CNBC.com Gold heads for biggest monthly gain since July CNBC.com Gold was little changed on Friday but was on track for its biggest monthly gain since July after investors and speculators chased prices higher on concerns about the pace of the U.S.
In the aftermath of the recent chaos and market turmoil in emerging markets, today King World News spoke with the man the Fed called on to execute QE1 and who also set up the Fed’s massive trading room, former Fed member and former Managing Director at Morgan Stanley, Andrew Huszar. What he had to say will stun KWN readers around the world. He warned stocks may collapse 30% or more in a matter of months if the Fed continues on the current course, and he also said that the Fed is now running the largest hedge fund in the world and it may end in disaster. Below is what Huszard had to say in Part I of this remarkable interview.
Eric King: “Andrew, what made you come out publicly and say that QE was a failure and apologize to everybody? What made you come out and do that?”
Huszar: “I left the Fed in 2011. ... I maintain great respect for a lot of the people inside (the Fed), and so I struggled for a long time to come out and speak publicly about it. But in the end I spoke out because I believe that QE, while initially well-intentioned, has really allowed the US to kick the can down the road with respect to major structural reform that has to do with its economy.
I think the financial crisis should have been a pretty significant wake-up call for the country, and yet five years after the peak of the financial crisis I think our economy looks pretty similar to where it was (after the 2008/2009 collapse), most importantly with respect to a banking sector, which has only become more concentrated and larger....
We know that government debt and the Fed’s balance sheet are growing exponentially, but household debt is also rising rapidly. We have just seen the highest rise in six years to $11.5 trillion. Mortgage debt is also up, and so is auto debt. So the US is continuing its spending based on debt. This very unsound and untenable trend will soon lead to the US dollar losing its value.
If we move to the emerging markets, for them to survive they will need growth in industrialized countries, which will not happen. So emerging markets will be another catastrophe not only economically but also socially.
Eric, I’ve stressed many times to get money out of the banking system and pension system. Country after country are planning to introduce bail-ins and forced savings systems. In Australia the treasurer has suggested instead the ‘Superannuation’ pension funds for financing government projects. The US has the ‘myRA’ system now and there will be more of this in coming years. ...
"We know from every expiry that the physical gold market just gets tighter and tighter. When you see there is a dramatic amount of physical gold taken down on the front month in Shanghai, that tells you Asia is acting as a huge vacuum cleaner of all of the world’s available gold supply. The bottom line is there is not enough gold around to satisfy that demand."
While the financial media tends to focus its discussion on gold, serious precious metals investors typically are more interested in silver. This is because, in terms of a risk/return matrix, silver's price movement behaves as a "leveraged derivative" of the price movement of gold. One "tool" that can be useful in forecasting the directional movement of both gold and silver is the gold/silver ratio, or GSR. It also can give us insight into how the price of silver might behave relative to the price of gold. Currently, in my view, the GSR is telling us that there is a high probability that gold and silver are starting to embark on a big bull market move higher. Additionally, if you like a little "leverage" with your market play, silver should outperform gold. ...
While 880.8 tonnes of gold flowed out of exchange traded funds in 2013, according to the World Gold Council's Gold Demand Trends report for the fourth quarter and full year 2013, three quarters of these outflows were absorbed by consumer demand.
This, the WGC says, marks the largest year-on-year increase in consumer demand for the yellow metal since its records began and justifies it calling 2013, the year of the consumer. But, it says, it also reflects a distinct polarisation in sentiment between those institutional funds selling out of ETFs and consumers buying jewellery, bars and coins. ...
Now that we have the full history of foreign Treasury purchases in 2013, we know the following: in December 2012 total US paper held by foreigners was $5,573.8 billion; one year later it rose to $5.794.9 billion or a $221 billion increase. So how does this look in the context of QE? In the past year, courtesy of the Fed's $1 trillion in TSY and MBS purchases, Ben Bernanke purchases some $552 billion in Treasurys, or about 150% more than all foreigners combined! Suddenly the need for MyRA is becoming all too clear...
ICBC, China's largest bank, is set to buy Deutsche Bank's seat to join the price-setting process for the benchmark used in the globe's physical gold trade.
Deutsche Bank announced in January it is withdrawing from the price-setting process for gold and silver, known as the London fix, amid a probe into the benchmark used for much of the physical trade around the globe.
A new report suggest South Africa's Standard Bank, in conjunction with Industrial and Commercial Bank of China, is in "prime position" to buy the Deutsche seat:
"Standard Bank is a shoo-in for the fixing seat – they want it, and it would be acceptable to the other members," a senior gold market source told Reuters. "It's just whether they can agree a fee." ...
Gold Heads for Second Monthly Advance as Haven Demand Increases Bloomberg Gold headed for the first back-to-back monthly gain since August as concern that the U.S. recovery may be losing momentum and turmoil in emerging markets boosted haven demand.
