The economic, political and social outlook for 2012 is profoundly negative. The almost universal consensus, even among mainstream orthodox economists is pessimistic regarding the world economy. Although, even here, their predictions understate the scope and depth of the crises, there are powerful reasons to believe that beginning in 2012, we are heading toward a steeper decline than what was experienced during the Great Recession of 2008 – 2009. With fewer resources, greater debt and increasing popular resistance to shouldering the burden of saving the capitalist system, the governments cannot bail out the system.Tuesday, December 27, 2011
Unrelenting Global Economic Crisis: A Doomsday View of 2012
The economic, political and social outlook for 2012 is profoundly negative. The almost universal consensus, even among mainstream orthodox economists is pessimistic regarding the world economy. Although, even here, their predictions understate the scope and depth of the crises, there are powerful reasons to believe that beginning in 2012, we are heading toward a steeper decline than what was experienced during the Great Recession of 2008 – 2009. With fewer resources, greater debt and increasing popular resistance to shouldering the burden of saving the capitalist system, the governments cannot bail out the system.
Nation urged to increase holdings of gold
Dec 27 (China Daily) — “The Chinese government should not only be cautious of the imported risk caused by rising global inflation, but also further optimize its foreign-exchange portfolio and purchase gold assets when the gold price shows a favorable fluctuation,” said Zhang Jianhua, director of the research bureau affiliated with the People’s Bank of China (PBOC).
Zhang said bleak economic conditions, increasing international liquidity as countries turned to monetary easing and the resulting high inflation had dampened investors’ confidence. He said that gold had become the only “safe haven” for risk-averse investors. “No asset is safe now. The only choice to hedge risks is to hold hard currency – gold.”
“The PBOC may have realized that its euro-denominated assets are in greater danger than it expected and started to eye gold,” said Li Jie, director of the foreign-reserves research center at the Central University of Finance and Economics.
Zhang said bleak economic conditions, increasing international liquidity as countries turned to monetary easing and the resulting high inflation had dampened investors’ confidence. He said that gold had become the only “safe haven” for risk-averse investors. “No asset is safe now. The only choice to hedge risks is to hold hard currency – gold.”
“The PBOC may have realized that its euro-denominated assets are in greater danger than it expected and started to eye gold,” said Li Jie, director of the foreign-reserves research center at the Central University of Finance and Economics.
A simple plan to keep your assets safe from an out-of-control government
By keeping all your assets in the country where you live, you commit, ahead of time, to ratify whatever policy your home government might adopt, no matter how objectionable, unreasonable or pernicious that policy happens to be. If the next new mandate is “Register today to get a nail pounded into your head,” you’re already signed up.
Americans, by and large, run all their affairs within the confines of the US. The US economy is so large and so varied that it’s easy to assume that everything you want to do with your wealth can be done without crossing any borders. And people in the US, like people anywhere, live with the habits and attitudes developed over generations. They’re only human. In the case of Americans, those habits grew out of long experience with a government that was small and that generally practiced the rare virtue of following its own laws. In a happy exception to mankind’s experience with rulers, there was little to fear from it.
Stay at home is still the norm for Americans, but it’s a norm that is slowly fading. Every billion-dollar tick of the government debt clock, every expansion of the government’s regulatory apparatus, every overreaching judicial decision made in the name of a compelling public need, every inversion of protection for citizens into license for the state and every intellectually tortured discovery of a new meaning in the Constitution’s 4,400 old words leaves a few thousand more people wondering how prudent it is to consign all their eggs to a single national basket. Encounters with high-handed IRS agents and eager TSA gropers do nothing to ease that concern. And for those who listen thoughtfully, the messages from our designated leaders and their would-be replacements only hurry the dawning sense of unease.
Specific worries include exposure to predatory lawsuits, especially claims that could draw extra go-power by association with politically favored causes or legally favored groups; fear of where income tax rates might climb; the prospect of losing a family business in a regulatory battle or simply through estate tax; the fragility of financial institutions that have operated for forty years with the assurance that the Federal Reserve would rescue them from any folly; the possibility that a government desperate to protect the dollar from collapse might impose foreign exchange controls or capital controls; the memory and precedent of the forced gold sales of 1933; and the thought that a government floundering in deficits might start pilfering from IRAs and other pension plans.
Americans, by and large, run all their affairs within the confines of the US. The US economy is so large and so varied that it’s easy to assume that everything you want to do with your wealth can be done without crossing any borders. And people in the US, like people anywhere, live with the habits and attitudes developed over generations. They’re only human. In the case of Americans, those habits grew out of long experience with a government that was small and that generally practiced the rare virtue of following its own laws. In a happy exception to mankind’s experience with rulers, there was little to fear from it.
Stay at home is still the norm for Americans, but it’s a norm that is slowly fading. Every billion-dollar tick of the government debt clock, every expansion of the government’s regulatory apparatus, every overreaching judicial decision made in the name of a compelling public need, every inversion of protection for citizens into license for the state and every intellectually tortured discovery of a new meaning in the Constitution’s 4,400 old words leaves a few thousand more people wondering how prudent it is to consign all their eggs to a single national basket. Encounters with high-handed IRS agents and eager TSA gropers do nothing to ease that concern. And for those who listen thoughtfully, the messages from our designated leaders and their would-be replacements only hurry the dawning sense of unease.
Specific worries include exposure to predatory lawsuits, especially claims that could draw extra go-power by association with politically favored causes or legally favored groups; fear of where income tax rates might climb; the prospect of losing a family business in a regulatory battle or simply through estate tax; the fragility of financial institutions that have operated for forty years with the assurance that the Federal Reserve would rescue them from any folly; the possibility that a government desperate to protect the dollar from collapse might impose foreign exchange controls or capital controls; the memory and precedent of the forced gold sales of 1933; and the thought that a government floundering in deficits might start pilfering from IRAs and other pension plans.
