Don’t dismiss the EU investigation into alleged gold and silver price fixing

Posted on 03 September 2015 with 6 comments from readers

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Goldbugs are bemused by reports that the European Union competition watchdog is investigating alleged ‘anti-competitive behavior’ by participants in the precious metals market.

But anybody who remembers how the EU broke up the cement cartel a couple of decades ago will know that this is a watchdog that has very powerful teeth. It’s fines can bankrupt even very large companies or banks.

Prior evidence

True the goldbugs have watched and waited in the past when various investigations into alleged precious metal price fixing have been launched in the US, UK and Germany. These investigations have quietly concluded that nothing was wrong, despite some very convincing evidence from market watchers and industry experts.

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The general view in the gold community is that the central banks themselves manipulate the gold price to help dampen inflation expectations. And the central banks are above the law in such matters.

However, they may have met their match in the EU competition watchdog. According to the Treaty of Rome and its later additions, EU law is the supreme authority, and even central banks are subservient to its law.

The European Union is particularly strong on maintaining a level playing field in terms of business competition and market pricing. There was a time big cement firms thought they were above EU law, until one day investigators turned up first thing in the morning to seize documents and take away computers.

After rather a short period of time the huge fines were made, hundreds of millions of dollars that really hurt profits. The cement cartel collapsed and prices fell, and so did their share prices.

EU calling

Could the bullion banks be the next to get that knock on the door early one morning? The EU investigators could do worse than start by reading back pages of the zerohedge.com website which regularly documents the false trades used to depress gold prices that are so blatant a blind man in a coal cellar could see them.

Why are these trades initiated? Who does it? On who’s orders are they operating? What is the benefit to them of these blatant price manipulations.

These are a few of the awkward questions the EU competition guys might like to put to those few players who count in the precious metals market. Could this be another cement cartel for them to bust? Why not? It is just as obvious.

Marc Faber: buy gold and gold stocks and short the Hong Kong dollar

Posted on 02 September 2015 with no comments from readers

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Always a controversial contrarian investment guru and Gloom, Boom & Doom Report editor Marc Faber now says to short the Hong Kong dollar as the devaluation of the yuan puts its peg to the US dollar under pressure.

The Sage of Chiang Mai is also keen on gold and gold shares as the only safe investment left in the world…

As per the leading debaters, the global economy is in crisis. There are very few safe havens for the investors. The Cyprus bank crisis has left investors thinking that even the bank deposits are not safe. While talking about the unemployment in Europe and its impacts, the precious metals and the economic slowdown of China they also shared their thoughts on investments in such unpredictable times. Their suggestion was to diversify the investments and not to rely on a single entity. Investing in multiple markets as real estate, equities, gold and other precious metals as well as bonds is the best go.

Investors can also look for emerging economies like exchange-traded funds or ETFs. Investing in stocks market has always been risky. But earning quick money comes with risks. With the Cyprus bank crisis, investors cannot even keep the money safe in banks too. In such crucial times, it is very important to diversify the investment and keep studying the market trends. For this, we need systems that can take in the current as well as the historical data and give us the proper analysis of the market trends. There are many such trading robots available in the market as of now. Ethereum Code is one of the leading. Check the latest research to understand is the Ethereum Code legit.

In volatile times markets can look distorted. With the extent of debt of GDP and the low economic standards, it is highly recommended to own gold. Gold has been in the market for ages as the investor’s popular choice. And there is no chance it is going to go away any time soon. Also, gold’s influence on the economy depends on how safe the other investments are turning out to be. When the markets are shaky investors see gold as their safe haven. Price of gold is considered the trademark for determining the health of the economy. Lower the gold price more stable the economy is.

Though nobody can predict how the markets will turn it is always advisable to diversify the investment for a better outcome.

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Why gold was the best buy in 2008-9 crash and will be this time too

Posted on 26 August 2015 with 1 comment from readers

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What was the best asset class to buy for the recovery that followed the 2008-9 crash in global financial markets? Step forward gold whose rise was only exceeded by silver.

Precious metals not only delivered the fastest recovery from that huge sell-off but offered increases way above the pre-crash levels. Gold tripled from its low in the crash, while silver went on to record an eight-fold increase, still just shy of its 1980 all-time high.

Deja-vu all over again

It is not hard to see history repeating itself all over again. Just look at the Chinese central bank this week cutting interest rates, just like the Fed had to do in 2008-9.

