In the latest Keiser Report, Max interviews gold expert Alasdair Macleod about 400 ounce London .995 gold bars being sent to Switzerland from Arab holders and melted down to 1 kilo .9999 bars, thus moving gold from the London standard, to the new better Chinese standard – suggesting we may be entering a post-petrodollar world. In which case, petrodollars could be flowing back into NY in pure dollar form to cause high inflation. And, finally, Max and Alasdair suggest that unless you rig gold markets, your forex and libor rigging won’t work. [Read more...]
The amount of gold absorbed by private sector purchases in Hong Kong and China amount to at least 2,130.7 tonnes in the first nine months of this year, or 2,841 tonnes annualised. This compares with the WGC’s estimates from their quarterly Gold Demand Trends of only 818.6 tonnes for the same period, or 1,091.5 annualised. Given the hard evidence of Hong Kong and SGE statistics it appears that the WGC’s figures substantially understate the true position. Estimates of China’s demand also exclude government purchases of gold in foreign markets, and gold that may have been acquired and imported by wealthy Chinese from foreign locations without going through Hong Kong or the SGE. So without taking into account these extra factors, China and Hong Kong’s combined imports from the rest of the world exceeds all other mine supply by at least 580 tonnes on an annualised basis.
It now becomes clear that without significant leasing by Western central banks total Asian demand could not be satisfied at current prices, because there is no evidence of material selling by existing holders of above-ground stocks, with the exception of ETF liquidation which is minor compared with the amounts involved. [Read more...]
There are many similarities between today’s market sentiment and that of September 1999, when the gold price jumped 27% in just two weeks. The bullion banks were bearish with gold at $255. The consensus then was that it was going to go lower perhaps to $220, stock markets were hitting new highs with the dot-com boom, and price inflation was not a problem.
The bear squeeze in September 1999 would have been more dramatic had the Bank of England and the Fed not used their still considerable bullion stocks to intervene and rescue the bullion banks from their short positions. If a similar bear squeeze develops today, it is unlikely the Western central banks will have enough gold available to control the market. [Read more...]
QE3 is running at $85bn, and directly increases FMQ by double that amount, or $170bn, indicating that other factors contributed $57bn to the FMQ total. This suggests that the current rate of QE was insufficient to provide the liquidity required in money markets consistent with current interest rates, at least for the month of September. [Read more...]
Zerohedge recently drew attention to the growing level of foreign bank cash deposits, tucked away at the bottom of the Fed’s H.8 statement.
Foreign banks’ cash balances have increased by $518.7bn since September 2012, accounting for almost all of the increase in these banks’ total assets in the H.8 table. The implication is that these cash balances are held as reserves on the Fed’s balance sheet, the counterpart of quantitative easing.
This naturally raises the reasonable question posed by Zerohedge as to why the Fed appears to be benefiting foreign banks with QE.
The answer is either these deposits have been transferred to them from US banks in the normal course of business or the Fed is prepared to provide liquidity to foreign banks: after all the US dollar is the reserve currency. And this liquidity is most needed by the weakest banks in the international banking system, many of which are in the euro-zone. [Read more...]
Just the hint of tapering recently was enough to derail the markets. So here again we come up against the same choice: if the Fed insists on mis-pricing the market with its interventions and zero interest rate policy it must fully support the market with both QE and also twist applied to the yield curve to maintain market liquidity.
For the investment analysts and commentators that still expect tapering this must come as something of a surprise. The underlying point they have missed is that once a central bank embarks on a policy of printing money as a cure-all, it is impossible to stop, or even to just taper without risking a liquidity crisis. Increasingly illiquid markets are now telling us that QE should be increased. [Read more...]
“Throughout these years no more than half of the gold has been invested. Gold has been invested in for example deposits similar to money market deposits and gold interest rate swap agreements. Gold investment activities are common for central banks. Risks related to gold investments are controlled with limits, de-centralising investments and limits regarding run times.” -Bank of Finland [Read more...]
There is a growing feeling the tide is turning against the dollar after the recent debt-ceiling crisis and therefore in favor of precious metals. Recent sentiment against gold could hardly have been more negative; and importantly gold has held well above the low of $1180 established in late June. Even gold-friendly analysts had lost confidence and have been recommending caution. It is at moments like this that experienced traders assess the vested interests in the market: if the overwhelming majority are saying sell or stay away, it is usually a reflection of their own market positions.
In other words, the sellers have already sold and in future there are only bears left in the market looking to close their shorts, along with genuine buyers seeking an entry point. [Read more...]
