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Henry Smyth: Is this the Rothschild Moment for Gold?`

rcwhalen's picture




 

"Interest is the difference in the valuation of present goods and future goods; it is the discount in the valuation of future goods as against that of present goods." 

Ludwig von Mises

“Planning for Freedom”

 

We’ve all been watching the selloff in the global gold market.  Armies of chicken littles are in a frenzy due to suggestions that the Fed may be ending its quantitative easing, so I thought this is a good time to check in with my friend Henry Smyth of Granville Cooper Asset Management Ltd. (GCAM). Henry is a former Coutts & Co. banker and a very astute observer of the global financial markets.  We spoke last week in New York. -- Chris

RCW:  Henry, the gold market has been taking a beating in the past few months.  What do you see as the drivers of the gold market today? 

HS:  Since $1525 support broke gold has been in the throes of stop loss selling.  Gold is now over 2% below its 200 day moving average. Physical supply is extremely tight. The precious metals analysts where I trade in Zurich have very good contacts among the refiners.  They tell me the order backlog is over four weeks now versus four days in a normal market.  Same for Shanghai and Mumbai where you see sharply increasing demand as US Dollar gold prices fall and gold premiums rise. Here in the United States the US Mint cannot keep up with demand for gold and silver eagles. 

RCW:  So is this correction a normal reaction to the Fed?  Or has the fact of QE magnified the volatility of gold (and everything else)?

HS:  The shorts in the market are running out of short fuel. The decline in gold has been going on since late 2011 and is very long in the tooth. Sentiment against gold is virtually 100% right now among Western gold analysts. This is a Rothschild moment.

RCW:  This is a reference to the famous dictum by Baron Rothschild: “Buy when there's blood on the street?”

HS:  It is.  There seems to be an expectation that the end of QE will be bullish for the Dollar and therefore bearish for gold. My view is the end of QE will be bearish for all those asset classes which require QE for life support and/or do not do well in a rising interest rate environment. That would include the bulk of US equity and fixed income markets.  

RCW:  So then I take it you currently are a buyer of gold?

HS:  Gold is in a primary uptrend and has been since 2001. The long gold strategy of the Granville Cooper Gold Fund II Ltd. began in 2003. We went through a correction in 2004-5 and another in 2008-09. The current correction is longer in duration but similar in percentage change to the previous corrections. Our investment mandate is long term outperformance against the US Dollar gold price. We use corrections to build positions for the resumption of the primary trend. We have buy stops out there now.

RCW:  So given the degree of government manipulation of the financial markets, how do you get a clear view of the gold market?  

HS:  Gold began its uptrend prior to the onset of the first QE. Fed policy can accelerate or retard, but not alter, the primary uptrend in gold. Gold is a global asset class but is viewed in a very provincial way in the United States.  We are seeing a tectonic shift in global asset allocation as gold moves from West to East. This is far more significant than the West appreciates. In my view, this shift is it is akin to the movement of gold from Europe to the US following the 1933 devaluation of the dollar via gold by the Roosevelt administration and the promulgation of the Nuremburg Laws in Germany in 1935.

RCW: That is a pretty bold statement.  The real driver of wealth migration from Europe to the US was two world wars. How do you see China leveraging their accumulation of gold to build long-term advantage for the Chinese economy? 

HS: It appears that China has since the turn of the century had a state policy of encouraging gold ownership by its citizens. Given this policy and the evolution of their bilateral trading and clearing agreements and systems, it is reasonable to assume the Chinese have global ambitions for their currency, and that their gold holdings will be a significant support to the international acceptance of that currency.  A reserve currency is the ultimate projection of state power. I think the Chinese get that.

RCW:  Thanks Henry.  Hopefully somebody in Washington will take heed of your analysis. 

www.rcwhalen.com

 

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Tue, 07/02/2013 - 20:14 | 3715947 MeelionDollerBogus
MeelionDollerBogus's picture

I could easily see gold at 500.

(per gram :D )

Sat, 06/29/2013 - 23:59 | 3707093 Geruda
Geruda's picture

If Jon Nadler was having speaking about the words of this gold man would be be having words like the words he is saying or woud be laughing at him.

