The Queen Of England Asks Economists – ‘Why Did Nobody Notice?’

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From Goldcore Gold Bullion

The Queen Of England Asks Economists – ‘Why Did Nobody Notice?’

Today’s AM fix was USD 1,696.50, EUR 1,297.32 and GBP 1,051.38 per ounce. 
Yesterday’s AM fix was USD 1,694.75, EUR 1,299.16 and GBP 1,051.46 per ounce.

Silver is trading at $32.58/oz, €24.99/oz and £20.29/oz. Platinum is trading at $1,621.50/oz, palladium at $697.00/oz and rhodium at $1,060/oz.

Gold was up $1.30 or 0.08% in New York yesterday and closed at $1,711.30/oz. Silver slumped to a low of $32.21 and ended with a loss of 2.6%.

Gold was not able to break $1,700/oz on Friday and prices are on course for their 3rd consecutive weekly fall, as investors focus on the looming fiscal cliff talks where little progress has been made.

Like an old western movie, with wind and dust blowing around, Obama and Boehner are holding out waiting to see who will “draw” or concede to the other’s plan to avert the fiscal cliff. Last Sunday, they exchanged counteroffers to their original campaigns.  Yesterday evening just an hour after U.N. ambassador, Susan Rice, (not a Republican favourite) removed her name as a candidate for Secretary of State, the U.S. President and Speaker of the House met for an hour and still agree to disagree. 

U.S. industrial output figures for November are published at 1415 GMT.

There is a decrease of liquidity in the gold bullion market with many institutional players taking profits, closing out positions for year end, and heading off for the Holidays all contribute to a lack of momentum in the market.

Spot silver hit a one month low in the prior session of $32.21. This is also its third weekly fall, and its longest period of weekly drops in 7 months.

Queen Elizabeth II and Prince Phillip visited the Bank of England’s gold vault and wonders like most people how the things got so bad.  

Back in 2008, when the monarch visited the London School of Economics she described the credit crunch as ‘awful.’ .  Fast forward to 2012, the heart of Europe’s  4 year-old debt crisis while the Queen of England hears a financial expert compare the debt crisis to a flu epidemic or an earthquake, as hard to predict. This comparison is truly patronizing and an insult to the Queen’s intelligence.

Although I am not English have some respect for your elders, especially your Queen, Britons!  Pensioners in England can recall hard times during the World War when items like sugar were a luxury.  In this new era of credit you have people complaining if they can’t borrow to have their new BMW financed to match their Cotswold’s country house or Spanish holiday home.

The Queen was informed that since financial risk has been managed better (need we mention Libor?) than it was in the past, people became complacent.  She smiled and said, ‘But people had got a bit...lax, had they?’ 

Her Royal Highness also suggested that the Financial Services Authority may not have been hard-line enough in its policing. She said: ‘The Financial Services – what do they call themselves, the regulators – Authority, which was really quite new … it didn’t have any teeth.’

It’s rather ironic that the tour showed the gold vault since a good portion of the UK gold reserves were sold off from 1999-2002, when gold prices were at their lowest in 20 years.  Hopefully so called financial experts can learn from the Queen as quantitative easing and money printing only debases currencies and strengthens gold which is not controlled by sovereign monarchies or governments.

Yesterday, Dr. Constantin Gurdgiev, a former non-executive member of GoldCore’s investment committee wrote “Some thoughts on gold’’ on his blogspot at True Economics.com in reference to an the Irish TV program Prime Time’s presentation on the yellow metal.

Prime Time’s program covering gold is undoubtedly one of the rare occurrences that this asset class got some hearing in the Irish mainstream media. Which is the good news.

Not to dispute the issues as raised in the program, here are some of my own thoughts on the question of whether or not gold prices today represent a bubble.

A simple answer to this question, in my opinion, is that we do not know.

Short-term and even medium-term pricing of gold (in any currency) is driven by a number of factors (fundamentals), all of which are hard to capture, model and value.

For example, currency valuations forward suggest that gold is unlikely to experience a sharp and protracted correction in the US dollar terms, if you believe the Fed QE4 is likely to persist over time. In euro terms, potential for devaluation of the euro implies pressure to the upside to the gold price. Yen price is also likely to play longer-term continued devaluation scenario. Things are less certain when it comes to Pound Sterling price… and so on. Here's just one discussion on one of the above effects:  Soberlook.com

Another example: drivers for prices on demand side that include rather volatile regulatory conditions in the major gold demand growth markets, such as China and India.

