The Banks Will Not Be Denied Franchises and are Buying Into Exchanges written by Soren K. for MarketSlant The US Government has essentially declared war on the OTC markets. This is the banking industry life blood. Banks are not going to go down easily. We have said so here in the past. Since the US government has essentially declared it wants exchanges to be the depositories for risk instead of Banks, the Banks are going to start buying exchanges. What ICE, (originally formed by Goldman and other banks) did for oil, EOS intends to do for Gold. That is ensure that if banks are disintermediated, at least they will own their replacement. ICE is the second largest oil exchange behind the CME now. And ICE is no longer bank owned. Hence the banks are creating a new vehicle to capture lost business, this one is in Gold. And its goal is to get in the middle of every Gold deal being bought in the East. And they are smart to do it.From a previous post, the problem for banks can be easily seen. Banks know this and are not going down without a fight. TBTF = Too Big to Exist The Federal Government's policies post the 2007 crash have done nothing to reduce the concentration of systemic risk in our markets. They have in fact concentrated power in a smaller number of counterparties' hands. Price discovery is less reliable. Transparency of price is better, but less reliable. We like this statement made today on transparency, diversity in market participants and our growing systemic risk. Exchanges Are the Answer One positive we see is the vested interest the Federal Government has take in the US Exchanges. By encouraging trades on the exchanges, the gov't at least has a fair shot of seeing systemic risk now. The opacity of banking's OTC markets are a big problem. Maybe it is bad to have all your eggs in one basket. But if you really watch that basket closely, then at least you can see trouble coming rather than waiting for a bank to blow up and start a cascade of OTC defaults. And as long as all the data "eggs" are transparent, then another 2007 event can be avoided. Manipulation in Metals They will preserve their FX franchises as long as they can. But they see the writing on the wall with the Gold OTC market. Therefore they will join what they cannot beat. Here are the talking points on the deal the Banks cut with the LME in summary: Banks take stakes in LME gold contracts through new company They promise to supply liquidity in return for revenue share Built-in liquidity may give LME edge over U.S. rivals LME gold, silver contracts to launch on June 5 For Example: At the moment, London's gold trade is dominated by over-the-counter (OTC) business conducted bilaterally among networks of brokers, producers and consumers. Gold futures trading takes place chiefly on the CME's New York market and the Tokyo Commodity Exchange. However, the LME and its rivals see an opportunity as regulation of the market tightens, hoping this will force the trade onto transparent, centrally-cleared exchanges. Bigger banks, which rely on their wide range of business relationships, stand to lose market share from such a shift because exchange trading would make it easier for smaller players to compete. Gold dealers keep their volumes secret and no precise figures are available, but analysts and traders estimate the EOS shareholders may control up to 50 percent of OTC bullion trading in London. The secular trend is Gold demand moves eastward. And it is a fact that exchanges do best in regions of demand, not regions of supply. Hence Comex vaults are emptied while SGE are getting filled. The LME is paying banks with revenues and guaranteed order flow in return for "liquidity provision". Does this seem like captive flow in which a bank's prop desk in the US can somehow front run? Here are the revenue streams a designated marketmaker/ specialist type market structure affords: revenue sharing from volumes traded rebates guaranteed order flow minimums implicit fees in bid/ask trading like a bookie information in which "non-affiliated" divisions can trade in front of or against the flow Here is how the marketmaker/specialist manages risk hedging and carrying risk on his book when he has to "stopping" or declaring order imbalances that remove its obligation to provide liquidity simply not making markets because the risk is too big compared to the revenues if he's unethical Small Players Will Be Shut Out The Specialist/DMM/PMM type liquidity provider with no real risk has a license to print money. And he can walk away is he doesnt like the deal. His risk is limited to the extent he participates. The LME has all the risk here. Do they even know how to police their liquidity providers beyond the "moral" obligation? It is not easy to quantify when a sub-contractor is shirking his responsibility in this business. From Reuters: The London Metal Exchange has reached a 50:50 revenue-sharing deal with a company founded by a group of banks to promote trade in its new gold futures contracts, sources said, aiming to overcome market skepticism surrounding their launch in June. Usually, exchanges merely consult potential users about their needs when planning new financial and commodity contracts. But in this case, the LME has opted for a radical departure from normal practice as it tries to grab a piece of London's $5 trillion-a-year gold market. Sources close to the matter told Reuters that the five banks and a proprietary trader which are shareholders in the new company have undertaken to bring guaranteed minimum levels of trade in the gold futures. Should they meet these levels, the project partners will receive a half share of the revenue under an incentive scheme designed to ensure the contracts have turnover, viability and credibility from the outset. "We're all committed to market-making and will at least bring our own trading book," said a source at one of the banks involved in the project. "It'll come with some built-in volume." The sources gave few details of the arrangement. However, one at a different bank backing the contracts said: "Do we have incentives for it to work? Yes." The LME, which is owned by Hong Kong Exchanges and Clearing Ltd, hopes the arrangement will give its contracts enough business to take off from June 5 despite doubts among many brokers and gold producers. The Key to the Gold Market's Eastern Success Lies in Market Structure Essentially, the contracted specialist has a free "put" to not do what he is morally obligated to do. This is not a new model. But it is now full circle where banks as liquidity providers ( the guys who rigged and or passively played a role in rigging the Gold and Silver Fix) are now at the hub of the Gold flow. Yet in much bigger markets like FX, the banks wont participate in this way. This is because the FX market is still largely OTC and a good profit center franchise still. That is not to say the Specialist/ DMM type market-structure cannot work. It is necessary in many cases where the marketmaker is the gold dust that gets the virtuously reinforced cycle of liquidty going. That is a paraphrase from the Goldman sponsored book "B2B exchanges" More: It also wants to shoulder aside U.S. exchanges CME Group and ICE which launched London gold contracts last month, although they have yet to attract any business.The LME's partners from the banking sector are Goldman Sachs, ICBC Standard Bank, Morgan Stanley, Natixis and Societe Generale. They have founded a company called EOS Precious Metals along with commodity trader OSTC and The World Gold Council, an industry market development body. And demand is moving East. Incumbent exchanges in precious metals should consider getting the gang back together to augment their currently homogeneous and hedged (conflicted?) liquidity pool and make a stronger play in China. Traders who invest their competitive ego and heart as well as financially vested interest into making London contracts work are out there. Even More: "If the LME can provide liquidity, then that's where people will go and so will we," said a source at one gold producer.The LME plans to offer a much wider range of contracts than its competitors do at the moment in London.The CME is offering gold and silver contracts to connect London with its established New York market. ICE runs the London gold auction, which sets a global benchmark price for bullion, and has a daily gold contract that will enable participants, which include most of London's largest bullion banks, to clear their trades.Neither set of contracts has traded since launching in January. The CME said it was working with major banks to synchronize their systems to start trading. While the regulators are patting themselves on the back for catching the Gold and Silver scandals after 20 years, the players have moved on to greener pastures. -VBL
