GoldCore's blog

U.S Government would rather default than lose their bullion.

It is worth remembering that Goldman, to much fanfare and media attention, “told clients” in November 2007, to sell gold. On November 29, 2007, Goldman recommended that investors sell gold in 2008 and it named the strategy as one of its ‘Top 10 Tips’ for the year.

The appalling fiscal and monetary situation in the U.S. will lead to further dollar weakness in the coming  months. This weakness will be most manifest versus gold as other fiat currencies have their own risks. 

His government has ramped up spending to ward off unrest, helping drive inflation to a 15-year high last year, and pushing Algerians into the currency and real estate markets as they seek to shield savings.

“To protect themselves against inflation, and therefore the devaluation of the dinar, Algerians are investing in property, gold and foreign currencies,” Abderrahmane Mebtoul, a professor of economics at the University of Algiers, said in an interview. 

One of the biggest laughs of the conference came when Smith presented the slide, ‘Emperor … With No Clothes’  which compared how the value of the Roman denarius, silver coin and the U.S. paper dollar have fared during periods of currency debasement. 

The chart shows the silver denarius since Nero and the dollar since Nixon and looked at the level of debasement during the reign of each Roman Emperor and the term of each Presidency.

Gold recouped much of Tuesday's peculiar flash crash losses and rose by 2.4% yesterday rebounding some $40 from a two month low at $1,278.24/oz earlier in the session.

$1,050/oz was identified as the likely level of support if gold weakens again in the short term - especially if gold falls below support at $1,200/oz. This was a possible scenario outlined in the closing session chaired by Dr Brian Lucey of Trinity College Dublin. 

During Banca d’Italia’s keynote address Salvatore Rossi the director general told delegates how gold plays a key role in the central bank reserves:

"Not only does it have the vital characteristic of allowing diversification, in particular when financial markets are highly integrated, in addition it is unique among assets in that it is not issued by any government or central bank, so its value cannot be influenced by political decisions or by the solvency of any institution," he said.

Silver continues to see strong store of value demand In India, the U.S. and elsewhere as buyers view the metal as cheap versus gold. 

‘Tapering’ may be put off indefinitely due to the very fragile state of the massively indebted U.S. economy. This means that interest rates must be kept low for as long as possible, leading to money printing and electronic money creation on a scale never before seen in history.

This will inevitably lead to higher gold prices - the question is when rather than if. 

Silver’s fundamentals remain very sound, with a very small finite supply of above ground, investment grade silver coins and bars and robust and increasing industrial and store of value demand - particularly in Asia.

We continue to believe silver will rise to its real record high or inflation adjusted high of $140/oz in the coming years.

Two hours prior to the Federal Open Market Committee (FOMC) release, gold was trading below $1,300/oz but started to gradually tick higher prior to surging higher on heavy volume, minutes prior to the release of the FOMC statement. 

FX markets, stock, bond and commodity markets did not see similar large moves.

Singapore is already the fastest growing wealth center in the world with $550 billion in assets under management and now aims to become a gold trading and storage hub. 

"If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That's the fiscal gap," he says. "That's our true indebtedness."

David Asman: What happens now? If it’s Yellin she'll be like Bernanke on steroids. What does that mean for our economy?

Dr Paul:  Prepare for the destruction of the dollar and the crash of the bond market one day. The bond bubble is weakening although the interest rates have doubled in the last year.