Back in August 2012, when negative interest rates were still merely viewed as sheer monetary lunacy instead of pervasive global monetary reality that has pushed over $6 trillion in global bonds into negative yield territory, the NY Fed mused hypothetically about negative rates and wrote “Be Careful What You Wish For” saying that “if rates go negative, the U.S. Treasury Department’s Bureau of Engraving and Printing will likely be called upon to print a lot more currency as individuals and small businesses substitute cash for at least some of their bank balances.” Continue reading »
For the first time since Gold suffered a “death cross” in 2014, the largest 3-week inflows into gold funds since June 2009 have set up a so-called bullish “golden cross” pattern in the precious metal.
On the week, BofA’s Michael Hartnett reports big precious metals inflows of $2.6bn as investors flee from stocks (equity outflows of $2.7bn).
This adds up to the largest 3-week inflows to gold ($5.8bn) since Jun’09 (Chart below) as inflows have coincided with Fed “talking-down” the US$ and rising investor fears of recession/Quantitative Failure.
This has maintained price pressure and pushed the 50-day moving-average above the 200-day moving-average, creating the so-called “Golden Cross” bullish trend pattern.
While obviously not guaranteed (2012 saw an upward-sloping 50DMA cross a upward-sloping 200DMA without trend gains), the last time a “golden cross” occurred coupled with major fund inflows was Feb 2009, which marked the start of a dramatic trend higher in the precious metal. Continue reading »
As gold prices “Golden Cross,” the precious metal is set for its best month in 4 years, and best 2-month rise since 2011. The entire precious metals complex is active with the largest fund inflows since 2009 and the biggest February COMEX trading volume in history. All of this adds up to the best start to a year for gold since 1980, when The Hunt Brothers tried to corner the silver market and sent all precious metals soaring.
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Two weeks ago, shortly before noting that Venezuela’s CDS is now at the same level where Greece was 3 months before its default, we wrote that as a result of a recently implemented gold swap with Deutsche Bank, Venezuela was preparing to liquidate its remaining gold holdings (ostensibly temporarily, if only on paper) in order to pay down its upcoming debt maturities.
As it turns out Venezuela has already started moving much of its gold reserve to Europe where it will be located closer to swap-provider and ultimate custodian, and liquidator, Deutsche Bank, by way of Switzerland. According to BullionStar, Switzerland has imported a net of 35.8 tonnes of gold from Venezuela in January 2016.
And so, the gold which deceased Venezuela leade Hugo Chavez so painstakingly tried to collect from Europe, is just a few short years later, about to make its way back to where it came from. Continue reading »
Earlier this month, as retail investors lost confidence in the global economy and broader stock markets, an air of panic began to set in. Reports indicate the lines were literally forming around the block at gold stores throughout London and elsewhere. It was, by all accounts, the very scenario one might expect in an environment where trust in government and central banks has been eroded.
But it’s only the beginning, explains Auryn Resources executive chairman Ivan Bebek in an interview with SGT Report, as nation states and large investors are trying to get their hands on gold as fast as they can:
Before any big move in gold we have always seen extreme volatility or volatility pick up. This was just a taste of what’s to come in the next few years… We’ll look back at this and be reflecting on how minimal this move was compared to what’s going to happen as we go forward… Continue reading »
Stock markets around the world continue to collapse as this new global financial crisis picks up more steam. In the U.S., the Dow lost 254 more points on Thursday, and it has now fallen for five days in a row. European stocks continued to get obliterated, and financial institutions are leading the way. But this week what is happening in Japan has been the most sobering. After falling 918 points the other day, the Nikkei plunged another 760 points early on Friday. The Nikkei has now fallen for seven of the past eight days, and investors in Japan are in full panic mode. Overall, global stocks are well into bear market territory, and nearly 17 trillion dollars of global stock market wealth has already been wiped out. Continue reading »
“What NIRP communicates is: this sucker’s going down, so sell everything and hoard your cash and precious metals. If that’s what the central banks want households and enterprises to do, NIRP will be a rip-roaring success.”
What NIRP communicates is: this sucker’s going down, so sell everything and hoard your cash and precious metals.
The last hurrah of central banks is the negative interest rate policy–NIRP. The basic idea of NIRP is to punish savers so severely that households and businesses will be compelled to go blow whatever money they have on something–what the money is squandered on is of no importance to central banks.