In short, things are much more brutally complex than the PrimeTime programme allowed for.

The reason for this complexity is that gold acts simultaneously (as an asset) in several structural ways:

1) as a simple bi-lateral long term hedge for inflation, equities and currency valuations

2) as a medium term (albeit not entirely persistent) hedge for some asset classes (e.g. equities)

3) as a short term speculative instrument to some investors

4) as a backing for numerous and large volume ETFs

5) as a benchmark backing for numerous and relatively large volume synthetic ETFs

6) as a store of value

7) as a risk management tool for complex structured portfolios

8) as a bilateral safe haven against equities and bonds, political and economic risks, systemic financial markets risks, etc.

These relationships can be unstable over time, can require long time horizon for materialization and are 'paid for' by assuming higher short term volatility in the price of gold. That's right - while PrimeTime contributors spoke about gold price 'correcting' or 'bubble bursting' none seemed to be aware of the fact that if you want to get something you want (hedging and safe have properties being desirable to investors), you should be prepared to pay for it (price volatility seems to be a good candidate for such cost of purchase).

No matter what happens in the short- to medium- term, gold is likely to remain the sole vehicle for the store of value and risk hedging over the long-term. It did so over the last 5,000 years or so and it will most likely continue doing so in years ahead. This property of gold is well established in the literature and is hardly controversial.

There is one caveat to it - due to instrumentation via ETFs, there are some early (and for now econometrically fragile) signs emerging that some of gold's hedging properties might be changing. More research on this is needed, however and only time will tell, so in line with PrimeTime, let's stay on the RTE side of Complexity Avoidance Bias on that one.

There is an excellent summary on what we know and what we don't know about gold by Brian M. Lucey, Trinity College Dublin Professor.  Available here

Last year I gave a presentation at the Science Gallery on some properties of gold: Read here

Not to make this post a lengthy one, let me summarize my own view of gold as an asset class:

In my view, gold can be a long-term asset protection from the risk of expropriation, inflation, devaluations, and tail risks on political and economic newsflow side etc.

To me, gold is not a speculative (capital gains) instrument for the short-term and it should not be acquired in a concentrated fashion - buying in one go large allocations. Gold should be bought over longer period to allow for price-averaging to reduce exposure to gold price volatility.

Gold allocation should be relatively stable as a proportion of invested wealth - different rules apply, but 5-10% is a reasonable one in my view.

Of course, any investment portfolio (with or without gold) should strive to deliver maximum diversification across asset classes, assets geographies etc.

Disclosure: I have no financial interest in or any commercial engagement with any organization engaged in selling gold. Until December 1, 2012 I used to be a non-executive member of the investment committee of GoldCore Ltd and was never engaged on their behalf in any marketing or provision of advice to any of their current or potential clients.

Dr. Constantin Gurdgiev’s Bio and Blogs

NEWS

Gold heads for 3rd straight weekly drop; US eyed- Reuters

Japanese business confidence slumps – The Financial Times

Queen gives Bank chiefs a ticking orf over the crash as she visits vaults – The Daily Mail

Queen and Duke of Edinburgh visit gold vault at Bank of England – The Telegraph

COMMENTARY

Mark Faber on the End of Modern Capitalism Including Comments on Gold & Silver – Zero Hedge

China Playing a Major Role in Global Silver Market – Silver Seek

France maintains top AAA credit rating from Fitch - BBC

For breaking news and commentary on financial markets and gold, follow us on Twitter.

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Fri, 12/14/2012 - 08:55 | 3062183 GetZeeGold
GetZeeGold's picture

 

 

Cheese it amigos.....it's the Queen.

 

 

Fri, 12/14/2012 - 08:57 | 3062190 Ghordius
Ghordius's picture

God save the Queen. I'd say she is making a strong hint

Fri, 12/14/2012 - 09:01 | 3062205 The Abstraction...
The Abstraction of Justice's picture

Just a hint? Too little, too late. The royal family do not deserve the throne.

Fri, 12/14/2012 - 09:06 | 3062216 Ghordius
Ghordius's picture

What is the old girl supposed to do? Unleash her reserve powers? She would need some popular support for that...

Fri, 12/14/2012 - 09:13 | 3062236 magpie
magpie's picture

We are entering a time machine...the UK without its own central bank or run by foreign ones.