Wednesday, December 14, 2011
The Debt March Goes On...
And imagine you have a big heart, with lots of desires. Your home has a comfy lounge with a large new HD television in front of it. There's a plush recliner in which to park your weary behind. And all around the house are the accumulated creature comforts that enhance the quality of your domestic life.
Now imagine you're forced to take a pay cut at work. Your job no longer provides you with enough income to support the interest payments on your mortgage. Your domestic bliss is still undisturbed. But in the back of your mind, you know that you're living way beyond your means. Your lifestyle exceeds your financial resources.
Now imagine you're the European Union – a vast army of faceless bureaucrats desperately trying to save its big 60-year project in social engineering. The private market – investors who buy government bonds – tells you its losing confidence that you can control your spending. More importantly, the private market tells you it doesn't see how you're going to repay the debts you've already accumulated in order to support your lavish, government-sponsored, Welfare State lifestyle.
Now imagine you're forced to take a pay cut at work. Your job no longer provides you with enough income to support the interest payments on your mortgage. Your domestic bliss is still undisturbed. But in the back of your mind, you know that you're living way beyond your means. Your lifestyle exceeds your financial resources.
Now imagine you're the European Union – a vast army of faceless bureaucrats desperately trying to save its big 60-year project in social engineering. The private market – investors who buy government bonds – tells you its losing confidence that you can control your spending. More importantly, the private market tells you it doesn't see how you're going to repay the debts you've already accumulated in order to support your lavish, government-sponsored, Welfare State lifestyle.
Investing in a Downgraded World
Maybe there never were. But it's one of those sacred cows that has never been gored before. It is now (gored, in painfully slow fashion). The dirty little secret of the bankrupt Welfare State is out: government bonds are just another liability.
The ratings agency Moody's took it upon itself to rain on everyone's parade yesterday. It said that the latest EU summit had failed to yield, "decisive policy measures". It said it would review the credit ratings of 15 EU nations in the next three months. Fellow ratings agency Fitch said it expected Europe's banking crisis to lead to, "a significant economic downturn" in 2012.
You don't say?
Here's a tip: the recession is the solution to the credit excess. It is the lancing of the ulcerous boil. It is the liquidation of bad debts, the reckoning for the bankers, and the justice of the markets on people who used capital poorly.
Instead we have the Interminable Intervention with the aim of more centralization. We'll get back to that in a moment. But meanwhile, with a downgrading of France and Germany (and the US) simply a matter of time, the bond market is a different beast now.
The ratings agency Moody's took it upon itself to rain on everyone's parade yesterday. It said that the latest EU summit had failed to yield, "decisive policy measures". It said it would review the credit ratings of 15 EU nations in the next three months. Fellow ratings agency Fitch said it expected Europe's banking crisis to lead to, "a significant economic downturn" in 2012.
You don't say?
Here's a tip: the recession is the solution to the credit excess. It is the lancing of the ulcerous boil. It is the liquidation of bad debts, the reckoning for the bankers, and the justice of the markets on people who used capital poorly.
Instead we have the Interminable Intervention with the aim of more centralization. We'll get back to that in a moment. But meanwhile, with a downgrading of France and Germany (and the US) simply a matter of time, the bond market is a different beast now.
Saturday, December 10, 2011
Gold price still consolidating after 3 months
This week the gold price has been bouncing around quite a bit. Gold got as high as $1750 on monday only to drop back to nearly $1700 yesterday only to rally back again today to trade around $1730.
When you take a step back and look at how gold has performed this year all the action in the past 3 months since September 23rd is all about one thing, consolidation.
All this is very healthy in a secular bull market and hardly surprising when you look at the action over summer.
On July 1st gold took off to the up-side and went from $1500 to $1920 – all in the space of a couple of months. That’s a 28% gain in very short order and at one point the gold price had actually put on 36% for year.
But like all powerful bull markets in the past that wants to show signs that it has much further left to run gold has pulled back and has really been in consolidation mode for the past 3 months. The range is quite big with $1800 marking the top and $1587 marking the closing bottom.
But in reality the action is really centered around the $1700 level.
When you take a step back and look at how gold has performed this year all the action in the past 3 months since September 23rd is all about one thing, consolidation.
All this is very healthy in a secular bull market and hardly surprising when you look at the action over summer.
On July 1st gold took off to the up-side and went from $1500 to $1920 – all in the space of a couple of months. That’s a 28% gain in very short order and at one point the gold price had actually put on 36% for year.
But like all powerful bull markets in the past that wants to show signs that it has much further left to run gold has pulled back and has really been in consolidation mode for the past 3 months. The range is quite big with $1800 marking the top and $1587 marking the closing bottom.
But in reality the action is really centered around the $1700 level.
Gold price falls as the EU gives a consummate lesson in the art of expectation management and spin
The headlines said it all this today “PM blocks EU-wide treaty changes” and the assumption is that the EU conference that started yesterday has been a failure. But has it?
First of all this conference wasn’t really about fixing the looming debt explosion that just about all EU countries face. After all how could it? We all know that the ‘solution’ will come via the printing presses of the ECB, FED and/of the IMF. Rather this conference should be seen in the light of ‘never letting a good crisis go to waste’.
What the unelected technocrats of Europe are really about is using the crisis to solidify Europe as a superstate and the increasing centralisation of power to those unelected faceless grey suits in Brussels.