All that matters is that people and enterprises are forced to spend whatever cash they have rather than “hoard” it, i.e. preserve and conserve their capital. Continue reading »
Editor’s Note: A previous version of this story reported that half of gold reserves had been sold off in early 2016, leaving 1.7 tonnes in the vaults by the beginning of February. Those numbers were based on International Monetary Fund statistics released Feb. 4. The IMF figures dated from late December, however, and additional sales were conducted through January, dropping the reserves to 0.62 tonnes. Global News regrets the confusion caused.The government of Canada sold off large chunks of its gold reserves in recent weeks, continuing a pattern of moving away from the precious metal as a government asset. Continue reading »
Only physical gold and silver are real, everything else is an illusion.
I’ve told you that there will come a time when you will not be able to buy physical gold and silver anymore.
This is the best quarterly performance for Gold in 30 years…
First, let’s look at the improved fundamentals. Gold bugs will exasperatingly proclaim that fundamentals have been great for the past four years yet the price plunged anyway, so who cares about fundamentals? To this I would respond with two observations. First, large institutional investors and sovereign wealth funds have been anticipating a rate hike cycle for a very long time now. They didn’t know when, but they expected it. The fact that the gold bugs never believed this is irrelevant; what matters is that big money believed it, and it was perceived to be very gold negative. In their minds, this anticipated rate hike cycle would confirm that things were getting back to normal, and if things are normal you don’t need to own gold, right?
And it has only just begun.
Talking of Oil and Gold, last week Deutsche Bank showed a long-term graph of Oil in real adjusted terms, showing that the average real price since 1861 was $47.
Following on from that, Deutsche notes one ratio they occasionally look at is the ratio of various assets to the price of Gold…
Today we update the Oil/Gold ratio back to 1865 and find that the Gold price has just hit an all time high at around 44 times the price of Oil.
The previous high of 41 in 1892 has just been exceeded. Continue reading »
Last Thursday when we recounted the story of how Venezuela is now literally flying in paper money (using three dozen cargo Boeing 747s), we wrote that “Venezuela’s hyperinflation, already tentatively estimated at 720%, will likely add on a few (hundred) zeroes by this time next year. It is also quite likely that Venezuela the country, as we know it now, will no longer exist because once any nation is swept up in hyperinflationary rapids two things occur like clockwork: social uprisings and political coups.
But before it gets there, Venezuela’s president Maduro will be busy liquidating the nation’s roughly $12 billion in gold reserves, which his late predecessor fought hard in 2011 to repatriate back to Caracas. Sadly that gold was never meant to stay in Venezuela after all.“
And sure enough, just a day later, Reuters writes that Venezuela’s central bank has begun negotiations with the suddenly troubled Deutsche Bank to carry out gold swaps “to improve the liquidity of its foreign reserves as it faces heavy debt payments this year”, payments which it won’t be able to fund unless it manages to “liquify” its gold. Continue reading »
Even before his coronation in 1626, King Charles I of England was almost bankrupt.
His predecessors King James and Queen Elizabeth had run the royal treasury down to almost nothing.
Costly war and military folly had taken its toll. The crown had simply wasted far too much money, and brought in too little.
To make matters worse, King Charles was constantly at odds with parliament. Continue reading »
The last time I shared my thoughts on gold, a subject I had previously wrote about constantly, was all the way back in July of last year. That post was titled, 4 Mainstream Media Articles Mocking Gold That Should Make You Think. Here’s an excerpt: Continue reading »
The current melt-down of the world’s debt bubble is likely to continue in the course of the next months. The secular trend to expansion of credit has morphed into contraction and liquidation. It is my opinion that the new trend is now established and no action by any of the Central Banks (CB) that issue reserve currencies will do anything at all to reverse that trend.
Sandeep Jaitly thinks that the desperate reserve-issuing CBs – the US Fed, the ECB, the Bank of England and the Japanese CB – may resort to programs of QEP, by which he means “Quantitative Easing for the People”. This quantitative easing will mean putting money into the hands of the populations by rebates on taxes, invented make-work schemes or any other excuse to furnish the people with the famous “helicopter money”, to get them to spend. Continue reading »
Willem Middlekoop, author of The Big Reset – The War On Gold And The Financial Endgame, believes the current international monetary system has entered its last term and is up for a reset. Having predicted the collapse of the real estate market in 2006, (while Ben Bernanke didn’t), Middlekoop asks (rhetorically) -can the global credit expansion ‘experiment’ from 2002 – 2008, which Bernanke completely underestimated, be compared to the global QE ‘experiment’ from 2008 – present? – the answer is worrisome. In the following must-see interview with Grant Williams, he shares his thoughts on the future of the global monetary system and why the revaluation of Gold is inevitable…
Middlekoop predicts the real estate crash in 2006… (ensure English Subtitles – Closed Captions – are enabled)
Bernanke did not… (stunning!!) Continue reading »
Deutsche Bundesbank has just released a progress report on its gold bar repatriation programme for 2015 – “Frankfurt becomes Bundesbank’s largest gold storage location“.
