze is the community fintech of Catalonia. Open an account by downloading the super app El Canut for Android or iOS and join the revolution!

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Despite the fact that the ECB has continued to raise interest rates, Spanish banks have kept the average remuneration on new deposits far below the rates offered by other European countries, taking advantage of the rise to earn more money from their customers.

 

The Spanish banking sector has shown itself to be one of the slowest in the whole of the European Union to reflect the European Central Bank’s rise in interest rates with a better return on deposits. In fact, according to data published by the ECB, banks in Spain and Cyprus were the only ones in the eurozone to start the year by reducing the remuneration they pay on deposits to their customers.

Spanish banks went from paying 0.64% in December 2022 to 0.59% in January this year, while in the eurozone as a whole banks raised rates on new deposits to an average of 1.65%. This happened at the same time as the interest differential between mortgages and deposits increased by 0.66 points since 2019, thanks to the fact that banks have made lending more expensive much faster than increased deposit remuneration.

All this has happened in a context where the big banks – CaixaBank, Banco Santander, BBVA, Banco Sabadell, Bankinter and Unicaja – have earned 5,696 million, 14% more, in the first quarter of the year compared to the previous period, despite the new tax on banking. The CEO of CaixaBank, Gonzalo Gortázar, argued that, “there is no extraordinary profit” and that it was a “modest” result, despite the fact that the financial sector recognises that interest rate rises have played a significant role.

 

A watered-down justification

 

The banks justify themselves by saying that, despite the ECB’s rate hikes, they are not paying more interest on deposits because they have plenty of liquidity. And it is true that many of these financial institutions enjoy ample liquidity thanks to bond purchases and long-term capital injections due to governments’ expansive monetary policies, which is why they no longer depend on depositors to finance their business.

However, this explanation seems poorly founded when we consider that Italian banks are the most liquid in Europe – far more so than Spanish banks – and, even so, pay more for deposits, in some cases up to 5% interest. Moreover, Spanish banks in Italy do offer a better return on their customer’s money than they do in Spain.

Given this situation of indifference of the financial sector towards the interests of its customers, it is not surprising that, although Spanish banks have begun to improve the remuneration of savings, during the first two months of the year Spanish families withdrew 18,000 million euros in deposits from Spanish banks in search of a better return on their money.

 

Fund lawsuits against banks. Do justice and get returns on your savings above inflation thanks to the compensation the banks will have to pay. All the information about Litigation Funding can be found at 11Onze Recommends.

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The gold industry has been affected by the inflationary spiral of the last two years. However, the impact has been very different depending on the type of company. The profit margins of mining companies have been greatly reduced, while the royalty companies that finance them have hardly been affected.

 

The profits of mining companies, with high overhead costs, have been severely eroded by the massive increase in energy and fuel prices. Royalty companies, on the other hand, which provide financing or land to mining companies in exchange for a percentage of revenue or production, have been boosted.

Since the beginning of 2021, gold has appreciated by less than 20%. Although this is a significant percentage, it is much lower than that experienced by energy and fuels over the same period. For example, electricity has risen by 20-30%; coal has doubled in price and at many points even quadrupled or quintupled in price; and oil has risen by around 50%, with peaks between March and June last year more than doubling the cost in early 2021. To this must be added significant wage increases around the world.

 

The burden of structure

 

Given that mining operations require large amounts of machinery, energy and personnel, it is not surprising that the net profit margins of the major gold mining companies have fallen considerably over the past two years.

Data from the world’s two largest mining companies illustrate this. After reaching a net margin of more than 36% in the second quarter of 2020, the balance sheets of the giant Newmont Goldcorp have progressively worsened to negative results in the last two quarters. In the same period, Barrick Gold’s net profit margin has fallen from 39% to less than 4%.

 

Royalty and streaming companies

 

The performance of royalty companies, which typically include both royalty and streaming companies, has been very different. These usually finance the activities of mining companies through what would be equivalent in Spain to a participation account contract, which is a hybrid between a loan and a shareholding. This financing formula is often more attractive for mining companies than traditional debt or capital increase. 