Back then that lit a fire under precious metals because of the inflation that was likely to follow. And inflation certainly did follow if you think about house prices and stock market prices but they were slower to deliver returns to investors than gold and silver up until 2011 when precious metal prices peaked.

They have now endured a four-year bear market and are perfectly positioned at much lower levels for a very strong rebound. On the other hand, global financial markets are still overvalued, even after the corrections of the past couple of months.

In that same time we have seen the gold price bottom out, advance $90 an ounce and then come back $40. All financial assets are currently very volatile but gold is still up in price and not down like stocks.

Going up or down?

The only reason that investors are hesitating to pile into precious metals is that they recall the 2008 collapse in their prices during the global financial crisis and hope that this will happen again to provide them with an even better entry point.

Will markets really be that kind to them? The prudent investor says it might be wise to start buying gold now in case it does not go down this time, and if the anti-gold camp on Wall Street has one single valid point it is that gold and stocks do not correlate.

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Those Wall Street commentators dancing on the grave of gold have perhaps got the wrong funeral here: ask not for whom the bell tolls, it tolls for thee…

Gold going to $50,000 in a hyperinflation to beat deflation repeats Jim Sinclair

Posted on 26 August 2015 with 1 comment from readers

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Central bankers are starting to lose control over financial markets from China to main street USA warns veteran gold trader Jim Sinclair who once advised the legendary Hunt Brothers.

‘They got the dickens scared out of them,’ he says in an interview with usawatchdog.com (click here). ‘They actually backed off providing the funds necessary… That’s your warning. The warning is markets can overrun plunge protection teams. Markets can and will overrun the manipulation of metals and currencies.

Dollar going down

‘The market will overrun the false strength in the US dollar. The idea that a lift in interest rates would be beneficial to the dollar is absolutely incorrect. We do know the limits of the Plunge Protection Team, and we do know the omnipotent power of the Fed is a total fallacy.’

Turning to his lifetime specialty, Mr. Sinclair recalls: ‘I didn’t call the top in gold in 1980 because of any kind of a system. I was told, I acted on what I was told.’

What are these voices saying now? ‘Number one, the downside on gold is extraordinarily limited here. Two, the rally we are facing that will come in gold is going to be stupendous. Three, they tell me we may never call you back because this may be the rally you don’t sell.

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‘This may be the rally you don’t sell because gold is moving from a currency form to a valuation form… This may be the last time we call you means this is a rally that is not meant to be sold.

‘What is coming up in front of us is the Great Reset where currencies wear their gold like ladies wear a necklace, and the most beautiful necklace will be the strongest currency. The ladies without the necklace won’t be invited to the ball.

$50,000 gold

Mr. Sinclair stands by his prediction last year of an eventual gold price of $50,000 an ounce. He explains: ‘You have to understand we are going into unprecedented deflation, and it’s the reaction of central banks around the world to the concept of deflation that brings about hyperinflation.

‘There will be debt monetization of all kinds of debt to maintain some sort of equilibrium. The price of gold is going to go to a level that is going to surprise everybody. I was told that this is a rally that you won’t sell.

‘That means gold will go to a level and not react violently down from that level… This is when gold is going to levels that today are considered more mental illness than monetary analysis.

‘Silver is best understood as gold on steroids because whatever potential and direction is taken up by gold, silver will be multiplied by two or by five… Silver will outperform gold.’

Gold rallies for a sixth day as equities crash and burn around the world

Posted on 24 August 2015 with no comments from readers

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Gold was the only standout winner on Black Monday with prices initially dipping a little but then rallying for a sixth day in a row to $1,170 an ounce at the time of writing, almost $100 up on the low earlier this month.

Any thought of the Federal Reserve raising interest rates next month, or anytime soon, were surely thrown out of the window with the crashing noises in global stock markets from Shanghai to London and other European Capital and lastly Wall Street.

False prophets

Bears who bought that argument from Goldman Sachs about rising rates being bad for gold just have to concede that therefore if rates are not going up then gold prices probably are going up. Then again when did Goldman ever call the gold price right. It’s got the worse gold forecast record of any major house. Gold’s going up.

And it’s not just because of that ridiculous argument – gold prices have actually gone up on the last for occasions that the Fed raised interest rates – has been trounced. Investors are suddenly fearful again and worried about the competence of central banks and bullion is an insurance policy as well as a safe haven.

