- Gold and silver steadily trending up
- PM says Europe will “muddle through”
- Turkey leading the way?
- Not just Central Banks buying gold
Gold and silver steadily trending up
Over the past week gold gave up all of the big one day gain from the previous Friday night. But overnight on Monday it did bottom out and has bounced back up since then. You can see today’s spot prices on our Products Page.
So since touching $2000NZ in mid May we have seen a series of slightly higher highs and higher lows which potentially bode well for the bottom being in. But it has been a volatile period with NZD gold trading through a range of almost $180 from $2000 to around $2180. But you can see in the chart below that these prices can change very fast from day to day so you need to keep you eyes peeled if you want to get it at the lower ends. (Our daily pricing alert can help you do this if you don’t already get it)
Like gold silver has been steadily trending up since the lows of mid May.
You could easily make an argument for silver being a comparatively better buy at the moment with the Gold/Silver ratio near its highs of the past year at around 56 after being as low as 48 as recently as March. The higher the ratio the cheaper silver is to gold.
As we mentioned in our daily pricing alert yesterday it was interesting to see gold up while global stock markets were down on the back of the Spanish bank 100 billion Euro bailout announcement over the weekend. It does seem as though gold (and silver) have decoupled from other markets – at the moment anyway.
We haven’t got much to offer on the Spain situation, or anywhere else in the Eurozone for that matter. Our guess remains that the powers that be will likely keep the Euro afloat much longer than most including us imagine possible. There’s likely to be many more bailouts and more capital to be conjured out of nowhere to fund these.
John comes back from visiting the Queen and says Europe will muddle through
The PM didn’t elaborate on what he discussed with the likes of Angela Merkel and Bank of England head Mervyn King but he did borrow a phrase we’ve heard from another John – John Mauldin – and say he thought Europe would manage to “muddle through” the current mess. Years ago we thought John Mauldin seemed a bit rosy in his predictions but as it turns out so far he has been correct that the world hasn’t stopped turning and the global economy is muddling through.
It seems likely we could have a while yet of ZIRP (Zero Percent Interest Policy) and the global economy could well be in a long term Japan like slump. People often ask how long can this all go on for? Our answer – until it can’t! With so much meddling the world over the powers that be may well keep things afloat far longer than any of us think. But when things change they will then likely change very fast too. Listen out for the denials as these repeated denials often precede governments doing exactly the opposite! As pointed out by The Reformed Broker just before the weekend’s announcement of the Spain bank bailout, officials in Spain and Europe were hard out denying any bailout was coming.
Some might think precious metals won’t do well in this environment of (seemingly) benign inflation but the period since 2008 would prove exactly the opposite with gold and silver having risen in all currencies.
This weeks articles
We’ve got another free share report from Fat Prophets, this time looking at Australian listed Junior gold miner Saracen.
Plus a video this week featuring an interview with trend forecaster Gerald Celente.
Then an interesting theory that the banking cartels aim is a 100% digital monetary system including some recent evidence for this.
And finally a counterintuitive look at why even with lows prices the table is now set for a mania in precious metals.
Turkey leading the way?
Following on from last week discussion of the probability of gold being classed as Tier 1 bank asset, we wonder whether Turkey is an indication of what is to come for gold in the rest of the world?
Frank Holmes of US Global Investors writes…
The Golden Wealth of Turkey
In November 2011, ahead of the changes considered under Basel III, Turkey’s central bank said it would allow lenders to hold up to 10 percent of local-currency reserves in gold, according to the Wall Street Journal. As of March 2012, the central bank increased the percentage to 20 percent.
Now, retail investors can not only hold their gold jewelry, bars and coins in an account at a bank, but can also accumulate gold in accounts, with tax-free 24-carat gold transactions. The WGC says people can choose among gold deposit accounts, gold checks, gold credits, gold transfers, gold gram accounts and protected capital gold backed gold funds. Now, total gold deposits in the banking sector have reached an estimated $7.69 billion, according to the WGC.
“I discussed last June how gold was being considered as a Tier 1 asset by the Basel Committee on Banking Supervision. The international banking supervisory committee helps ensure global banks have adequate capital, and the yellow metal was historically considered a Tier 3 asset with a net stable funding ratio of 50 percent. This means that banks’ gold holdings have historically been discounted by 50 percent of their current market value. I said at the time that upgrading gold to Tier 1 encourages banks to increase gold’s share of their reserves.