Royalty agreements provide borrowers with a percentage of the mining company’s sales over the life of a deposit. Although there are many formulas for arrangements, the most common one fixes royalties on the basis of the smelter’s net return or, in other words, gross revenues. The particularity of streaming agreements is that the consideration for the initial funding is not financial, but directly a share of the mine’s gold production.

Two factors have meant that royalty companies have hardly been affected by inflation and have maintained huge profit margins. On the one hand, because most royalty agreements calculate royalties as a percentage of the mine’s gross revenues rather than its profits, their turnover has remained relatively high in the last two years. On the other hand, because they have minimal overheads, their overheads have hardly increased.

 

Minimal structure

 

Unlike mining companies, which have huge workforces and have to maintain large facilities with fleets of vehicles and heavy machinery, the royalty companies’ structure only includes a few offices with a few dozen employees, including mining engineers, geologists, metallurgical technicians and financiers. 

This has allowed Franco-Nevada and Wheaton Precious Metals, the world’s largest royalty companies, to maintain net profit margins above 50% in all their quarterly reports since mid-2021 despite high inflation. 

 

Protecting savings with physical gold has been one of 11Onze’s main contributions to its community, and now the range of products is expanding. This is why, in the face of volatility, still high inflation and the growing crisis of confidence in the banking system, gold is once again strengthening its position as a safe-haven asset. Discover Gold Seed at Preciosos 11Onze.

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The US Federal Reserve will launch this summer a real-time payments system designed to streamline transactions between bank accounts. This is a development that some critics see as a further step towards a digital dollar to counter cryptocurrencies and eliminate cash.

 

In an increasingly digital and interconnected world, payment systems are evolving to meet the needs of businesses and consumers who demand access to fast payment services to make transactions more efficient and better control their cash flow. The private sector has been at the forefront of this evolution, but governments also want to play a role.

To meet these needs, the US Federal Reserve plans to introduce a new payment system known as FedNow in July this year. This new instant payment platform is designed to enable secure and efficient payments in real-time, 24 hours a day, 365 days a year.

This is a great advantage for businesses and consumers, as they will not have to rely on traditional processing times, which can now be several business days. The new system will allow funds to be transferred instantly between participating bank accounts, and as a non-profit governmental organisation, it will be able to offer more competitive prices.

On the other hand, the adoption of FedNow by US banks, corporations and major financial institutions could result in other foreign entities being forced to use the service. This is significant because it could help the dollar, also in digital form, to perpetuate its reign in international cross-border transactions. This is a possibility that cannot be ruled out in the face of increasing de-dollarisation and the announcement of the launch of a new currency by the BRICS group.

 

A new payment system linked to the digital dollar?

 

In parallel with the launch of FedNow, the Federal Reserve is considering the possibility of introducing the digital dollar. As other countries have done already, this would involve putting into circulation a Central Bank Digital Currency (CBDC). This proposal has been criticised on the grounds that it could affect the fundamental freedoms of citizens, increasing the ability of governments to track and control the population.

In this regard, Florida Governor Ron DeSantis and presidential candidate Robert Kennedy Jr, questioned the motives behind the possible introduction of the digital dollar and the new FedNow payment system. Specifically, Robert Kennedy Jr stated that the issuance of a digital dollar will serve as a mechanism to control US citizens, just like the FedNow payment system, declaring that “the distinction between FedNow and a CBDC is important from a technical point of view, but not from a civil liberties point of view”.

As a result of these statements that seek to link the two proposals, yet another controversy has been unleashed on social networks, in which content is circulating that claims that the Federal Reserve will launch a central bank digital currency called FedNow this July, which will give more power to the government to ratify financial slavery and political tyranny.

