Despite Janet Yellen’s latest suggestion that the U.S. Fed will complete its latest QE programme in October, gold has risen sharply in price this morning. What gives?
Author: Lawrence Williams Posted: Thursday , 10 Jul 2014
LONDON (MINEWEB) -
Aren’t the markets fickle? Back last year the gold price crashed once it became clear that the U.S. Fed was looking to cut back its Quantitative Easing programme on fears that it was QE that had been supporting the gold price. It was quickly forgotten that the gold price had advanced strongly prior to the term Quantitative Easing even being coined – but the market – with its ultra short term viewpoint – seemed to have assumed that QE and the gold price were inextricably linked and marked the yellow metal down accordingly. This was perhaps prompted also by gold mega-bears like Goldman Sachs’ Jeffrey Currie calling for a fall to around the $1,000 level before the end of the current year. Now things could yet turn back again for gold and it is perhaps too soon to write off Currie’s and other bank analysts’ herd-like predictions as 5 months can be a long time in the gold market, particularly when those with huge pockets, and mega short positions, start to feel threatened. However the past month or two does seem to have seen something in terms of a positive turnaround in overall investor sentiment towards gold. ...
The emerging economies of Brazil, Russia, India, China and South Africa, are a couple of days from agreeing the $10 billion BRICS development bank, as well as a $100 billion currency pool. It could challenge global lenders like the IMF and World Bank.
The story for gold is firming, and that is also for the gold miners. Sterne Agee’s metals and mining analysts have a report out on Thursday defending gold and the miners, on a day when gold is already soaring due to new European bank worries. The firm’s Michael Dudas and Satyadeep Jain are signaling […]
Stock prices went down early this week and — oh my! — you’d have thought the world was about to end.
As I’ve been telling you — and others have since confirmed — the stock market is rigged.
Central banks, including the Federal Reserve, have kept rates so low that there really isn’t any other money-making alternative for investors except stocks. But that’s the old news.
Around the world, central bankers have also been actively buying stocks to keep equity prices up. Why? First, because the stock market is the only thing creating any kind of optimism in the world economy. And, second, because Central Banks need to make profits, too, and they can’t with interest rates so low.
So it’s a Big Rig — an 18-wheeler that’s being driven by the Fed and other central bankers. ...
Today an acclaimed money manager told KWN that Germany has yet again strengthened its alliance with China. Stephen Leeb also said that as the China/German relationship strengthens, Germany’s relationship with the United States is rapidly declining. All of this is good news for Russia, who is more than happy watch this unfold.
Leeb: “I was floored by the comments made on Merkel’s visit to she just concluded to China. The German leader went to China for several days and many trade agreements were signed in what turned out to be an extremely friendly visit. The president of China left Merkel saying he wished Germany luck against Brazil in the World Cup and called Germany an ‘important strategic partner.’....
It's amazing how quickly things are turning against the dollar. Click through for the rest of the interview.
Lear Capital CEO Scott Carter tells TheStreet's Joe Deaux that he expects gold to touch $1,450 an ounce this year, because he says positive headline economic data is overshadowing weaker details in the reports. Carter defends his forecast despite the June jobs report, which showed ...
Two potentially big stories for gold are unfolding right now. In disparate parts of the globe.
First in terms of gold supply. In the world’s fifth-largest bullion producer: Peru.
Reports late last week from the Peruvian government show another notable decline in monthly gold output. With production for May falling 24.6% compared to the year-ago period. Equating to a loss of over 111,000 ounces for the month.
The drop in output continues a trend we saw the previous month. With April production figures down by over 116,000 ounces – or 26% – compared to April 2013. ...
Today an acclaimed money manager told KWN that investors need to prepare themselves because the Chinese are going to push the price of gold, silver, and oil dramatically higher. Stephen Leeb also said the Chinese are going to start loaning money to companies to produce gold and they will demand physical gold as repayment.
Leeb: “Eric, right now the new dynamic is Germany, China, Russia, and India becoming the new economic leaders in the world. There will also be a new economic bloc involving China, Russia, and Germany....
Nope – that’s my answer. It’s my assumption the People’s Bank Of China (PBOC) does not buy any gold through the Shanghai Gold Exchange (SGE), for a number of reasons. In previous posts I’ve speculated about these reasons, here’s a recap; from Koos Jansen (April 15, 2014):
The main objectives for the PBOC to accumulate gold are:
Supporting the renminbi for its internationalization (adding trust and credibility)Owning hard currency as the cornerstone of capitalism.Owning reserves that protect the Chinese economy from external/internal shocks and inflation. ...
Surely never before have so many lines been written by journalists on a subject that they palpably know so little about and have made little attempt to understand... as the London gold fix.
Yesterday we were questioned by the BBC in a live TV interview which demonstrated the problem ; their belief was clearly that a group of bankers met in secret and arbitrarily decided what the price should be without reference to actual trades and that was the price for that day - they clearly were unaware that gold also has a spot price outside the fix and that almost all commodities have a benchmark or reference price. The lack of research ahead of the interview was shameful - but that did not prevent them for recycling hackneyed stereotypes about secretive banksters. They are not alone.
More laughably some authors suggest the gold price might rise if we dispensed with the fix - presumably on the notion that the banks have been artificially holding the price down... well who do you suppose creates the spot price that is your alternative - the same banks that are in the fixing room ! In fact ...