Fri, 12/14/2012 - 09:23 | 3062253 Harlequin001
Harlequin001's picture

' ‘The Financial Services – what do they call themselves, the regulators – Authority, which was really quite new … it didn’t have any teeth.’

It has plenty of teeth. Just try bucking the status quo and you'll find out just how sharp it's teeth are...

Like every regulator it exists only to preserve the flow of funds into government bonds or stock markets. Just try punting something that doesn't and see how far you get...

Fri, 12/14/2012 - 09:51 | 3062328 Dalago
Dalago's picture

Dearest Queen,

 

Ask the Rothchilds of England.

 

Warmest Regards.

Fri, 12/14/2012 - 10:09 | 3062388 Pseudo Anonym
Pseudo Anonym's picture

she's just making sure her own, unlike everybody else's, gold was not stolen by the hofjuden.  i call that being prudent.  other than that, she couldnt give a fuck

Fri, 12/14/2012 - 10:15 | 3062411 overmedicatedun...
overmedicatedundersexed's picture

most likely she is seeing what size vault to build to hold her AU, as like many she sees it at risk of being corzined.

Fri, 12/14/2012 - 11:17 | 3062602 TruthInSunshine
TruthInSunshine's picture

Fuckin' old hag. That bitch owns more real estate than anyone, and she didn't work for it.

The "Royal Family" =  Sponsored/encouraged wunderlust to allow debt slave Brits to fantasize about Unicorns and Prince Charming, much like little girls have princess dress up tea parties. Modern day bread & circus.

This message was Johnny Rotten approved.

God save the queen
The fascist regime
They made you a moron
Potential H-bomb


God save the queen
She ain't no human being
There is no future
In England's dreaming


Don't be told what you want
Don't be told what you need
There's no future, no future,
No future for you

Sex Pistols - God Save the Queen
Fri, 12/14/2012 - 11:09 | 3062592 john39
john39's picture

she is hofjuden...  the house of windsor claims that it descended from the "king david"... look it up.

Fri, 12/14/2012 - 11:39 | 3062727 Pseudo Anonym
Pseudo Anonym's picture

the queen is not hofjuden by definition

it think you're confusing (and lumping together) jew w/ hofjuden as court bankers:

http://en.wikipedia.org/wiki/Court_Jew

Fri, 12/14/2012 - 11:58 | 3062782 john39
john39's picture

perhaps technically correct... but the point i tried to raise is that the so called royal families all trace the lineage back 'hebrew' roots.... including the widsors, the spanish royal family etc....  (not to mention most U.S. presidents who are related to the windsors)....   court bankers is a bit of misdirection...  they were also the court itself, carefully concealed from the ignorant masses.

Fri, 12/14/2012 - 12:08 | 3062807 Pseudo Anonym
Pseudo Anonym's picture

never disputed:

they [hofjuden] were also the court itself, carefully concealed from the ignorant masses.

in times of renaissance, the royals were the front, later beheaded by the ignorant masses, while the hofjuden were enriching themselves by stealing from the public purse, just like today, and ran the show from behind the scenes (just like today) via the 'invisible' hand principle.

Fri, 12/14/2012 - 12:16 | 3062832 Thisson
Thisson's picture

You're both fucking ignorant bigots arguing over which flavor of ignorance tastes better, so go fuck yourselves.

Fri, 12/14/2012 - 12:40 | 3062912 Pseudo Anonym
Pseudo Anonym's picture

i understand.  the truth and reality of the hofjuden kleptocratic psychopathy is just too uncomfortable for you. i'll come and tuck you in after i burp you so you can sleep better.  good night, dont let the bed bugs bite you.

Fri, 12/14/2012 - 09:23 | 3062256 NoDebt
NoDebt's picture

What's the Queen SUPPOSED to do??  Try this on for size.....

How about the 'ol girl whips out her Makita and drills a few "test holes" in some of those bars.  Then she looks STRAIGHT into the camera and says "Now tell those crazies on Zero Hedge to STFU!!"

Fri, 12/14/2012 - 09:24 | 3062259 Harlequin001
Harlequin001's picture

Yeah, that'll look real good with a shit load of tungsten round her feet...

Fri, 12/14/2012 - 11:50 | 3062759 old naughty
old naughty's picture

Oh, Diana, why did you choose such an in-law?