This misinformation has gone viral to the point that the Fed has deemed it necessary to officially deny it, stating that “FedNow is not related to a digital currency. FedNow is a payment service that the Federal Reserve makes available to banks and credit unions to transfer funds. The FedNow service is neither a form of currency nor a step toward the elimination of any form of payment, including cash.”

Additionally, federal officials – including Fed chair Jerome Powell and former vice chair Lael Brainard – noted that a digital dollar could still be years away from becoming a reality, but that FedNow could emerge as a better alternative to a CBDC. Be that as it may, the controversy is served, and is likely to further boost the case for cryptocurrencies as decentralised digital currencies that can be used as a defence against CBDCs or other state-backed monetary alternatives.

 

11Onze is the community fintech of Catalonia. Open an account by downloading the super app El Canut for Android or iOS and join the revolution!

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What is the size of the gold market, what are the keys to the supply of this precious metal and how is demand for it evolving? Discover the key elements of a growing market. 

 

Gold is not the most expensive precious metal in the world, a privilege that belongs to rhodium, but mankind has used it for centuries as a currency and a store of value. It is estimated that over 200,000 tonnes of gold have been mined throughout history. Although that sounds like a huge amount, all that gold can practically fit into three Olympic-sized swimming pools.

Despite the relative scarcity, the rate of mining has greatly intensified in recent decades, with two-thirds of the total mined since 1950. Today, the pace of mining production is adding about 3,500 tonnes of gold each year to the total, according to the World Gold Council, an annual increase in reserves of about 2 per cent. 

Three-quarters of the gold supply comes from mines scattered across most of the world. No single country accounts for 10% of world production, which helps to reduce price volatility relative to other commodities such as lithium, where production is much more concentrated. In addition, the recycling of gold from jewellery and technological devices, which accounts for a quarter of the supply, also helps to stabilise prices in times of high demand.

 

Twelve trillion in gold

 

Of all the gold on the market, valued at around 12 trillion, around half (46%) has been used in jewellery, two-fifths have ended up in the financial system, either in central bank deposits (17%), in the form of investment bullion and coins (21%) or as ETFs backed by physical gold (2%), and the rest is split between industrial and other secondary uses. 

However, the shape of demand has changed significantly in recent years. The main destination of gold today is already investment (38%), followed by jewellery (37%), central bank reserves (18%) and technological devices (7%).

Emerging countries, led by China and India, already account for about 75% of the annual global demand for gold, while the rest is accounted for by developed countries.

The sheer size of the financial gold market, at close to five trillion euros, gives it considerable stability. Even large purchases and sales by central banks and institutional investors do not tend to have a major impact on price movements.

 

Central banks’ voracity

 

Central bank reserve managers are tasked with investing large sums of money in financial assets. And although the investment strategies of each of them are nuanced, they all follow the principles of safety, liquidity and profitability, qualities associated with gold.

This is why this precious metal has been one of the traditional reserve assets for central banks. According to the IMF, by the end of 2022 these institutions would hold more than 35,000 tonnes of gold. The approximate value of all this gold is 2 trillion euros, making it the third most important asset for central banks, after their dollar and euro reserves. 

The demand for gold by these institutions has intensified since 2010. However, the weight of gold reserves in their portfolios varies considerably among them. In the case of developed countries’ central banks, gold is estimated to account for 21% of their assets, while in emerging countries it is only equivalent to 10%.

 

One per cent of global financial assets

 

Despite the voracity of central banks in the gold market in recent years, their gold reserves remain smaller than those held by investors in the form of bullion, coins and ETFs, which are worth $3 trillion. 

On average, gold is estimated to account for just over 1% of global investment portfolios, although the World Gold Council has concluded that investors could benefit enormously from a share of between 2% and 10%, depending on their profile. 

It should not be forgotten that, in addition to security, one of the great virtues of gold is its liquidity, which has nothing to envy to that of other major assets. As an example, suffice it to say that in the last five years the average daily volume of gold transactions has almost reached 150 billion euros, a figure higher than that of the Dow Jones Industrial Average.