Following a recent surge in precious metal and mining equity prices, Gary Savage, technical gold trader and publisher of the Smart Money Tracker was kind enough to share a few comments. Here is his full interview with Tekoa Da Silva: TD: Gary, you published a piece last Friday, February 14th entitled “Another Piece of the Puzzle Falls into Place,” in which you laid out some pretty big market expectations for the stock market, commodities, gold and for the dollar as well. I’m wondering if you can talk to us a little bit about that. GS: Sure Tekoa. My overarching theme for 2014, and what is going to drive all other markets, is that
All over the media we have seen extreme gold shopping sprees around new year and at the Lunar year in China. This resulted in an all time Chinese gold demand record in January – which accounted for 246 tons. In the screen shot below the second number from the right (green - 本年累计交割量) is the amount of gold withdrawn form the SGE vaults in January in Kg.
In order for our current level of debt-fueled prosperity to continue, the rest of the world must continue to use our dollars to trade with one another and must continue to buy our debt at ridiculously low interest rates. Of course the number one foreign nation that we depend on to participate in our system is China. China accounts for more global trade than anyone else on the planet(including the United States), and most of that trade is conducted in U.S. dollars. This keeps demand for our dollars very high, and it ensures that we can import massive quantities of goods from overseas at very low cost. As a major exporting nation, China ends up with gigantic piles of our dollars. They lend many of those dollars back to us at ridiculously low interest rates. At this point, China owns more of our national debt than any other country does. But if China was to decide to quit playing our game and started moving away from U.S. dollars and U.S. debt, our economic prosperity could disappear very rapidly. Demand for the U.S. dollar would fall and prices would go up. And interest rates on our debt and everything else in our financial system would go up to crippling levels. So it is absolutely critical to our financial future that China continues to play our game. ...
Interview with Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank, published in Handelsblatt on 19 February 2014.
Translation: Deutsche Bundesbank
Interview conducted by Norbert Häring and Jens Münchrath.
Mr Thiele, do you consider yourself a kind of psychotherapist of the German soul?
No, why should I?
Bundesbank President Jens Weidmann described the partial transfer of German gold from New York as a trust-building measure in Germany.You are the one responsible for organising this major logistical undertaking.
Indeed, we are inspiring trust by storing half of the 3,400 tonnes of gold in Frankfurt by 2020. Building trust also means being transparent. We were the first central bank to publish details of our storage facilities, including the respective quantities of gold stored there. ...
On the heels of another supposed JP Morgan banker ‘suicide,’ today an acclaimed money manager told King World News that we are now living in a ‘Matrix,’ where people at the highest levels of government are scared. He also said, “I’m sure this is a terrifying situation for those who are at the heart of this investigation on the banking side.” Below is what Stephen Leeb had to say in this powerful interview.
Leeb: “Eric, for the United States government, there is nothing more important in this world right now than to maintain having the world’s reserve currency. Having the reserve currency allows the US to deal with all sorts of problems. ...
February 18, 2014 the World Gold Council released the Gold Demand Trends for Q4 2013. According to this report total 2013 Chinese consumer demand was 1,065.8 tons. In my opinion this number is highly disputable.
Chinese Gold Market Essentials
The Chinese gold market is completely structured top down. The main physical (spot and deferred) exchange in China is the Shanghai Gold Exchange (SGE), that serves as the entrance point for imported and mined gold to the Chinese marketplace. Additionally the SGE is supplied by recycled gold. The Shanghai Futures Exchange (SHFE) facilitates the trading of gold futures contracts (to compete the pricing power of Western markets).
Most financial journalism and most academic teaching maintain that gold is at best a quaint antique. I'm here to argue that gold not only remains money but may again be the best and most important money -- to argue that, even more than this, gold is in fact the secret knowledge of the financial universe.
Gold already is so important that Western central banks -- particularly the U.S. Treasury and its Exchange Stabilization Fund, the Federal Reserve, and allied central banks -- rig the gold market every day, even hour by hour, to control and usually suppress gold's price.
Why do Western central banks rig the gold market?
It's because gold is a powerful competitive international currency that, if allowed to function in a free market, will determine the value of other currencies, the level of interest rates, and the value of government bonds. Gold's performance is usually the opposite of the performance of government currencies and bonds. Hence central banks fight gold to defend their currencies and bonds.
The problem is that central bank tactics in this fight affect more than gold; they affect markets generally and eventually destroy markets generally. This destruction of markets now has a name, a name used even by former members of the Federal Reserve Board. That name is "financial repression." ...
For thousands of years, people have valued gold as both a store of wealth and a medium of exchange. But despite its storied history, much of today's financial media have derided it as a useless, barbarous relic. Today, Greg Kadajski shares a few interesting graphics that show how valuable gold really is, even in a world of faith-based currencies.