Sat, 06/29/2013 - 21:51 | 3706890 q99x2
q99x2's picture

Good article. I've been watching the markets and reading the articles and what I've noticed is a very direct relationship between market turmoil and Gold statistics.

I think the Fuckers at the FED and JP Morgan sold everybody's gold and that is what is behind current volatility. The uprecendented FRAUD and lawlessness are components but the Gold...they are about to get busted big time over it.

Sat, 06/29/2013 - 17:35 | 3706440 eatapeach
eatapeach's picture

Do you know? where you're going to. Do you like the things that life is showing you?

I'm betting on mahogany.

Sat, 06/29/2013 - 06:59 | 3705744 theprofromdover
theprofromdover's picture

So, the inscrutible Chinese are encouraging their people to privately buy gold. (Presumably with dollars)

Does that mean the time when they sequester it all for the state is just a short distance down the road.

 

(Col. Kurtz)

"And then I realized... like I was shot... like I was shot with a diamond... a diamond bullet right through my forehead. And I thought, my God... the genius of that! The genius! The will to do that! Perfect, genuine, complete, crystalline, pure. And then I realized they were stronger than we, because they could stand that these were not monsters, these were men... trained cadres. These men who fought with their hearts, who had families, who had children, who were filled with love... but they had the strength... the strength... to do that."

Sun, 06/30/2013 - 05:33 | 3707221 BigDuke6
BigDuke6's picture

No point

Fri, 06/28/2013 - 21:00 | 3705243 passwordis
passwordis's picture

 All I know is I have a rather large check coming to me in 6 months, I hope it's not to late.

Fri, 06/28/2013 - 19:06 | 3704969 enloe creek
enloe creek's picture

if I was bernake I'd fucking just come out on you tube and  laugh like an imbecille while flipping off a map of the U S or maybe just a globe for that matter.

Fri, 06/28/2013 - 18:55 | 3704948 MedTechEntrepreneur
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F_S anti-Jew diatribe shit storm in 3...2...1...

Sat, 06/29/2013 - 20:15 | 3706735 BigDuke6
BigDuke6's picture

Nah
It's now white shoe wearers we hate
Thanks to cunts like u

Fri, 06/28/2013 - 18:44 | 3704933 Praetorian Guard
Praetorian Guard's picture

Its ALL a fucking ponzi, INCLUDING PM's (ie gold/silver). Everyone keeps thinking they are going to game the system... fact is, no one, except the "big boys" are playing the game, everyone else is a retarded kid sitting in the background trying to mimic these folks.

Sun, 06/30/2013 - 01:24 | 3707172 buyingsterling
buyingsterling's picture

It's Argentina and Zimbabwe potentially writ planet-wide. Gold and Silver (we capitalize less deserving things, let's all start capitalizing these two pure servants of honest men!) are insurance and antidote. They're about the only thing that aren't ponzis. Everything else is in the reach and thrall of the manipulators. They can affect the 'market price' of Gold and Silver, but ultimately they can't destroy their value.

Fri, 06/28/2013 - 20:58 | 3705238 passwordis
passwordis's picture

"Its ALL a fucking ponzi,"

Ok, but so what? Someone makes money in a Ponzi scheme. It's pretty simple, either Gold is going to go up or it's not. The "big boys" are either going long gold or they are not. About the smartest thing I can think of is to do what the big boys do.

 Because of the internet, it's a lot easier to figure out what the big boys are doing. When the media reports that billionairs are selling all thier gold, you could dig deep and discover that the "big Boys" are really buying more Gold not selling it.  That's your clue.  If you listen carefully to the media you begin to decern a pattern.   They protect thier masters and owners.

There are no guarantees but I bet you will end up doing better if you duplicate what the "big boys" are doing.

 

 

 

Fri, 06/28/2013 - 17:03 | 3704689 lakecity55
lakecity55's picture

Anyone see Kitco???

Ag and Au are exploding upwards...............

Fri, 06/28/2013 - 17:31 | 3704774 jimmytorpedo
jimmytorpedo's picture

By EXPLODING upwards you mean regaining what they lost since Wednesday?