Gold To Rise - Real Chinese Gold Demand Higher Than "Official" Demand Frank Holmes joins Lawrie Williams, Koos Jansen and many others in questioning the "official" Chinese gold demand numbers. Real gold demand is likely much higher than the official numbers by Frank Holmes Inflation just got another jolt, rising as much as 2.5 percent year-over-year in January, the highest such rate since March 2012. Led by higher gasoline, rent and health care costs, consumer prices have now advanced for the sixth straight month. In addition, January is the second straight month for rates to be above the Federal Reserve’s target of 2 percent. Air fares are also climbing, and speaking of air fares, billionaire investor Warren Buffett added to his domestic airline holdings, we learned last week. Buffett’s holding company, Berkshire Hathaway, is now the second-largest holder of American Airlines, with an 8.79 percent share of the company. It also increased its holdings in Delta Air Lines by over 800 percent, to 60 million shares. The company now owns 43.2 million shares of Southwest Airlines, and it increased its stake in United Continental to about 28 million shares. A March rate hike now looks all but imminent. Many economists—including the Goldman Sachs economists I had the pleasure to hear speak this week—expect to see at least three such hikes this year alone. Gold responded accordingly, closing above $1,240 for the first time since soon after the November election. Below you can see the gold price charted against the inflation-adjusted 10-year Treasury yield, which is now in subzero territory. The question I have is: Why would an investor deliberately choose to lose money? But that’s precisely what’s happening now with inflation where it is. 2-Year 3-Year 10-Year Treasury Yield 1.22% 1.95% 2.45% Consumer Price Index 2.50% 2.50% 2.50% Real Yield -1.28% -0.55% -0.05% As of February 16 Source: Federal Reserve, U.S. Global Investors These were among some of the topics addressed by former Fed Chair Alan Greenspan, who spoke with the World Gold Council (WGC) for the winter edition of its “Gold Investor.” "Significant increases in inflation will ultimately increase the price of gold,” Greenspan said. “Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection.” He also reiterated his view, which I share, that gold is much more than just a metal but a currency: "I view gold as the primary global currency. It is the only currency, along with silver, that does not require a counterparty signature. Gold, however, has always been far more valuable per ounce than silver. No one refuses gold as payment to discharge an obligation. Credit instruments and fiat currency depend on the credit worthiness of a counterparty. Gold, along with silver, is one of the only currencies that has an intrinsic value. It has always been that way. No one questions its value, and it has always been a valuable commodity, first coined in Asia Minor in 600 BC." Although major stock indices continue to hit fresh all-time highs on hopes of tax reform and fiscal stimulus, it’s important to temper the exuberance with a little prudence. The bull market, currently in its eighth year, is facing some significant geopolitical and macroeconomic uncertainty, and we could be getting late in the economic cycle. This makes gold’s investment case even more attractive. For the 10-year period, the yellow metal has shown an inverse correlation to risk assets such as stocks and high-yield bonds. It might be time to ensure that your portfolio has the recommended 10 percent in gold—that includes 5 percent in gold coins and jewelry, the other 5 percent in quality gold equities and mutual funds. China and India to Lead World Economy by 2050 The long-term investment case for gold looks just as compelling following bullish reports last week from PricewaterhouseCoopers (PwC) and Morgan Stanley. China and India are the world’s top two consumers of gold, and both countries are expected to make huge economic gains in the next few decades. This is likely to boost gold demand even more, which has a high correlation with discretionary income growth. China alone consumed approximately 2,000 metric tons in 2016, or roughly 60 percent of all the new gold that was mined during the year, according to veteran mining commentator Lawrie Williams, who based his estimates on calculations made by BullionStar’s Koos Jansen. The 2,000 metric tons is a much higher figure than what analysts and the media have been telling us, but I’ve always suspected China’s annual consumption to run higher than “official” numbers. Click here for rest of Frank Holme's latest analysis on Forbes Gold and Silver Bullion - News and Commentary Gold steady as investors look for rate hike clues from Fed (Reuters) Asian stocks edge up ahead of Fed minutes (Marketwatch) Gold shakes off dollar strength to finish flat amid geopolitical hand-wringing (Marketwatch) Higher dollar pressures gold, uncertainty offers support (Reuters) Swiss gold exports fall 19% to 120 mt in January, lowest for ten months (Platts) Gold Gets a Shot in the Arm from China and Inflation (Forbes) Gold And The Inflationary Firestorm (Goldseek) Bring Back the Gold Gillt (Cobden Centre) How Many Euro Crises Will This Make? It’s Getting Hard To Keep Track (Dollar Collapse) After seven years of bailouts, Greeks sink yet deeper in poverty (Reuters) Gold Prices (LBMA AM) 22 Feb: USD 1,237.50, GBP 994.21 & EUR 1,178.22 per ounce21 Feb: USD 1,228.70, GBP 988.86 & EUR 1,166.16 per ounce20 Feb: USD 1,235.35, GBP 991.49 & EUR 1,163.21 per ounce17 Feb: USD 1,241.40, GBP 1,000.57 & EUR 1,165.55 per ounce16 Feb: USD 1,236.75, GBP 988.41 & EUR 1,163.29 per ounce15 Feb: USD 1,225.15, GBP 985.27 & EUR 1,161.81 per ounce14 Feb: USD 1,229.65, GBP 986.67 & EUR 1,157.84 per ounce Silver Prices (LBMA) 22 Feb: USD 18.00, GBP 14.47 & EUR 17.14 per ounce21 Feb: USD 17.89, GBP 14.41 & EUR 16.97 per ounce20 Feb: USD 17.98, GBP 14.42 & EUR 16.92 per ounce17 Feb: USD 18.01, GBP 14.50 & EUR 16.91 per ounce16 Feb: USD 18.10, GBP 14.49 & EUR 17.02 per ounce15 Feb: USD 17.88, GBP 14.39 & EUR 16.94 per ounce14 Feb: USD 17.91, GBP 14.37 & EUR 16.85 per ounce Recent Market Updates - Russia Gold Buying Is Back – Buys One Million Ounces In January- Gold The “Ultimate Insurance Policy” as “Grave Concerns About Euro” – Greenspan- Sharia Standard May See Gold Surge- Gold Price To 2 Month High As Fiery Trump Declares World Order- Gold’s Gains 15% In Inauguration Years Since 1974- Turkey, ‘Axis of Gold’ and the End of US Dollar Hegemony- Gold Up 5.5% YTD – Hard Brexit Cometh and Weaker Dollar Under Trump- Bitcoin and Gold – Outlook and Safe Haven?- Physical Gold Will ‘Trump’ Paper Gold- Gold Lower Before Trump Presidency – Strong Gains Akin To After Obama Inauguration- Gold Rallies To $1,207 After Trump Press Conference Shambles- Prince Owned Land and Gold Bars Worth $800,000- Gold Price In GBP Up 4% On Brexit and UK Risks Interested in learning more about physical gold and silver?Call GoldCore and speak with a Gold and Silver Specialist today!
Hardly a day goes by now without more good news for gold investors appearing, and the pace of this news flow is accelerating. Former Fed chairman Alan Greenspan was interviewed by the World Gold Council in the February edition ...
Германия и США являются крупнейшими покупателями золота у монетного двора Австралии в городе Перт. Его представитель сообщил о значительном росте продаж драгоценных металлов за последние месяцы...
