Snip ~ "Bull markets climb a wall of worry," said Peter Schiff, CEO of Euro Pacific Capital "These sharp drops shake out the speculators and keep other would-be buyers on the sidelines. Once the weak longs are cleared out, the trip to $2,000 and beyond will resume unencumbered by excess baggage." December 15, 2011
Gold Sheds 'Can't Lose' Status: Now, No One Wants It
In just three months, gold (Exchange: XAU=) has gone from the trade that works in every kind of market to the trade that doesn't work in any market.
Bullion is off more than 17 percent from an all-time high reached in September as strapped hedge funds and sovereign funds sell the metal to raise funds and the strong U.S. dollar (Intercontinental Exchange US: .DXY) strips it of its safe haven status.
For a time, gold rose with stocks and other assets as central banks added liquidity to stem off a global financial crisis. It also climbed in down equity markets as investors crowded into the trade for its traditional status as a store of value in tough times.
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"Gold was a safe haven, a hedge and a speculative trade all at the same time," said Michael Murphy, CEO of Rosecliff Capital, a hedge fund. "Long gold has been a winning trade for years. We expect the selloff in gold to gain momentum into 2012.
Traders are finding better hedges, better safe havens, and better speculative commodity plays than long gold."
Gold was up more than 25 percent in 2011 through early September. The market value of leading gold exchange-traded fund , the SPDR Gold Trust (NYSEArca: GLD - News), ballooned to $73 billion in November as investors poured more money into gold funds than any other asset class. In just four days, the gold sell-off has turned violent, plummeting more than $100 to breach the $1,600 level. On Wednesday gold fell with stocks. The next day, the metal fell even as the equity market rose.
"When an asset is thought to work in any market, that is the surest sign of a bubble," said Stephen Weiss of Short Hills Capital. "I believe we will hear about massive central bank selling to put currency in markets."
Gold gained some notable backers along its bull run, which only added to the speculative fervor. Most notably, hedge fund manager John Paulson has made the SPDR Gold Trust ETF his firm's single largest holding.
The flagship fund run by Paulson, who's received more accolades than anyone for profiting from the housing bust, is down more than 40 percent for 2011 at last count. With the recent drop in gold, it's likely down even more, if he isn't selling.
To be sure, gold has always been a volatile trade that can turn on a dime. Unlike a stock, there are no earnings behind the metal. It's only worth as much as what the next guy will pay for it. That dynamic has been skewed by the ETF and other retail money flowing into the trade this year, say long-term gold bulls.
"Bull markets climb a wall of worry," said Peter Schiff, CEO of Euro Pacific Capital "These sharp drops shake out the speculators and keep other would-be buyers on the sidelines. Once the weak longs are cleared out, the trip to $2,000 and beyond will resume unencumbered by excess baggage." link
December 12, 2011
'Funding stresses' as gold plummets, MF Global fallout causes confusion over who owns gold bars
International. Spot market gold prices dropped to US$1,670 an ounce Monday lunchtime in London – 2.3% off last week's closing spot price – while stocks and commodities also fell and US Treasury bonds rose.
Silver prices dropped to US$31.12 per ounce – 3.4% down on the end of last week.
Gold prices started the week with a 1.4% drop inside half-an-hour during Monday's Asian trade, with many analysts citing 'technical selling' and a stronger Dollar as contributing to the steep fall.
One gold bullion dealer in Hong Kong says there were rumors over the weekend of stop losses set just below US$1,700, all of which were cleared out "within seconds" this morning.
"We expect physical demand to return in some strength on approach of US$1,650," says Standard Bank commodities strategist Walter de Wet.
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"Key support for the metal lies at its 200-day moving average at US$1,617. Since early 2009, gold has consistently bounced off its 200-day moving average. Unless funding issues in Europe deteriorate substantially...we expect this support to hold."
"The next couple of days are going to be crucial technically for gold," adds Credit Agricole analyst Robin Bhar.
"Last week we were up at $1760 and we have now lost US$80 fairly quickly, that shows that rallies are difficult to sustain in this sort of environment...[given current] funding stresses and money market stresses and the dash for cash."
"Gold market people say European commercial banks are being driven to lend gold for Dollars at negative interest rates just to raise some extra cash for a few weeks," the FT's John Dizard reports.
"Until the funding difficulties at European banks are resolved," adds HSBC chief commodities analyst James Steel, "it is difficult for us to see any near term halt in gold lending. This may help keep gold prices on the defensive."
A unit of HSBC Holdings Plc meantime has asked a judge to determine the rightful owner five gold bullion and fifteen silver bullion bars it is currently storing, newswire Bloomberg reports.
Jason Fane, formerly a client of brokerage MF Global – which filed for bankruptcy in October – says the bars belong to him.
"We had a letter from HSBC that they were on the loading dock to be shipped to our warehouse contractor when there was some action taken by a third party to stop or delay shipment."