Russia has produced more gold than the United States for the first time in 25 years. It’s now the world’s third biggest producer after China and Australia, Minister of Natural Resources and Environment of Russia Sergey Donskoy said.
Isn't that intriguing? Who knew gold was so important [he said with tongue in cheek].
Update 1: Adds new Kitco price graph for silver at the end showing a possible short squeeze trying to get underway mere hours following the release of this offering.
HOUSTON -- A sure-enough short squeeze might be developing in the volatile silver market. We attempt to identify who, or rather which class of futures trader, might be squeezed in this brief offering.
The inspiration for this article is actually misinformation found elsewhere. We have seen and read commentary on the Web from various analysts and market watchers that have attributed, or rather misattributed, the very large increase in large commercial net short positioning (LCNS) for silver futures to members of the Producer/Merchants – which would be to the “silver trade” itself.
Recall that the Producer/Merchants primarily use futures to hedge a natural long position by those who hold or manage significant amounts of gold or silver inventory – either for themselves or for others. It also includes the bullion-trading banks many of those Producers, Merchants, Processors, and Users end up trading through.
“I think we are going to see a series of bankruptcies. I think the rise in interest rates is the fatal sign which is going to ignite a derivatives crisis. This is going to bring down the derivatives system (and the financial system).
There are (over) one quadrillion dollars of derivatives and most of them are related to interest rates. The spiking of interest rates in the United States may set that off. ...
The Fed spends an inordinate amount of time focusing on increasing Lending with the idea that loan growth increases economic activity. Is it possible that it is Interest Income derived from Savings that is more important to economic growth?
Click through for the full article. It's worth a read. I would hazard a guess to say, yes. With the clarification being, only if you don't want to enslave people via debt. But if you are looking to enslave the populous with debt then the FED is doing it right.
Those who own the resources and influence the political control of those resources are the New Nobility in a pernicious Neofeudalism enforced by the very government that claims to serve the debt-serfs and tax donkeys.
Let's tease apart several strands of Neofeudalism, my preferred term (along with Neocolonialism) for the Status Quo.
The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)
It is increasingly clear that a new form of feudalism has subverted democracy, and that the New Feudalism is powered by concentrations of private wealth and centralized state control: what I call the New Nobility ...
Gold is turning into something of a forgotten asset, and that’s fine by me. There will be a time to buy gold again, and when that time comes, there will be very few believers. That’s the way italways is before a major rally.
With most things in life, you see something like a 90/10 or 80/20 rule. As it relates to gold, this means that 5% are in the “gold bug” crowd, 5% is in the “gold is a barbaric relic” crowd, and 90% in the “I don’t have a strong opinion about gold” crowd. This helps explain rallies; remember, there is tremendous latent energy in gold, and it comes from the majority that isn’t thinking about gold–yet.
Now this is really the case with any asset, such as stocks. I am telling you, more people will be stampeding to buy the Dow at 30,000 than at 10,000. And I’m not only talking about the mythical and much-derided “herd” that always buys too late. I’m talking about institutional money. It’s not, “let me think in terms of probabilities and expected value and ease into stocks.” Nope. It’s skepticism, disbelief, and absolute religious-like refusal to buy stocks. Then finally capitulation and panic buying. ...
Can the prophet ever be honored at home? Part of the challenge of converting friends & family to precious metal ownership is just that—it requires a conversion. But it is different than a conversion, lets say, from being a Catholic to being a Baptist, or from apostasy to any religion. Within the bounds of western societies, these are perfectly normal and expected conversions. A guy gets married and starts going to church with his more religious wife. A teenager finds Jesus and attends the youth group at the local church. Today, these are common and acceptable conversions and indeed my own parents breathed a sigh of relief when I started going to church instead of hanging out with my troublemaker friends.
No, converting to precious metals is more like converting from Islam to Christianity, or vice versa. It has to be complete and it could cost you much. Those who talk too much about their conversion to family & friends are often alienated. But, you are literally saving your soul from the hell of poverty and destitution…that is if you believe in societal collapse, or even economic impoverishment as a nation. With conversion to precious metals, you cross a line. You are putting your labor-wages into true money that will survive whatever hell may be approaching us. ...
Institutionalizing the speculative excesses that inflated the previous housing bubble has fed magical thinking and fostered illusions of phantom wealth and security.
The global housing market has been dominated by magical thinking for the past 15 years. The magical thinking can be boiled down to this:
A person who buys a house for $50,000 will be able to sell the same house for $150,000 a few years later without adding any real-world value. The buyer will be able to sell the house for $300,000 a few years later without adding any real-world value. The buyer will be able to sell the house for $600,000 a few years later without adding any real-world value.
And so on, decade after decade and generation after generation: a house should magically accumulate enormous capital (home equity) without the owner having to do anything but pay the mortgage for a few years.
The capital isn't created by magic, of course: it's created by a greater fool paying a fortune for the house on the ...
There are several aspects about working in today’s financial industry that are less than perfect, although gaining an insight into how many on Wall Street think and why they make the decisions that they do is certainly one of the positives. In fact what many on the outside often have a hard time understanding is that most on Wall Street are in reality somewhat oblivious to massive bubbles that the Federal Reserve has inflated, and that can make things confusing when you don’t factor it in properly. However whether they should understand what’s going on or not, once you can understand the mindset from which the average Wall Streeter is coming from, it can give you an incredible trading advantage that’s almost the equivalent of spotting your opponent’s “tell” at the poker table. ...