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Goldman Goes To German: Draghi To Enter The Lion’s Den

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From GoldCore Gold Bullion

Draghi To Enter The Lion’s Den

Today’s AM fix was USD 1,708.50, EUR 1,321.04, and GBP 1,069.28 per ounce. 
Yesterday’s AM fix was USD 1,717.00, EUR 1,317.22, and GBP 1,072.12 per ounce.

Silver is trading at $31.93/oz, €24.77/oz and £20.02/oz. Platinum is trading at $1,577.25/oz, palladium at $596.70/oz and rhodium at $1,100/oz.

Gold fell $21.60 or 1.25% in New York yesterday and closed at $1,706.90. Silver hit a low as $31.55 and ended finished with a loss of 2.35%.

Gold trimmed gains Wednesday amid worries about the global economy grew and demand from the world’s largest consumer, India helped support prices.


Cross Currency Table – (Bloomberg)

The China HSBC Flash Manufacturing Purchasing Managers Index (PMI) hit a three month high of 49.1 in October, and ramped up its largest order books since April, hinting at signs of a gradual economic recovery.

Investors await the US Fed’s policy statement today at 18:15 GMT but most economists expect no new policy initiates before the US presidential elections on November 6th.  Recent rumours released claim Bernanke has no interest in renewing his 4 year term as Chairman of the US Federal Reserve’s Federal Open Market Committee.

The festival season peak begins next month in India and physical demand is expected to increase.

Spanish government bond prices dropped on Tuesday after Moody's downgraded five Spanish regions. The news comes just days after more Spanish regions tapped the federal government's regional bailout fund, effectively depleting the remaining balance of the fund and increasing the need for Spain’s bailout.

Mario Draghi travels to Berlin today to meet with key German parliament members involved in the eurozone crisis policy.  This private meeting is the ECB president’s effort to defend his new bond buying plan as a legitimate instrument in its monetary policy arsenal.

Germany’s legislative backing is critical for Draghi’s plan to buy up Spanish and other eurozone area government bonds.

The Bundesbank president, Jens Weidmann, says the program is tantamount to financing governments by printing money, which is prohibited by the ECB’s founding treaty.

ECB presidents normally give evidence to the European parliament but rarely if ever address national legislatures especially behind closed doors.  This journey is highly unusual but a critical sell for Draghi. Today’s session will be followed by a press briefing at 4pm local time by Mr. Draghi and Bundestag leader Norbert Lammert.


XAU/EUR 6 Months – (Bloomberg)

The main goal will be to convince lawmakers that the ECB is committed to keeping inflation low.

Draghi’s plan outlines that the ECB will only buy a government’s bonds on the secondary market after it has agreed to economic reform measures set out by the single currency zone’s finance ministers and the IMF.

Although, Weidmann and other German politicians have been vocal in their objections, Chancellor Angela Merkel has backed the plan and asserted that it isn’t outside the central bank’s mandate.

German opposition lies deep in its history when under the Weiman Republic in the 1920’s massive bond buying is widely thought to have triggered hyperinflation.

The 2010 ECB bond buying program that initiated German adversity to ECB policies resulted in then-Bundesbank President Axel Weber and ECB chief economist Juergen Stark, a former Bundesbank vice president, to resign in protest.

In September, when Super Mario unveiled the new bond program, called Outright Monetary Transactions, to replace a prior facility the markets received the news favourably.

The ECB plans to buy bonds only if countries first seek assistance from Europe's bailout funds and agree to undertake fiscal overhauls or austerity.

The ECB (which wants the International Monetary Fund involved in overseeing compliance ) has said it would cease buying bonds if countries renege on their pledges.

Over the course of the eurozone debt crisis Germany's parliament has increased its powers requiring the government to seek its approval of any bailout.

German Parliament could throw a spanner into the works if Mario Draghi fails to convince lawmakers that he is operating within the ECB's mandate and increases speculation that the ECB is propping up state budgets.

"The decisive question is whether the ECB is conducting monetary policy or fiscal policy," said Carsten Schneider, a financial-policy expert for the main opposition Social Democrats. "If this is financing state budgets, then the Bundestag and the European Parliament will have to decide on it."

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Wed, 10/24/2012 - 08:02 | 2915309 malikai
malikai's picture

Draghi going to the Lion's den?

So he's going back to HQ to meet with Lloyd?

Wed, 10/24/2012 - 08:05 | 2915314 GetZeeGold
GetZeeGold's picture

 

 

Draghi thinks he's a Daniel.......good luck with that Amigo.

Wed, 10/24/2012 - 08:08 | 2915319 LongSoupLine
LongSoupLine's picture

no, no...meeting with Lloyd would be kneeling at the alter.  Lest we forget what type of work Goldman does.

Wed, 10/24/2012 - 08:06 | 2915316 jayman21
jayman21's picture

Are there any grassy knolls in Berlin?

Wed, 10/24/2012 - 08:09 | 2915324 Ghordius
Ghordius's picture

no, Italian bankers are not afraid of grassy knolls, they fear bridges. And Berlin has over 1'000 of them...

Wed, 10/24/2012 - 08:09 | 2915321 q99x2
q99x2's picture

Sounds like a meeting where the banksters bribe the politicians to commit treason.

Wed, 10/24/2012 - 08:12 | 2915331 Robslob
Robslob's picture

So now Financial "Mad Men" get more protection than Government Officials?

This should tell you all we need to know about where this is all going....

Wed, 10/24/2012 - 08:12 | 2915332 Vegetius
Vegetius's picture

"The China HSBC Flash Manufacturing Purchasing Managers Index (PMI) hit a three month high of 49.1 in October, and ramped up its largest order books since April, hinting at signs of a gradual economic recovery."

Does anyone believe these numbers?

As for Dragi and his "Outright Monetary Transactions" what can you say that ZH has not pointed out on the folly that these guys are engaged in. Though Dragi and his friends have recruited Aristophanes and intend to begin to build Nephelokokkygia this year as part of the OMT work.

“The European single currency is bound to fail, economically, politically and indeed socially, though the timing, occasion and full consequences are all necessarily still unclear.” — Margaret Thatcher 

Wed, 10/24/2012 - 08:14 | 2915342 plaspotje
plaspotje's picture

and why does Draghila want to push the value of the euro higher , while  to save the euro zone a lower euro would  go along way ,,   especialy for the south   bring in the tourists from the world and the north of europe , a lower euro make europeans stay closer to home .

Wed, 10/24/2012 - 08:14 | 2915343 resurger
resurger's picture

when these guys disappeare, markets bleed...

 

Wed, 10/24/2012 - 08:37 | 2915376 new game
new game's picture

I ask you if tfptb care about constitutions, laws, treaties?

looky around the world; courts mending bending meanings of original intent

to keep er goin; debt refied and created to keep it going.

what are you going to do; quite using dollars or euros.  ha fucking ha.

tried to "spend" some american eagle and was looked at like i was a kook.

dude, the masses are fully "owned" by the system and the fptb are in complete

control of your financial future except phyzz; and that is manipulated to the max.

on that note though it appears the market functioning as normal as .382 retrace

to 31.89 complete; time to add if funds avail as stairway to qe infinity says buy me now!
retrace/consolidation underway-pop from fed expected today and off to resist at 32.50...

same shit different day, so have fucking great mf day bitcheez...

Wed, 10/24/2012 - 09:46 | 2915553 Shevva
Shevva's picture

I hear they will be writing new government bonds onto chocolate and then will only sell them to fat people or countries with very hot climates. You can also buy special Christmas chocolate bonds covered in gold and silver foil that you can hang on your tree.

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