During the calendar year to December 2015, the Bundesbank claims to
have transported 210 tonnes of gold back to Frankfurt, moving circa 110
tonnes from Paris to Frankfurt, and just under 100 tonnes from New York
to Frankfurt. Continue reading »
There had been an eerie silence at the Comex in recent weeks, where after registered gold tumbled to a record 120K ounces in early December nothing much had changed, an in fact the total amount of physical deliverable aka “registered” gold, had stayed practically unchanged at 275K ounces all throughout January.
Until today, when in the latest update from the Comex vault, we learn that a whopping 201,345 ounces of Registered gold had been de-warranted at the owner’s request, and shifted into the Eligible category, reducing the total mount of Comex Registered gold by 73%, from 275K to just 74K overnight. Continue reading »
Plunging oil prices, rising market volatility, surging global debt—it’s all beginning to remind some investors of 2008. Earlier this month, billionaire former hedge fund manager George Soros warned of an impending financial crisis similar to the last major one, which sent shockwaves throughout global markets.
I’ve already shared with you the fact that gold has historically had a low correlation with equities. This point is worth reiterating: When equities have zigged, gold has zagged. And with volatility high in global markets right now, many investors are choosing to rotate a portion of their portfolios into the precious metal.
This was the advice of my friend Marc Faber, who recently warned investors in his influential “Gloom, Boom & Doom Report” newsletter that global stocks could fall an additional 40 percent on mounting liquidity and debt problems. In the event such a crisis occurs, Marc says, investing in gold—which, again, has been shown to be inversely correlated with stocks—might be one way to protect one’s wealth.
Sound money issues make for good politics these days. The leading Republican candidates have all suggested reforms to our monetary system. The topic is popping up in debates as well as interviews. Predictably, Fed worshipers and proponents of central planning everywhere are snickering and trotting out the usual responses.
Michael Hiltzik, with the Los Angeles Times, recently published a column titled “The Worst Idea in the Presidential Debate: a Return to the Gold Standard.” He thinks “a return to the gold-standard would be so not right that it’s not even wrong.” It’s another way of saying the idea is so bad it defies analysis. Nevertheless, he tries anyway. Continue reading »
The number of barrels of oil that a single ounce of gold can buy has never, ever been higher.
For the last 30 years, when the ratio of gold-to-oil spikes, something systemically serious occurs globally (as opposed to the usual bullshit “this is transitory” statements).
So what happens next?
The World’s Most Famous Case of Hyperinflation (Part 1)
The Great War ended on the 11th hour of November 11th, 1918, when the signed armistice came into effect.
Though this peace would signal the end of the war, it would also help lead to a series of further destruction: this time the destruction of wealth and savings.
The world’s most famous hyperinflation event, which took place in Germany from 1921 and 1924, was a financial calamity that led millions of people to have their savings erased.
The Treaty of Versailles
Five years after the assassination of Archduke Franz Ferdinand, the Treaty of Versailles was signed, officially ending the state of war between Germany and the Allies.
The terms of the agreement, which were essentially forced upon Germany, made the country:
- Accept blame for the war
- Agree to pay £6.6 billion in reparations (equal to $442 billion in USD today)
- Forfeit territory in Europe as well as its colonies
- Forbid Germany to have submarines or an air force, as well as a limited army and navy
- Accept the Rhineland, a strategic area bordering France and other countries, to be fully demilitarized.
“I believe that the campaign for securing out of Germany the general costs of the war was one of the most serious acts of political unwisdom for which our statesmen have ever been responsible.”
– John Maynard Keynes, representative of the British Treasury
Keynes believed the sums being asked of Germany in reparations were many times more than it was possible for Germany to pay. He thought that this could create large amounts of instability with the global financial system.
1. Germany had suspended the Mark’s convertibility into gold at the beginning of war.
This created two separate versions of the same currency:
Goldmark: The Goldmark refers to the version on the gold standard, with 2790 Mark equal to 1 kg of pure gold. This meant: 1 USD = 4 Goldmarks, £1 = 20.43 Goldmarks
Papiermark: The Papiermark refers to the version printed on paper. These were used to finance the war.
In fear that Germany would run the printing presses, the Allies specified that reparations must be paid in the Goldmarks and raw materials of equivalent value.
2. Heavy Debt
Even before reparations, Germany was already in significant debt. The country had borrowed heavily during the war with expectations that it would be won, leaving the losers repay the loans.