As John Rubino eloquently puts it, "when the history of these times is written, former Fed Chair Alan Greenspan will be one of the major villains, but also one of the greatest mysteries. This is so because he has, in effect, been three different people." Greenspan started his public life brilliantly, as a libertarian thinker who said some compelling and accurate things about gold and its role in the world. An example from 1966: "This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Yet everything changed a few decades later when Greenspan was put in charge of the Federal Reserve in the late 1980s, instead of applying the above wisdom, for example by limiting the bank's interference in the private sector and letting market forces determine winners and losers, he did a full 180, intervening in every crisis, creating new currency with abandon, and generally behaving like his old ideological enemies, the Keynesians. Predictably, debt soared during his long tenure. Along the way he was also instrumental in preventing regulation of credit default swaps and other derivatives that nearly blew up the system in 2008. His view of those instruments: The reason that growth has continued despite adversity, or perhaps because of it, is that these new financial instruments are an increasingly important vehicle for unbundling risks. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it. This unbundling improves the ability of the market to engender a set of product and asset prices far more calibrated to the value preferences of consumers than was possible before derivative markets were developed. The product and asset price signals enable entrepreneurs to finely allocate real capital facilities to produce those goods and services most valued by consumers, a process that has undoubtedly improved national productivity growth and standards of living. In the aftermath of the dot com crisis Greenspan cut interest rates to near-zero in the early 2000s, igniting the housing bubble, which neither he nor anyone else at the Fed was able to detect along the way. He even made it into the dictionary, as the "Greenspan put" became the term for government bailing out its Wall Street benefactors. From this the leveraged speculating community learned that no risk was too egregious and no profit too large, because government - that is, the Fed - had eliminated all the worst-case scenarios. Put another way, under Greenspan profit was privatized but loss was socialized. Then, another metamorphosis took place: after Greenspan retired from the Fed in 2006 he began morphing back into his old libertarian self. A cynic might detect a desire to avoid the consequences of his past actions, while a neurologist might suspect senility. But either way the transformation has been breathtaking. Consider Greenspan's latest public address. In an extended interview published in the World Gold Council’s Gold Investor February issue, Greenspan repeated his now standard warning about the risk of coming stagflation, which would send the price of gold higher: "The risk of inflation is beginning to rise...Significant increases in inflation will ultimately increase the price of gold." As such, "investment in gold now is insurance. It’s not for short-term gain, but for long-term protection.” Going back to his libertarian roots, it was the idea of returning to a gold standard that Greenspan focused on: a gold standard that he said would help mitigate risks of an “unstable fiscal system” like the one we have today. “Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today, we would not have reached the situation in which we now find ourselves,” he said.“[T]here is a widespread view that the 19th Century gold standard didn’t work. I think that’s like wearing the wrong size shoes and saying the shoes are uncomfortable! It wasn’t the gold standard that failed; it was politics.” And the punchline: “We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line.” To be sure, this is something we discussed exactly two years ago, when we showed a chart showing the sudden end of prosperity for the "bottom 90%" of US earners at the time Nixon ended the US Gold Standard in August 1971, unleashing what ultimately would be the "Great Moderation", an unprecedented increase in US debt, and the stagnation of real incomes and net worth for all but the "top 1% of earners." As we said then, in retrospect it is no wonder "why the 1% hates the gold standard" and added that the chart above, "should also clarify just why to the "1%", including their protectors in the "developed market" central banking system, their tenured economist lackeys, their purchased politicians and their captured media outlets, the topic of a return to a gold standard is the biggest threat conceivable." As for Greenspan's repeated attempts to undo the past by admitting his mistakes, the jury is out. As Rubino concludes, "one of the nice things about the information age is that public figures leave long paper trails and can't therefore easily escape their pasts. Greenspan's past, being perhaps the best documented of any central banker in history, will haunt him forever." That said, at least Greenspan is going out a gold bug. * * * Below are the key excerpts from his Gold Investor interview: Q. In recent months, concerns about stagflation have been rising. Do you believe that these concerns are legitimate? We have been through a protracted period of stagnant productivity growth, particularly in the developed world, driven largely by the aging of the ‘baby boom’ generation. Social benefits (entitlements in the US) are crowding out gross domestic savings, the primary source for funding investment, dollar for dollar. The decline in gross domestic savings as a share of GDP has suppressed gross nonresidential capital investment. It is the lessened investment that has suppressed the growth in output per hour globally. Output per hour has been growing at approximately ½% annually in the US and other developed countries over the past five years, compared with an earlier growth rate closer to 2%. That is a huge difference, which is reflected proportionately in the gross domestic product and in people’s standard of living. As productivity growth slows down, the whole economic system slows down. That has provoked despair and a consequent rise in economic populism from Brexit to Trump. Populism is not a philosophy or a concept, like socialism or capitalism, for example. Rather it is a cry of pain, where people are saying: Do something. Help! At the same time, the risk of inflation is beginning to rise. In the United States, the unemployment rate is below 5%, which has put upward pressure on wages and unit costs generally. Demand is picking up, as manifested by the recent marked, broad increase in the money supply, which is stoking inflationary pressures. To date, wage increases have largely been absorbed by employers, but, if costs are moving up, prices ultimately have to follow suit. If you impose inflation on stagnation, you get stagflation. * * * Q. As inflation pressures grow, do you anticipate a renewed interest in gold? Significant increases in inflation will ultimately increase the price of gold. Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection. I view gold as the primary global currency. It is the only currency, along with silver, that does not require a counterparty signature. Gold, however, has always been far more valuable per ounce than silver. No one refuses gold as payment to discharge an obligation. Credit instruments and fiat currency depend on the credit worthiness of a counterparty. Gold, along with silver, is one of the only currencies that has an intrinsic value. It has always been that way. No one questions its value, and it has always been a valuable commodity, first coined in Asia Minor in 600 BC. * * * Q. Although gold is not an official currency, it plays an important role in the monetary system. What role do you think gold should play in the new geopolitical environment? The gold standard was operating at its peak in the late 19th and early 20th centuries, a period of extraordinary global prosperity, characterised by firming productivity growth and very little inflation. But today, there is a widespread view that the 19th century gold standard didn’t work. I think that’s like wearing the wrong size shoes and saying the shoes are uncomfortable! It wasn’t the gold standard that failed; it was politics. World War I disabled the fixed exchange rate parities and no country wanted to be exposed to the humiliation of having a lesser exchange rate against the US dollar than it enjoyed in 1913. Britain, for example, chose to return to the gold standard in 1925 at the same exchange rate it had in 1913 relative to the US dollar (US$4.86 per pound sterling). That was a monumental error by Winston Churchill, then Chancellor of the Exchequer. It induced a severe deflation for Britain in the late 1920s, and the Bank of England had to default in 1931. It wasn’t the gold standard that wasn’t functioning; it was these pre-war parities that didn’t work. All wanted to return to pre-war exchange rate parities, which, given the different degree of war and economic destruction from country to country, rendered this desire, in general, wholly unrealistic. Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today we would not have reached the situation in which we now find ourselves. We cannot afford to spend on infrastructure in the way that we should. The US sorely needs it, and it would pay for itself eventually in the form of a better economic environment (infrastructure). But few of such benefits would be reflected in private cash flow to repay debt. Much such infrastructure would have to be funded with government debt. We are already in danger of seeing the ratio of federal debt to GDP edging toward triple digits. We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line. * * * Finally, buried at the very end of the interview was perhaps the most interesting statement by Greenspan : the former Fed Chair's implicit admission that Ron Paul was right all along: Q. Against a background of ultra-low and negative interest rates, many reserve managers have been large buyers of gold. In your view, what role does gold play as a reserve asset? When I was Chair of the Federal Reserve I used to testify before US Congressman Ron Paul, who was a very strong advocate of gold. We had some interesting discussions. I told him that US monetary policy tried to follow signals that a gold standard would have created. That is sound monetary policy even with a fiat currency. In that regard, I told him that even if we had gone back to the gold standard, policy would not have changed all that much. For those unfamiliar, here is Ron Paul 's explanation of his plan for monetary freedom and a return to a gold standard. Full Greenspan interview below (link)
