Home » Posts tagged 'gold'

Tag Archives: gold

This article is an overview of the principal factors likely to drive the gold price in 2019. It looks at the global factors that have developed in 2018 for both gold and the dollar, how geopolitics are likely to evolve, the economic outlook and how it is worsened for the dollar by President Trump’s tariff war against China, the availability and likely demand for bullion, and the technical position in paper markets. Taken together, the outlook is bullish for gold.

2018 reprise

For gold bulls, 2018 was disappointing. From 11 December 2017, when gold made a significant bottom against the dollar at $1243, it has ended virtually unchanged today, after being 4.2% up. Gold had to struggle against a rising dollar, whose trade-weighted index rose a net 3.7% over the same period, and as much as 9.4% from its mid-February low.

Dollar strength has been driven less by trade imbalances and more by interest rate differentials. A speculating bank for its own book or for a hedge fund client can borrow 3-month Euro Libor at minus0.354% and invest it in 3-month US Treasury bills at 2.36%, for a round trip of over 2.7%. Gear this up ten times or more, either on a bank’s capital, or through reverse repos for annualised returns of over 27%. To this can be added the currency gain, which at times has added enough to overall returns for an unhedged geared position to double the investment.

Not that these forex returns have been guaranteed, but you get the picture. The ECB and the Bank of Japan have been frozen into inactivity, reluctant to raise rates to correct this imbalance, and the punters have known it.

…click on the above link to read the rest of the article…

Trend is Clear – Rapid Decline of World Economy – Egon von Greyerz

December 12, 2018

Trend is Clear – Rapid Decline of World Economy – Egon von Greyerz

Financial and precious metals expert Egon von Greyerz (EvG) says don’t expect the global financial situation to get better anytime soon. EvG says, “You know what the politicians are doing now? Theresa May is my best example. These politicians are just running around posing and acting, but they are not achieving anything, and they are not achieving anything because the world is in a mess. What we are seeing the beginning of is the decline of the western world economy, which means the whole world economy. . . . There is no use in putting a time period on it, that it’s going to happen this year or next year. The trend is clear. We know that the world economy is in a mess. It’s going to decline, and in my view, it’s going to be a rapid decline.. . . Gold will reflect all of this, and currencies will be totally debased. . . . You don’t need a lot, you might only need another few snowflakes to trigger this avalanche. It could come in a month or in three months time because the system is a fake system. . . . I count $2 quadrillion in money. If you add debt, unfunded liabilities and the risk of derivatives, you come up to $2 quadrillion of debt and liabilities. The global GDP is $70 trillion. . . . So, you are talking about 30 times global GDP.”

What could go wrong? EvG says, “You don’t need much to go wrong. It will happen. They have no remedy anymore. 2007 to 2009, I have said many times that was a rehearsal. The real thing is coming now or in the next few years, and no money printing will ever stop it. They will try, but they will fail. This is why you will get the depressionary hyperinflation, and when that fails you get the implosion of the system.

…click on the above link to read the rest of the article…

The Big Picture: Paper Money vs. Gold

December 12, 2018

The Big Picture: Paper Money vs. Gold

Numbers from Bizarro-World

The past few months have been really challenging for anyone invested in gold or silver; for me personally as well. Despite serious warning signs in the economy, staggering debt levels and a multitude of significant geopolitical threats at play, the rally in risk assets seemed to continue unabated.

Bizarro-World intrudes into our reality, courtesy of central banks. [PT]

In fact, I was struggling with this seeming paradox myself. As I kept looking at the state of the markets, I couldn’t help but wonder “what if they just keep kicking the can down the road for the next 20 years, or even longer?”

Since the peak in 2011, gold and silver have been in a strong correction period and overall, prices haven’t benefited from all the trillions that have been injected into the markets since 2008. Total credit growth was approximately $80 trillion, climbing from $160 trillion to around $240 trillion in a mere 10 years.