But how to do it? You see if the gang meeting in Brussels did come out with a new all singing all dancing treaty they would face a rather huge problem. Namely that a new treaty would require votes through parliament and even a few referendums in some countries.
These guys in Brussels are a lot of things but stupid is one they are not. They know that they haven’t got a hope in hell in getting public support for more centralised power. No, far better to announce before the meeting that you’re trying to pass a new treaty only to wrap up the meeting seemingly in ‘failure’ because you only managed to agree an accord of the 17 euro using countries.
First of all this conference wasn’t really about fixing the looming debt explosion that just about all EU countries face. After all how could it? We all know that the ‘solution’ will come via the printing presses of the ECB, FED and/of the IMF. Rather this conference should be seen in the light of ‘never letting a good crisis go to waste’.
What the unelected technocrats of Europe are really about is using the crisis to solidify Europe as a superstate and the increasing centralisation of power to those unelected faceless grey suits in Brussels.
But how to do it? You see if the gang meeting in Brussels did come out with a new all singing all dancing treaty they would face a rather huge problem. Namely that a new treaty would require votes through parliament and even a few referendums in some countries.
These guys in Brussels are a lot of things but stupid is one they are not. They know that they haven’t got a hope in hell in getting public support for more centralised power. No, far better to announce before the meeting that you’re trying to pass a new treaty only to wrap up the meeting seemingly in ‘failure’ because you only managed to agree an accord of the 17 euro using countries.
Bank of England maintains 0.5% interest rates – Gold price holds steady on the news
The Bank of England has decided to keep those printing presses working overtime and keep interest rates at 0.5%. This is while CPI inflation is running at 5%, some 3% more than its government mandated target of 2%
The BoE also said it will keep it’s money printing facility – also known as the APF (Asset Purchased Facility) at an almost unbelievable £275bn.
From the release:
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its program of asset purchases totaling £275 billion financed by the issuance of central bank reserves.
The Committee expects the announced program to take another two months to complete. The scale of the program will be kept under review.
The BoE also said it will keep it’s money printing facility – also known as the APF (Asset Purchased Facility) at an almost unbelievable £275bn.
From the release:
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its program of asset purchases totaling £275 billion financed by the issuance of central bank reserves.
The Committee expects the announced program to take another two months to complete. The scale of the program will be kept under review.
Thursday, December 1, 2011
The Gold in Gold etfs, Now You See it, Now You Don’t
London Metals Trader whistle-blower Adrian has stated as much at a Commodity Futures Trading Commission Hearing (CFTC), the US Government regulatory agency, to the chagrin of the London Bullion Market Association (LBMA).
He claims that the worlds largest gold trading center is nothing more than a giant ponzi scheme with trades backed, not by gold, but by a fractional reserve system where 100 ounces of gold is backed buy only one ounce. So if everyone who 'owned' gold in the system demanded their stored value in gold bars and not cash, like a run on the bank, there would not be enough gold to supply the demand.
This is not the first time this has come to light. In 2007, Morgan Stanley forked out several million dollars to settle claims it had charged 22,000 clients for storage fees on non existent silver bullion.
He claims that the worlds largest gold trading center is nothing more than a giant ponzi scheme with trades backed, not by gold, but by a fractional reserve system where 100 ounces of gold is backed buy only one ounce. So if everyone who 'owned' gold in the system demanded their stored value in gold bars and not cash, like a run on the bank, there would not be enough gold to supply the demand.
This is not the first time this has come to light. In 2007, Morgan Stanley forked out several million dollars to settle claims it had charged 22,000 clients for storage fees on non existent silver bullion.
Comex Gold Trades Near Steady as Recent Gains Consolidated
(Kitco News) -Comex February gold futures prices are trading near steady in early U.S. trading Thursday. The market is pausing and consolidating this week’s solid gains, and in the wake of the surprise move by the major central banks of the world to increase liquidity in the financial markets. The general market place has stabilized this week, which is a bullish factor for the gold market, which has been trading in sync with the general raw commodity sector recently. February gold last traded up $1.90 at $1,752.20 an ounce. Spot gold last traded down $1.40 an ounce at $1,748.50. March Comex silver last traded up $0.426 at $33.23 an ounce.
The unexpected collective move by the U.S. Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of Canada and the Swiss National Bank were bullish for risk assets as the U.S. and European stock markets, and most commodity markets, rallied on the news. Earlier Wednesday China announced it was also lowering its reserve requirement ratio for banks, which in effect also eased China’s monetary policy.
The unexpected collective move by the U.S. Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of Canada and the Swiss National Bank were bullish for risk assets as the U.S. and European stock markets, and most commodity markets, rallied on the news. Earlier Wednesday China announced it was also lowering its reserve requirement ratio for banks, which in effect also eased China’s monetary policy.
Saturday, November 26, 2011
In Nervous Market, Gold Gains Respectability
Byron Wien, the investment strategist, has been forecasting the future for decades. But this is the first year that he has officially recommended gold in his model portfolio.
And at the beginning of this month, Mr. Wien, vice chairman of Blackstone Advisory Partners, said he was maintaining his 5 percent allocation to gold for next year.
The metal has become the insurance policy of choice for many sophisticated investors. Even among those who were never gold bugs, there is now a belief that it has its place in a portfolio.
Mr. Wien’s view comes despite the fact that gold, which was up 29.5 percent in 2010, was up an additional 20.7 percent at the end of October of this year, according to Mr. Wien’s most recent report — nearly double the increase for real estate, the second-highest increase among Mr. Wien’s recommended asset classes.
His decision to continue recommending gold comes even while some investors feel that after such a steep run, prices may fall. The returns reflect the hard reality that as governments print money, thereby debasing the value of their currencies, gold still looks like a sensible option.
