– What do gold and Briscoes have in common?
– Gold manipulation – what do we think?
– ISDA rules no on Credit Default Swaps
– Gold and silver on sale (again!)
Well unlike last week no fear of a quiet news week this week. We saw a massive smack down in both gold and silver prices last Thursday on the back of what should have been a reason to buy gold not sell it – the announcement that the ECB had made over 700 billion in low interest loans to European banks. At the same time Bernanke made the announcement that ‘Due to the modest improvement in housing, it is possible that our reliance on QE may not be as necessary.’
Instead we saw both metals tank on the back of a massive seller in the futures market. As Jim Sinclair explained over in King World News, shares reacted in a ho-hum manner to Bernanke’s announcement while strangely gold and silver plummeted. Even though you’d expect both these assets to continue to move in tandem this wasn’t the case.
This interview with Jim Sinclair was definitely a must listen (or read at the link above) for the week as he really summarised the events well.
Overnight the stock markets and precious metals seem to again be moving in tandem. With gold and silver down 2% and 3.5% respectively while the DOW is down 1.75% as we write.
Is this the start of a longer drop in all markets? Stuffed if we know.
We said last week that “Over the past couple of days the [gold] price has fallen away again. It may return back close to the 200 day moving average again at just below $2100. So it could be another chance for us NZers to grab some more gold at a lower risk price.”
Well, it did that and then some, dropping as low as $2030NZ last Thursday. It climbed back up to be sitting on the 200 day moving average yet again yesterday. But as mentioned already gold and silver have dropped again significantly overnight. However so has the NZ dollar again against the USD. Gold in NZD is now at $2058, just above where it was last week after the one day $100 sell off.
So here’s why Gold is a lot like Brisoces at the moment…
It’s on sale again twice in the space of a week!
So we’ll beat our drum again and say that gold is again under it’s 200 day moving average. Again could it drop further? Sure could but that’s why we say don’t purchase in one hit, but average in. But this is in the area we like to place orders ourselves as it’s where the Chinese buyers will be getting in again and likely to help the price find support around here.
Well last Thursday it dropped from $45NZ to as low as $41NZ an ounce. Still up significantly from the $36NZ it started the year at but $4 an ounce was a pretty good discount. After the fall last night it is right now trading at $40.44. So it’s much closer to the bargain basement levels it hit during the New Year holidays.
Speaking of Jim Sinclair earlier, reminds us that we mentioned in this newsletter 2 weeks ago that it was he who first drew our attention to the International Swaps and Derivatives Association (ISDA). We won’t summarise who the ISDA are again – go and check out what we wrote 2 weeks ago for that. But this week the other big, but perhaps not surprising news, was that the ISDA ruled that…
“Default insurance on Greek debt won’t be paid out, the International Swaps & Derivatives Association said after it was asked to rule whether part of the nation’s $170 billion bailout was a credit event.
The group said the European Central Bank’s exchange of Greek bonds for new securities exempt from losses being imposed on private investors hasn’t triggered $3.25 billion of outstanding credit-default swaps. ISDA’s determinations committee, including JPMorgan Chase & Co. and Pacific Investment Management Co., said the switch didn’t constitute subordination, one of the criteria for a payout under a restructuring event.” Source: Bloomberg.
So not surprisingly the financial institutions who are on the hook if the Greek bond insurance is activated (i.e. the Credit Default Swaps) are choosing not to call a default a default. Rather it’s a “credit event”. Just like money printing is “Quantitative Easing”. The money masters are also masters of semantics it seems.
The massive 1 day plunge in gold last week certainly provided widespread discussion of price manipulation or as Jim Sinclair says “orderly management of price”.
What’s our take on manipulation? Well, look up the London Gold Pool of the 1960’s and there is clear evidence that Western Governments colluded to keep the price of gold down. So why wouldn’t they also want to stop the alarm (i.e. a rapidly rising gold price) from being rung now?
Who knows just how widespread and regularly it occurs – last week would certainly look like a good example of this. Here’s a selection of articles on price suppression/manipulation/management we read in the past week if you want to get a few takes on the topic…
“Large Seller in the Market” as COMEX Gold Hits $1,708
Billionaire Hugo Salinas Price – Central Banks Smashed Gold
But to be honest we don’t lose too much sleep over the question. Rather we see it as a chance to continue to accumulate more gold and silver at lower prices. Just like in any other part of life it’s best to concentrate on what you can have an impact on (and funnily enough buying physical gold and silver could have an impact on suppression as more and more physical gold being hoarded will make the futures markets less and less important). Plus regardless of the suppression the trend has still been up for the past decade.
Last weeks video featuring a different take on the standard version of events on the Hunt brotherscornering the silver market in the 70′s proved pretty popular.
This week we’ve got an even more controversial video we came across. It looks at Warren Buffet and the massive silver purchase he made in 1996 and why he might have sold it so early in 2006.
We’ve also got a very interesting article from someone we’ve met a couple of times here in Auckland over the past 2 years at Prof Fekete’s Gold Symposiums. If you’ve heard the term “gold backwardation” but wondered what exactly it means and why it’s so important, then this will be a must read…
We’re pleased to say we got a few orders in on the day of the big price drop last week. So perhaps people are learning what we’ve been repeating the past couple years… buy… the… dips!
So if you think today’s dip might again be offering good value, get in touch with David for a quote. We don’t know how much longer gold will do a Briscoes or a Harvey Normans! Experience says it usually only offers “sale” prices a few times a year – not twice in one week!
1. Email: email@example.com
2. Phone: 0800 888 GOLD ( 0800 888 465 )
Have a golden week!
Glenn (and David). Founders Gold Survival Guide
Over the past few years we’ve further expanded our own knowledge of the world of gold by attending various conferences both here in New Zealand and in Australia. We’ve been to three Gold Symposiums headed by Professor Anatal Fekete. At the last two here in New Zealand, American entrepreneur and gold analyst and trader Keith […] read more…
It’s fair to say we lost our respect for Warren Buffet when he did his deal effectively bailing out Goldman Sachs in 2008. It was pretty obvious then that the ”Oracle of Omaha” had become an insider and stepped over to the “dark side”. His many disparaging and not very logical thoughts on gold are further evidence that […] 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.