The major central banks combined increased their balance sheet by buying government and institutional debt from $6 trillion to $21 trillion (FED, ECB, BOJ, PBoC), but none of it went into gold. However, even though these days we read and hear these numbers so often, it is still almost impossible for the true meaning of these sums to really sink in.

A trillion is hard to truly take in and understand; $80 trillion in debt is something already so far beyond our grasp that it might as well be $100, $200, or $300 trillion and it would almost make no conceptual difference. A good way to correct this dissonance is just think about the fact that 1 million seconds are 8 days, 1 billion seconds are 35 years and 1 trillion seconds translate into 32,000 years – bringing us back to the Stone Age.

Assets held by major central banks.

PBoC balance sheet

…click on the above link to read the rest of the article…

Gold & Silver Prices Rise As The Markets & Oil Decline

December 9, 2018

Gold & Silver Prices Rise As The Markets & Oil Decline

Over the past week, the gold and silver prices have held up rather well compared to the overall markets. While precious metals investors still fear that a huge sell-off in the gold and silver prices will take place during the next market crash, it seems that the metals continue to be very resilient during large market corrections.

Now, I am not saying that the metals prices cannot fall any lower, but a lot of the leverage in the gold and silver market has already been removed and is now at a near all-time low. So, even though we could see weaker precious metals prices, the overwhelming leverage and bubble asset prices are in the stock and real estate markets.

Furthermore, one of the reasons precious metals investors still fear that a major selloff is imminent is that they are using the 2007-2008 economic market meltdown as a guideline. However, when gold and silver prices were plummeting from their highs in 2008, along with the rest of the market, speculators held huge long positions while the commercials controlled an enormous number of short contracts.

If we look at the following Gold Hedgers Chart, we can clearly see that the market setup today is the exact opposite of what it was in 2008:

When gold was trading near $1,000 in early 2008, the commercial banks held a record high of 252,000 net short contracts compared to the present gold price of $1,222 (time of chart), with the commercials only holding 16,000 net short contracts. The commercial short positions are shown by the blue line. Thus, the higher the commercial short positions, the lower the line goes and the lower the number, the higher the line moves. Currently, the gold price and commercial net short positions are both at the near lows. Also, the speculator net long positions are close to their lows as well

…click on the above link to read the rest of the article…

Irish Central Bank Refuses To Discuss If Gold Reserves Are In Bank of England Vaults

December 7, 2018

Irish Central Bank Refuses To Discuss If Gold Reserves Are In Bank of England Vaults

– As Brexit looms, the Central Bank of Ireland has refused to discuss the location and value of Irish gold reserves
– No date given for removal of “commercially sensitive” gold reserves from Bank of England vaults
– Bank of England vaults in London believed to hold almost €200 million of Irish gold
– Ireland’s financial system & economy is hugely exposed to a Brexit downturn

via Irish Independent:

IRELAND’S Central Bank has refused to say if it plans to move almost €200m worth of gold bars from the vaults of the Bank of England as a result of Brexit, insisting that any such move would be “commercially sensitive”.

The gold reserves have been held by its UK counterpart for a number of years, and the Central Bank has traditionally been coy on the precise details of the reserves, and the terms of the arrangement it has with the Bank of England.

It refused to be drawn yesterday on whether the reserves would be removed from the Bank of England either before or after the Brexit deadline of next March.

“It is for the Central Bank to determine how Ireland’s gold reserves ought to be managed,” a spokeswoman told the Irish Independent.

“The Central Bank’s portfolio is managed in line with approved parameters, which are kept under regular review and we report on key activities and developments in our annual report,” she added.

“The Central Bank’s transactions in gold are commercially sensitive and no further comment can be made at this time,” she said.

The latest Central Bank annual report shows that it had €209.3m worth of gold and gold receivables on its books at the end of 2017.

…click on the above link to read the rest of the article…

Why buy gold now? Because I don’t know

December 6, 2018

Why buy gold now? Because I don’t know

From 2000 through 2012, the price of gold increased every year, rising from around $280 an ounce to nearly $1,700. It was an unprecedented run.