 

Protecting savings with physical gold has been one of 11Onze’s main contributions to its community, and now the range of products is expanding. This is why, in the face of volatility, still high inflation and the growing crisis of confidence in the banking system, gold is once again strengthening its position as a safe-haven asset. Discover Gold Seed at Preciosos 11Onze.

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Central banks buy record amounts of gold while drastically reducing their dollar reserves. The banking crisis, market volatility and geopolitical tension are shaking the global monetary system and threatening the dollar’s hegemony.

 

It is no secret that the rising value of gold is fuelled by bad news and economic uncertainty. The risk of contagion from the US banking crisis and market volatility in the face of a possible recession have caused the price of this precious metal to rise by 10% since January.

So far nothing new, the demand and price of gold are approaching historic highs whenever money seeks refuge in safe-haven assets such as precious metals. According to a report by the World Gold Council (WGC), central banks have maintained a steady pace of gold purchases during the first quarter of 2023, adding almost 230 tonnes of gold to their national reserves, an increase of 176% over purchases made in the same period last year.

In this case, however, the gold rush is partly due to an occurrence that could signify a paradigm shift in the world order. We are talking about de-dollarisation, a process that implies a reduction in dependence on the dollar as a currency for international trade transactions and as a reserve currency. The consensus among geopolitical and economic analysts is that the end of the dollar’s reign as an international reserve currency is not a question of if, but of when it will happen.

Growing demand for tangible assets

It would be unfair to attribute the rise in gold purchases to a single factor, but there is no denying that a return to fiat currencies underpinned by tangible assets such as precious metals is the order of the day. From digital currencies issued by some central banks to a future quantum financial system, gold is establishing itself as the ultimate safe-haven asset and an antidote to the loss of confidence in today’s fiat currencies.

According to the IMF, the US dollar’s market share as the world’s reserve currency has fallen from 66% in 2003 to 58.4% at the end of the fourth quarter of this year. A downward trend that is accelerating thanks to economic sanctions and which contrasts with an exponential increase in central banks’ gold reserves.

In this context, and unlike other occasions, it is important to bear in mind that this increase in demand for gold is not only driven by small and large investors who want to protect themselves against inflation and falling interest rates but is also led by central banks, which now account for 33% of the global market.

This diversification into gold, especially spurred by large emerging economies that are part of the BRICS group, seems to confirm that the international financial system is undergoing a radical transformation process which, although it is too early to know whether it will mean a return to the gold standard, suggests a continued demand for this precious metal and other tangible assets.

 

If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.

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Another US bank has failed, central banks offer emergency credit lines and stocks fall. Governments and regulatory agencies assure us that we don’t have to worry about our money and the stability of the banking sector. But should we trust them? What do they say behind closed doors?

 

The Federal Deposit Insurance Corporation (FDIC) is a US federal agency that was created in 1933 in the aftermath of the Great Depression to protect bank deposits and prevent mass bank failures. Currently, the FDIC insures up to USD 250,000 per depositor, per insured bank, for each account ownership category.

Inside this federal agency we find the Systemic Resolution Advisory Committee (SRAC), an advisory committee established in 2011 by the FDIC as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a law that was passed in response to the 2008 financial crisis and which introduced a series of measures to regulate the financial sector and prevent future collapses of the system.

The SRAC assists in the management of potential failures of the country’s largest banks and is made up of financial industry experts who advise the FDIC on the development of plans of action in the event of a large-scale banking collapse. The committee comprises members from different sectors of the economy, including representatives from financial regulators, banks, insurance, mutual funds and other entities.

On a need-to-know basis

Members of the SRAC meet regularly to discuss and make recommendations to the FDIC on how to address problems that a financial institution may be experiencing. They provide advice on issues such as resolution planning, identification of a bank’s assets and liabilities, communication with creditors and other related issues to help ensure the stability of the bank and the banking ecosystem. They also establish a plan of action in the event of a possible banking crisis, agreeing on the information to be provided to the public to avoid a collapse of the system.