Gold The "Ultimate Insurance Policy" as "Grave Concerns About Euro" - Greenspan "The eurozone isn't working ..." warns Greenspan "I view gold as the primary global currency" said Greenspan "Significant increases in inflation will ultimately increase the price of gold" "Investment in gold now is insurance..." Source: Getty Alan Greenspan, the former head of the Federal Reserve has warned that the euro may collapse, saying that he has "grave concerns" about its future. The imbalances in the economic strength of euro area countries make the continued function of the single currency area a primary concern, said former US Federal Reserve chairman Alan Greenspan in an interview (February issue of "Gold Investor") with the World Gold Council. He suggests the inequality is largely down to a north/south geographical divide which means the division between the northern and southern EU countries is too big. The bloc's more prosperous nations such as Germany consistently fund the deficits of those in the south, and that simply can't go on, said Greenspan. "The European Central Bank (ECB) has greater problems than the Federal Reserve. The asset side of the ECB’s balance sheet is larger than ever before, having grown steadily since Mario Draghi said he would do whatever it took to preserve the euro,” he said. “And I have grave concerns about the future of the euro itself… The eurozone is not working", added Greenspan. Greenspan, chairman of the Federal Reserve from 1987 and 2006 has consistently been critical of the eurozone and the European Monetary Union (EMU). He has long maintained that the eurozone was doomed to fail because the impact of the divergent cultures and economies in the bloc has been grossly underestimated. Greece is currently in the midst of yet another financial crisis with withdrawals from bank accounts and new bank runs indicating the public is preparing for a crash. Meanwhile Europe's oldest bank, Banca Monte dei Paschi di Siena, in Italy is on the verge of bankruptcy and needs another bail out to survive. Even Germany's largest lender Deutsche Bank is facing a crisis of gargantuan proportions as it struggles with its shadow banking assets book which is plagued with non performing loans (NPLs). Ireland, Spain and Portugal face their own economic challenges and many are doubtful whether there can be any meaningful recovery given the scale of the national debt and total debt burden in the periphery euro nations. Mr Greenspan said Brexit will almost certainly trigger a collapse of the ECB despite the UK not having adopted the euro: "Brexit is not the end of the set of problems, which I always thought were going to start with the euro because the euro is a very serious problem." Mr Greenspan says that investors are diversifying into precious metals and increasingly seeking to buy gold, because there is a deepening lack of trust in the euro and in the banking system. The former Fed chair, correctly pointed out that investment in gold now is insurance; and it’s not for short-term gain, but for long-term protection: "Significant increases in inflation will ultimately increase the price of gold. Investment in gold now is insurance..." advised Greenspan. Given the increasing uncertainty regarding the economic outlook, many investors internationally are now considering how to buy gold for the first time. A prudent diversification into non bank, non digital, physical gold will protect and grow their wealth in the coming years. "Gold Investor" with the World Gold Council can be accessed here Gold and Silver Bullion - News and Commentary PRECIOUS - Gold prices steady, focus shifts to timing of US rate hikes (Reuters.com) Gold ends lower, but tallies a third-weekly gain (MarketWatch.com) Gold steadies as global equities lose momentum (Reuters.com) Stocks Rise To Records, Dollar Gains With Bonds (Bloomberg.com) Arizona bill would remove state tax on profit from sale of gold coins (Tucson.com) Gold: "Ultimate insurance policy" - Greenspan (Gold.org) Large Fund Managers Moving Into Gold (Bloomberg.com) Why gold bars are the ultimate Valentine's gift (MenaFN.com) For world’s top gold miners, growth no longer a dirty word (Reuters.com) Gold shines as political jitters trump economic indicators (TheWest.com) Gold Prices (LBMA AM) 20 Feb: USD 1,235.35, GBP 991.49 & EUR 1,163.21 per ounce17 Feb: USD 1,241.40, GBP 1000.57 & EUR 1,165.55 per ounce16 Feb: USD 1,236.75, GBP 988.41 & EUR 1,163.29 per ounce15 Feb: USD 1,225.15, GBP 985.27 & EUR 1,161.81 per ounce14 Feb: USD 1,229.65, GBP 986.67 & EUR 1,157.84 per ounce13 Feb: USD 1,229.40, GBP 982.04 & EUR 1,155.64 per ounce10 Feb: USD 1,225.75, GBP 980.23 & EUR 1,151.35 per ounce09 Feb: USD 1,241.75, GBP 988.18 & EUR 1,161.04 per ounce08 Feb: USD 1,235.60, GBP 989.47 & EUR 1,160.10 per ounce Silver Prices (LBMA) 29 Feb: USD 17.98, GBP 14.42 & EUR 16.92 per ounce17 Feb: USD 18.00, GBP 14.50 & EUR 16.90 per ounce16 Feb: USD 18.10, GBP 14.49 & EUR 17.02 per ounce15 Feb: USD 17.88, GBP 14.38 & EUR 16.93 per ounce14 Feb: USD 17.91, GBP 14.37 & EUR 16.85 per ounce13 Feb: USD 17.97, GBP 14.34 & EUR 16.89 per ounce10 Feb: USD 17.62, GBP 14.15 & EUR 16.55 per ounce09 Feb: USD 17.71, GBP 14.10 & EUR 16.58 per ounce08 Feb: USD 17.74, GBP 14.20 & EUR 16.66 per ounce Recent Market Updates - Silver Price To Surge As “Investors and Users Fighting Over Available Physical Supplies”- Jim Rogers Buying Gold Bullion On Dips- French Election Could See Euro Break Up – New Global Crisis- Gold Prices Up 5.8% YTD – Trump ‘Honeymoon’ Ends- Gold Buying Russia To Intensify Diversification On Trump ‘Unpredictability’?- Gold Prices Rising Mean “Impending Market Volatility”- Gold Bullion Banks To “Open Vaults” In Transparency Push?- Ignore Sabre-Rattling and Buy Gold- Buy Gold Because of Uncertainty not Doomsday- The Alternative Fact of the Cashless Society- Silver, Platinum and Palladium As Safe Havens – Reassessing Their Role- Why 2017 Could See the Collapse of the Euro- Dow 20K … US Debt $20 Trillion … Trump and $15,000 Gold- Switzerland’s Gold Exports To China Surge To 158 Tons In December Interested in learning more about physical gold and silver?Call GoldCore and speak with a Gold and Silver Specialist today!
Submitted by John Rubino via DollarCollapse.com, When the history of these times is written, former Fed Chair Alan Greenspan will be one of the major villains, but also one of the greatest mysteries. This is so because he has, in effect, been three different people. He began public life brilliantly, as a libertarian thinker who said some compelling and accurate things about gold and its role in the world. An example from 1966: An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other… …In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in 1934 under FDR]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard. Awesome, right? But when put in charge of the Federal Reserve in the late 1980s, instead of applying the above wisdom — by for instance limiting the bank’s interference in the private sector and letting market forces determine winners and losers — he did a full 180, intervening in every crisis, creating new currency with abandon, and generally behaving like his old ideological enemies, the Keynesians. Not surprisingly, debt soared during his long tenure. Along the way he was instrumental in preventing regulation of credit default swaps and other derivatives that nearly blew up the system in 2008. His view of those instruments: The reason that growth has continued despite adversity, or perhaps because of it, is that these new financial instruments are an increasingly important vehicle for unbundling risks. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it. This unbundling improves the ability of the market to engender a set of product and asset prices far more calibrated to the value preferences of consumers than was possible before derivative markets were developed. The product and asset price signals enable entrepreneurs to finely allocate real capital facilities to produce those goods and services most valued by consumers, a process that has undoubtedly improved national productivity growth and standards of living. He cut interest rates to near-zero in the early 2000s, igniting the housing bubble – which he was unable to detect along the way. He even made it into the dictionary, as the “Greenspan put” became the term for government bailing out its Wall Street benefactors. From this the leveraged speculating community learned that no risk was too egregious and no profit too large, because government – that is, the Fed – had eliminated all the worst-case scenarios. Put another way, under Greenspan profit was privatized but loss was socialized. Greenspan retired from the Fed in 2006 and, miraculously, began morphing back into his old libertarian self. A cynic might detect a desire to avoid the consequences of his past actions, while a neurologist might suspect senility. But either way the transformation is breathtaking. Consider this from yesterday: Gold Standard Needed Now More Than Ever? – Alan Greenspan Comments (Kitco News) – It would be best not to be short-sighted when it comes to gold; at least that is what one former Fed chair says. “[T]he risk of inflation is beginning to rise…Significant increases in inflation will ultimately increase the price of gold,” noted Alan Greenspan, Federal Reserve chairman from 1987 to 2006, in an interview published in the World Gold Council’s Gold Investor February issue. “Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection.” However, it is really the idea of returning to a gold standard that Greenspan focused on — a gold standard that he said would help mitigate risks of an “unstable fiscal system” like the one we have today. “Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today, we would not have reached the situation in which we now find ourselves,” he said. “We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line.” To Greenspan, the reason why the gold standard hasn’t worked in the past actually has nothing to do with the metal itself. “[T]here is a widespread view that the 19th Century gold standard didn’t work. I think that’s like wearing the wrong size shoes and saying the shoes are uncomfortable!” he said. “It wasn’t the gold standard that failed; it was politics.” One of the nice things about the information age is that public figures leave long paper trails and can’t therefore easily escape their pasts. Greenspan’s past, being perhaps the best documented of any central banker in history, will haunt him forever. But hey, at least he’s going out a gold bug.