Then, in 2013, gold took a nose dive, losing over 27% of its value.

It was widely reported that the Swiss National Bank, the former bastion of monetary conservatism, lost $10 billion that year just on its gold holdings.

As you probably know, central banks hold a portion of their reserves in gold. The practice goes back to when central banks actually had to have gold on hand to trade in and out of paper money (or even trade for goods and services).

And central banks still hold reserves in gold today, even though they don’t need it to transact like they used to.

So that begs the question, did the Swiss National Bank actually lose $10 billion? It still had every ounce of gold in its vaults. And gold, after all, ismoney.

Plus, the SNB wasn’t holding gold to speculate…

Today, central banks hold gold as a hedge against fiat money. These are the guys with their fingers on the printing press… so they know exactly the effect they have on money.

And right now, banks are buying up gold hand over fist. Central banks currently hold 20% of all the gold ever mined—33,000 metric tons.

And JPMorgan Chase says they’ll buy another 650 tons this year and next.

Why?

Gold is for the I don’t knows.

And right now, there are a LOT of I don’t knows.

Markets have been going crazy over the past few months.

After a record bull run for stocks, we are now seeing massive volatility with the Dow regularly jumping 500+ points in a single day. Just yesterday, the Dow fell a whopping 800 points.

…click on the above link to read the rest of the article…

GOLD, SILVER & THE MARKETS: What’s Next For 2019

December 6, 2018

GOLD, SILVER & THE MARKETS: What’s Next For 2019

The big question on the minds of most investors is what will happen to the markets and precious metals in 2019. Well, the answer depends mainly on two factors, the oil price and overall weakness in the economy. If the oil price continues to decline, it will indicate a deflationary outcome for the economy and markets.

While this sounds counter to the notion that falling oil prices will drive higher consumer demand, we also must remember that it will negatively impact the U.S. shale oil industry. A lower sustained oil price, as I wrote about in my previous article, IT BEGINS… Rapidly Falling Oil Prices First Guts Tar Sands, Then Shale Oil will begin to destroy the oil industry, especially the unconventional oil industry. I don’t believe Americans or the investors realize the tremendous amount of economic activity it takes to produce shale oil.

Now, the last U.S. economic bubble in 2007-2008 was based on a highly leveraged housing market. However, the present economic bubble is being propped up by the U.S. Shale Oil Ponzi Scheme. Some energy analysts don’t believe the U.S. shale oil industry has that much of an impact on the market, but I disagree. Since the 2008 market crash, the U.S. shale oil industry has brought on nearly 7 million barrels per day (mbd) of tight oil. U.S. oil production has surged from 5 mbd in 2008 to 11.7 mbd currently.

So, to understand what happens to the markets in 2019, we need to focus on the number one driver of the economy… THE OIL PRICE. In my most recent video, GOLD, SILVER & MARKETS: What’s Next For 2019, I discuss what is taking place in the broader markets, gold-silver, and the oil price:

…click on the above link to read the rest of the article…

2019 Outlook: The State of Sound Money in the United States

December 6, 2018

2019 Outlook: The State of Sound Money in the United States

The Great Recession, coupled with the “Ron Paul Revolution,” prompted a renaissance of the sound money movement in the United States.

As Germany, Russia, and China — to name a few — continue to increase their gold holdings, the hegemonic power of Federal Reserve Notes (referred to today as the dollar) is slowly slipping away.

Simultaneously, whispers—once relegated to fringe corners—of restoring sound money have become passionate, concerned, and loud.

The destruction of sound money over the past century stems from actions at the federal level, but there are steps which states can take —and even have already taken —to move toward real, sound, constitutional money.

As state legislatures reconvene in the next few weeks, let’s take a look at the current state of play…

Since 2016, sound money has made a splash on the state level. According to the 2018 Sound Money Index, a new ranking of all 50 states on the extent to which they have implemented the pro-sound money policies, there are currently 38 states with an exemption of sales and use tax on the purchase of gold and silver.