Metals & Markets With Alasdair Macleod: “Swiss Refiners Working 24/7 Producing Kilo Bars Headed to China”
On this week’s SD Weekly Metals & Markets, gold expert Alasdair Macleod joins The Doc & Eric Dubin to discuss:
- QEternity: Indications of a renewed bias of global monetary easing
- Negative GOFO rates continue, physical gold supply tightening again
- Bond market implications of the Federal Reserve as bond “buyer of last resort”- how much longer can the Fed maintain control of interest rates?
- China’s golden global hoover: China’s intentions vis-à-vis the US Dollar as reserve and trade settlement currency and how gold fits into China’s strategy
- Alasdair provides an inside look at a Swiss refiner: “They are working 24 hours a day, 7 days a week turning every ounce of gold they see into 1 kilo bars headed to China“. [Read more...]
China is now overtly pushing for the US dollar to be replaced as the world’s reserve currency.
While the West’s financial system has been bad-mouthing gold, all the members of the SCO, including most of its prospective members, have been accumulating it. The result is a strong vein of gold throughout Asia while the West has left itself dangerously exposed.
The West selling its stocks of gold has become the biggest strategic gamble in financial history. We are committing ourselves entirely to fiat currencies, which our central banks are now having to issue in accelerating quantities. In the process China and Russia have been handed ultimate economic power on a plate. [Read more...]
“ULTIMATE Economic Power” Handed to China & Russia On a “Golden” Platter– Bill Murphy & Alasdair Macleod
In this excellent interview with Elijah Johnson, gold experts Alasdair Macleod and Bill Murphy discuss the de-Americanization of the world, and how the Fed and US gov’t has facilitated the demise of the dollar, and handed the ultimate economic power on a “golden” platter to China and Russia.
Macleod digs deep into official Chinese gold statistics, pointing out that at 2,600 tons, China is now absorbing more than the whole world’s annual gold production. Add Russia, India, Turkey, and the Middle East, and the only way the price of gold remains at current levels is by massive quantities of Western central bank gold being supplied to the market.
Bill Murphy & Alasdair Macleod’s MUST LISTEN interview is below:
In this episode of the Keiser Report, Max Keiser and Stacy Herbert, discuss the EBT ‘free lunch’ card chaos at Walmart when an ‘unlimited’ benefits glitch causes card holders to pile shopping carts high with ‘free’ goods, while on Wall-Street, the ‘free lunch’ card of Quantitative Easing has caused a similar misallocation of capital into property and toxic debt instruments. Finally, they discuss the world about to shut off America’s ‘free lunch’ card, otherwise known as the Exorbitant Privilege’ of having the world’s reserve currency. In the second half, Max interviews Alasdair Macleod of GoldMoney.com about the $640 million sell order of gold. They also discuss Alasdair’s new theory on money supply (FMQ) and his differences with Professor Fekete, a recent guest on the Keiser Report, regarding whether or not there is deflation. [Read more...]
Before Lehman collapsed, there was a general lack of awareness of the risk that the whole financial system was in danger. In this context, a gold price of less than $918 was perhaps justifiable. After the event, while the Fed struggled to stabilise the banking system, the gold price initially fell to $656, or to 71 on our index, reflecting fears of a deflationary collapse. As the Fed showed signs of succeeding with monetary expansion, gold began to rise and in January 2009 regained the pre-Lehman crisis level in nominal terms for the first time. It wasn’t until September 2010 that gold recovered to pre-Lehman levels in real terms.
The conclusion is simple: gold should logically be priced at a premium to pre-crisis levels to reflect the increasing inevitability of future monetary hyperinflation. That figure today would be somewhere above $1860, which is the equivalent of the price in July 2008. Instead it stands at a discount of 32% to its pre-Lehman level, and therefore appears to be grossly under-priced. [Read more...]
We are now into a second week of a partial Federal Government shut-down, which is causing considerable concern, centered on the Government’s ability to finance its debt and pay interest without a budget agreed for the new fiscal year. Should this continue into next week and beyond, the Fed will have to enter damage-limitation mode if the Treasury cannot issue any more bonds because of the separate problem of the debt ceiling.
Most likely, QE will have to be switched from financing the government to buying Treasuries already owned by the private sector. Any attempt to reduce the monthly addition of raw money will simply result in bond yields and then interest rates rising. And indeed, already this week we have seen yields on short-term T-bills rise in anticipation of a possible default. The market is naturally beginning to discount the possibility that the Fed may not be able to control the situation. [Read more...]