(American Hard Assets) – It has become a bromide in the subject of global economics – that the US economy, during recessions, will drive gold price up when many of its investors run to gold as a safe haven or hedge; and that, during times of economic expansion or financial plenty, US investors prefer to let their money ride on the riskier but better paying stock or real estate markets. No matter that the Federal Reserve is trying to wean American investor trends into more flexible and balanced diversification that will keep them less volatile and help keep the majority of investors afloat in good or bad times, the pattern has become a settled one. This double edged economic sword has come to prove that there is no perfect, ironclad system of maintaining national wealth through the markets.
All of the talk about the Fed focusing on unemployment or inflation or whatever are red herrings. What the Fed is really trying to do is to create a set of macro conditions that will allow the federal government to slowly crawl out from under a pile of debt and entitlement obligations that it literally cannot pay by honest, above board means.
This is a must read. Click through for the full post. It's long but worth it.
But the interesting thing is how gold keeps trading with the action in the Chinese Shanghai Composite Index. If you look at the action in the Shanghai Index and the action in gold, they are very similar in terms of building a bottom. The Shanghai Index made its low in November of last year. Now the Chinese stock market is trading well even though the economy is growing less than expected.
But gold is doing exactly what Shanghai’s Index is doing in that...
Gold prices gave back some ground today as stocks fell and the dollar index rose. Many are still wondering if the recent volatility seen in stocks is over. Judging by the V bottom made on the daily chart, stocks may have put in a near-term bottom. This could be potentially bearish for gold prices as investors look to continue to ride the stock market higher. Perhaps the even bigger story right now when it comes to gold, however, is the dollar and the euro. The dollar index appears to be heading back to its recent highs as the euro continues to drop. This drop in the euro is likely based on the notion that the ECB will be forced to act with additional stimulus measures in order to combat its slowing economy.
The US government’s debt is getting close to reaching another round number—$18 trillion. It currently stands at more than $17.9 trillion.
But what does that really mean? It’s such an abstract number that it’s hard to imagine it. Can you genuinely understand it beyond just being a ridiculously large number?
Just like humans find it really hard to comprehend the vastness of the universe. We know it’s huge, but what does that mean? It’s so many times greater than anything we know or have experienced.
German astronomer and mathematician Friedrich Bessel managed to successfully measure the distance from Earth to a star other than our sun in the 19th century. But he realized that his measurements meant nothing to people as they were. They were too abstract.
So he came up with the idea of a “light-year” to help people get a better understanding of just how far it really is. And rather than using a measurement of distance, he chose to use one of time.
By Charlotte McLeod+ - Exclusive to Gold Investing News
Many investors aren’t pleased with the current price of gold , which closed Wednesday at $1,241.10 per ounce, but for buyers in India, the metal’s ill fortune has turned into an opportunity.
CNBC reported that a better Indian economy has prompted those in the country to buy the yellow metal during this year’s five-day Diwali festival, which will peak on Thursday. “[T]here is more money around to spend,” Matthew Turner, a precious metals analyst at Macquarie, told the news outlet.
Also helping sales is a slight relaxation in the 80:20 rule. Put in place by the Indian government back in 2012, it mandates that 20 percent of imported gold be set aside for re-export. Along with a concurrent jump in the country’s gold tax from 2 to 10 percent, it put quite a damper on gold sales last year. ”Many jewelers in Delhi and Mumbai witnessed up to a 40% drop in sales last Diwali,” The Wall Street Journal points out.
The equipment maker is scheduled to report third-quarter earnings Thursday.
Caterpillar (NYSE:CAT), the world's largest maker of mining and construction equipment, said Wednesday that its worldwide dealer machinery sales dropped 10% for the three months ended in September.
The worst affected of its division was the resources segment, made up mainly by mining equipment, which sank by 28% compared to the same period last year. Construction sales for the period also fell, but only by 3%.
Since the financial crisis, the government of the UK and the Bank of England have jumped through hoops and twirled around in extraordinary gyrations to bail out one of the largest financial centers in the world, the uniquely powerful and at once unaccountable speck of land, the City of London, an incorporated area within London known as the Square Mile; or rather bail out its financial institutions, its way of doing business, and its bonuses; and along the way, bail out banks further afield.
Done in the now classic way. Key ingredient: the Bank of England printed enormous amounts of money, repressed interest rates, and stirred up inflation, which hit 5% in 2011. But somebody had to pay for it: savers and workers. It demolished real wages and purchasing power of the people who make up the rest of the country.
Yesterday witnessed the launch of both the “Save our Swiss Gold” (Gold Initiative)” campaign and the opposing “Cross-party Committee against the Gold Initiative” campaign in Switzerland’s political capital, Bern.