Fri, 06/28/2013 - 20:12 | 3705143 garypaul
garypaul's picture

Better than dropping a similar amount!

Fri, 06/28/2013 - 17:33 | 3704777 lakecity55
lakecity55's picture

there has not been a jump up this high for a while in one shot.

Fri, 06/28/2013 - 19:22 | 3705013 CPL
CPL's picture

It's not Monday yet.

Fri, 06/28/2013 - 16:04 | 3704479 SILVERGEDDON
SILVERGEDDON's picture

For a change, I wanna be sitting on a pile of metal, while banker boy sits on his pile of paper, so fucking dead broke, he has to jerk off his dog to feed his cat. coming soon to a theater near uyou.

Sun, 06/30/2013 - 00:33 | 3707120 e_goldstein
e_goldstein's picture

Nice, but will that be a show on TV?

Sat, 06/29/2013 - 08:41 | 3705802 Dooud
Dooud's picture

Far out, Man, even I have never been that broke, but I will remember this the next time I need some half and half.

Fri, 06/28/2013 - 17:25 | 3704755 auric1234
auric1234's picture

Well spoken friend. Vampires needs to suck blood in order to survive. Let's deprive them of their food.

 

Fri, 06/28/2013 - 15:15 | 3704208 Squiddly Diddly
Squiddly Diddly's picture

We are seeing a tectonic shift in global asset allocation as gold moves from West to East. This is far more significant than the West appreciates."   The object seems to be to equalize the wealth distribution as the mass populations of east and west are brought into parity to implement global socialism. Chinese and Indian gold holders will have affluence formerly enjoyed by American middle class when fiat is reset versus gold like FDR did.  It's not too late Mr. and Ms. America to own gold.  Good time to buy, now. Rick Harrison of Pawn Stars is having a hard time buying physical metals, that should tell you something.

Sat, 06/29/2013 - 22:04 | 3706923 Go Tribe
Go Tribe's picture

When China issues a currency backed by gold, people will flee the dollar as reserve and the catastrophe will begin.

Sun, 06/30/2013 - 09:37 | 3707497 WillyGroper
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BB, someone didn't want that info known. Blog was taken down.
Will you give us a synopsis please?

Fri, 06/28/2013 - 14:42 | 3704067 toadold
toadold's picture

Carrier pigeons across the English channel, a wild horse ride to London. now there was "insider" trading. 

The old long game used to be buy "safe" bonds during an up market then when the crash came sell the safe bonds and buy solid stocks and other revenue generators on a discount.  Now it kinda looks like  all of the central banks have ********* that up. So I guess that PM's for the up market then sell for cash when disaster hits?  We don't have carrier pigeons anymore, just a lying financial press #####ting on everything.  

Fri, 06/28/2013 - 14:36 | 3704039 WhiteNight123129
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Interest rates going up on the long end,

Yield curve steeper

Bond holders saddled with losess

That means base money moving out of financial assets (bonds mostly) and idle cash

and chasing present goods (goods and services, commodities ).

Stagflation coming bitchez with a 20 years bear market on bonds and sticky prices.

Inflate away just starting now with steeper curve.

 

 

Fri, 06/28/2013 - 14:21 | 3703988 ebworthen
ebworthen's picture

"Hopefully somebody in Washington will take heed of your analysis."

Ron Paul is probably the only one, but pretty sure he has left our Sodom and Gomorrah dome of delusion.

Sat, 06/29/2013 - 07:40 | 3705766 Turtle49
Turtle49's picture

Washington is bought and paid for by the big kids They -- the big kids -- could care less about anyone else.  Washington gives Sodom and Gomorrah a bad name.  It was a fun place. 

Fri, 06/28/2013 - 14:09 | 3703959 billsbest
billsbest's picture
Goldman Sachs Exits China's Largest Bank: Crisis Escalates: Some Banks Suspend Lending Activity

You don't suppose GS had inside information do you? Course not. Rothschild had a stake in ICBC as well. Did the banksters skedaddle with another booty load? What were those 70+ trips to Red China taken by Hank Paulson while with GS all about anyway (before becoming our Treasury Secretary)?

Sun, 06/30/2013 - 09:35 | 3707485 WillyGroper
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That link was given the kibosh quickly. That blog is history.