Submitted by Ronan Manly, BullionStar.com On 5 February, the Financial Times of London (FT) featured a story revealing that the London Bullion Market Association (LBMA) plans to begin publishing data on the amount of real physical gold actually stored in the London precious metals vaulting network. The article titled “London gold traders to open vaults in transparency push” can be read here (accessible via FT subscription or via free monthly FT read limit). This new LBMA ‘monthly vault data’ will, according to the FT’s sources, be published on a three-month lagged basis, and will: “show gold bars held by the BoE, the gold clearing banks, and those [vaults] operated by the security companies such as Brink’s, which are also members of the LBMA.” The shadowy source quoted in the FT article is attributed to “a person involved in setting up the programme”, but at the same time, although “the move [to publish the data] is being led by the LBMA“, the same LBMA ”declined to comment” for the FT story. This then has all the hallmarks of a typical authorised leak to the media so as to prepare the wider market for the data release. On 16 February, the World Gold Council in its “Gold Investor, February 2017″ publication featured a focus box on the same gold vault topic in its “In the News” section on page 4, where it states: “Enhanced transparency from the Bank of England The Bank of England is, for the first time, publishing monthly data revealing the amount of gold it holds on behalf of other central banks. As a leading custodian of gold, with one of the largest vaults in the world, the Bank of England’s decision is highly significant. Not only will it enhance the transparency of the Bank’s own gold operations; it will also support the drive towards greater transparency across the gold market. The data reveals the total weight of gold held within the Bank of England’s vaults and includes five years of historical data.” The Proposed Data Based on these two announcements, it therefore looks like the gold vault data release will be a combined effort between the LBMA and the Bank of England, the blood brothers of the London Gold Market, with the Bank of England data being a subset of the overall LBMA data. While neither of the above pieces mention a release date for the first set of data, I understand that it will be this quarter, i.e. sometime before the end of March. On a 3 month lagged basis, the first lot of data would therefore probably cover month-end December 2016, because that would be a logical place to start the current dataset, rather than, for example, November 2016. While the Bank of England data looks set to cover a 5 year historical period, there is no indication (from the FT article) that the wider LBMA vault data will do likewise. From the sparse information in the FT article, the LBMA data will “show gold bars held“. Does it mean number of gold bars, or combined weight of gold bars? What exactly it means, we will have to wait and see. The Bank of England data will capture “total weight of gold held“. Notice that in the above World Gold Council piece it also states that the data will cover the amount of gold that the Bank of England “holds on behalf of other central banks.” There is no mention of the amount of gold that the Bank of England holds on behalf of commercial bullion banks. Overall, this doesn’t exactly sound like it is “enhancing the transparency of the Bank’s own gold operations” as the World Gold Council puts it. Far from it. Enhancing the transparency of the Bank of England’s gold operations would require something along the lines of the following: Identities of all central banks and official sector institutions (ECB / IMF / BIS / World Bank) holding active gold accounts at the Bank of England. Active gold accounts meaning non-zero balances Identities of all commercial / bullion banks holding active gold accounts at the Bank of England A percentage breakdown between the central bank gold held in the Bank of England vaults and the bullion bank gold held in the Bank of England vaults An indicator for each gold account as to whether it is a set-aside earmarked custody account or whether it is a fine troy ounce balance account Information for each central bank and official sector institution as to whether any of “its” gold is lent, swapped or repo’d Information for the bullion bank gold accounts as to whether the gold recorded in those accounts is borrowed, sourced from swaps, sourced from repos, or otherwise held as collateral for loans Information on the gold accounts of the 5 LPMCL clearing banks showing how much gold each of these institutions holds each month and whether the Bank of England supplies physical gold clearing balances to these banks Information on when and how often the London-based gold-backed ETFs store gold at the Bank of England, not just using the Bank of England as sub-custodian, but also storage in their own names, i.e. does HSBC store gold in its own name at the Bank of England which is used to supply gold to the SPDR Gold Trust Information on whether and how often the Bank of England intervenes into the London Gold Market and the LBMA Gold Price auctions so as to supply gold in price smoothing and price stabilisation operations in the way that the Bank of England’s Terry Smeeton seems to have been intervening into the London Gold Market in the 1980s Information on the BIS gold holding and gold transactions settlements accounts at the Bank of England and the client sub-account details and central bank identities for these accounts Information on gold location swaps between gold account holders at the Bank of England and gold accounts at the Federal Reserve Bank of New York, the Banque de France, and the Swiss National Bank, and BIS accounts in those locations Gold for oil swaps and oil for gold swaps Anything less does not constitute transparency. And its important to remember that any publication of gold vault data by the LBMA and Bank of England is not being done because the LBMA suddenly felt guilty, or suddenly had an epiphany on the road to Damascus, but, as the FT correctly points out: “the LBMA, whose members include HSBC and JPMorgan, hopes to head off the challenge and persuade regulators that banks trading bullion should not have to face more onerous funding requirements.” The Current Data As a reminder, there is currently no official direct data published on the quantity of real physical gold bars held within the London gold vaulting system. This vaulting system comprises the vaults of eight vault operators (see below for list). Once a year in its annual report, the Bank of England provides a Sterling (GBP) value of gold held by its gold custody customers, while the LBMA website states a relatively static total figure of “approximately 6,500 tonnes of gold held in London vaults” that it claims are in the vaults in its network. But beyond these figures, there is currently no official visibility into the quantity of London Good Delivery gold bars held in the London vaults. There are, various ways of estimating London gold vault data using the Bank of England annual figure and the LBMA figure together with Exchange Traded Fund gold holdings and central bank divulged gold holdings at the Bank of England. These approaches have been documented in BullionStar articles “Central bank gold at the Bank of England” and “How many Good Delivery gold bars are in all the London Vaults?….including the Bank of England vaults“, both from September 2015, and more recently “Tracking the gold held in London: An update on ETF and BoE holdings” from September 2016. The September 2015 estimates calculated that there were 6,256 tonnes of gold in total in the London vaults, with 5,134 tonnes at the Bank of England (as of end February 2015), and 1,122 tonnes in London “not at the Bank of England“, all of which was accounted for by gold-backed ETFs which store their gold in London. These calculations implied that there was nearly zero gold stored in London outside the Bank of England that was not accounted for by ETF holdings. The “Tracking the gold held in London” estimates from September 2016 used a figure of 6,500 tonnes of gold in total in the London vaults, and showed that there were 4,725 tonnes inside the Bank of England vaults, of which about 3,800 tonnes was known to be held by central banks (and probably a lot of the remainder was held by central banks also) and that there were 1,775 tonnes of gold outside the Bank of England. The article also calculated that there were 1,679 tonnes of gold in the gold backed ETFs that store their gold in London, so again, there was very little gold in the London vault network that was not accounted for by ETFs and central bank gold. The Vaults of London Overall, there are 8 vault operators for gold within the LBMA vaulting network. These 8 vault operators are as follows: The Bank of England HSBC Bank plc JP Morgan Chase ICBC Standard Bank Plc Brink’s Limited Malca-Amit Commodities Ltd G4S Cash Solutions (UK) Limited Loomis International (UK) Ltd HSBC, JP Morgan and ICBC Standard are 3 of the London Gold Market’s clearing banks that form the private company London Precious Metals Clearing Limited (LPMCL). The other two member of LPMCL are Scotia Mocatta and UBS. Brink’s, Malca-Amit, G4S and Loomis are the aforementioned security companies. The LBMA website lists these operators, alongside their headquarters addresses. Bizarrely, the FT article still parrots the LBMA’s spoon-fed line that the vaults are “in secret locations within the M25 orbital motorway”. But this is far from the truth. Many of the London vault locations are in the public domain as has been covered, for example, on this website, and the FT knows this: JP Morgan: https://www.bullionstar.com/gold-university/jp-morgan-gold-vault-london Malca-Amit https://www.bullionstar.com/gold-university/malca-amit-london-gold-vault G4S: https://www.bullionstar.com/gold-university/g4s-london-gold-vault And perhaps HSBC: https://www.bullionstar.com/gold-university/hsbc-gold-vault-london G4S location https://www.bullionstar.com/blogs/ronan-manly/g4s-london-gold-vault-2-0-icbc-standard-bank-in-deutsche-bank-out Malca-Amit location https://www.bullionstar.com/blogs/ronan-manly/gold-vaults-london-malca-amit HSBC possible location https://www.bullionstar.com/blogs/ronan-manly/hsbcs-london-gold-vault And obviously, the Bank of England vaults are where they always have been, under the Bank’s headquarters in the City of London: https://www.bullionstar.com/gold-university/bank-england-gold-vaults It’s slightly disappointing that we spend time and effort informing the London financial media where some of the London gold vaults are, and then they continue to parrot the LBMA’s misleading “secret locations” line. I put this fake news down to a decision by the FT editors, who presumably have a stake in playing along with this charade so as not to rock the boat with the powerful investment banks that they are beholden to. The FT also reminds us in its article that “last year a gold vault owned by Barclays, which can house $80bn of bullion, was bought by China’s ICBC Standard Bank.“ This Barclays vault in London was built by and is operated by Brink’s, and presumably after being taken over by ICBC Standard, it is still operated by Brink’s. Logistically then, this ICBC Standard vault is most likely within the Brink’s complex, a location which is also in the public domain, and which even hosts an assay office as was previously mentioned here over a year ago. The Barclays vault (operated by Brink’s) is even mentioned in a Brink’s letter to the SEC in February 2014, which can also be seen here -> Brinks letter to SEC February 2014. Brink’s letter to SEC, February 2014 Given the fact that there are eight sets of vaults in the London vault system (as overseen by various groups affiliated to the LBMA such as the LBMA Physical Committee, the LBMA Vault Managers Working Party, the gold clearers (London Precious Metals Clearing Limited), and even the LBMA Good Delivery List referees and staff, then one would expect that whatever monthly vault data that the LBMA or its affiliates publishes in the near future, will break out the gold bar holdings and have a distinct line item in the list for each vault operator such as: HSBC – w tonnes JP Morgan – x tonnes ICBC Standard – y tonnes Brink’s – z tonnes Conclusion At the LBMA conference in Singapore last October, there was talk that there were moves afoot for the Bank of England to begin publishing data on the custody gold it holds on a more regular basis. It was also mentioned that this data could be extended to include the commercial bank and security carrier vaults but that some of the interested parties were not in favour of the idea (perhaps the representative contingents of the powerful HSBC and JP Morgan). Whatever has happened in the meantime, it looks like some data will now be released in the near future covering all of the participating vaults. What this data will cover only time will tell, but more data than less is always welcome, and these data releases might also help show how near or how far we were with earlier estimates in trying to ascertain how much gold is in the London vaulting system that is not accounted for by ETF holding or central bank holdings. Revealing the extent of the gold lending market in London is critical though, but this is sure to remain a well-kept secret, since the LBMA bullion banks and the Bank of England will surely not want the general market to have any clue as to which central banks don’t really have any gold while still claiming to have gold (the old gold and gold receivables “tiresome” trick), in other words, that there is serious double counting going on, and that some of the central bank gold has long gone out the door. This article was first published on BullionStar's website as “A Chink of Light into London’s Gold Vaults?”
