BOE / ECB At 0.5% - Must See Interest Rate Charts Make Case For Gold

GoldCore's picture

Today’s AM fix was USD 1,249.50, EUR 961.15 and GBP 819.67 per ounce.
Yesterday’s AM fix was USD 1,246.00, EUR 962.16 and GBP 818.28 per ounce.

Gold was tentatively higher overnight on worries about the revolution in Egypt which ended with President Mursi ousted. They crept lower prior to the BOE and ECB rate decisions but gold rose in sterling and euro terms after the BOE  and ECB decisions to keep rates at 0.5%. 

UK Bank Rate (1694 – 2013)

Carney, the new Bank of England governor, kept interest rates at historically record low levels at 0.5% and the pound fell after the announcement and was down 1% to £828/oz soon after.

Draghi, emulated his fellow Goldman Sachs banker, Carney and kept rates at 0.5%.

Ultra loose monetary policies involving record low base rates have been in place in the UK since March 2009, a lengthy 4½ years. In the Eurozone 0.5% record low rates have been seen since May this year.

Since 1694 and the ensuing three centuries’ of Bank of England history, the base rate has never been this low.

German and ECB base rates have never been this low. 

German Interest Rates and Inflation (1975-2013)

UK and western government bond yields remain near record lows only because western governments and their central banks are manipulating their bond markets by electronically creating currency in order to buy their own debt. 

Euro zone consumer prices are being driven upward by rising energy and food prices, data showed on Monday, underlining the fragility of the bloc's economic health. Inflation in the euro zone, which is suffering from its longest ever recession and record high unemployment, increased to 1.6% year-on-year in June from 1.4% in May. 

June's inflation reading was the second upward move from a three-year low of 1.2% in April.

Cross Currency Table - (Bloomberg)

Germany's most populous state and a bellwether for German inflation data, North Rhine-Westphalia, saw inflation pick up to 2.1% on the year in June.

U.K. inflation accelerated more than economists forecast in May rising to 2.7% (CPI) due to rising energy costs. Britons face a persisting squeeze in living costs as they endure inflation triple the rate of basic pay growth, which was 0.9% in the three months through April.

Transport provided the biggest upward pressure on the inflation rate in May, as air transport and motor fuel rose from a year earlier. Air fares soared 22% from April, a record for the month of May. Higher clothing and footwear costs also stoked consumer prices.

Citizens throughout the EU are feeling the pinch in their pocket due to rising costs and many believe that inflation is higher than the statisticians in government departments are calculating.

Negative real interest rates and continuing money printing and QE will lead to inflation. The question is not if but rather when. They will support gold and lead to a lower fiat currencies versus gold in the long term. 

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walküre's picture

Draghi said basically they will never raise rates again. Word on the streets in Germany is that "they can't raise rates". Mortgage rates are at all time lows. Cheap money if you've got the credentials.

Next is the debt cut and finally reset. The script is pretty obvious now. Debt that doesn't earn interest might as well be written off. If it can be rolled over at 0% eternally than it is virtually worthless. Therefore the money is becoming worthless when debt is worthless. With the final reset all liabilities will be erased or discounted to the point where a reasonable servicing is possible again. The system is chocked with debt but also overburdened by too much wealth, either current or future. The wealth of pension plans for example is not sustainable. The payments are not covered by the revenues. None of the models are working.

Gardening is more fullfilling and creates more value than either banking or trading. At least you can exterminate the parasites threatening to destroy or devour your crops. What can you do against the many banking and trading parasites in the financial centers of the world who all want to make a payday? Nothing much. Leave them to their own parasitic nature and they will surely devour themselves in the process.

Racer's picture

"Citizens throughout the EU are feeling the pinch in their pocket due to rising costs and many believe that inflation is higher than the statisticians in government departments are calculating."

It isn't a question of 'believe'.

We KNOW for a fact that it is much higher!

Racer's picture

Why anyone would want to put savings in a bank is beyond me, for a start you get back less in value than you put in. You let the banksters do this so they can lend it out to a few people and charge them much higher interest rates. I much rather own gold or have toilet paper money in the Bank of Mattress rather than risk it in a bank to be used by the very banksters who are highly likely to steal it for themselves.

Give me a decent rate of interest and I might consider it again, but at the pathetic levels I am being offered.... NO WAY BANKSTERS

wattie's picture

Depositors are now creditors and fair game when the bank you trusted goes bust........taking your "bail in " deposits with them!!!

eddiebe's picture

Not if our masters can keep smashing gold in every way and keep the working class cowed into accepting low wages. So far people keep taking it.

ronaldawg's picture

Low FIAT wages to boot.