Some of these meetings are open to the public via webcast and others are held in private, behind closed doors. One of the objectives of the last public meeting, which took place last November, seems to be to avoid widespread panic in the face of a banking crisis that could lead to a massive withdrawal of deposits by people worried about their money. It should be borne in mind that the money we have in the bank is governed by a fractional-reserve banking system, in which only a fraction of the deposits, 1% in the case of the eurozone, are required to be available for withdrawal.

In this context, we should remember that in order to avoid a collapse of the financial system during a banking crisis, the first option is to bail out certain institutions with taxpayers’ money, i.e. an external bailout. But there is also a second option known as an internal bailout or bail-in, whereby the money from shareholders, bondholders and customers with uninsured deposits – amounts above 100,000 euros in the case of the EU – is used to save the bank from falling into bankruptcy. As the committee points out, bank debt today is not systematically protected, and if it gets out of hand, the whole system collapses.

 

 

This happened in Cyprus during the 2008 financial crisis, when the government, following the instructions of the Troika (EU, ECB and IMF), confiscated citizens’ uninsured deposits to liquidate and restructure banks, causing a two-week bank shutdown to avoid a likely bank run. Hence, the importance that SRAC places on limiting communication with the general public, lest people want to withdraw their money from these banks before it completely disappears. Privileged information that, according to the committee, must be reserved for a select minority, presumably themselves or the like, who must be privy to it.

 

 

Friday news dump

The internet and 24-hour news coverage have not done away with the common PR practice of releasing bad news on a Friday to avoid major media coverage. At least this is the view of the committee’s panel when it points out that when preparing a statement detailing the tough measures that would be applied in the face of a banking crisis it is preferable to release the information “on a Friday, or ideally on a Friday night, so that people are in a position to receive it, understand it and say yeah, that works.”

 

 

Perhaps most surprising, or not, are the statements of Gary Cohn, former President and Chief Operating Officer of Goldman Sachs, when he explains that “you have to think about the unintended consequences of taking a public that has more faith and confidence in the banking system than maybe people in this room do (laughter from the audience) that, we want them to continue to have full faith and confidence in the banking system”.

One might think that the banks and regulatory agencies are aware a collapse is coming, but have little interest in letting the public know because they want to use people’s deposits to bail out these banks. Maybe we should know better after what happened during the 2008 crisis or with the failure of Silicon Valley Bank in March this year, when only a select minority who were informed of the seriousness of the situation were able to get their money out in time, but as Hegel said, “The only thing we learn from history is that we do not learn from history”.

 

If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.

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Starting in May, a whole series of calls for applications for direct aid from the Generalitat to boost the competitiveness of Catalan companies in seven different areas will be open. These grants, which are awarded in chronological order of application, can reach up to 20,000 euros in areas such as digitisation and Industry 4.0.

 

Part of the €200 million annual budget of Acció, the Generalitat’s agency dedicated to promoting the competitiveness of Catalan businesses, will be available in the form of “coupons” from May. These coupons offer a direct economic discount that companies can exchange for an expert service in internationalisation, innovation, sustainability or new technologies through the advice of Acció’s accredited suppliers.

The windfall of millions is distributed in seven different calls for proposals. In addition to accompanying companies in their digitalisation or international expansion, this year’s grants will also help them to access European research and innovation programmes or to reformulate their strategy.

Once the calls for proposals have been opened, it should be noted that grants are awarded in chronological order of application and are usually sold out in a short time. Projects can be implemented between 1 January 2023 and 30 September 2024.

The best endowed vouchers

The calls for proposals with the highest grants are those aimed at digital transformation and towards Industry 4.0, with amounts of up to 20,000 euros per project.

The one for advanced digital technologies will allow the contracting of consultancy services to test technologies that contribute to the digital transformation of the company. It will be possible to do this through the technological facilities of the Digital Innovation Hub of Catalunya. Projects may include, for example, technological feasibility studies, analysis of new disruptive business models or the development of proofs of concept or new prototypes.