Since 2016, legislators in 10 different states have introduced bills, seven of which were signed into law, to restore sound money by eliminating taxes on gold and silver within their borders.

In 2017, a quarter of all states without a sales tax exemption on gold and silver introduced new measures to eliminate the tax against the monetary metals. As states continue to make inroads on the sales tax issue, Tennessee and West Virginia are expected to introduce bills to remove sales and use taxes on sound money in 2019.

…click on the above link to read the rest of the article…

Will 2019 Bring a Free and Fair Gold & Silver Market?

December 4, 2018

Will 2019 Bring a Free and Fair Gold & Silver Market?

JPMorgan Chase and a number of other bullion banks are in a whole lot of trouble. Evidence detailing years of rigging markets and swindling clients is piling up.

Deutsche Bank pleaded guilty two years ago and forked over hundreds of thousands of documents. John Edmonds, a former JPMorgan trader, entered his own guilty plea last month and turned state’s evidence.

The carefully cultivated system of captured regulators may not help the banks this time.

FBI investigators and Department of Justice attorneys are involved now. This investigation is out of the hands of CFTC bureaucrats who hope to avoid rocking the boat and/or land high-paying jobs on Wall Street someday.

The DOJ might be ready to actually prosecute crimes this time around. Bankers may have to explain to criminal juries what they have been doing. When they have finished, class-action attorneys and civil juries will get in on the action.

Perhaps for the first time since metals futures began trading, the possibility exists that crooked bankers will be held to account. There is still a long way to go, and there is certainly plenty of reason to doubt the Department of Justice will live up to its name. But there is hope.

Recent Prosecutions Could Spark and End to Fake Markets for Precious Metals

It is never too early for market participants to be thinking about what free and fair metals exchanges might look like.

For starters, electronic metals markets need a direct, unbreakable connection to physical supply and demand.

Banks should not be able to meet extraordinary demand for metal with an unlimited supply of paper.

There are days during which futures contracts purporting to represent the entire annual mine production of silver trade on the COMEX. Yet, once all the furious trading is over, barely any actual silver changes hands. That must end.

…click on the above link to read the rest of the article…

ANALYSTS TOTALLY WRONG ABOUT GOLD: Top Gold Miners Production Cost Still Provides Floor In The Market Price

November 26, 2018

ANALYSTS TOTALLY WRONG ABOUT GOLD: Top Gold Miners Production Cost Still Provides Floor In The Market Price

While the debate on the dynamics of the gold market continues, at least the top gold miners production cost provides us with a floor price. Or rather, a basic minimum price level. I get a good laugh when I read analysts suggesting that the gold price will fall back to $450-$700. For the gold price to fall back to $450, then we would need to lose 95+% of global gold mine supply.

Due to two factors of rising energy prices and falling ore grades in the gold mining industry, COSTS WILL NEVER go back to where they were a decade ago. Again, the only way for that to happen is if a large percentage of gold mine production was shut down.

Furthermore, analysts continue to wrongly forecast the gold price based mainly on gold supply and demand forces. This is a NO-NO. The overriding factor that has determined the gold market price has been the gold mining industry cost of production. I proved this point by showing the increase in the gold production cost at Homestake Mining (the United States largest gold mine 1970’s) from 1971-1979:

Homestake Mining was producing gold at the cost of $42 an ounce in 1971 when the average price was $40.80. Thus, Homestake Mining lost money producing gold in 1971. However, as energy-driven inflation ravaged throughout the economy as the price of a barrel of oil increased from $2.24 in 1971 to $31 in 1979, this impacted the cost to produce gold significantly. By 1979, Homestake Mining’s gold production cost jumped to $247 an ounce.

While it is true that the tremendous demand for gold by investors also drove the gold price to new highs in the 1970s, we can see that at least 80+% of the increase in the gold price from 1971-1979, in the case of Homestake Mining, was due to higher production costs.