World Gold Council data released earlier this month reveal a paradox. Demand hit 4,389 tons during 2016, but mines produced only 3,236 tons. Yet despite differing supply demand fundamentals, gold prices rose by only 9%.
Алан Гринспен, бывший глава ФРС, вновь защищает Золотой стандарт, который США покинули в 30-е гг.. Тогда ФРС и другие крупнейшие Центральные банки мира придерживались золотого стандарта...
Дональд Д. Трамп (Donald J. Trump) без сомнения получил непростую работенку, победив на президентских выборах в США в 2016 году. На дворе необычное время. время острого кризиса - политического, экономического, культурного, правового и морального кризиса. Застарелые проблемы, которые напугали бы самих неординарных людей, стоят перед Дональдом Трампом и популистскими бунтарями, собравшимися вокруг своего руководителя, любящего […]
Gold Prices Up 5.8% YTD - Trump ‘Honeymoon’ Ends Gold prices continued to shine this week reaching $1,244.70 per ounce and and has posted gains in five of the last six weeks. This week it reached a new three-month high - it’s highest since the Trump win and has climbed over 6% this year, beating the gains made in the same period in 2016. The yellow metal has climbed 4.30% in the US dollar, 3.38% in the Euro and 1.35% in the sterling, in the last 30 days. This week gold is marginally higher in dollars and pounds but 1.5% higher in euro terms after the euro weakened on concerns of contagion due to the unresolved issues with Greece and other so called "PIIGS" nations and their still vulnerable banks and economies. This performance has surprised many commentators and analysts as gold’s three month high has come at a time when stock prices are also breaking records. When we are asked in years to come what we learnt from the Trump administration, the first thing that will come to mind is ‘Rules no longer applied.’ Whether you are for or against Trump, there is no denying that the rule book of what elected politicians should and should not do has been wholly torn to pieces and thrown out the window. For starters, Trump appears to expect to be busy during his first 100 days putting in place exactly what he promised he would do, during his election campaign. This is almost unheard of. As Frank Holmes writes, the media took Trump literally but not seriously, his supporters took him seriously but not literally. The outcome of these expectations are showing themselves. We take a brief look at what has driven gold this week and ask what the end of Trump’s honeymoon means for the gold price. Strong stocks…strong dollar? This week the gold price hit a three-month high and has surged over 7.5% so far this year. As we have shown in recent weeks, January saw gold post its biggest monthly gains since June 2016 (see table below) when surprise and uncertainty surrounding Brexit was driving the markets. It may come as a surprise to some, but we are not just seeing reactions to everything that comes out of Trump’s mouth, office and Twitter feed at the moment. (Soon people will begin to realise that not every tweet can be seen as some kind of constitutional crisis). Attentions are beginning to refocus on the implications of what Trump may or may not succeed in doing, the wider US economy and, of course, what is happening elsewhere. The gold price is being pushed upwards not only by the uncertainty surrounding Trump’s economic, foreign and domestic policies, a more dovish Fed, the growing populist movement in Europe, ongoing currency printing and debasement by central banks, growing inflation and the strength of the US dollar. It is not just in Trump’s case that conventional rules no longer apply, they also appear to have been thrown out the window for precious metals in these first few weeks of 2017, namely that a strong US stock market means weak gold. Instead apparently strong economies, a record breaking stock market and recent highs for gold all seem to be able to exist in one realm of reality. But this is a feat unlikely to last in the long-run, which only appears to be good for gold. As Frank Holmes points out in a recent piece, the rally on Wall Street is beginning to slow-down and investors are turning to gold. Investors turn to gold at end of the honeymoon Earlier this week we wrote about how you should really buy your loved one real gold this Valentine’s Day, by setting up a GoldSaver account, rather than waste money on the usual jewellery, chocolates and flowers. As Frank Holmes explains it seems gold is also what we should turn to when the love affair is over, which is exactly what institutional investors are doing as the rose-tinted glasses and honeymoon with Trump disappears. As we mentioned last week, the World Gold Council’s report for 2016 showed that gold demand climbed to it’s highest in four years, by 70%. Much of this was driven by ETF demand, which had their second-best year on record. Flows into gold ETFs have continued this year. Currently GLD holdings are 150 tonnes below their peak of 2016, but still at significant levels. The inflows into GLD are perhaps having some effect on the gold price. These significant inflows are likely coming from institutional buyers which are indication of perhaps further gains in the gold price. Holmes also highlights the growing demand for gold as a safe haven and hedge against uncertainty. He explains that as the world starts to get a proper feel for the Trump presidency, fund and investment managers have been ‘given a strong opportunity to demonstrate [their] value in the investment world.’ Institutional buying was no doubt influenced by leading hedge fund manager Stanley Druckenmiller who announced this week that he had bought gold in late December and January. Goldcore readers will remember that we wrote about Druckenmiller's gold sales on the night of Trump's victory. At the time he declared that he no longer saw the reasons to hold gold. Today however he does, in an interview earlier this week he stated, “I wanted to own some currency and no country wants its currency to strengthen. Gold was down a lot so I bought it.” Quite the about turn! It is likely that comments from the likes of Mario Draghi and Fed Chair Janet Yellen, that economic growth could be derailed, have encouraged Drukenmiller to buy back the gold he was so sure was right to sell Uncertainty, gold’s best friend. According to Bloomberg, Druckenmiller also pointed to the uncertainty over whether or not Trump will back the House Republican’s tax plan, as a reason for his precious metal’s purchase. Holmes also points to this uncertainty as reason for the slow down in the Wall Street rally and gold’s climbs. Two campaign promises regarding infrastructure and tax reform, appear not to be moving anywhere. In fact, the chance of tax reform happening in the first 100 days days, even 200 days looks ‘less and less likely.’ Even though Trump has signed an executive order that is designed to reduce red-tape, companies, executives and shareholders seem increasingly lukewarm in their responses to Trump’s changes. The most notorious of these was the Executive Order banning the immigration of citizens from seven countries. Holmes writes” “…many in the business world have traditionally depended on foreign talent. That’s especially the case in Silicon Valley, where close to 40 percent of all workers are foreign-born, according to the 2016 Silicon Valley Index. (Around the same percentage of Fortune 500 companies were founded by immigrants or children of immigrants, including Steve Jobs, whose biological father was Syrian.) One of the more dramatic responses toward the travel ban was Uber CEO Travis Kalanick’s dropping out of Trump’s business advisory panel, following an outcry from users of the popular ride-sharing app who saw his participation with the president as an endorsement of his immigration policies.” And whilst we may not all agree with Trump’s protectionism ideas and planned policies, Holmes argues that it is difficult not to see why US companies might feel like they need some level of protection. He refers to “China’s ascent as an economic and corporate juggernaut”. “Take a look at the chart below, using data from Fortune Magazine’s annual list of the world’s 500 largest companies by revenue. Whereas the U.S. has lost ground globally over the past 20 years, China’s share of large companies has exploded, from having only three on the list in 1995 to 103 in 2015. The number of Japanese firms, meanwhile, has more than halved in that time. But this, combined with how it is received across the various areas of US policy and lawmaking, is making predictions regarding the financial climate, so uncertain. The weakening in the US dollar, something Trump has been pushing for since the week of his inauguration, combines with a dovish Federal Reserve, expectations of higher inflation and growing demand for a safe haven, have each helped to support the gold price. The broken record of uncertainty The most imminent threat of uncertainty comes from Trump. His proposals are running into problems and the new President’s reactions each time he realises the meaning of checks and balances are not even worthy of a prediction. In turn, whilst Trump’s words to clearly have an impact, there is a wider world out there that is also trying to navigate financial crises, political changes and security issues. We have written before about ignoring the hype. Right now, it is difficult not to as one cannot