Ten days ago, it was a tongue in cheek suggestion that the Reserve Bank of India should lease their gold in a last ditch effort to procure much needed USD and keep the economic engine going. Then it was an offer so good, the citizens could simply refuse (or maybe not if it was enforced) that the millions of ounces of local wealth preserving gold be converted into Rupees in a wholesale gold purchasing campaign by the domestic banks. Now, the India Times, reports that as the dollar-starved desperation deepens, the local central bank is "discussing with banks on how to convince temple trusts to deposit their hoard of idle jewellery that could be converted into bullion." In other words, the government is going for the sacred gold which will be sold to keep the petrodollar economy functioning for another several months. Surely, yet another "transitory" measure.
This week will see the end of August trading and September is, along with November, one of the strongest months to own gold. This is seen in the charts showing gold’s monthly performance over different time frames - 1975 to 2011, 2000 to 2011 and our Bloomberg Gold Seasonality table from 2003 to 2013 (10 years is the maximum that can be used).
Thackray's 2011 Investor's Guide notes that the optimal period to own gold bullion is from July 12 to October 9. During the past 25 periods, gold bullion has outperformed the S&P 500 Index by 4.7%.
“… gold is the hard currency of choice, and we expect for this trend to accelerate going forward. We still believe that in the next couple of years we will be looking at a gold price of around $US3,500. As the gold/silver ratio plummets near 30, this would also suggest a silver price above $US100.”
Gold Confisaction Imminent? Or Does India Simply Have An Offer For Its Citizens They Can't Refuse...Submitted by Tyler Durden on 08/29/2013 09:08 -0500
Even as the Indian capital outflows and current account exodus may be threatening to shut down the economy altogether (except for the three oil companies that received a last ditch USD infusion from the RBI yesterday), the central bank is planning and strategizing. And it appears to have come up with more of precisely the same that has led it to its current unprecedented predicament: prevent the population from converting their wealth into hard money, i.e., gold. But while the government's attempts to impose capital controls on gold purchases have been well documented, the latest foray is just a headspinner. Reuters reports that India is now considering a "radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency." Here we can safely assume that the commercial banks will pay for the gold in... Rupees which just hit an all time low?
Nearly 2,400 years ago, Aristotle wrote one of the defining works of political philosophy in a book entitled Politics. It’s still incredibly relevant today, particularly what he writes about tyranny. The ancient Greeks used the word ‘turannos’, which referred to an illegitimate ruler who governs without regard for the law or interests of the people, often through violent and coercive means. Aristotle attacks tyrants mercilessly in his book, and clearly spells out the criteria which make a leader tyrannical. You may recognize a few of them...
Presenting The Numerous, Undisputed And Very Clear Signs That India's Currency Was Set For An Epic CrashSubmitted by Tyler Durden on 08/28/2013 19:45 -0500
Citizens of India have been watching, in stunned amazement, as over the past month the local currency has lost an unprecedented 15% of its value, with a record plunge taking place just last night. And, as so often happens, the population habituated to a government "acting in its best interests" is asking itself - how could we have possibly known this was coming. The answer, as usually happens, was staring everyone right in the face. As Grant Williams shows in his latest "Things That Make You Go Hmm", the warnings came loud and clear, and were very explicit in the form of not one, not two, not ten, but many more sequentially imposed and escalating forms of capital controls by the Indian central bank that sought to prevent the conversion of paper into hard currency. Gold.
ISRAEL IS DEPLOYING ALL OF ITS MISSILE DEFENSES AS A PRECAUTION.
It makes perfect sense that the precious metals are being slammed lower (as well as WTI modestly) as US equity markets open. No other asset-classes are exhibiting the vertical moves. Pre-open margin calls?
Despite the best efforts of the efficient and idiotic things we call the US equity markets - which exhibited the kind of epic VIX smashfest into the close - the Dow was unable to be rescued from its 3rd red week in a row (the first in 9 months). The S&P closed above its 50DMA (at the highs of the week) with a late-day scramble (but Nasdaq ends the week +1.7%). So a very mixed bag for stocks and the USD (thanks to today's post-home-sales dumpfest) ends the week unchanged. The real story of the day (and week) though is precious metals and bonds. The 30Y bond's best week in a month and best day in 5 months wa snotable but perhaps more so, while the entire complex ripped lower in yield as the un-taper un-housing-recovery data hit, the flattening of the 5s30s spread is extreme. Gold and Silver spiked on the home-sales data ending the week up notably. The VIX-compression into the close ended at 14.00% for the biggest 2-day drop in 2 months.
It seems the crossing of the Maginot 100-day moving average combined with Jackson Hole chatter and the dismal new home sales data has set the precious metals ablaze once again. For the first time since early June, gold has crossed the psychological $1,400 level (up 18.5% from its 6/18 lows). We suspect the still-unprecedented short-interest in COMEX gold futures may well be feeling more heat here (having fallen 40% in the last 5 weeks)...
It would appear the news that the housing 'recovery' may not be as strong as every asset-gethering talking-head exclaimed it will be in the face of soaring mortgage rates has driven investors to the safety of precious metals in a soon-to-be-re-stimulated economy as moar free money is clearly needed... (bonds are bid too on the Un-Taper inspiring news - and USD dumping - but stocks appear to have been side-tracked for now as the 'wedge' between fundamental reality and monetary-policy perceptions is shown even more egregiously).
The latest policy being implemented by Governments around the world consists of simply making data points up when reality doesn’t conform to their wishes.
Just as Japan's department store sales hit overnight (plunging at their fastest level in 13 months), gold and silver prices were shellacked lower almost instantaneously (admittedly in thin markets). We haven't seen this kind of morning smack-down in a little while but this time was different... the dip was bought aggressively and has now been retraced.
Gold traded near a two-month high after holdings in the largest ETP posted the first weekly expansion this year and markets digested the very robust global physical demand data reported last week . Demand from China and India is projected to to soar to 1,000 tonnes each in 2013 and mixed U.S. data has boosted gold’s safe haven appeal. Gold forward offered rates (GOFO), remain negative and are becoming more negative. This shows that physical demand is leading to supply issues in the highly leveraged LBMA gold market. GOFO rates are those which contributors may use to lend gold on a swap for dollars, according to the London Bullion Market Association and the negative gold interest rates show a preference to own gold over dollars by bullion banks. Negative 1, 2 and 3 month GOFO rates mean that bullion banks lent their customers, including other bullion banks, gold to obtain a positive return, thereby increasing the "paper" gold supply. Some may now may be struggling to get their gold back which may explain the significant decline in COMEX gold holdings of certain bullion banks (see commentary). This is creating significant supply demand issues in the physical gold market which should lead to higher gold prices.
Asia has become the most important issue for the markets today. The Central Bankers’ dream of endless QE has become a nightmare for Japan while China’s “growth miracle” is rapidly falling to pieces.
On the surface, there is nothing spectacular about the weekend news that JPMorgan is seeking to sell its 1 Chase Manhattan Plaza office building. After all, the former headquarters of Chase Manhattan Bank, located deep in the heart of the financial district and which was built by its then chairman David Rockefeller, is a remnant to another time - a time when banking was about providing loans, not about managing and trading assets which has become the realm of Midtown New York, and since JPM already has extensive Midtown exposure with its offices at 270, 270 and 245 Park, the 1 CMP building always stood out as a bit of a sore thumb. Of course, as Zero Hedge readers first learned, the big surprise is literally below the surface, some 90 feet below street level to be exact, where the formerly secret JPM gold vault is located, which also happens to be the biggest commercial gold vault in the world.