By making this change last year, Turkey is light-years ahead of other central banks around the world since the changes do not go into effect until January 2013.”
Could Turkey be a leading light for how gold may be treated more favourably in other nations in the not too distant future?
Not just Central Banks buying gold
Last week we also mentioned some of the many central banks of the world that had been buying swathes of gold in recent months.
Well we could say the same thing about a number of high net worth individuals in recent months too. From the Dailyreckoning.com:
Like [Hedge Fund Manager] Einhorn, many other high-profile hedge fund managers are amassing large quantities of gold and gold-related investments. According to filings with the Securities and Exchange Commission, several big hedge funds upped their allocation to gold during the first three months of 2012. Billionaire fund manager John Paulson, for example, maintained his large 17.3 million-share position in the SPDR Gold Trust (NYSE:GLD). He also upped his holding of NovaGold Resources (NYSE:NG) and IAMGOLD (NYSE:IAG).
Daniel Loeb’s Third Point hedge fund maintained its position in “GLD,” while boosting its stake in Barrick Gold (NYSE:ABX). George Soros’ management firm nearly quadrupled its exposure to “GLD” during the first quarter, while also buying call options on Newmont Mining (NYSE:NEM).
Those guys aren’t buying gold because they expect it to be “forever unproductive,” as Buffett asserts, or because it is only useful during a Nazi occupation, as Munger asserts. They are buying it because they believe the American economy of the near-future will not treat investment capital as hospitably as the American economy of the last several decades.
They are buying it because they perceive that important aspects of American civilization are becoming somewhat more barbaric…like, for example, the barbaric fiscal policies that never fail to produce trillion-dollar deficits, or the barbaric monetary policies that always fail to produce sustainable economic activity.
Barbarous times call for barbarous measures.”
As we reported in 2010 in our article “When will you know it’s time to sell gold?” Soros was quoted as saying gold was the ultimate bubble and you could argue he did play a part in talking gold down from its highs right after he’d sold most of his shares on the GLD ETF. Now after the price has dropped significantly he has bought back in again.
“Soros Fund Management LLC, founded by the 81-year-old billionaire, more than tripled its investment in the SPDR Gold Trust in the first quarter to 319,550 shares now valued at $50.2 million, an SEC filing May 15 showed. It held as few as 42,800 shares last year and as many as 6.2 million at the end of 2009. Soros called gold the “ultimate asset bubble” in January 2010. “
So probably fair to call the likes of these guys the “smart money”, and buying when the price is down. If you’d like to follow their lead get in contact with David for a quote.
Have a golden week!
This Weeks Articles
Gold not liquid enough for the RBNZ
This week: Massive one day jump in gold Should I buy local bullion or PAMP Suisse bullion? How the Bankers could be brewing up a game changer for the gold market Central Banks buying gold big time Gold not liquid enough for the RBNZ Massive one day jump in gold Well, we were proven wrong […] read more…
Australian Gold Mining Junior Saracen is Again a Buy: Free Report
With gold mining shares having bounced up significantly in the last week or so, this latest free gold mining stock report from Fat Prophets we have for you this week could be timely. This features an Australian listed junior gold mining stock Saracen Mineral Holdings. If you’re looking at gold mining shares in Australia, then […]read more…
Is the Table Set for a Mania in Precious Metals?
With the prices of gold and silver having fallen so far it may seem hard to believe, but from our experience some of the biggest moves in precious metals have come after long periods of going sideways and consolidating. Looking even further ahead, in the following article Jeff Clark makes a compelling argument for why […]read more…
The Criminal Banking Cartel’s End Game: A 100% Digital Monetary System
In the following article J.S. Kim theorises that it is the banking elites plan to bring in a 100% digital monetary system. He outlines the dangers of this and how gold and silver as money would have many benefits. At first glance many people would think this sounds like a “return to the dark ages” […] read more…
Gerald Celente – Global Currency Watch with Stephen Ayre
In this radio interview with Gerald Celente he covers a multitude of topics including: The Euro and the US are locked in a debt burden downtrend More QE3 on the way in the USA Major countries such as China and India lowering their interest rates to flood the environment with cheap money A new world currency […] read more…
The Legal stuff – Disclaimer:
We are not financial advisors, accountants or lawyers. Any information we provide is not intended as investment or financial advice. It is merely information based upon our own experiences. The information we discuss is of a general nature and should merely be used as a place to start your own research and you definitely should conduct your own due diligence. You should seek professional investment or financial advice before making any decisions.