For the moment capital markets appear to be adapting to deflation piece-meal. The fall in the gold price is equally detached from economic reality. While it is superficially easy to link a strong dollar to a weak gold price, this line of argument ignores the inevitable systemic and currency risks that arise from an economic slump. The apparent mispricing of gold, equities, bonds and even currencies indicate they are all are ripe for a simultaneous correction, driven by what the economic establishment terms deflation, but more correctly is termed a slump.
"China should accumulate 8,500 tonnes in official gold reserves - more than the US... Gold is money par excellence in all circumstances and will help support the renminbi to become an international currency as gold forms the very material basis for modern fiat currencies"
As we previewed on Friday, when we reported that "Russia Nears Completion Of Second "Holy Grail" Gas Deal With China", moments ago during the Asia-Pacific Economic Cooperation forum taking place this weekend in Beijing, Russia and China signed 17 documents Sunday, grenlighting a second "mega" Russian natural gas to China via the so-called "western" or "Altay" route, which as previously reported, would supply another 30 billion cubic meters (bcm) of gas a year to China. Gazprom CEO Miller noted that with the increase of deliveries via the western route, the total volume of Russian gas deliveries to China may exceed the current levels of export to Europe in the medium-term perspective. In other words, China has now eclipsed Europe as Russia's biggest, and most strategic natural gas client.
Today, with little fanfare, Russia's president Putin - whose economy is said to be reeling as a result of a plunging currency, paradoxically something Japan would love to be able to achieve on such short notice - told the media ahead of his visit to the Asia Pacific Economic Conference on November 9-11, that Moscow and Beijing have agreed many of the aspects of a second gas pipeline to China, the so-called western route, or as some already are calling it, the "second holy grail." “We have reached an understanding in principle concerning the opening of the western route,” Putin said. "We have already agreed on many technical and commercial aspects of this project laying a good basis for reaching final arrangements,” the Russian President added.
Back in September, there was a summit meeting in a city that involved an organization that most Americans have never heard of. Mainstream media coverage was all but nonexistent. The place was Dushanbe, the capital of Tajikistan, a country few Westerners could correctly place on a map. But you can bet your last ruble that Vladimir Putin knows exactly where Tajikistan is. Because the group that met there is the Russian president’s baby. It’s the Shanghai Cooperation Organization (SCO), consisting of six member states: Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. We should care what’s going on inside the SCO. Once India and Pakistan get in (and they will) and Iran follows shortly thereafter, it’ll be a geopolitical game changer.
"The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or euros. The sooner the better." - Ron Paul
The Petrodollar, long serving as the US leverage to encourage and facilitate USD recycling, and a steady reinvestment in US-denominated assets by the Oil exporting nations, and thus a means to steadily increase the nominal price of all USD-priced assets, just drove itself into irrelevance. A consequence of this year's dramatic drop in oil prices, the shift is likely to cause global market liquidity to fall. This decline follows years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling. But no more: "this year the oil producers will effectively import capital amounting to $7.6 billion.
Earlier this week some of the biggest financial news of the year made huge waves all over Asia. Yet in the Western press, this hugely important information has barely even been mentioned. So what’s the news? The Chinese government announced that the renminbi will become directly convertible with the Singapore dollar... effective immediately.
Greenspan told the CFR that "gold is a good place to put money these days given it's value as a currency outside of the policies conducted by governments." "Gold has always been accepted without reference to any other guarantee." When asked where the price of gold was headed in the next five years he said “higher --- measurably" ...
"This is simple payback for Washington's threats, banking fines and penalties against institutions and nations de jure that fail to march to the US tune of dictating trade and financial arrangements. The world is now ganging up on the United States because Washington has terrorized smaller nations around the world for decades as the big bully on the block."
Having been relatively quiet for a while, Russia's leader Vladimir, speaking in Sochi (following meetings with Middle East crown princes who confirmed Russia as a key partner - "isolated"?), has unleashed his most aggressive statements with regard the failing world order: PUTIN SAYS U.S. DOLLAR LOSING TRUST AS RESERVE CURRENCY, WORLD WITHOUT RULES IS POSSIBILITY; ANARCHY GROWING. Adding that the risk of major conflicts involving major countries is growing, as well as the risk of arms control treaties being violated, Putin exclaimed that the US-led unipolar world is like a dictatorship over other countries and that "US leadership brings no good for others," and calls for a new global consensus.
Gold has been in a bear market for three years. Technical analysts are asking themselves whether they should call an end to this slump on the basis of the "triple-bottom" recently made at $1180/oz, or if they should be wary of a coming downside break beneath that level. The purpose of this article is to look at the drivers of the gold price and explain why today's market value is badly reflective of gold's true worth.
What do an old German bank note, a current $100 bill, and an apple all have in common? The answer, according to ConvergEx's Nick Colas, is that these simple objects can tell us much about the current investment scene, ranging from Europe’s economic challenges to the U.S. Federal Reserve’s attempts to reduce unemployment. Colas takes an “object-ive” approach to analyzing the current investment landscape by describing 10 common items and how they shape our perceptions of reality. The other objects on our list: a hazmat suit, a house in Orlando, a barrel of oil, a Rolex watch, a butterfly, a heating radiator in Berlin, and a smartphone.
"The Fed is really holding the market up.... The Fed turned this market around here because it let it be known that the Fed funds rate isn't going to be raised in March. I am concerned about the high yield market, I think that's in a major bubble, but nobody knows when it's gonna burst." - Carl Icahn
The head of the San Francisco Federal Reserve Bank on Tuesday said he would be open to another of round asset purchases if inflation trends were to fall significantly short of the U.S. central bank's target. Although he said it would take a big shift in the U.S. economic outlook for the Fed to restart its bond buying, John Williams said the possibility of a new downturn in Europe and other global economic woes pose a risk to the United States. "If we really get a sustained, disinflationary forecast ... then I think moving back to additional asset purchases in a situation like that should be something we should seriously consider," Williams said in an interview with Reuters.