Industry 4.0 aims to facilitate the first steps to implement technologies such as 3D printing, ‘big data’, the internet of things or robotics, among others, with the aim of improving products, services or company processes.

The necessary internationalisation

Another important area for businesses today is internationalisation. In this area, there are two calls for proposals: one for initiation to exporting and another dedicated to increasing sales around the world through digital channels.

The first includes the possibility of making an international promotion plan, with a maximum grant of 2,500 euros, or subcontracting an export manager, for which a subsidy of up to 8,000 euros is envisaged.

The second allows access to a consultancy service to define the international digital strategy, carry out a complete analysis of the company’s online presence or design an action plan for digital channels. The maximum grant for each project is 6,000 euros.

Strategy, innovation and sustainability

Two new calls for proposals this year are for strategy and European R&D programmes. In the first, with grants of up to 8,000 euros, an advisor accompanies the company in the analysis of changes in the environment, to see the effect they may have on the business model and identify new opportunities and challenges. The second aims to help companies access European research and innovation grants in a collaborative way. The grants, of up to 12,000 euros, provide advice on how to prepare proposals and create a consortium, as well as support in the application of the regulations.

The last call for proposals, with grants of up to 8,000 euros, is aimed at moving towards climate neutrality. Actions can be related to the use of technologies to develop sustainable materials, move towards renewable energies, work to improve efficiency in the use of water, energy or biodiversity, among others.

An ambitious objective

More than 3,800 Catalan companies have already benefited from this type of Acció aid in previous calls for proposals, which have helped them to make their first exports, implement or develop new technologies or adapt their business model to changes in the environment.

With more than 35 years of history, Acció has set itself the goal of making Catalonia the most competitive economy in Southern Europe by 2030. Its grants and services aim to create a more sustainable, digitised and innovative business ecosystem, increase the number of internationalised companies and continue to make Catalonia a pole of attraction for foreign multinationals.

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The economic exuberance of the late 17th century will make the European monarchies believe that the wealth of the world is static and just needs to be shared out. The constant inflow of gold and silver into the economy would allow them to universalise their idea of civilisation, and they would take advantage of the wonder caused in those cultures with ancestral practices and beliefs. Of the 700 million people who will inhabit the world, almost 120 million will live in Europe, given that globalisation – begun two centuries earlier – will provide them with a food variety that will allow them to extend their life expectancy.

 

Oriol Garcia Farré, historian and 11Onze agent

By the end of the century, Europeans will have empirically verified the whole of the earth, which will enable them to generate cartography based on observation of reality. Gone will be the imaginary geography based on dogmatic superstitions. Thus, an infinite number of descriptions of exotic civilisations would appear in the European imaginary, which would bring about a change in tastes -more orientalised- and would give rise to a progressive critical attitude towards the beliefs that Europeans held about the world. This feeling of cultural universality will be diluted as Europeans understand that the world is also inhabited by a multitude of cultures and civilisations, which are different from the descriptions contained in the Bible.

Therefore, the adoption of critical thinking will entail the encyclopaedic codification of nature through the revolutionary scientific method, which will be based on observation, experimentation and empirical speculation. Physics – written in mathematical language – will describe the shapes and measurements of celestial bodies, using the newly created analytical geometry. And from this moment on, science will become a body of knowledge differentiated from philosophy and religion. All this will lead to a perception of reality that will cause European intellectual elites to question such basic concepts as property, justice, power and, above all, religion.

“The adoption of critical thinking will entail the encyclopaedic codification of nature through the revolutionary scientific method, which will be based on observation, experimentation and empirical speculation”.

The questioning of the divinisation of power

Clearly, the Church – both Catholic and Protestant – will have to face a multitude of dissenting voices that will doubt the divine origin of the sacred texts, since the divine authorship of the Holy Scriptures will be questioned. Religion will then become an individual and private matter between man or woman and God. And by virtue of this privatisation, Europeans will progressively free themselves from compulsory dependence on the dogmatic disciplines imposed by the Church since the 10th century.