Fri, 12/14/2012 - 10:03 | 3062351 SilverDOG
SilverDOG's picture

The Abstraction...,

 

Precisely.

Who is foolish or multi-generational trained enough to respect that old raping and pillaging financial whore. I have more respect for the drug dealer on the corner. Not, a guarded old hag responsible for millions of deaths. Rid the planet of the inbred, bank sucking retards. 

Can anyone remotely utilize their hindsight... without bending over to check their ass?

Down with the Queen whore.

Fri, 12/14/2012 - 10:37 | 3062492 CPL
CPL's picture

The Royals do not deserve a fart in a sack.

But like anyone else that has trusted these fools with their money she has just as much a right to know.

 

This will not turn out how people thought it will, not by a long shot.

Fri, 12/14/2012 - 09:15 | 3062240 Acet
Acet's picture

It's not the first time she makes some comments on the Economic situation in the UK, the involvement of banks in the current mess and regulatory failures.

Given the English subtlety, avoidance of giving offence and tendency to tip-toe around a subject rather than straight talk - the Queen being a master practitioner of the art - the Queen's comments about this have been surprisingly strong and critical.

 

Fri, 12/14/2012 - 09:31 | 3062276 williambanzai7
williambanzai7's picture

GOLDFINGER 2012 (FINAL)

Fri, 12/14/2012 - 09:39 | 3062292 Harlequin001
Harlequin001's picture

Of course, it's not just any Queen. It's THE Queen...

Fri, 12/14/2012 - 09:50 | 3062325 Downtoolong
Downtoolong's picture

 

Queen: Do you expect the muppets to believe you?

Goldfinger: No Your Majesty, I expect them to die.  

 

Fri, 12/14/2012 - 10:50 | 3062538 lmm166
lmm166's picture

75 years and those Germans are still nippen' @ my royal ankles.

Fri, 12/14/2012 - 11:54 | 3062770 TheGardener
TheGardener's picture

Queen : So we will buy the Empire back for Pence on the Pound if I claim German citizenship because of my forefathers ?

 

Gerd Fröbe :  My apologies her Majesty, this is a paid for commercial and those chocolate bars will be sold by Christmas !

Fri, 12/14/2012 - 15:52 | 3063899 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

Awesome!  

 

would be nice to have a hidden, smiling, Corzine in there, vaporizing the shit

Fri, 12/14/2012 - 12:22 | 3062853 Bansters-in-my-...
Bansters-in-my- feces's picture

Gordius.... Did you mean "Gold save the Queen"..?

Fri, 12/14/2012 - 10:29 | 3062462 Tommy Gunner
Tommy Gunner's picture

God save the queen - fascist regime.

Fuck off Liz - I saw the collapse coming about 8 months before Lehman and was busy dumping every bit of cash I could lay my hands on into gold.

And instead of reading Hello - try reading the Big Short.  Lots of people saw this coming.

And guess what you dumb bitch - a worse crash is on the way.

And you'll be asking the same dumb questions again. 

That's what you get when you are your mother and father are brother and sister

Fri, 12/14/2012 - 08:56 | 3062188 EscapeKey
EscapeKey's picture

Why would they? They made out like bandits out of taxpayer funded bailouts.

As for the regulators - the BoE now "regulates" the banks - talk about the fox guarding the henhouse.

Fri, 12/14/2012 - 08:59 | 3062195 Ghordius
Ghordius's picture

"For example, currency valuations forward suggest that gold is unlikely to experience a sharp and protracted correction in the US dollar terms, if you believe the Fed QE4 is likely to persist over time. In euro terms, potential for devaluation of the euro implies pressure to the upside to the gold price."

Am I the only one that finds those two sentences a bit strange?

Fri, 12/14/2012 - 12:22 | 3062854 TheGardener
TheGardener's picture

That whole article is a bit strange.  Explaining Gold in currency terms get`s you off track easily, but this particular sentence makes sense for those who looked for arbitrage opportunities in the Gold/Dollar Gold/Euro

USD/EUR crosses : there were none ! So Gold is traded in Dollars but appreciates in Euros , no big deal , the Euro has a long way to fall to his "Peseta" or "Drachma" implied value or purchasing power, ultra low

wage Germany excluded. Same could be said about the American Peso, buys you nothing but shit compared to other big bloc consumption vouchers, or whatever they call their currencies.

 

Recommending 5-10% Gold makes those folks almost moronic, I`d prefer to recommend 115% so you get used to manage and settle your debts for real and in real money.