…click on the above link to read the rest of the article…

We are Living with Maximum Uncertainty – Catherine Austin Fitts

November 25, 2018

We are Living with Maximum Uncertainty – Catherine Austin Fitts

Financial expert Catherine Austin Fitts has said for years that the economy was not going to crash, but be on a “slow burn.” How long can they make this heavily indebted game last? Fitts says, “Our problem as investors is we don’t know. If you look at all the information we need to make an intelligent assessment, we don’t have access to that information. I have said many times this is a military question. Who has the biggest weapons and who has the ability to deliver force and control? So, we are living with maximum uncertainty. . . . Clearly, we are headed into a new currency world that’s part of a new control system, but the answer is we don’t know when. My fear with many, many commentators is they are underestimating the power and endurance of the system. I am always getting yelled at because people think I am pro-empire. I am not saying I am pro-empire or I am for the things they are doing to keep it going.”

Fits adds that things are so uncertain that “the old system could go five years or five months.”

On introducing a new dollar, Fitts says, “Even if they do introduce a dollar backed by gold, it’s going to start off with a small market share. They are very unlikely to do a big bang thing. These guys are prototypers.”

There is no doubt wealthy people around the world are buying gold. Why? Fitts says, “The reality is . . . in the worst case scenario, gold is a store of value because it is respected globally as a currency or money without the backing of a sovereign government. What is the global currency that has backing without a sovereign government, and gold and silver are one of the few.

…click on the above link to read the rest of the article…

GLOBAL DEBT INCREASE 2018 vs. GOLD INVESTMENT: Must See Charts

November 23, 2018

GLOBAL DEBT INCREASE 2018 vs. GOLD INVESTMENT: Must See Charts

Global debt increased at the fastest rate at the beginning of 2018. In just one quarter, total global debt jumped by more than $8 trillion. That is quite surprising as total world debt rose by $22 trillion for the full year in 2017. Thus, the increase in global debt last year averaged $5.5 trillion each quarter.

However, global debt according to the Institute of International Finance dropped by $1.5 trillion in the second quarter of 2018. While mature markets saw their debt decline in Q2 2018, emerging market debt increased by $1 trillion lead by China. In looking at the data from the Institute of International Finance (IIF), they stated that global debt jumped by over $8 trillion in the first quarter of 2018 to $247 trillion, but then declined $1.5 trillion to $247 trillion in Q2 2018.

So, the global debt must have jumped by $9.5 trillion to $248.5 trillion during the first quarter of 2018 and then dropped $1.5 trillion in Q2. Thus, the IIF must be revising their figures each quarter. Either way, the net increase in global debt in the first half of 2018 was $8 trillion.

If we look at the following chart below, we can see how the increase in global debt compares to the value of the total global gold investment as well as the value of world gold supply:

From my research, total world gold investment, Central bank and private investment total approximately $3 trillion. This is based on the data from the next chart that estimates global gold investment of 2.25 billion oz valued at a $3 trillion:

Interestingly, when I did the chart above earlier this year, the market price of gold was trading at $1,330. Today, it is $100 less. So, if I want to be totally accurate, total Central bank and private gold holdings are presently valued at $2.8 trillion. Regardless, global debt increased $8 trillion in the first half of 2018, more than 2.5 times than the value of all world investment gold holdings.

…click on the above link to read the rest of the article…

Tom Cloud Update: Mainstream Financial Planners Getting More Interested In Gold & Silver

November 20, 2018

Tom Cloud Update: Mainstream Financial Planners Getting More Interested In Gold & Silver

In Tom Clouds newest update, he discusses many topics on rising precious metals premiums, silver miners production cost higher than the market price, skyrocketing debt and the coming rise in the gold and silver price. However, one of the most important parts of his video is the number of financial planners now calling him because they are becoming more interested in precious metals.