MF Global trustee James Giddens reportedly wrote to HSBC to say the silver and gold bars were MF Global "customer property", and therefore should not be released to Fane.
Other investors have also found themselves adversely affected by the brokerage's bankruptcy, including 'Martial Artist of Trend Forecasting' Gerald Celente, who was using MF Global to buy gold via futures contracts – in contrast to directly buying allocated gold.
In its final days, MF Global is alleged to have covered its own positions using funds from customers' accounts – with Giddens saying "the amount of money MF Global should have segregated for customers may be short by $1.2 billion or more."
"I simply do not know where the money is," echoed John Corzine, chief executive of MF Global when it collapsed, in testimony to Congress last week.
On New York's Comex exchange, the number of bullish minus bearish contracts held by noncommercial gold futures and options traders – the so-called speculative net long – rose 4.7% in the week ended 6 December, its first gain since the opening week of November, data published Friday by the Commodity Futures Trading Commission show.
Despite the bullish signal, "the weak market remains highly volatile to news flow," says this morning's note from precious metals consultancy VM Group, point out that gold prices have since fallen substantially.
On the ETF front, the volume of gold bullion held to back shares in the SPDR Gold Trust (ticker: GLD) – the world's largest gold ETF – has fallen slightly since the start of the month, from 1297.9 tonnes to 1295.4 tonnes as of last Friday.
By contrast, the volume of silver bullion backing shares in the iShares Silver Trust (ticker: SLV) – the world's largest silver ETF – has risen over the same period, gaining 0.6% to 9769.1 tonnes.
Here in Europe, stock markets traded lower Monday morning. In London the FTSE was down 0.6% by lunchtime, while Germany's DAX lost 1.6%.
Ratings agency Moody's meantime says it will review European sovereign ratings in the first quarter of 2012. Fellow ratings agency Standard & Poor's last week placed every Eurozone nation on CreditWatch negative – often a precursor to a sovereign downgrade.
Friday's EU summit "doesn't tackle the shorter term problems," says Commerzbank economist Peter Dixon.
"Yes, we have a plan in place to tackle the longer term problems but... I'll be very surprised if it actually generates the results many EU leaders are currently hoping for."
"The lack of progress in as far as socializing liabilities is concerned prevents any major involvement of the ECB and or the creation of common bonds in the short term," adds Jacques Cailloux, chief European economist at Royal Bank of Scotland.
Leaders agreed on Friday to lend up to €200 billion to the International Monetary Fund, which the IMF in turn could then lend to Eurozone governments. There are suggestions that some of this money could come from central banks.
However, if central banks were to lend to the IMF, "the money cannot migrate into some sort of special pot that is used exclusively for Europe," Bundesbank board member Andreas Dombret tells German newspaper Handelsblatt.
"That would be a clear breach of the prohibition of monetary financing of states. The German Bundesbank has explicitly ruled this out."
Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.
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March 2011 ~ Obama Praises Latin American Progress March 2011 ~ Geithner seeks expanded Latin America trade ~ further appreciation of LatAm currencies expected ...Links ~ Latin America .. Politics and Economy
December 4, 2011
Latin America Summit Ends With High Hopes but Few DetailsCaracas, Leaders from across the Americas wrapped up a two-day summit in Venezuela on Saturday, promising greater cooperation on economic and social issues but offering scant detail on how their new 33-country bloc would help further regional integration.
In his comments to close the gathering, Chilean President Sebastian Pinera, a conservative who will host next year's meeting, acknowledged that the member countries had significant political differences, as evidenced by his presence on the dais with Venezuelan President Hugo Chavez, a self-described socialist revolutionary.
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But the formation of the Community of Latin American and Caribbean States, or Celac, was less about navigating geopolitical realities as much as enshrining the pursuit of regional unity in an organization that pointedly excludes the U.S. and Canada.
The group distributed a 40-point "Declaration of Caracas," after the event ended, which stated that "political unity and integration" was a "fundamental aspiration" of the region and necessary for progress.
Brazilian President Dilma Rousseff, who was among the various leaders who didn't stick around for Celac's second day, called for increased economic cooperation while others, like Colombian President Juan Manuel Santos, looked for joint efforts to confront drug trafficking.
But the most prominent voices were leftist leaders like Mr. Chavez and his counterparts from Nicaragua, Ecuador, Bolivia and Cuba, who filled their speeches with references to "imperialism" and ending foreign exploitation of Latin America.
Few significant accords were solidified and scheduled concurrent meetings of other regional alliances—like the Union of South American Nations, or Unasur, and energy group PetroCaribe—were canceled without explanation.
But Mr. Chavez, who has been the driving force behind Celac, has expressed high hopes and reiterated that he believed the Washington-based Organization of American States, or OAS, had outlived its usefulness and said "Celac will leave the OAS behind."