And at the beginning of this month, Mr. Wien, vice chairman of Blackstone Advisory Partners, said he was maintaining his 5 percent allocation to gold for next year.
The metal has become the insurance policy of choice for many sophisticated investors. Even among those who were never gold bugs, there is now a belief that it has its place in a portfolio.
Mr. Wien’s view comes despite the fact that gold, which was up 29.5 percent in 2010, was up an additional 20.7 percent at the end of October of this year, according to Mr. Wien’s most recent report — nearly double the increase for real estate, the second-highest increase among Mr. Wien’s recommended asset classes.
His decision to continue recommending gold comes even while some investors feel that after such a steep run, prices may fall. The returns reflect the hard reality that as governments print money, thereby debasing the value of their currencies, gold still looks like a sensible option.
Central bank gold buying to rise from 142 to 450 tons in 2011 says World Gold Counci
Purchases of gold bullion by the central banks of the world will rise from 142 tons last year to 450 tons in 2011, predicts the World Gold Council. However, gold industry experts are still expecting a pull-back in gold prices as global equity markets fall sharply over the next two months as the eurozone crisis comes to a head.
IMF data shows that the central banks of the world added a net 142 tons of bullion to their reserves last year. The tripling of purchases this year has added to the upward pressure on the gold price helping to make gold the second best performing commodity after gasoil.
Price rises
Bullion is up 19 per cent at the time of writing, despite a fall back to around $1,680 from a peak of $1,923 an ounce. Holdings by exchange traded funds in gold rose by 79.5 tons in November alone, the best monthly inflow since July. The combined holdings of the so-called paper-gold ETFs is now higher than all but four of the world’s central banks.
Bloomberg also highlighted the bullish position in the futures market where the price is set. That said the price of gold fell by 3.5 per cent last week as the S&P lost 4.7 per cent in its worst Thanksgiving Week since 1932.
There is a high correlation between movements in all major asset prices at the moment. Basically falls in stocks trigger margin calls and that means that investors also have to dump other assets like gold too.
Equity markets
Therefore if global equity markets continue to weaken over the next couple of months – and there is nothing on the horizon at the moment to suggest a reversal is coming – then gold and silver will also decline in value.
IMF data shows that the central banks of the world added a net 142 tons of bullion to their reserves last year. The tripling of purchases this year has added to the upward pressure on the gold price helping to make gold the second best performing commodity after gasoil.
Price rises
Bullion is up 19 per cent at the time of writing, despite a fall back to around $1,680 from a peak of $1,923 an ounce. Holdings by exchange traded funds in gold rose by 79.5 tons in November alone, the best monthly inflow since July. The combined holdings of the so-called paper-gold ETFs is now higher than all but four of the world’s central banks.
Bloomberg also highlighted the bullish position in the futures market where the price is set. That said the price of gold fell by 3.5 per cent last week as the S&P lost 4.7 per cent in its worst Thanksgiving Week since 1932.
There is a high correlation between movements in all major asset prices at the moment. Basically falls in stocks trigger margin calls and that means that investors also have to dump other assets like gold too.
Equity markets
Therefore if global equity markets continue to weaken over the next couple of months – and there is nothing on the horizon at the moment to suggest a reversal is coming – then gold and silver will also decline in value.
Monday, November 14, 2011
Euro debt crisis could launch gold to record highs above $2,000/oz
Gold has confounded market watchers by refusing to behave like a safe-haven and instead has tracked equities over the past few weeks, but the escalating European debt crisis could see bullion ditch its risk-asset mantle and return to record highs.
The debt problems of some of the smaller euro zone states have mortally wounded the premierships of Greece's George Papandreou and of Italy's Silvio Berlusconi and hounded the euro to one-month lows against the dollar and eight-month lows against the pound as confidence evaporates over the ability of Europe's leaders to stem the spread of the crisis.
Gold has risen 4 percent this month, having touched its highest in 7 weeks above $1,800 an ounce this week, still back from the $1,920.30 record reached early in September, but pointing towards $2,000 judging by current options positions.
Unlike previous phases of market turmoil, such as the aftermath of the 2008 collapse of U.S. bank Lehman Brothers, when gold lost as much as 7 percent in a single day, or during this May's commodities "flash crash" that stripped 3 percent off the price in two days, investors and analysts say gold looks unlikely to be sucked into a vortex of mass selling.
"Whenever you get total panic, even gold goes down, because people take profit on their gold positions. When people start losing money very rapidly, they close down all positions including the ones that are sitting on a profit," said Jesper Dannesboe, senior commodity strategist at Societe Generale.
"That's why you had that gold sell-off in September, when everything was in panic mode. You don't have quite the same panic mode right now. It's (an environment of) moderately bad news and that tends to be bullish for gold," he said, although no-one is yet placing bets on what happens if the euro melts down.
CASH FOR GOLD
In periods of extreme risk aversion and volatility, gold can hitch itself to more growth-dependent assets and succumb to broad selloffs, especially if investor panic is such that the desire for the safety of cash is the driving force. In September, the gold price shed more than 20 percent in two weeks as investors scrambled to cover losses in other markets.
The debt problems of some of the smaller euro zone states have mortally wounded the premierships of Greece's George Papandreou and of Italy's Silvio Berlusconi and hounded the euro to one-month lows against the dollar and eight-month lows against the pound as confidence evaporates over the ability of Europe's leaders to stem the spread of the crisis.
Gold has risen 4 percent this month, having touched its highest in 7 weeks above $1,800 an ounce this week, still back from the $1,920.30 record reached early in September, but pointing towards $2,000 judging by current options positions.