Tom starts by discussing the rising precious metals premiums on certain products since the summer. He then talks about the primary silver miners average cost of production is above the current market price. I have written a recent article on this, which he quotes, and it’s true:

As I mentioned, Tom was quoted the data from the chart below which shows how the top primary silver miners average All-In-Sustaining Cost (AISC) is now $16.10. However, the AISC does not include all costs and also deducts by-product credits. I believe the costs are even higher:

All the primary silver miners shown in red posted a higher AISC than the current market price. There were only two that posted a lower AISC. Even though the silver production cost is not the only factor that determines the market price, it is at least helps provides a floor. We must also remember, these AISC were based on much higher oil prices in the third quarter. Oil prices have now fallen by more than $20 from their highs. So, I believe the primary silver miners costs will continue to decline over the next several quarters if oil prices remain at the current level or fall further.

…click on the above link to read the rest of the article…

Does China Have Enough Gold to Move Toward Hard Currency?

November 20, 2018

Does China Have Enough Gold to Move Toward Hard Currency?

Are the Chinese Keynesian?

We can be reasonably certain that Chinese government officials approaching middle age have been heavily westernised through their education. Nowhere is this likely to matter more than in the fields of finance and economics. In these disciplines there is perhaps a division between them and the old guard, exemplified and fronted by President Xi. The grey-beards who guide the National Peoples Congress are aging, and the brightest and best of their successors understand economic analysis differently, having been tutored in Western universities.

It has not yet been a noticeable problem in the current, relatively stable economic and financial environment. Quiet evolution is rarely disruptive of the status quo, and so long as it reflects the changes in society generally, the machinery of government will chug on. But when (it is never “if”) the next global credit crisis develops, China’s ability to handle it could be badly compromised.

This article thinks through the next credit crisis from China’s point of view. Given early signals from the state of the credit cycle in America and from growing instability in global financial markets, the timing could be suddenly relevant. China must embrace sound money as her escape route from a disintegrating global fiat-money system, but to do so she will have to discard the neo-Keynesian economics of the West, which she has adopted as the mainspring of her own economic advancement.

With Western-educated economists imbedded in China’s administration, has China retained the collective nous to understand the flaws, limitations and dangers of the West’s fiat money system? Can she build on the benefits of the sound-money approach which led her to accumulate gold, and to encourage her citizens to do so as well?

…click on the above link to read the rest of the article…

Bank of England refuses to return 14 tonnes of gold to Venezuela

November 16, 2018

Bank of England refuses to return 14 tonnes of gold to Venezuela

The Bank of England claims to be one of the largest physical gold custodians in the world, holding gold bars in vault storage on behalf of more than 70 central banks and a number of commercial (bullion) banks.

As a long-standing and well-known gold custodian, it should therefore be a simple matter operationally and logistically for any central bank customer from around the world to withdraw gold bars from the Bank of England and to have those gold bars sent overseas. These types of shipments have been happening at the Bank of England for hundreds of years.

Such an event would normally not generate any media interest nor even be known about in the public domain such is the secrecy and opacity of central bank gold transactions. For these reasons, the current case involving the Bank of England’s refusal to deliver Venezuela’s gold stored in London, and the way its been publicized, raises some questions and deserves comment.

HM Treasury and Fleet Street

So what exactly is the issue? On 5 November, the London headquartered Reuters news agency reported that the Venezuelan state, fearing sanctions, is attempting to repatriate 14 tonnes of gold from the Bank of England in London, but that this gold withdrawal and transport operation has not yet been actioned despite the withdrawal request being made by Venezuela nearly two months ago.

According to Reuters’ sources which were two unnamed “public officials with direct knowledge of the operation“, Venezuela’s gold bar withdrawal delay is being caused by the difficulty and cost in obtaining insurance for the gold shipment, and also because the Bank of England wants to know what Venezuela plans to do with its gold once it receives it.

…click on the above link to read the rest of the article…

Tag Archives: gold

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Are the Chinese Keynesian?

Post navigation

Latest Posts