The fact of questioning the sacred foundation that justified the existence of Christian states would crack the confessional legitimacy of the political authority represented by the monarch. With the awareness of the self – through the rational principle “cogito ergo sum” – modern philosophy was inaugurated, which led enlightened scholars to openly question the divinisation of royal power

This innovative rational thinking will provoke a frontal clash between the supporters of absolute power – in the hands of a single person and fiercely defended by all the European monarchies – against the defenders of the natural state of the human being, who will argue that “no man can be subjected to the arbitrary will of another man, nor can he be forced to obey laws that another man would not follow as he would”. This thought will provoke a profound crisis of European consciousness, which will open the way to the invention of liberty and the claim for social equality.

Absolute power and mercantilism

The theorists of monarchical power – such as Jean Bodin and Thomas Hobbes – justified absolutism as the most perfect form of government and the only one capable of managing the vast accumulation of wealth extracted from the colonies. The high civil service – appointed by the king himself – will develop ever more efficient mechanisms to meticulously organise the state’s finances, since its profits will not only be made by introducing large quantities of gold and silver into the economic system but also by maximising exports and minimising imports with the help of strategic tariffs.

Convinced that the wealth of the world was static because it could only be taken, traded or stolen, absolutist monarchies would persecute any intrusion or private initiative that would destabilise the international trade system, such as the systematic persecution of piracy. On the other hand, the multitude of war conflicts between the different European monarchies – throughout the 17th and 18th centuries – will be seen as a necessary exchange of wealth, territories or people in which everyone will either win or lose and in this way, the economic system will be maintained, which will always have to add up to zero.

The European monarchies – overjoyed by abundance – will completely forget about the lives of their subjects. Marvelling at the situation, they were incapable of implementing social and economic improvements and soon came up against the serious problem of collective poverty within their societies. And in a context of incipient social conflict – such as that of the early 18th century – the economists of the time, Colbert, Mun, Serra or Misselden, defended the application of a low wage policy as the only way to achieve competitiveness in international trade, followed by the perverse argument that “if the population has wages above subsistence level, these will be the cause of the reduction in labour effort”.

The wealth extracted from the colonies will not only be accumulated or transformed into the productive resources that the economy requires but above all it will be used to be exhibited through the arts – architecture, painting and sculpture – the sciences and culture. And all this will lead to a paradox when the main absolutist monarchies – French, Austrian, Russian or Castilian – will be able to live in their lavish palaces, in the most exquisite and refined opulence, regardless of the scarcity of resources on which most of their subjects lived. Even so, this structural dynamic would crumble with the irruption of enlightened rationalism in European thought, which would contribute to the definitive rupture of the status quo of centuries of monarchical excesses. Enlightened despotism attributed to the monarch the mission of bringing economic progress and social welfare to all his subjects, which led to an infinite number of social conflicts. On this point, not all European monarchies tackled the problem of redistributing wealth in the same way.

“The main absolutist monarchies will be able to live in their lavish palaces, in the most exquisite and refined opulence, without caring about the scarcity of resources on which the majority of their subjects lived.”

Two solutions to the same problem

One of the answers would be provided by the Crown of Castile through its economic policies, which would still allow it to enjoy relative international predominance. However, the massive extraction of precious metals from the “New World” – which had allowed it to become obsessed with its particular idea of cultural universalisation – had led to short-sightedness and a lack of adaptability to the changing movements of the economy. Therefore, faced with the challenge of redistributing prosperity among its subjects, it will find itself trapped between a gigantic debt and a lethargic society that will depend mostly on royal decisions and the resources coming from the colonies. All this will reveal the existence of a parasitic social pyramid that will result in a single peasant – constrained by the system of censuses and privileges – being obliged to feed thirty non-producers.