disparage the thought that is the US-centric news that is supporting gold and will likely send it much higher. But, the wider-outlook is what makes gold a good investment for the long-run. Presidents come and go, but their impact takes time to unfold and in the meantime there are decisions, trades, wars and elections going on across the world that also feed into the long-term gold trade. Not too mention the looming milestone of a bankrupt America hitting the $20 trillion national debt mark in the coming weeks. Gold as Druckenmiller alluded to, is a currency. But unlike sovereign currencies, it holds its value and does not rely on outside sources to maintain its value. We’re starting to sound like broken records here but we strongly believe that the uncertainty and unpredictability that exists across much of the geopolitical sphere, but is exacerbated by Trump, makes being long-gold right now, an entirely logical and prudent decision. Providing it is owned in non digital, website, technology dependent formats of actual gold coins and bars that you can sell to many providers and take delivery with a phone call or a visit. Gold and Silver Bullion - News and Commentary Germany brings its gold stash home sooner than planned (CNBC.com) Gold futures end lower after five-session rise (MarketWatch.com) Greek Two-Year Bond Yield Crosses 10% Amid Creditor Dispute (Platts.com) London wholesale gold market mulling UK-focused trade body: sources (Bloomberg.com) Gold Stashed in Bag Shows Hurdles in Italy’s Tax-Evasion Fight (Bloomberg.com) Lettuce and spinach shortage prompts supermarket rationing (IrishTimes.com) Look out: Gold and bonds are sending a signal reminiscent of 1987 and 1973 market crashes (CNBC.com) “Savers will seek to escape financial assets and shift to gold" - Dalio (ValueWalk.com) Fear in a time of Trump: How Wall Street thinks about risk (MarketWatch.com) Treat others as you would have them treat you (SalientPartners.com) Death Of The Petrodollar - Oil, Gold in Yuan - Williams (ZeroHedge.com) Gold Prices (LBMA AM) 10 Feb: USD 1,225.75, GBP 980.23 & EUR 1,151.35 per ounce09 Feb: USD 1,241.75, GBP 988.18 & EUR 1,161.04 per ounce08 Feb: USD 1,235.60, GBP 989.47 & EUR 1,160.10 per ounce07 Feb: USD 1,231.00, GBP 995.14 & EUR 1,154.43 per ounce06 Feb: USD 1,221.85, GBP 978.34 & EUR 1,138.15 per ounce03 Feb: USD 1,214.05, GBP 970.93 & EUR 1,128.99 per ounce02 Feb: USD 1,224.05, GBP 966.14 & EUR 1,131.88 per ounce01 Feb: USD 1,210.00, GBP 960.01 & EUR 1,122.03 per ounce Silver Prices (LBMA) 10 Feb: USD 17.62, GBP 14.15 & EUR 16.55 per ounce09 Feb: USD 17.71, GBP 14.10 & EUR 16.58 per ounce08 Feb: USD 17.74, GBP 14.20 & EUR 16.66 per ounce07 Feb: USD 17.60, GBP 14.21 & EUR 16.49 per ounce06 Feb: USD 17.60, GBP 14.10 & EUR 16.39 per ounce03 Feb: USD 17.28, GBP 13.84 & EUR 16.10 per ounce02 Feb: USD 17.71, GBP 13.95 & EUR 16.38 per ounce01 Feb: USD 17.60, GBP 13.91 & EUR 16.29 per ounce Recent Market Updates - Gold Buying Russia To Intensify Diversification On Trump ‘Unpredictability’?- Gold Prices Rising Mean “Impending Market Volatility”- Gold Bullion Banks To “Open Vaults” In Transparency Push?- Ignore Sabre-Rattling and Buy Gold- Buy Gold Because of Uncertainty not Doomsday- The Alternative Fact of the Cashless Society- Silver, Platinum and Palladium As Safe Havens – Reassessing Their Role- Why 2017 Could See the Collapse of the Euro- Dow 20K … US Debt $20 Trillion … Trump and $15,000 Gold- Switzerland’s Gold Exports To China Surge To 158 Tons In December- Blockchain – Central Banks Banking On It- Sharia Standard May See Gold Surge- Gold Price To 2 Month High As Fiery Trump Declares New American Order- Gold’s Gains 15% In Inauguration Years Since 1974 Interested in learning more about physical gold and silver?Call GoldCore and speak with a Gold and Silver Specialist today!
Что изменится для рынка драгметалла в 2017 году? В 2016 году значительное число портфельных инвесторов в золото вернулись на рынок, поскольку ряд макроэкономических показателей мировой экономики и возросший спрос на физическое золото поддержал интерес к этому активу. По данным Всемирного совета по золоту (World Gold Council – WGC), по итогам 2016 года золото продемонстрировало рост на […]
By the SRSrocco Report, When the paper markets finally collapse, the silver market is set up for much higher price gains than gold. Why? Because the fundamentals show that precious metals investment demand has put a great deal more pressure on the silver supply than gold... and by a long shot. There are three crucial reasons why the silver price will outperform the gold price when the highly inflated paper markets disintegrate under the weight of massive debt and derivatives. While many precious metals investors are frustrated by the ability of the Fed and Central Banks to continue to prop up the markets, the longer they postpone the day of reckoning, the worse the collapse. The first reason I wrote about in my article, Critically High U.S. Silver Supply Reliance In Jeopardy When Paper Markets Crack: The United States silver net import reliance as a percentage of total consumption, was 72%, versus 36% for copper and a negative 48% for gold. This chart shows that the U.S. relied upon 72% of its domestic silver demand from foreign sources in 2015. Thus, U.S. silver supply reliance (72%) is double that of copper (36%), while U.S. gold demand enjoyed a 48% surplus versus its domestic supply. The second reason the silver price will surge higher than the gold price is due to the amount of physical silver, in total ounces, purchased by investors versus gold: From 2010 to 2016, investors purchased a total of 1,505 million oz (Moz) of silver bar and coin compared to only 284 Moz of physical gold. Thus, precious metals investors purchased five times more silver ounces, than gold ounces during this seven year time period. Of course, the total value of physical gold investment was much higher than silver during this time period, but this tremendous amount of silver bar and coin demand has impacted the silver market much greater than the gold market. This brings me to the third reason. Due to the huge amount of silver bar and coin demand since 2010, the silver market suffered a net deficit of 801 Moz. However, the 284 Moz of gold bar and coin demand did not impact the gold market the same way. According to the World Gold Council, the gold market enjoyed a small 7.5 Moz net surplus during this time period: While it is true that World Gold Council may be underestimating Chinese physical gold demand, and its impact on the annual surplus of deficit figures, a 7.5 Moz surplus is only 3% of the 284 Moz total gold bar and coin demand figure 2010-2016. However, the 801 Moz net silver deficit is more than 50% of total silver bar and coin demand during that same time period. Which means, physical silver investment demand is causing much more stress on the silver market than it is on gold. While the silver market has been able to supplement the annual deficits with old silver coin stocks or large bars that were liquidated during the 1990's, this is not an endless supply. According to the data I obtained from the GFMS Team at Thompson Reuters, invested dumped a net 580 Moz of silver bar and coin on the market between 1995-1999. Now compare that to the past five years (2012-2016) as investors purchased a net 1,152 Moz (1.15 billion oz) of silver bar and coin. And here is the CLINCHER. From 1985 to 2007, the total net silver bar and coin demand was a NEGATIVE 95 Moz. Which means investors sold a net 95 Moz of silver bar and coin in that 23 year period. However, investors purchased a net 1,785 Moz of silver bar and coin from 2008 to 2016. This is a huge TREND CHANGE. After the U.S. financial and economic meltdown in 2007, investors continue to purchase a record amount of silver bar and coin. This has put severe stress on the silver market as the total net deficit since 2008 surpassed 1,155 Moz. While the silver market will continue to supplement the ongoing annual deficits with old silver stocks, this supply is not endless. Furthermore, the days of the TRUMP STOCK MARKET RALLY are numbered. The last time the stock market crashed 2,000 points in the beginning of 2016, investors flocked into gold and silver in a BIG WAY. In conclusion, the fundamentals in the silver market are setting up for a much higher price spike than gold due to the three reasons stated in the article. The timing of these event is hard to forecast as it is difficult to pinpoint when the Fed and Central Banks lose control of their massive market intervention. My work is not meant to provide a short term outlook on the precious metals, rather it offers fundamentals that will win out over the medium to longer term. Precious metals investors need to look at buying and holding gold and silver the same way an individual puts money away each month in their 401K, pension plan or retirement account. The difference between the precious metals investor acquiring PHYSICAL METAL compared to individual acquiring PAPER ASSETS or DIGITS, is one is real wealth, while the other is an IOU. To understand why the markets may be heading for big trouble, check out my article, A Large Crack Appeared In The Global Market... And No One Noticed. Lastly, if you haven't checked out our new PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page, I highly recommend you do. Check back for new articles and updates at the SRSrocco Report.