Those who thought gold was in a short-term rally driven by short covering – some called it a ‘dead-cat bounce’ – are also looking a bit sick today as prices rock-an-roll again.

Global financial markets are clearly into a profoundly structural change and that could leave the previous dogs of the markets having their day while the former stars crash and burn. Step forward precious metals.

Times have shown the worth of precious metals and also how perfectly they work with other assets of the market like the cryptocurrencies. Investors desiring a better output should diversify their portfolios and also look for alternative investments. Cryptocurrency trading is gaining popularity and ease with revolutions like the Bitcoin Loophole trading software . Investors should without doubt utilize this more often.

Next stop?

Contrarian thinking is back with a vengeance. Where’s it all going to end? With much lower share prices and a much higher price for gold and silver?

Honestly this party has only just gotten started and those gate-cashing at this point still have a lot of fun ahead. You don’t have to stick with equities.

Just push that button and buy some gold and silver to lighten your day!

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HSBC expects gold price to be up 10% by the end of 2015

Posted on 19 August 2015 with 1 comment from readers

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HSBC, the fourth-largest bank in the world, is predicting that the price of gold will be up 10 per cent by the end of this year and finish the year worth around $1,225 an ounce. Gold is down six per cent year-to-date.

The bank believes Goldman Sachs and other commentators are wrong to say gold will fall in price as interest rates go up. HSBC’s analysis of the data showed that the last four times that the Fed raised interest rates the gold price went up, not down.

Fed policy change?

The Federal Reserve is widely expected to raise rates later this year for the first time since 2006, albeit the Chinese equity crash, devaluation and trade slowdown might well scupper that plan anyway.

Goldman’s argument is that gold pays no interest or dividends, so when interest rates go up then investors will shift away from gold. ArabianMoney has pointed out that this is wrong before: in the late 1970s gold prices rose eight-fold amid very high interest rates.

That’s because gold is a hedge against inflation and higher interest rates are generally an indication that inflation is coming or already a problem.

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All the same, inflation does not seem to be an imminent issue facing the global economy.Indeed, deflation is far more the worry of the moment with commodity prices, aside from gold and silver, in free fall and China devaluing its currency.

Then again precious metals are an excellent hedge against deflation and devaluation too, especially when their own price cycle has just bottomed out as it appears to have done this summer.

Gold has completed the classic 50 per cent bull market price retracement that also happened in 1975-6, and is preparing for the final stage of its bull market that started back in 2001.

Price spike?

That won’t be a 10 per cent price advance, although that might be the first sign of it by the end of the year, but a massive price spike. Think how the Chinese equities shot up recently before their crash. This is how markets behave.

Where will the gold price get to in 2016? $5,000+ as Martin Armstrong forecast in 2009 (click here), or $8,800 in a repeat of the 1976-80 spike?

Another early warning of this spike is the conversion of banks like HSBC to the idea of gold as an investment class. For gold output is falling and reserves are tightly held, and once retail investors like HSBC’s customers begin to seriously chase the price up then anything could happen.

Will others now follow Stanley Druckenmiller’s 20% gold allocation?

Posted on 17 August 2015 with no comments from readers

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Billionaire investor Stanley Druckenmiller has just raised his gold holdings to 20 per cent of the asset allocation reported by his Duquesne Family Office, according to Zerohedge.com.

He’d not been a big investor in gold in the recent past despite public warnings about the danger of zero interest rates and money printing. But this latest filing showed that at the end of June his largest portfolio allocation was 2.9 million shares in the GLD exchange traded fund, or 20 per cent of total holdings.

Trend setter?

You have to wonder if this will not set a trend among hedge fund managers whose raison d’être is to hedge risk? Gold is the classic hedge against both deflation and inflation as a store of value, although ironically its recent four-year bear market makes it an even better buy at the moment.

Many potential investors are waiting for the gold price to collapse by 50 per cent from its peak of $1,923 almost four years ago. Jim Rogers is among them.

However, trying to call the bottom could be an expensive mistake if gold now continues higher from its recent summer lows. To be fair it has already completed a 50 per cent retracement of its bull-market advance and that could be enough before resuming its upward trajectory (click here).

Chinese devaluation

More fundamentally the Chinese devaluation that started last week could be an important catalyst for higher gold prices. First, it was the stock market boom in China that cut demand for gold in the first half and that has now gone bust; and secondly the devaluation policy response will cause a rush to buy hard assets before the yuan drops in value again.