Unlike previous phases of market turmoil, such as the aftermath of the 2008 collapse of U.S. bank Lehman Brothers, when gold lost as much as 7 percent in a single day, or during this May's commodities "flash crash" that stripped 3 percent off the price in two days, investors and analysts say gold looks unlikely to be sucked into a vortex of mass selling.
"Whenever you get total panic, even gold goes down, because people take profit on their gold positions. When people start losing money very rapidly, they close down all positions including the ones that are sitting on a profit," said Jesper Dannesboe, senior commodity strategist at Societe Generale.
"That's why you had that gold sell-off in September, when everything was in panic mode. You don't have quite the same panic mode right now. It's (an environment of) moderately bad news and that tends to be bullish for gold," he said, although no-one is yet placing bets on what happens if the euro melts down.
CASH FOR GOLD
In periods of extreme risk aversion and volatility, gold can hitch itself to more growth-dependent assets and succumb to broad selloffs, especially if investor panic is such that the desire for the safety of cash is the driving force. In September, the gold price shed more than 20 percent in two weeks as investors scrambled to cover losses in other markets.
Thursday, November 10, 2011
Kazakhstan to build 3rd gold refinery in 2012
Kazakhstan plans to begin construction of a third gold refinery next year to process an expected increase in volumes of the precious metal, the country's Industry Ministry said on Monday.
State miner Tau-Ken Samruk will run the refinery, which will have capacity to produce 25 tonnes of bullion per year and could cost up to $30 million to build, the ministry's committee of industry told Reuters in a written reply to questions.
Kazakhstan, Central Asia's largest economy, has ambitious plans to raise annual gold output to 70 tonnes or more by 2015. It produced 27.5 tonnes of gold in the first nine months of 2011, including 12.5 tonnes of refined gold, official data show.
State miner Tau-Ken Samruk will run the refinery, which will have capacity to produce 25 tonnes of bullion per year and could cost up to $30 million to build, the ministry's committee of industry told Reuters in a written reply to questions.
Kazakhstan, Central Asia's largest economy, has ambitious plans to raise annual gold output to 70 tonnes or more by 2015. It produced 27.5 tonnes of gold in the first nine months of 2011, including 12.5 tonnes of refined gold, official data show.
Italy's issues push gold higher
Asia stood above $1,790 ahead of London's opening this morning with the euro at €1: $1.3771 and the gold price in the euro at €1,299.83.
The Fix was set at $1,794.00 with the euro price Fixed at €1,301.509 while the euro was at €1: $1.3784.
The gold price held just slightly below that level at $1,793.00 while the euro weakened slightly ahead of New York's opening to €1: $1.3767 making the price of gold in the euro €1,302.39. The London gold Fix remains the dominating factor for the gold price.
The silver price rose but only slightly at $34.77 ahead of London's opening. It is struggling to break the $35 level and stay alongside gold. Thereafter, remarkably it slipped to $34.82 ahead of New York's opening.
Gold (very short-term)
The gold price should be subject to Berlusconi's political survival today.
Silver (very short-term)
The silver price should be subject to Berlusconi's political survival today.
Price Drivers
The Eurozone crisis has shifted gear to a higher one as Italy's Prime Minister, Berlusconi is the subject of another vote of confidence, but this time he may not make it. With debts of €1.8 trillion, more than 120% of Italy's GDP and sluggish, if any growth; if Italy turns to the Eurozone for help then the very survival of both the euro and the Eurozone is doubtful.
It has taken over two years to sort out the much smaller Eurozone member's debt crises of a much smaller scale. Italy's problems are just too much to swallow. This is what the rising gold price is telling us now. For the first time the survival of the entire Eurozone is questionable. What is not being highlighted is the massive flight of capital to Germany [so much that the German Bunds won't be able to absorb it]. This leaves these debt-distressed nation drained of capital. Whether in the euro or not, it is unlikely that the governments of these nations will be able to resuscitate growth there. To do so they will have to meet German standards, which they have never been able to do in the past.
The Fix was set at $1,794.00 with the euro price Fixed at €1,301.509 while the euro was at €1: $1.3784.
The gold price held just slightly below that level at $1,793.00 while the euro weakened slightly ahead of New York's opening to €1: $1.3767 making the price of gold in the euro €1,302.39. The London gold Fix remains the dominating factor for the gold price.
The silver price rose but only slightly at $34.77 ahead of London's opening. It is struggling to break the $35 level and stay alongside gold. Thereafter, remarkably it slipped to $34.82 ahead of New York's opening.
Gold (very short-term)
The gold price should be subject to Berlusconi's political survival today.
Silver (very short-term)
The silver price should be subject to Berlusconi's political survival today.
Price Drivers
The Eurozone crisis has shifted gear to a higher one as Italy's Prime Minister, Berlusconi is the subject of another vote of confidence, but this time he may not make it. With debts of €1.8 trillion, more than 120% of Italy's GDP and sluggish, if any growth; if Italy turns to the Eurozone for help then the very survival of both the euro and the Eurozone is doubtful.
It has taken over two years to sort out the much smaller Eurozone member's debt crises of a much smaller scale. Italy's problems are just too much to swallow. This is what the rising gold price is telling us now. For the first time the survival of the entire Eurozone is questionable. What is not being highlighted is the massive flight of capital to Germany [so much that the German Bunds won't be able to absorb it]. This leaves these debt-distressed nation drained of capital. Whether in the euro or not, it is unlikely that the governments of these nations will be able to resuscitate growth there. To do so they will have to meet German standards, which they have never been able to do in the past.
Gold Fields Q3 earnings up, but shy of expectations
South Africa's Gold Fields, the world's fourth largest gold producer, reported a 58 percent surge in third quarter earnings on Thursday fuelled by gold's record run but fell just short of analysts' bullish expectations.