Adding together previous debts with the reparations, debt exceeded Germany’s GDP.
3. Inability to Pay
The burden of payments was high. The country’s economy had been damaged by the war, and the loss of Germany’s richest farmland (West Prussia) and the Saar coalfields did not help either.
Foreign speculators began to lose confidence in Germany’s ability to pay, and started betting against the Mark.
Foreign banks and businesses expected increasingly large amounts of German money in exchange for their own currency. It became very expensive for Germany to buy food and raw materials from other countries.
Germany began mass printing bank notes to buy foreign currency, which was in turn used to pay reparations.
4. Invasion of The Ruhr
After multiple defaults on payments of coal and timber, the Reparation Commission voted to occupy Germany’s most important industrial lands (The Ruhr) to enforce the payment of reparations.
French and Belgian troops invaded in January 1923 and began The Occupation of The Ruhr.
German authorities promoted the spirit of passive resistance, and told workers to “do nothing” to help the invaders. In other words, The Ruhr was in a general strike, and income from one of Germany’s most important industrial areas was gone.
On top of that, more and more banknotes had to be printed to pay striking workers.
Just two calendar years after the end of the war, the Papiermark was worth 10% of its original value. By the end of 1923, it took 1 trillion Papiermarks to buy a single Goldmark.
All cash savings had lost their value, and the prudent German middleclass savers were inexplicably punished.
Learn about the effects of German hyperinflation, how it was curtailed, and about other famous hyperinflations in Part 2 (released sometime the week of Jan 18-22, 2016).
Washington, D.C. – In spite of French-led U.N. Security Council Resolution 1973 creating a no-fly zone over Libya with the express intent of protecting civilians, one of the over 3,000 new Hillary Clinton emails released by the State Department on New Year’s Eve, contain damning evidence of Western nations using NATO as a tool to topple Libyan leader Muammar al-Gaddafi. The NATO overthrow was not for the protection of the people, but instead it was to thwart Gaddafi’s attempt to create a gold-backed African currency to compete with the Western central banking monopoly.
The emails indicate the French-led NATO military initiative in Libya was also driven by a desire to gain access to a greater share of Libyan oil production, and to undermine a long term plan by Gaddafi to supplant France as the dominant power in the Francophone Africa region.
The April 2011 email, sent to the Secretary of State Hillary by unofficial adviser and longtime Clinton confidante Sidney Blumenthal with the subject line “France’s client and Qaddafi’s gold,” reveals predatory Western intentions. Continue reading »
“… except high quality bonds.”
High quality bonds?
When the real collapse happens “Bunds and Treasuries” will be everything but safe.
I recommend to own physical gold and silver to protect your assets.
– RBS cries ‘sell everything’ as deflationary crisis nears (Telegraph):
Clients told to seek safety of Bunds and Treasuries. ‘This is about return of capital, not return on capital. In a crowded hall, exit doors are small’
By Ambrose Evans-Pritchard
RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel.
The bank’s credit team said markets are flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008. “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note. Continue reading »
Ming Pao, the most influential Chinese newspaper in Hong Kong, reports that Shanghai residents are lining up at local banks to sell Yuan for Dollars over fears of even more Yuan devaluation.
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As China’s leaders figure out that pegging the yuan to the dollar while quintupling their debt in five years was a colossal mistake, they are, apparently, concluding that the only way out is a sudden, sharp currency devaluation…
The low oil price is the signal of the dying dollar.
Sub $30 Oil – When this happens, big banks explode
“The reset has begun, the plug has been pulled. Americans and US and western press watch the dollar and say it’s strong. I watch the oil price and say the dollar’s dead.
After ’71 when the gold standard was broke, called the Bretton Woods Accord, what replaced the gold standard but the de facto petrodollar standard? Continue reading »
As Wall Street axioms (Santa rally, January effect, as goes January etc.) are rapidly falling by the wayside at the start of 2016, following a chaotic but return-less 2015, the UBS analysts who correctly forecast last year’s volatility are out with their forecast for 2016. It’s simple – Sell Stocks, Buy Gold… expect a Fed u-turn.
On Christmas Day, 2015, we told our readers the fascinating tale about the Turkish-Iranian gold smuggling ring – perhaps the biggest and most brazen in history, one which lasted for years, which saw billions in gold transported out of Turkey and into Iran to allow Tehran to circumvent the western financial sanctions using gold as a medium for bater, and which was all made possible thanks to the tiny Emirate of Dubai.
What made this particular instance of gold smuggling especially memorable is that it reached to the very political top in both Turkey, and Iran, and Dubai. Continue reading »