Zacks Industry Outlook Highlights: Tahoe Resources, Goldcorp, Seabridge Gold and Fortuna Silver Mines
Zacks Industry Outlook Highlights: Tahoe Resources, Goldcorp, Seabridge Gold and Fortuna Silver Mines
The World Gold Council today announced that it has appointed John Reade as Chief Market Strategist. John joins the World Gold Council from Paulson & Co, where he served as Managing Partner of Paulson Europe and Gold Strategist. Prior to Paulson & Co, John worked at UBS as the Precious Metal Strategist for a number of years. He is widely viewed as one of the preeminent gold analysts in the...
Submitted by Ronan Manly, BullionStar.com The second half of 2016 saw announcements by three exchange providers for plans to compete in the London Gold Market through offerings of exchange-traded London gold futures contracts. First off the mark was the London Metal Exchange (LME) in conjunction with the World Gold Council with a planned platform called LMEprecious. There were rumblings of this initiative in the London financial media from as early as January 2015, but concrete details for the actual platform were only announced on 9 August 2016. See LME press release “World Gold Council, LME and key market participants to launch LMEprecious.” The LME plans to call its gold futures contract LME Gold. There will also be an “LME Silver”. Each is a suite of contracts of varying lengths including a daily futures (spot settlement) contract. See also BullionStar blog “The Charade Continues – London Gold and Silver Markets set for even more paper trading” from August 2016 which took a first look at the LMEprecious suite. Two months after the LME announcement, during the annual conference of the London Bullion Market Association (LBMA), Intercontinental Exchange (ICE) announced on 17 October that it too planned the launch of a gold futures contract in the London market. See Bullion Desk’s “ICE to launch gold futures in 2017, competition in gold market grows” as well as the ICE press release. The ICE contract is named “Gold Daily Futures” and resides on the ICE Futures US platform. It too is a daily futures contract. Not to be outdone, the CME Group then followed suit on 1 November 2016 and it too announced plans for a “London Spot Gold Futures contract” as well as a “London Spot Silver futures contract”. See CME press release “CME Group Announces New Precious Metals Spot Spread” from 1 November 2016, and “CME to launch London spot gold, silver futures for spot spread” from the Bullion Desk, 1 November 2016. The CME contract was to trade on COMEX (Globex and Clearport) as a daily futures contract, and was devised so as to offer traders a spot spread between COMEX and London OTC Spot gold. As of August 2016, the LME’s target launch date was said to be “the first half of 2017”. ICE was more specific with a target launch of February 2017 (subject to regulatory review). In it’s announcement, CME went for an even earlier planned launch date of 9 January 2017 (subject to regulatory approval). Two Launches – No Volume Why the update? Over the 2 weeks, there have been a number of developments surrounding these 3 contracts. The CME and ICE gold futures contracts have both been launched, and additionally, LME has provided more clarity around the launch date of its offering. Surprisingly, while there was plenty of financial media coverage of these 3 gold futures contracts when their plans were initially publicised from August – November 2016, there has been little to no financial media coverage of the contracts now that 2 of the 3 have been launched. On 25 January, I took a look at the CME website to see what the status of the CME gold futures contract might be. Strangely, the contract itself was defined on the CME website (with a code of GSP) but it had no trading volume. From the website, it was not clear when the contract actually launched, but it looked to be sometime during the last week of January. On 25 January, I also sent a short email to CME asking: “Has the London Spot Gold contract started trading yet? http://www.cmegroup.com/trading/metals/precious/london-spot-gold.html It doesn’t look like it has, even though the contract is defined on your website. Could CME confirm when it will start trading?” Next day on 26 January, I received this response from the CME: “Thank you for reaching out to the CME Group with your query. The London Spot Gold and Silver products are available to trade but at this time no trades have been made in the listed contract months.” Fast forward to end-of-day 7 February. From the CME website, I still cannot see that there have been any trades in this gold futures since it was launched. The volumes are all zero. The same applies to the London Spot Silver futures contract (code SSP). Next up the ICE gold futures contract (AUD). Upon checking the ICE website under section “Products”, the new ICE Gold Daily Futures contract has been defined, and the description states “The Daily Gold Futures contract will begin trading on trade date Monday, January 30, 2017“. Turning to the ICE reporting section of the website for futures products, and selecting the end of day ICE Futures US report page, and then selecting the reports for AUD, there are 6 daily reports available for download, namely, from 30 and 31 January, and 1, 2, 3 and 6 February. Again, looking at each of these reports, there are varying prices specified in the reports but there are no trading volumes. All of the volumes are zero. Therefore, as far as the CME and ICE websites show, both of these new gold futures contracts have been launched and are available to trade, but there hasn’t been a single trade in either of the contracts. Not a very good start to what was trumpeted and cheer-led as a new dawn for the London Gold Market by outlets such as Bloomberg with the article “Finance Titans Face Off Over $5 Trillion London Gold Market“. LMEprecious – To Launch Monday 5 June 2017 Finally, possibly so as not to be forgotten while its rivals were launching their London gold futures offerings, the LME on Friday 3 February announced in a general LME and LME Clear update memo that the planned launch date of its LMEprecious platform is now going to be Monday 5 June, i.e. 4 months from now. As a reminder, the LMEprecious contracts will be supported by a group of market maker investment banks, namely Goldman Sachs, Morgan Stanley, Société Générale, Natixis and ICBC Standard Bank. It’s also important to remember that all 3 of these gold futures contract product sets are for the trading of unallocated gold, (i.e. claims on a bullion bank for gold, aka synthetic / fictional gold). All 3 contracts claim to be physically-settled but this is essentially a play on words, because in the world of the London Gold Market, physically-settled does not mean physically-settled in the way any normal person would define it. LBMA physically-settled just means passing unallocated balances around, a.k.a. pass the parcel. To wit: ICE London gold futures settle via unallocated accounts: “The contract will be settled through unallocated loco London gold vault accounts using LBMA Good Delivery Rules.” CME London gold futures settle via unallocated accounts: “London Spot Gold futures contract will represent 100 troy ounces of unallocated gold“ And for LMEprecious, settlement will be: “Physical settlement one day following termination of trading. Seller transfers unallocated gold to [LME Clearing] LMEC account at any LPMCL member bank, and buyers receive unallocated gold from LMEC account at any LPMCL member bank.” Conclusion With neither the CME nor the ICE gold futures contracts registering any trades as of yet (according to their websites), it will be interesting to see how this drama pans out. Will they be dud contracts, like so many gold futures contracts before them that have gone to the gold futures contracts graveyard, or will they see a pick up in activity? All eyes will also be on the LME contract from 5 June onwards. The lack of coverage of the new CME and ICE London gold futures contracts is also quite unusual. Have the London financial media already forgotten about them? According to Reuters it would seem so. On 22 January, Reuters published an article titled “LME’s pitch for share of gold market faces bumpy ride” which exclusively questioned whether the LME gold contract would be a success, while not even mentioning the CME and ICE contracts. Given that 22 January was right before the CME and ICE contracts were about to be launched, this is quite bizarre. Presumably Bloomberg will come to the rescue of its ‘financial titans’ heros, and will write glowing tributes about the new contracts, but this will be tricky given the zero trade volumes. We await with bated breath.