Given that China was the biggest buyer of gold last year this is very important for the gold market. Could it be that New York speculators will now jump on this bandwagon and Mr. Druckenmiller has just gotten in ahead of the crowd?

The price action for gold over the past week since the Chinese devaluation announcement suggests he was prescient in his purchase of bullion, and probably got in at the market low. Buyers today can still buy at very reasonable prices but they likely won’t stay down for very long.

Gold price hits $1,118 as China adds to its official gold reserves again

Posted on 14 August 2015 with 1 comment from readers

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The gold price jumped to $1,118 on news that China, the world’s biggest bullion consumer, has disclosed a 1.1 per cent increase in its gold reserves in July to 54 million ounces, according to data released on Friday by the central bank.

On July 17th the country ended six years of mystery surrounding its hoard, revealing a 57 per cent jump in assets since 2009 and overtaking Russia to become the country with the fifth-largest stash. However, this is still widely believed to be an understatement of the true gold reserves held by China.

Reserve status

The IMF said earlier this month that more work was needed on data transparency before deciding whether to grant the yuan reserve status. China devalued the currency this week and announced a shift to a more market-driven exchange rate mechanism.

Bullion remains a large part of many central banks’ reserves, decades after they stopped using it to back paper money. Stockpiles of the metal help China to diversify its foreign-exchange holdings as the world’s second-largest economy seeks to raise the international profile of its own currency.

The central bank said on July 17th that it had boosted bullion assets to 1,658 tonnes, up from 1,054 tonnes in 2009, when it last updated the figures. The US has the biggest reserves at 8,133 tonnes.

Golden hedge

Many central banks remain exposed to a small number of key reserve currencies and look to gold as a hedge against volatile currency movements, according to the World Gold Council.

Countries will probably buy 400 tons to 500 tons of the metal this year, the council said in May. Russia more than tripled its hoard since 2005 and Kazakhstan has raised its holdings every month since October 2012.

Fed preparing a 50% market crash proposes Deutsche Bank

Posted on 06 September 2015 with no comments from readers

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The Federal Reserve may already have pencilled in a 50 per cent crash in US stock markets as a neat way to remove a lot of the liquidity created by its QE money printing suggests Europe’s largest bank, Deutsche Bank in a new report.

As ZeroHedge.com explains today: ‘DB’s Dominic Konstam implicitly ask out loud whether what comes next for global capital markets (most equity, but probably rates as well), is nothing short of a controlled demolition. A premeditated controlled demolition, and facilitated by the Fed’s actions or rather lack thereof…’

Premeditated crash?

The DB report itself says: ‘The more sinister undercurrent is that as the relationship between negative rates has tightened with weaker liquidity since the crisis, there is a sense that policy is being priced to ‘fail’ rather than succeed.

‘Real rates fall when central banks back away from stimulus presumably because they ‘think’ they have done enough and the (global) economy is on a healing trajectory. This could be viewed as a damning indictment of policy and is not unrelated to other structural factors that make policy less effective than it would be otherwise – including the self evident break in bank multipliers due to new regulations and capital requirements.’

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As to what happens next? Back to the ZeroHedge analysis again: ‘Well, DB casually tosses an S&P trading a ‘half its value’, but more importantly, also remarks that what we have also said from day one, namely that ‘helicopter money’ in whatever fiscal stimulus form it takes (even if it is in the purest literal one) is the only remaining outcome after a 50 per cent crash in the S&P.’

In order words, QE4 to keep the show on the road. In that case why not just keep the current show on the road and forget about having a crash? What if that is not now possible, and this is the least worst option?

Central banks live in a la-la land where mere mortals fear to tread. However, the consequences of all the money printing of the past few years have already ended in a stock market crash in China, so why not the US where stock market valuations are also very high on historic measures?

Chinese precedent

We’ve certainly heard it said that the People’s Bank of China has deliberately used a stock market crash to mop up its liquidity problems. Why not see the Fed do the same? It could well be the only route back to normal interest rates and investment dividends.

Would there be a hurried panic reaction in the opposite direction by the Fed with a QE4? We would put money on it and buy gold and silver to profit from that last great bubble before the great global reset of currencies that will be the end of this volatile period, and a transition away from the dominance of global financial markets.

Be careful you could be about to lose rather more than your shirt!