Therefore, the strategy followed by the Crown of Castile – through the king’s ‘valid ones’, the famous Duke of Lerma, the Count-Duke of Olivares or Father Nithard – would be to exert strong fiscal pressure by increasing or creating new taxes on the fragile peasant economies, or on the urban classes by constantly raising prices and lowering wages. This economic programme sought to obtain the maximum resources to continue to support the idea of Empire, given that until then it had allowed them to enjoy a positive balance of trade. In contrast, the nobility and the clergy would be completely exempt from all these tax burdens, as well as allowing them to increase their income. In the end, all this led to a significant impoverishment of Castilian society, with disastrous consequences for the birth rate and the depopulation of large areas of the ‘Meseta’, which would not fully recover until the beginning of the 20th century. And to top it all off, society would be hijacked by the Court of the Holy Office of the Inquisition, which would ensure – through censorship, the creaming of “banned” books and misogynist fundamentalism – that no critical thought that shunned the official line would germinate.

On the other hand, we find the response of the northern European territories – such as the English Crown and the seventeen United Provinces – which will involve firmly introducing Enlightenment ideas into society, politics and economics. While England was to become a parliamentary monarchy through a political process that limited the power of the monarch and the separation of powers, the military union of Utrecht – made up of the seventeen United Provinces – fought energetically until the Peace of Münster against the occupation of the Crown of Castile to become the republic of the United Provinces of the North. Both territories will adopt a new approach to trade that will lead to a mutation of the economic system and will adopt a free market logic without restrictions or state protection. The generation of wealth will no longer be through blood but through the individual’s ability to accumulate capital, which will lead to the emergence of surplus value, the source of the new conflict. And in this new economic paradigm, the State will no longer have a place, given that the basic and irreducible elements that will drive this new mentality will be – both for companies and individuals – under the economic imperative of maximising profits and minimising losses.

“In contrast, the nobility and the clergy will be totally exempt from all these tax burdens, as well as allowing them to increase the collection of their rents.”

Change of the economic paradigm

The cultural universality that had prevailed until then would be replaced by new reasoning based on “if it can be shown that the economic output of all the world’s industrial production must be concentrated in Madagascar or Fiji or that the entire population of black Africa must move to the New World to work on the cotton or sugar cane plantations, there is no economic argument that can stop these initiatives”. And so capitalism will impose ever more extensive globalisation and reach ever more remote regions, which will be more profoundly transformed.

The world will be divided into productive plots according to global criteria such as “it makes no sense to produce bananas in Norway because they are much cheaper to produce in Honduras”. Therefore, when Argentinean landowners will only produce meat or Australian farmers will only be expert wool producers, they will have abandoned their own agricultural production, since it will be more profitable for them to buy grain production for their own consumption abroad. Thus, these transactions will allow them to speculate and get a better economic return on their investments.

And in this sense, both England and Holland were the only exporters of capital and financial services to the American or Asian colonies in order to destabilise the old empires – Castile and Portugal – and thus secure the raw materials for the incipient industrial revolution. The London and Antwerp stock exchanges – founded at the end of the 17th century – would become the commercial capitals of the new economy based on the expectation of speculative dynamism, which would be mainly participated in by the descendants of the Sephardic Jews expelled by the Hispanic Monarchy at the end of the 15th century.

From the beginning, both England and Holland were certain that in order to develop the new economic paradigm, a process of concentration of economic activity by means of the urbanisation of coastal areas had to be set in motion, which enabled them to promote shipbuilding and the development of manufacturing close to the ports. This allowed them to turn their coastlines into economically very dynamic and powerful areas. A similar situation occurred on the Mediterranean peninsular coast, which became one of the territories with economic growth similar to that of the territories of Northern Europe. It was then that Catalonia would acquire territorial cohesion on the basis of an urban system closely intertwined with Barcelona – as a commercial and political centre – while at the same time, the industry would develop for the nearby towns – Sants and Saint Martin de Provençales – and mercantile activity would be reoriented towards the Atlantic and the interior of the peninsula.

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