Sat, 06/29/2013 - 23:35 | 3707073 disabledvet
disabledvet's picture

GS and the rest of these clowns are long that thing over there. that's a 100 TRILLION dollar housing bubble that is now about to burst...one that will make what happened here in the USA (where you're talking single family housing which by definition can't be in a bubble because it can never be worth zero) look like a walk in the park (since in the entirety of East Asia...as with most of the world...you're talking "apartment reits" which absolutely can be worth zero because you've gotta live in a building a million miles high just for the privilege of existing!) i'm unclear whether this very interesting article will in fact "be true" but it sure has the ring of truth. somebody just freaked out "at" the Fed and that says to me "buy gold." i mean Larry Kudlow is telling me to ignore the massive amount of leverage in this market place? is he CRAZY? there is MASSIVE amounts of risk in this market hence "let the professionals handle this one" has been my mantra going on six months now. (i'm out in case anyone is wondering.) if you're not sitting on 50% cash right now and you're trading this thing professionally you are an IDIOT. i can make a bull case...even now!...but the irresponsibility of those who in fact are/have been making the bull case...basically forever now (CNBC should absolutely be sued out of existence they're so irresponsible) to just "buy, buy, buy" make it impossible for me to really say anything positive other than "wait for the crash and determine later." i mean the yen is getting killed again...and i'm suppose to be all in on the Nikkei? after what just happened? NO WAY. the Chinese inter bank market seizes up...then go "ho hum" and i'm suppose to be going all in here? NO WAY. besides me i can't think of ANYONE who has called the RATIONALE behind this market correctly (besides it's direction which was higher)...namely "scream bloody hell about inflation" but don't fight the Fed's "bubble reinflation" either. Just don't fight the fed when the jump on the "bubble deflation" bandwagon just as the "gold bubble" starts deflating!(gold bubble Larry???? REALLY? start buying on news of DEFLATION. REALLY???) I mean are we just a few weeks away from one of the biggest market corrections in history here? 2008 was just an American phenomenon. If China is about to fly apart in every direction soon then obviously you want to go long PROTECTION. but don't be alarmed sheeple! "Bill Gross is a dope!" really? give me a break. that guy's annual compounded returns are actually POSITIVE over the past thirty years UNLIKE Wall Streets. there's an old saying about the airline industry folks: "IT HAS NEVER MADE MONEY IN IT'S ENTIRE EXISTENCE." and yet look! "the planes still fly."

Fri, 06/28/2013 - 21:30 | 3705313 illyia
illyia's picture

Gold, derivatives, treasuries.

And, silence.

Fri, 06/28/2013 - 14:03 | 3703930 Fuh Querada
Fuh Querada's picture

Dear Henry,

Very eloquent.

Are you buying paper gold not-gold, or physical ? If the latter, where are you storing it?

 

Fri, 06/28/2013 - 13:41 | 3703843 disabledvet
disabledvet's picture

well lest we forget "the USA piled into Europe in the 80's under a guy named Reagan"...by the time that war had ended gold was at 200 bucks. hmmmm. "the USA appears to be doing the same thing again." i do agree there was a "strategy" on the part of the Mandarins to "allow the Chinese people to have gold." this of course is a very BAD strategy as "all that gold winds up in leverage to billion banks" that are currently breaking beneath the waves. gold is nice and shiny and all...but yo, dudes...this is all about an ENERGY MARKET. gold could never create any of this. EVER. this is wealth creation on scale that should boggle the entire planets mind actually. ALL PAID FOR WITH PAPER! obviously you want to be a buyer of gold here. even better of course is silver. http://en.wikipedia.org/wiki/Thales hmmmm. still...we must answer the question..AND ANSWER IT CORRECTLY...WHAT IS QUANTITATIVE EASING. i don't think ANYONE has understood precisely what this "mathematical formulation" means/has meant vis a vis "how it impacts money markets" and "the cabbage" (meaning cash.) obviously the value of discounted free cash flow has soared because of it...incredibly so...yet as the other side of the coin shows us..."this money has all gone to the government" as well. hmmmm. absolutely fascinating and extraordinary. https://en.wikipedia.org/wiki/Janus

Fri, 06/28/2013 - 13:30 | 3703795 rosiescenario
rosiescenario's picture

Just wondering what Baron Rothschild would make of Ben, the CME, the tacit manipulation of pm prices by the primary dealer banks that are th benfactors of Ben's POMO, etc.