The group also said it was now aiming to produce 3.5 million ounces of gold in 2011, the bottom end of a targeted range of 3.5 to 3.7 million ounces, as it tries to take full advantage of sky-high bullion prices.
The company said it expected to hit this target "despite the recent wage-related industrial action and higher than expected safety-related stoppages which disrupted the South African operations."
The average gold price was up about 13 percent to just over $1,700 an ounce during the quarter to the end of September compared to the previous one.
In rand terms it was up around 20 percent and both trends flowed to Gold Fields' bottom line as about 50 percent of its output comes from South Africa.
As expected, the group said its production for the quarter rose three percent to 900,000 ounces, a figure it had already flagged.
Its adjusted earnings per share leapt to 291 cents from 184 cents in the previous quarter. A Reuters poll of six analysts had seen the number coming in at 303.5 cents. (Reporting by Ed Stoddard; Editing by Ed Cropley)
The group also said it was now aiming to produce 3.5 million ounces of gold in 2011, the bottom end of a targeted range of 3.5 to 3.7 million ounces, as it tries to take full advantage of sky-high bullion prices.
The company said it expected to hit this target "despite the recent wage-related industrial action and higher than expected safety-related stoppages which disrupted the South African operations."
The average gold price was up about 13 percent to just over $1,700 an ounce during the quarter to the end of September compared to the previous one.
In rand terms it was up around 20 percent and both trends flowed to Gold Fields' bottom line as about 50 percent of its output comes from South Africa.
As expected, the group said its production for the quarter rose three percent to 900,000 ounces, a figure it had already flagged.
Its adjusted earnings per share leapt to 291 cents from 184 cents in the previous quarter. A Reuters poll of six analysts had seen the number coming in at 303.5 cents. (Reporting by Ed Stoddard; Editing by Ed Cropley)
Sunday, October 30, 2011
The Daily Market Report
28-Oct (USAGOLD) — Gold surged this week on rumors, and then ultimately confirmation, that policymakers had agreed on a deal to address the Eurozone’s sovereign debt and banking crises. Whether or not the measures agreed to will actually mitigate the twin crises is subject to debate and will be under intense scrutiny in coming weeks, but for the time being anyway, the relief associated with more borrowed time (and money) has reignited risk appetite.
The EFSF bailout fund will apparently be expanded to about €1 trillion. Greek bond holders were arm-twisted into accepting a 50% haircut. And European banks will be recapitalized. While there wasn’t much detail beyond this, stocks were off to the races on Thursday and the euro rebounded to new 7-week highs.
The EFSF bailout fund will apparently be expanded to about €1 trillion. Greek bond holders were arm-twisted into accepting a 50% haircut. And European banks will be recapitalized. While there wasn’t much detail beyond this, stocks were off to the races on Thursday and the euro rebounded to new 7-week highs.
Eurozone fix so far so good, but gold positive doubts remain
Gold and silver prices rose a little in London this morning, openingat $1,735 in Europe before rising as high as $1,738 before London's morning Fix was set at $1,735.00 and in the euro at €1,224.504 while the euro itself stood at €1: $1.4194. The London Fixing price then continued to dominate trade just ahead of the opening of New York. The euro slipped slightly to €1: $1.4156 and gold began to rise ahead of New York's opening to $1,737.50 and in the euro at €1,227.39.
The silver price in Asia stood above $35 then rose slightly in London to Fix there at $35.42. Thereafter the silver price moved slightly weaker, ahead of New York's opening, to $34.97.
Now the euphoria over the ‘solution' to the Eurozone crisis is abating, markets are looking a little more closely at what we have been told. There appears to be far more debt involved and the way that is to be structured points to the E.U. carrying a far greater load. It will be weeks before we have clear details, but markets are telling us, ‘so far' so good!' It is apparent though that there will be far more money around than before, far more than the 50% losses the banks will have to take on the chin in the Greek haircut.
The silver price in Asia stood above $35 then rose slightly in London to Fix there at $35.42. Thereafter the silver price moved slightly weaker, ahead of New York's opening, to $34.97.
Now the euphoria over the ‘solution' to the Eurozone crisis is abating, markets are looking a little more closely at what we have been told. There appears to be far more debt involved and the way that is to be structured points to the E.U. carrying a far greater load. It will be weeks before we have clear details, but markets are telling us, ‘so far' so good!' It is apparent though that there will be far more money around than before, far more than the 50% losses the banks will have to take on the chin in the Greek haircut.
Gold ends winning streak
NEW YORK, Oct 28, 2011 (UPI via COMTEX) -- Gold prices ended a five-session winning streak Friday in New York as the dollar index rose.
Traders deemed dollars worth buying as the U.S. Congress' deficit reduction committee eyed its Nov. 23 deadline and worried about the European debt deal holding together. The ICE Dollar Index rose to 75.04 from 74.879.
On the Comex division of the New York Mercantile Exchange, gold lost $3.10 to close at $1,744.60 per troy ounce. Silver added $1.74 to reach $35.27 per ounce.
West Texas Intermediate crude oil eased 55 cents to $93.41 per barrel.
The euro fell to 1.4147 from Thursday's $1.4186. Against the yen, the dollar fell to 75.82 yen from Thursday's 75.94 yen.
Traders deemed dollars worth buying as the U.S. Congress' deficit reduction committee eyed its Nov. 23 deadline and worried about the European debt deal holding together. The ICE Dollar Index rose to 75.04 from 74.879.
On the Comex division of the New York Mercantile Exchange, gold lost $3.10 to close at $1,744.60 per troy ounce. Silver added $1.74 to reach $35.27 per ounce.