The U.S. has indicated that it will continue to back the embattled OAS amid renewed criticism from Chavez-allied leaders who say it is a shill for U.S. interests.
"There's many subregional organizations in the hemisphere, some of which we belong to. Others, such as [Celac], we don't," said Mark Toner, a U.S. State Department spokesman, at a press briefing Friday. "We continue, obviously, to work through the OAS as the pre-eminent multilateral organization speaking for the hemisphere."
The OAS was founded more than 60 years ago as a kind of United Nations of the Western Hemisphere. And as a regional arbitrator the organization is regularly accused of ineffectiveness and bias by disputing members.
Earlier in the week OAS Secretary General, Jose Miguel Insulza, said in a statement that he welcomed the formation of Celac and expressed confidence that it would develop into an effective organization and close partner. Many analysts say they have yet to see any indication that Celac, admittedly in its early days, can match the institutional heft of the OAS and have raised questions over the direction of the new pact.
But Nicaragua's Daniel Ortega said the birth of Celac should be seen as representing the end of the Monroe Doctrine and the U.S. hegemony carried out in its name. Ecuadorian President Rafael Correa used much of his time at the microphone to rail against private media agencies in his country.
For his part, Mr. Chavez stressed the need to decrease dependence on U.S. and European financial institutions and called for the region to keep its foreign currency reserves at home, citing his government's move to repatriate billions in gold currently held in foreign banks.
Latin America has avoided the worst of the global economic crisis in recent years, but the region is likely to feel some pinch as many developing countries remain in muddy waters. Goldman Sachs estimates that economic growth in Latin America will slow to 3.2% in 2012, down from 4.2% in 2011, thanks to expectations for global commodity prices to remain elevated.
AFP Global Edition
December 2, 2011One question that is raised again and again by customers of ours is whether or not the gold they buy can be confiscated by the government.
Here’s the short answer: we have no idea. For a more detailed explanation, read on!Article @ The Truth about Gold Confiscation
Related article ~ Gold Lures Central Banks ...
December 01, 2011
S. Korea raises gold reserves amid global fears
South Korea's central bank said Friday it has increased the amount of gold it holds as it moves to hedge against global volatility caused by European and US debt crises.
The Bank of Korea said it bought 15 tons of the precious metal from the London gold market last month, bringing its total reserves to 54.4 tons at the end of November.
It is the second time it has bought gold to diversify its foreign exchange reserves this year. It purchased 25 tons of gold between June and July -- its first purchase since the 1997-98 Asian financial crisis.
The bank said its gold holdings account for one percent of its foreign-exchange reserves, which stood at $308.63 billion at the end of November, the eighth largest in the world.
"Demand for gold is increasing as a hedge against global inflation amid the persistent sovereign-debt crisis in Europe," Lee Jung, head of the bank's reserve-investment strategy team, said, according to Dow Jones Newswires.
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"The gold purchase will help us cope with volatile global financial markets and enhance investor confidence in Korea in times of crises."
Asian governments have become increasingly concerned about the problems in the West, with European leaders struggling under the weight of a crippling sovereign debt crisis that threatens the end of the eurozone.
And in the United States lawmakers have been unable to agree a plan to bring down the country's titanic deficit, which sits at more than $15 trillion.
The ongoing woes have led to forecasts of further gold purchases, especially from Asia.
Gold has become increasingly attractive to central banks worldwide, and prices have risen sharply since the global financial crisis as it is considered a safe haven while a weaker dollar makes it even more attractive.
The yellow metal has more than doubled since the 2008 meltdown and soared to almost $2,000 an ounce earlier this year, although it has weakened slightly as the dollar has strengthened against the troubled euro.
European central banks have stopped selling gold. China, which has the world's biggest foreign-currency reserves, has been increasing its gold holdings mainly through domestic producers.
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Bumped ~ Article of the Day .. recent articles below ... This is all looking really good, check out the following links, kel ~ CURRENCY SWAPS 2008-2009-2010 LINKS ~
November 30, 2011Gold price rockets towards $1750 on coordinated central bank actionRegular readers will be not surprised at all today by the news that central banks around the world are taking ‘coordinated action’. Coordinated action of course is euphemism for money printing and the news was good to spike gold all the way towards $1750 and £1110.
So what is this ‘coordinated action’? From the release by the BoE:
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.
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These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from 5 December 2011. The authorization of these swap arrangements has been extended to 1 February 2013. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice.
As a contingency measure, these central banks have also agreed to establish temporary bilateral liquidity swap arrangements so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant. At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise. The swap lines are available until 1 February 2013.
The introduction of the network of temporary swap lines will enable the Bank of England to provide sterling to the other central banks if required, as well as enabling the Bank of England to provide liquidity, should it be needed, in Japanese yen, euro, Swiss francs and Canadian dollars (in addition to the existing operations in U.S. dollars).
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