Astute investor, Jim Rogers has warned overnight in an interview with Tara Joseph of Reuters that “oil and gold will go much, much higher” due to “market panic” regarding Syria and the coming end of free money… “When this artificial sea of liquidity ends we’re gonna see panic in a lot of markets, including in the US, including in West developed markets. Have we seen panic, have we seen terror? Absolutely not. Not in any markets yet. We haven’t seen much of anything yet.“
Today’s AM fix was USD 1,425.50, EUR 1,066.03 and GBP 919.91 per ounce.
Yesterday’s AM fix was USD 1,411.00, EUR 1,057.80 and GBP 909.38 per ounce.
Gold rose $13.10 or 0.95% yesterday, closing at $1,415.50/oz. Silver rose another $0.16 or 0.66%, closing at $24.46. Platinum fell $20.25/oz to $1,521.75 and palladium edged down 0.1% to $743.22/oz.
Gold and silver are higher in all currencies today. The rupee sharp falls continue and it fell the most in 20 years overnight and gold reached new record highs in the rupee.
Safe haven demand has returned due to concerns that military action against Syria could lead to a war in the already very unstable Middle East which could result in much higher oil prices and impact the already fragile global economy.
Gold in USD – 5 Years (Bloomberg)
Geopolitical risk, which has been vastly underestimated for months, has returned with a vengeance. Markets have seen increased volatility and risk aversion as the US, the UK and France press ahead with plans for a 48 hour cruise missile attack on selected targets in Syria this week.
Gold and silver have risen 4% and 7.5% in the 5 trading days since the drums of war began.
Oil prices rose sharply yesterday with NYMEX crude rising 2.9% and Brent crude rising 3.3%. This was the sharpest daily rise this year and led to a six-month high of $114.35 a barrel. NYMEX crude has risen 6% since last Thursday.
Share prices tumbled globally in volatile trading on Tuesday as momentum built for military action. Stocks in Asia also saw some losses. Falls in Europe have continued again this morning.
The FTSE All-world share index dropped 1.4% to close at its lowest since early July. The S&P 500 was down 1.42% and the Nasdaq by 2%.
It is noteworthy that one of the largest moves in stock, bond, commodity and all markets today is the sharp fall in British gilts which has seen 10 year yields rise sharply from 2.59% to 2.8%, the higest level since August 2011.
Western officials said sea launched cruise missiles would be used to attack Syria. Syria vowed yesterday to use “all means available” to counter a U.S. led assault on the country.
Russia and China have repeatedly used their Security Council vetoes to block UN action against Syria.
NYMEX Crude Oil – (Bloomberg)
Yesterday, they warned strongly against a U.S. led strike on Syria in response to the alleged use of chemical weapons, arguing it would be dangerous, irresponsible and could have “catastrophic consequences”.
Mohammad-Javad Zarif, the Iranian foreign minister, urged western countries to avoid “hasty decision making” about Syria, warning military action could worsen the situation.
The greatest risk is that an already threatened and embattled Iran decides to attempt to aid one its few allies Syria by closing the Strait of Hormuz.
Much of the oil that the Western world consumes still comes from the Middle East and most of it is still shipped through the very narrow Strait of Hormuz. More than 20% of the world’s petroleum, and about 35% of the petroleum traded by sea, passes through the strait making it a highly important strategic location for international trade.
The shipping lane is only two miles wide in each direction with a two mile buffer zone in between and is therefore a potential choking point. The narrowness of the lane makes it easy for Iran to block it. Iran is on the recorded stating that if attacked, it will block the strategic shipping lane.
Cross Currency Table 1230 GMT – (Bloomberg)
Astute investor, Jim Rogers has warned overnight in an interview with Tara Joseph of Reuters that oil and gold will go much, much higher” due to “market panic” regarding Syria and the coming “end of free money”:
Jim Rogers: Well, Tara, I own oil, I own gold, I own things like that and if there is going to be a war, and it sounds like America is desperate to have a war, they’re gonna go much, much higher. Stocks are gonna go down, some of the markets that I’m sure are already going down, commodities are gonna go up. I mean, yeah, some of the things I own all make a lot of money. It’s, I’m not particularly keen on war, I assure you, but it sounds like they want it.
Tara Joseph: Is your main concern about supply chain disruptions for oil? Is that where we’ll see the biggest moves?
Jim Rogers: Well, that’s where we’ll see huge moves but the problem with war, Tara, is — and I’m not the first to know this — no matter how well the plans are made, strange things happen in war and who knows what unintended consequences will come. But I do know that throughout history whenever you had war, things like food prices have gone up a lot, energy prices have gone up a lot, copper price, lead prices: you know, all of these things go up a lot whenever there’s been a war in the past.
TJ: Meanwhile, moving farther to the Far East, we’re seeing of a mini crisis around Asia. The Fed stimulus unwinding really affecting confidence in India and Indonesia in particular. Do you think this is a short-term blip or do you think these countries face very rough waters ahead?
Jim Rogers: Of course they face rough waters ahead, Tara. You know, India and Indonesia – Turkey too, which is part of Asia – all of them have huge balance of trade deficits, which they’ve been able to finance with all this artificial free money that’s been floating around. Now, the artificial sea of liquidity is going to end some day and when it ends, all the people depending on this free money and this sea of liquidity are gonna suffer. Whether its this week or this year or next year, they’re all going to suffer.
TJ: We’re already, though, Jim seeing sort of the unwinding of what happens when there’s fears of that stimulus coming out. What’s next for these countries? Where does it go from here?
Watch the interview in full here. If the video does not display correctly, please click on this link.
Jim Rogers: Tara, we, we haven’t seen much of anything yet. I mean, normally, in bear markets things go down 40% to 80% and people give up. They throw the shares out the window and they say, “I never want to invest again as long as I live.” Sure, we’ve seen some declines. Have we seen panic, have we seen terror? Absolutely not. Not in any markets yet.
TJ: Are you expecting panic? We’ve seen mini crises do you see more panic?
Jim Rogers: Yes, of course. When, when, when this artificial sea of liquidity ends we’re gonna see panic in a lot of markets, including in the US, including in West developed markets.
I mean, Tara, this is the first time in recorded history that all major central banks have been flooding the market with artificial money printing at the same time. They’ve all been trying to debase their currencies at the same time.
This has never happened in recorded history. When this ends its gonna be a huge mess.
The interview can be watched here.
Gold Demand Rises On Fears Of Syria Attack – Irish Independent
Gold Keeps Momentum After Run Into Bull Market – MarketWatch