West Texas Intermediate crude oil eased 55 cents to $93.41 per barrel.
The euro fell to 1.4147 from Thursday's $1.4186. Against the yen, the dollar fell to 75.82 yen from Thursday's 75.94 yen.
Friday, October 21, 2011
The Mineral gold
Gold is one of the most popular and well-known minerals, known for its value and special properties since the earliest of time. Most of the natural Gold specimens that have been found since early times have been smelted for production. Nice specimens, therefore, are regarded very highly, and are worth much more than the standard gold value. Only recently have more specimens been available to collectors, as more miners have been saving some of the larger pieces for the collectors market.
Gold in its natural mineral form almost always has traces of silver, and may also contain traces of copper and iron. A Gold nugget is usually 70 to 95 percent gold, and the remainder mostly silver. The color of pure Gold is bright golden yellow, but the greater the silver content, the whiter its color is. Much of the gold mined is actually from gold ore rather then actual Gold specimens. The ore is often brown, iron-stained rock or massive white Quartz, and usually contains only minute traces of gold. To extract the gold, the ore is crushed, then the gold is separated from the ore by various methods.
Gold in its natural mineral form almost always has traces of silver, and may also contain traces of copper and iron. A Gold nugget is usually 70 to 95 percent gold, and the remainder mostly silver. The color of pure Gold is bright golden yellow, but the greater the silver content, the whiter its color is. Much of the gold mined is actually from gold ore rather then actual Gold specimens. The ore is often brown, iron-stained rock or massive white Quartz, and usually contains only minute traces of gold. To extract the gold, the ore is crushed, then the gold is separated from the ore by various methods.
Gold price retests the 150 daily moving average
The gold price kept falling this morning and went and tested its 150 daily moving average. Something we thought might happen yesterday:
The 150 DMA stands at $1604 which should offer up some decent support should we trade that low.
After the initial sell-off spike lower back on September 26th we re-tested the 150DMA on the 29th September and again this morning:
The 150 DMA stands at $1604 which should offer up some decent support should we trade that low.
After the initial sell-off spike lower back on September 26th we re-tested the 150DMA on the 29th September and again this morning:
Tuesday, October 18, 2011
Hong Kong starts trading gold in renminbi
Hong Kong’s Chinese Gold & Silver Exchange Society officially starts trading gold denominated in renminbi today, in a bid to attract the HK$600 billion of Chinese currency sitting on deposit in the city’s banks.
Haywood Cheung, president of the 101-year-old bullion exchange, said the so-called Renminbi Kilobar Gold contracts could boost trading volumes by up to 30%, or HK$40 billion a day, during the next six months. Growth has already been strong this year, with average daily electronic transactions reaching HK$136 billion after a full-year average of just HK$31 billion in 2010.
“By attracting both local and international investors, the Renminbi Kilobar Gold is a significant step towards internationalising the renminbi,” said Cheung. “It also consolidates Hong Kong’s position as an offshore renminbi centre by providing investors with a new alternative in leveraged trading of renminbi.”
Haywood Cheung, president of the 101-year-old bullion exchange, said the so-called Renminbi Kilobar Gold contracts could boost trading volumes by up to 30%, or HK$40 billion a day, during the next six months. Growth has already been strong this year, with average daily electronic transactions reaching HK$136 billion after a full-year average of just HK$31 billion in 2010.
“By attracting both local and international investors, the Renminbi Kilobar Gold is a significant step towards internationalising the renminbi,” said Cheung. “It also consolidates Hong Kong’s position as an offshore renminbi centre by providing investors with a new alternative in leveraged trading of renminbi.”
Thursday, October 13, 2011
Fed Keeps QE3 on the Table Despite Internal Dissent
The Federal Reserve released the minutes from their September policy meeting where the now famous “Operation Twist” was unveiled. The minutes released today indicate the Fed plans to keep a third quantitative easing program in their arsenal to combat a possible deflation threat or a widening of the output gap.
More Money Printing Could Be on the Way
Despite September’s upside surprise on the jobs data, the economy is still seen as growing well below potential. Even if the relative strength of September’s jobs numbers (100K jobs/month) remain, the unemployment rate is unlikely to fall and growth will remain near stagnant. The Fed sees the economic picture as weakening going into the end of September and lowered their growth forecasts as a result. The Fed, in response to their bleak outlook, engaged in a policy designed to increase the average maturity of their balance sheet without affecting the overall size, thereby flattening the yield curve. Some considered QE3 as a better option than a maturity composition shift but preferred to reserve another asset purchase program for future needs. According to the minutes,
More Money Printing Could Be on the Way
A number of participants saw large-scale asset purchases as potentially a more potent tool that should be retained as an option in the event that further policy action to support a stronger economic recovery was warranted.
Others saw QE3 as more dangerous than helpful,Volatility Approaches Crisis Levels
Investor fears – along with volatility – are on the rise...
THERE ARE few sure bets in the financial markets, writes Brian Hunt for Steve Sjuggerud's Daily Wealth.
Few "this is the case, and it always will be" statements that we're comfortable making. The market is just too messy for those kinds of words. A particular stock investment idea will work for years, and then it won't. A commodity trading strategy will work for years, and then it won't.
THERE ARE few sure bets in the financial markets, writes Brian Hunt for Steve Sjuggerud's Daily Wealth.
Gold Price "Will Push Higher in 2012" says report
INTEREST RATE policy, quantitative easing and increased government debt are expected to lead to a higher Gold Price in 2012, according to a report released today by research strategists at Standard Bank.
The report's authors say there are two long-term causal drivers of the Gold Price:
The report estimates that global liquidity will grow by 18% in 2012 – compared to 20% this year and 16% in 2010.
