GoldCore's blog

Rather than sitting nervously and passively and awaiting the coming financial dislocations and expropriations, investors and savers need to be prepared for the uncertain financial scenarios that seem increasingly likely.

Hoping for the best, but preparing for less benign scenarios remains prudent.

The mooted savings levy in Cyprus is a form of wealth confiscation on behalf of the EU which is making depositors throughout the Union nervous. There has been no dramatic increase in the demand for gold in recent days. However, this could be a ‘tipping point’ moment when savers realise that they are unsecured creditors of banks and their savings are not sacrosanct.

Retail investors are piling into the stock market again in the false belief that the worst of the economic crisis is over. Alas, those who are not properly diversified may again be in for a rude awakening.

The spectre of stagflation threatens the UK economy due to concerns that sterling weakness will contribute to even higher inflation amid very weak economic growth and the likelihood of a recession – likely a severe one.

Markets are pricing in a jump in inflation as inflation expectations, as measured by the difference between nominal and inflation-linked bond yields, ticked up to near 3.3% yesterday.

Recent poor economic data and the appalling UK fiscal position are rightly leading to concerns of stagflation as was seen in the 1970s. Conditions that make owning gold and silver vitally important to own in order to protect and grow wealth.

The World Gold Council noted that central banks increased gold buying 17% to 534.6 tons last year.

Central banks are among the shrewd investors who buy gold bullion on dips. It was reported that South Korea bought 20 tonnes of gold last month rumoured to be below the $1,600/oz mark. This is the first purchase this year for South Korea, after they purchased 30 tonnes in 2012.  Previously they purchased in July 2012 at the same price levels.

Gold is trading flat today near a one and a half week high hit yesterday as Federal Reserve Chairman Ben Bernanke defended the U.S.  ultra loose monetary policy.

The selloff in gold ETFs in February underscores the weakness in gold sentiment among retail investors that has been prominent recently. 

Gold has come under pressure from heavy liquidation by hedge funds and banks on the COMEX this week. The unusual and often 'not for profit' nature of the selling, at the same time every day this week, has again led to suspicions of market manipulation.

Gold’s ‘plunge’ is now headline news which is bullish from a contrarian perspective. As is the fact that many of the same people who have been claiming gold is a bubble since it was $1,000/oz have again been covering gold after periods of silence.

Gold edged up on Thursday, as bargain hunters showed buying interest and gold was particularly strong in euro terms after data from Europe confirmed the continent remains very vulnerable to economic shocks.

The euro area recession deepened and data showed that the euro area economy shrank the most since 2009 and its three biggest economies, Germany, France and Italy, suffered slumping output.

Many of the banks, now predicting gold’s bull market will end in 2013, never predicted gold’s bull market in the first place. Most were bearish on gold in the early to mid years of the bull market and most only became bullish quite recently.

 Many of these banks' primary focus is short term profit, often trading profits, and therefore they do not understand the long term, passive diversification benefits of gold in a portfolio or as financial insurance.

Gold climbed $5.70 or 0.34% in New York yesterday and closed at $1,673.50/oz. Silver inched up to $31.86 in Asia, then it fell back to $31.38, and then rose to a high of $31.91, but eased off in afternoon trade and finished with a loss of 0.35%.

Gold rose to a new record nominal high on the TOCOM at 0.156 million yen per ounce. The resignation of Bank of Japan Governor, Shirakawa on March 19 is pressuring the yen as is increased tensions in the Pacific between China and Japan -  Japan accused China of targeting a Japanese naval vessel and helicopter.

Gold fell $11.70 or 0.7% in New York yesterday and closed at $1,664.80/oz. Silver slipped to a low of $31.09 and finished with a loss of 1.66%.

Gold Spot $/oz, 60 Days, 30 Minutes – (Bloomberg)

Gold rose $13.80 or 0.83% in New York yesterday and closed at $1,676.50/oz. Silver slipped to a low of $31.24 in the morning, but it then ran up to a high of $32.24 and finished with a gain of 2.01%.

Gold hovered nearly unchanged after surprise GDP figures showed that the U.S. economy contracted and the U.S. Federal Reserve maintained asset purchases. Platinum is on track for its most stellar month’s performance in a year.

Gold fell $4.00 or 0.24% in New York yesterday and closed at $1,654.90/oz. Silver climbed to $31.30 in Asia before it eased off to $30.73 and finished with a loss of 1.09%.

Gold in USD, 1 Year – (Bloomberg)

Gold edged up and Tokyo gold hit a record multiyear high after the Bank of Japan announced a bold, some would say reckless, $117 billion ‘stimulus’ program as expected. The BOJ’ package included doubling its inflation target to 2% and making an open-ended commitment to asset purchases from next year.

This open ended policy surprised some that expected a small rise in the BOJ's $1.1 trillion asset-buying and lending program.

On Wednesday, there is a scheduled vote in the U.S. Congress proposed by Republicans on the U.S. borrowing limit.

“Gold, the way we look at it, is anywhere from being undervalued to being seriously undervalued,” Kaye said. “We’re in the early stages, in our judgment, of what would likely be the world’s largest short squeeze in any instrument.”