Fri, 12/14/2012 - 09:01 | 3062199 PUD
PUD's picture

Money as debt. The very fundamental nature of credit money is the root cause of everything. This is a fact which is totally absent from the thinking of everyone. All money is debt. Debt carries interest. Interest requires more debt money creation...it compounds...it goes exponential at some point of saturation. This is why things are as they are. Every other discussion from MMT to gold is a sidebar.

Fri, 12/14/2012 - 09:04 | 3062201 NoDebt
NoDebt's picture

Has anyone noticed all the pictures of gold bullion vaults sent to the media lately?

"Yes, we actually have the gold!  We swear!  We're running 3 tours a day through the place!  Come see for yourself!  We're not lying about this!  Here's a picture of the Queen inspecting it personally!  What more do you want from us?  Can you not see how strong and stable we are?  Now everyone please start having confidence again!"

 

Fri, 12/14/2012 - 09:07 | 3062218 HD
HD's picture

 Let me drill into a few random bars....I'm in the mood for chocolate.

Fri, 12/14/2012 - 09:30 | 3062272 Bicycle Repairman
Bicycle Repairman's picture

I'd want to publish the numbers of a gold bar or two and find out how many people "own" it.

Fri, 12/14/2012 - 12:23 | 3062862 FeralSerf
FeralSerf's picture

Only one person, "Lord" Rothschild, actually owns them -- the real solid gold ones, that is. There may be others that think they have an interest in them though.

Fri, 12/14/2012 - 20:43 | 3065186 Bicycle Repairman
Bicycle Repairman's picture

The others are silly, aren't they?

Fri, 12/14/2012 - 09:19 | 3062249 insanelysane
insanelysane's picture

I didn't do too well in strengths of materials class in college but methinks those bars of gold must be gold plated aluminum because those steel racks don't seem strong enough to hold that much gold/tungsten.

Fri, 12/14/2012 - 11:00 | 3062560 Going Loco
Going Loco's picture

We went through all that on a previous thread. The racks are correct for the weight they are bearing.

Doesn't prove it's not Tungsten though.

Fri, 12/14/2012 - 11:08 | 3062585 earnulf
earnulf's picture

We may have gone through that on an earlier post, however it still does't change the fact that each shelf is holding 5,000 pounds (English weight) of 400 oz bars.    Some of those shelves are five deep, meaning that they are supporting 25,000 pounds of weight per shelf.  (80 bars per shelf, 400 troy oz each is about 2200 kg per shelf)

Fri, 12/14/2012 - 11:08 | 3062586 earnulf
earnulf's picture

double post

 

Fri, 12/14/2012 - 09:19 | 3062250 Wakanda
Wakanda's picture

The propaganda machine is in high gear.  The internet is destroying it.

The Second American Revolution, through the cables to a computer near you.

Fri, 12/14/2012 - 12:38 | 3062922 TheGardener
TheGardener's picture

So whoever fails to see and accept those huge useless amounts of Gold in those vaults shall henceforth be called a Gold-doubter and be punished as such.

 

Questioning, "relativating" or discussing Gold in groups more than three should be treated as such felony.

/sarc off

 

 

 

 

Fri, 12/14/2012 - 12:48 | 3062952 FeralSerf
FeralSerf's picture

"Here's a picture of the Queen inspecting it personally!"

"The lady doth protest too much, methinks." -- Hamlet

Fri, 12/14/2012 - 09:02 | 3062208 q99x2
q99x2's picture

Keep that Queenie's dirty little hands away from the gold. I do not trust her. Queens are easier to replace than gold these days. The worthiness of her hiniest has been debased.

Fri, 12/14/2012 - 09:09 | 3062225 magpie
magpie's picture

Hard to call, House of Goldman vs House of Windsor, though a monarchs personal credit and real estate ownership often trumps the financiers in the most inopportune moments.

Fri, 12/14/2012 - 09:22 | 3062255 Acet
Acet's picture

She has no power.

Wether or not she personally benefited from the exuberance of the last couple of decades is open to discussion, but it's hard to point out anything she has done to make this come about or anything that she could have done to avoid it.

On the upside, at least she has managed to maintain a very high level of Respect from her subjects, so she has quite a lot of Moral Power. Wether she will deploy it or not when, in the UK the fecal mater finally makes contact with the rotary impeller, is unclear.

 

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