Real interests meantime remain low or negative in many parts of the world, including the US, UK and Europe. In August Fed chairman Ben Bernanke said the economic conditions are likely to warrant "exceptionally low" interest rates until at least mid-2013.
The report's authors say there are two long-term causal drivers of the Gold Price:
- Global liquidity – which they measure by using the US Federal Reserve's balance sheet plus foreign exchange holdings
- Real interest rates – nominal rates minus the rate of inflation
The report estimates that global liquidity will grow by 18% in 2012 – compared to 20% this year and 16% in 2010.
Real interests meantime remain low or negative in many parts of the world, including the US, UK and Europe. In August Fed chairman Ben Bernanke said the economic conditions are likely to warrant "exceptionally low" interest rates until at least mid-2013.
Monday, October 10, 2011
Nevada: Low-grade, World Class
The romance of golden riches has attracted would be gold miners for hundreds of years; unfortunately, very few of the early prospectors were successful in their hunt. When the gold rush hit California most who had good fortune in finding gold out west had previous victories back east. Did pure luck play a part? Perhaps, but experience was paramount. These early prospectors were the first to use science to increase the probability of discovering gold.Over the years, gold exploration has evolved. The early-day prospectors searched for gold with nothing more than a pick axe and perhaps a gold pan. Today, explorers hone in on a gold resource by using a variety of technically advanced geophysical surveys.
Modern day explorers, while still concerned with discovering gold, are even more interested in the quality of a potential deposit. In assessing quality, an exploration company will estimate the concentration (grade) of the gold, the total amount of gold, the cost of extracting the gold, and the cost of refining the gold. The balance of all these variables determines the value of a mine. The estimated value of a property indicates whether or not it can be developed into a viable mining operation, a transition that many exploration properties never make.
When determining the viability of transitioning an exploration property to a profitable mine, the total picture must be assessed. According to the World Gold Council, larger and better quality underground mines contain around 8 to 10g/t of gold, while marginal underground mines have averages of around 4 to 6g/t. Open pit mines usually have lower grades from 1g/t to 4g/t, but can be highly valuable despite the lower average grade. In all cases, the tonnage contained in the deposit is the last and most important piece of the puzzle.
In the past, gold explorers would shy away from a deposit with less than 1g/t of gold, common in Nevada. However, those who saw the total picture were willing to take a risk in mining for gold in the state. To date, the low grade deposits in Nevada have become one of the largest sources of gold in the world. Total recorded gold production from 1835 to 2008 totaled 152 million ounces, worth about US$180 billion at 2010 prices with the majority coming from low grade/high tonnage deposits in the last 30 years.
Nevada is home to the famous Carlin trend, one of the top three gold fields in the world. The Carlin and other mines along the trend pioneered the method of open-pit mining with cyanide heap leach recovery that today is used at large low-grade gold mines worldwide. The state is also home to other prolific gold trends, including the Cortez.
Thursday, October 6, 2011
Gold Mining in Russia
Covering more than a ninth of the Earth’s land area, Russia, has the largest reserves of natural gas. In 2009 Russia was the world’s largest exporter of natural gas, the second largest exporter of oil, and the third largest exporter of steel and primary aluminum. Russia is also well reputed to have an expansive mineral wealth including: coal, cobalt, copper, diamond,lithium, nickel, oil, potash, silver, as well as gold.
Successful gold exploration and mining were introduced in Russia by Peter the Great. In 1702 the first silver deposit was discovered in Transbaikalia (Nerchinsky Mine) and in 1745 a peasant named Erofey Markov found gold on the eastern slope of the Ural Mountains and in 1748 the first Russian purely gold mine was set up.
According to United States Geological Survey base estimates, Russia has the third most extensive gold resources tin the world. With the majority of gold extraction remaining generally in the control of state run industry, the nation was theoretically underrepresented in its global productivity total as Russia was the fifth largest gold producer last year. The total numbers of exploration enterprises are also considerably underrepresented by junior gold companies compared with activity in other mining jurisdictions, considering the vast underlying mineral potential in Russia.
Economic Context
Transforming from a globally-isolated, centrally-planned economy to a more market-based and globally-integrated economy, Russia has undergone significant changes since the collapse of the Soviet Union. Economic reforms in the 1990s privatized some industry, with notable exceptions in the defense-related and energy sectors. The swift privatization process has left equity ownership highly concentrated, including a highly contentious “loans-for-shares” scheme that capitulated major state-owned firms to politically-connected “oligarchs”.
Successful gold exploration and mining were introduced in Russia by Peter the Great. In 1702 the first silver deposit was discovered in Transbaikalia (Nerchinsky Mine) and in 1745 a peasant named Erofey Markov found gold on the eastern slope of the Ural Mountains and in 1748 the first Russian purely gold mine was set up.According to United States Geological Survey base estimates, Russia has the third most extensive gold resources tin the world. With the majority of gold extraction remaining generally in the control of state run industry, the nation was theoretically underrepresented in its global productivity total as Russia was the fifth largest gold producer last year. The total numbers of exploration enterprises are also considerably underrepresented by junior gold companies compared with activity in other mining jurisdictions, considering the vast underlying mineral potential in Russia.
Economic Context
Transforming from a globally-isolated, centrally-planned economy to a more market-based and globally-integrated economy, Russia has undergone significant changes since the collapse of the Soviet Union. Economic reforms in the 1990s privatized some industry, with notable exceptions in the defense-related and energy sectors. The swift privatization process has left equity ownership highly concentrated, including a highly contentious “loans-for-shares” scheme that capitulated major state-owned firms to politically-connected “oligarchs”.
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