 

I assume that there is an understanding between the Fed. Res. and their primary dealers that they get free money but in return they must boost the stock market and crush pm's with it. Of course longer term this puts them in a quite precarious situation....maybe we are there right now? If the staement, "The precious metals analysts where I trade in Zurich have very good contacts among the refiners.  They tell me the order backlog is over four weeks now versus four days in a normal market" is true, then any move to cover short sales is going to produce an eruption in pm prices.If China chose to, they could seize that time to also launch a buying program of pm's and deal a major blow to the U.S. financial system. If their goal is to have their currency as a reserve currency, then they might just do so.

Fri, 06/28/2013 - 21:57 | 3705365 Bringin It
Bringin It's picture

All the PDs are just vehicles to an end.  They could all wind up stuffed with garbage someone heavy has to get rid of and then detonated, like MFG, then PFG.

Fri, 06/28/2013 - 13:40 | 3703836 Bullionaire
Bullionaire's picture

Ummmm...he's pleased that Ben is following his plan.

Fri, 06/28/2013 - 13:13 | 3703733 SmittyinLA
SmittyinLA's picture

Wasn't the quote "Buy REAL ESTATE when there's blood on the streets”, and Bill Gates did that in Egypt, I think Gold was pretty high at the time too, Imagine what those US dollars will be worth in 10 years what that Egyptian farmland will be worth in 10 years, or all the gold he could buy from 10 years of good crops. 

Fri, 06/28/2013 - 14:57 | 3704127 Marco
Marco's picture

Farmland in Egypt won't be worth dick to a foreigner in 10 years, in a country overpopulated as fuck and with poor access to water resources it's highly likely that food security will cause them to either create export restrictions or outright nationalize the farmland.

Fri, 06/28/2013 - 21:29 | 3705312 KansasCrude
KansasCrude's picture

Marco's got dat,  Egypt is one of the most environmentally degraded countries with the densest per square mile  populations in the world not to mention one of the youngest.  Cramming all those folks into one of the only remaining habitable segments of land...ie where they should be farming is total irony.   High percentage of the country is a desert.  Heaven help them when the subsidies stop and they must manage total chaos.    

Fri, 06/28/2013 - 13:17 | 3703725 A. Magnus
A. Magnus's picture

No, I think they're talking about the Lord Rothschild moment from the Battle of Waterloo, where Rothschild went to the London Stock Exchange during the battle with Napoleon and instituted HUGE stock sell orders periodically throughout the morning and early afternoon. The traders panicked and a cascade crash ensued because they thought Rothschild was selling because Napoleon was winning Waterloo. In fact Wellington was winning but the LSE didn't know that and once the panic crashed the market Rothschild stepped in and bought up the WHOLE exchange for pennies on the pound. I think the White Shoe boys are fixing to empty ALL the gold in warehouses for a fraction of the paper price with these little shitbag short raids of theirs...

Fri, 06/28/2013 - 16:38 | 3704619 resurger
resurger's picture

yup this is 100% correct.

 to add.. they are helping the CRIMEX and JPM Fucks to stock up

Fri, 06/28/2013 - 13:53 | 3703892 fourchan
fourchan's picture

you are spot on. cudos

 

i love a good sale especially on a product that never goes bad and has had value in all human history, in the end

there can only be one highlander.

Fri, 06/28/2013 - 13:51 | 3703884 Seize Mars
Seize Mars's picture

White Shoe Boys? You're an idiot.

Fri, 06/28/2013 - 14:33 | 3704023 A. Magnus
A. Magnus's picture

If I'm an idiot then that makes you a banker ball-sucking, sphincter-felching, bootlicking pogue motherfucker. Put THAT in your pipe and smoke it, bitch!

Fri, 06/28/2013 - 16:05 | 3704472 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

+1, I'd give ya more up arrows if I could cause it made me laugh!

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