Gold has been in a bear market for three years. Technical analysts are asking themselves whether they should call an end to this slump on the basis of the "triple-bottom" recently made at $1180/oz, or if they should be wary of a coming downside break beneath that level. The purpose of this article is to look at the drivers of the gold price and explain why today's market value is badly reflective of gold's true worth.
First, I think a reminder would be timely. Those who seek to trade gold are at substantial disadvantage:
they line themselves up against too-big-to-fail banks which have the implicit backing of the taxpayer to bail them out of their trading positions; furthermore markets have become so manipulated and dangerous that gold should be considered as insurance against systemic risk instead of a punt. Because the majority of market investors don't fully grasp these risks, when the current global financial bubbles eventually burst, there will only be a tiny minority who end up possessing gold -- by which I mean physical gold held outside the fiat money system.
First of all, the authorities are absolutely Keynesian. And so Ambrose gave the standard Keynesian response -- you’ve got to put more stimulus into the system, otherwise the system will collapse. So rather than acknowledging that debt is the problem, they don’t see debt as the problem, they see consumption as the problem. They refuse to acknowledge the fact that we’ve created so much debt that the very process of the debt is forestalling consumption.
Last GEAB excerpt – The world afterwards: towards a BRICS gold backed multi-currency system
Our team thus anticipates that, before anyone actually realizes it, an alternative BRICS monetary system will be operational from 2017. Not a common currency, but a lightweight system, multi-currency, mainly based on the Yuan, the Ruble, the other BRICS currencies and perhaps even the yen, all backed by gold and easily exchanged thanks to modern digital tools; a system also upgradable with the ability and ambition to host other currencies one day.
A Yahoo headline: Pentagon Readying For Long War in Iraq, Syria. More war means more debt and higher inflation. Increasing national debt is as certain as death and taxes. Increasing consumer prices follow.
Oct 22 (BBC) — For the last two days Neeta Malhotra has been busy shuttling from one jewellery store to another in Mumbai. Her elder daughter is getting married next year but she’s trying to buy as much jewellery as possible for the wedding now. ‘I was waiting for this period to start buying gold jewellery for my daughter’s wedding’ says Mrs Malhotra, as she checks out a necklace in the store. But why is she in such a hurry to buy so much jewellery right now? After all, her daughter’s wedding is still a year away. “This is the best time to purchase gold and the prices are also low right now. I am not sure whether I will get the same rate next year,” she says. Neeta is one among millions of Indians who have been thronging stores over the last two weeks to purchase jewellery, as the festive and wedding season kicks in.
The city known as America’s story factory is making up Census data.
In the latest allegation of The Post’s exclusive probe into fishy goings-on at the Census Bureau, a new whistleblower says workers in the Los Angeles region have been manipulating economic data.
Contact information for the veteran Census worker — who reached out to me by e-mail recently and whom I interviewed by phone — has been turned over to congressional investigators who are looking into data falsification in other parts of the country.
“Everybody knows falsification is going on,” the whistleblower told me, adding the malfeasance in the LA region is so obvious that it’s hard to miss. ...
Could an infectious disease kill the monster that has been choking gold and silver prices for more than a year? On the heels of a lively Sprott Precious Metals Roundtable discussion, The Gold Report caught up with investor Eric Sprott to ask how a tragedy in Africa could impact the price of precious metals and mining stocks. We also spoke to his Executive Vice President of Corporate Development John Ciampaglia about a new way to gain exposure to gold.
The Gold Report: Deutsche Bank warned in a recent note that the Ebola virus could impact commodity markets, including gold and cocoa, as it spreads to producing countries in West Africa, particularly Ghana and Mali. In a recent article titled "Ebola, The Tipping Point," you mourned the unnecessary loss of life and predicted 5% less global production next year than this year. Could a lack of supply due to Ebola-related closures really cause the price of gold to rise?
Eric Sprott: There is already a shortage of gold and silver in the markets without a corresponding increase in the price. I wrote an open letter to the World Gold Council questioning its data on China. If you believe the Shanghai Gold Exchange data, China consumes more than 2,000 tons (2 Kt). In 2011, it consumed only about 1 Kt. In the last two years, China has bought an extra 1 Kt gold—25% of a 4 Kt market. If any country came in and bought 25% of the oil market, the wheat market or the orange juice market, the commodity price would not go down. Obviously, the physical gold market is not manifesting itself in the price changes.
I think Friday saw a power-shift from the central banks to the global private banks. I think the global banks served notice that the Central bank plan of 1) reining in the risk-taking of the TBTF banks and 2) stimulating growth in the real economy is now dead in the water. There is a new plan.