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The West Is Losing Control Over the Gold Price

August 29, 2023

The West Is Losing Control Over the Gold Price

An important change has unfolded in the global gold market. The East has been driving up the gold price, predominantly in late 2022 and the first months of 2023, breaking the West’s long standing pricing power.

turkey goldGold bazaar in Turkey. Pricing power in the gold market has recently shifted to the East.

Until recently, Western institutional money was driving the price of gold in wholesale markets such as London, mainly based on real interest rates. Gold was bought when real rates fell and vice versa. However, from late 2022 until June 2023 gold was up 17% while real rates were more or less flat, and Western institutions were net sellers. Most likely, Eastern central banks, and Turkish and Chinese private demand, lifted the price of gold.

Introduction

For about ninety years, up until 2022, there was a pattern of above-ground gold moving from West to East and back, in sync with the gold price falling and rising. Western institutions set the price of gold and bought from the East in bull markets. In bear markets the West sold to the East. For more information read my article: The West–East Ebb and Flood of Gold Revisited.

If we zoom in on the period from 2006 through 2021 the main reason for Western institutions to buy or sell gold was the 10-year TIPS rate, which reflects the 10-year expected real interest rate (“real rate,” in short) of US government bonds.

The physical gold price was predominantly set in the London Bullion Market and to a lesser extent Switzerland. Gold trade in London can be divided in three categories:

…click on the above link to read the rest…

‘Clash of civilizations’ or crisis of civilization?

May 21, 2019

‘Clash of civilizations’ or crisis of civilization?

Talk about a graphic display of soft power: Beijing this week hosted the Conference on Dialogue of Asian Civilizations. 

Organized under the direct supervision of President Xi Jinping it took place amid an “Asian Culture Carnival.”  Sure, there were dubious, kitschy and syrupy overtones, but what really mattered was what Xi himself had to say to China and all of Asia. 

In his keynote speech, the Chinese leader essentially stressed that one civilization forcing itself upon another is “foolish” and “disastrous.” In Xi’s concept of a dialogue of civilizations, he referred to the New Silk Roads, or Belt and Road Initiative (BRI), as programs that “have expanded the channels for communication exchanges.”

Xi’s composure and rationality present a stark, contrasting message to US President Donald Trump’s “Make America Great Again” campaign.

West vs East and South

Compare and contrast Xi’s comments with what happened at a security forum in Washington just over two weeks earlier. Then, a bureaucrat by the name of Kiron Skinner, the State Department’s policy planning director, characterized US-China rivalry as a “clash of civilizations,” and “a fight with a really different civilization and ideology the US hasn’t had before.”

And it got worse. This civilization was “not Caucasian” – a not so subtle 21st century resurrection of the “Yellow Peril.” (Let us recall: The “not Caucasian” Japan of World War II was the original “Yellow Peril.”) 

Divide and rule, spiced with racism, accounts for the toxic mix that has been embedded in the hegemonic US  narrative for decades now. The mix harks back to Samuel Huntington’s The Clash of Civilizations and the Remaking of World Order, published in 1996. 

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

Interview Willem Middelkoop About The Big Reset

December 18, 2015

Interview Willem Middelkoop About The Big Reset

The very reason I became interested in gold after the financial crisis in 2008 was because of Dutch gold guru, author, journalist, entrepreneur, and fund manager Willem Middelkoop. When I started reading his books I was immediately obsessed with economics and the gold market – along with thousands of others across the world.  Who would have thought that I would become a precious metals analyst a few years later?

It was an honor to have contributed to Willem’s latest book The Big Reset with translations from Chinese policy makers that stimulate their citizenry to accumulate physical gold and my initial research into the Shanghai Gold Exchange that revealed Chinese gold demand was approximately twice a large as what was previously thought in the English-speaking world.

When The Big Reset was first released in January 2014 I’ve conducted an interview with its author about the inevitable reset of the international monetary system (the interview was published in two parts on this blog – one, two). Since then a lot has happened in the global realm of economics and at the same time The Big Reset became an international best seller. As we speak The Big Reset has been translated in Dutch, German and Chinese and is expected to appear in Portuguese, Arabic, Polish and Vietnamese.

To keep up with the most recent developments Willem has added 70 pages in the revised edition of The Big Reset. For me a reason to have another chat with him about what he saw has happened in the past two years:

The Big Reset

J: Is it a coincidence that after the financial crisis more tensions between the West and East emerged and is there a financial war played by the US?

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

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