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Inevitable US, UK, Japan, Euro Downgrades Lead To Further Currency Debasement
From GoldCore
Inevitable US, UK, Japan, Euro Downgrades Lead to Further Currency Debasement And Safe Haven Gold Demand
Gold’s London AM fix this morning was USD 1,721.00, EUR 1,303.10, and GBP 1,091.80 per ounce.
Yesterday's AM fix was USD 1,727.00, EUR 1,302.22, and GBP 1,093.17 per ounce.

Cross Currency Table – (Bloomberg)
Gold fell overnight in Asia despite the Moody’s European downgrades and very gold friendly news regarding the very poor Japanese and US fiscal positions. Moody’s Investors Service cut the debt ratings of six European countries including Italy, Spain and Portugal and said it may strip France and the U.K. of their top Aaa ratings
Gold rose in Japanese yen again this morning after the Japanese announced that they are further expanding their “asset-purchase program” while keeping interest rates at zero and increasing the size of its “powerful monetary easing” to ¥65 trillion ($835.83 billion) from ¥55 trillion, with the net ¥10 trillion increase earmarked for the purchase of Japanese government bonds.
Safe haven demand for gold continues due to concerns that Greece’s “bail out” is yet another short term panacea and Moody's downgrade of various European nations' ratings have reignited contagion fears.
Greece is but a small pebble in the pond when compared to the huge levels of debt seen in Japan, the UK, the US. The Moody’s downgrade may cause ripples in markets which could lead to waves which could coalesce a tsunami of financial contagion across Europe and much of the world.
While all the focus has been on Greece in recent days, the global nature of the debt crisis came to the fore yesterday and overnight. This was seen in the further desperate measures by the BOJ and Moodys warning that the UK could lose its AAA rating. Some of us have been saying for some years that this was inevitable but markets remain myopic of the risks posed by this.
Possibly the greatest risk is that of the appalling US fiscal situation which continues to be downplayed and not analysed appropriately. President Obama unveiled a massive $3.8 trillion budget yesterday and he is to increase Federal spending by 53% to $5.820 trillion by 2022.
The Outstanding Public Debt as of 14 Feb 2012 at 11:00:00 AM GMT is:
The estimated population of the United States is 312,222,693 so each citizen's share of this debt is $49,221.89.
The National Debt has continued to increase an average of $3.98 billion per day since September 28, 2007.
The US government is projected to spend over $6 trillion a year by 2022. Still bizarrely unaccounted for is the ticking time bomb of unfunded entitlement liabilities - Social Security and Medicare, which Washington continues to deal with by completely ignoring them.
While Washington and markets are for now ignoring the fiscal train wreck that is the US. This will change with inevitable and likely extremely negative consequences for markets – particularly US bond markets and for the dollar.
The coming US sovereign debt crisis in conjunction with the massive fiscal challenges facing the UK, Japan and Euro Zone countries makes gold an essential diversification today.
Indeed, not owning gold and those who advise against owning gold are irresponsible and imprudent in the extreme.
For breaking news and commentary on financial markets and gold, follow us on Twitter.
OTHER NEWS
(Reuters Global Gold Forum) -- The world's first yuan-denominated gold ETF has got off to a lukewarm start on the HK stock exchange today, but the expectation in the analyst community is that demand will pick up as investors become more familiar with this sort of product.
(Bloomberg) -- Gold Held in Exchange-Traded Products 0.1% From All-Time High
Gold holdings in exchange-traded products backed by bullion stood at 2,390.065 metric tons yesterday, data compiled by Bloomberg show. This is about 0.1 percent, or 2.9 tons, from a December 13 record of 2,392.976 tons.
(Bloomberg) -- Touradji Sold Entire Stake in SPDR Gold Trust in Fourth Quarter
Touradji Capital Management LP, founded by Paul Touradji, sold its entire stake of 45,000 shares in the SPDR Gold Trust as of Dec. 31, a U.S. Securities and Exchange Commission filing showed today.
The SPDR trust is the biggest exchange-traded product backed by physical gold.
(Bloomberg) -- GLG Partners Sells Stake in SPDR Gold Trust in Fourth Quarter
GLG Partners LP sold its stake in the SPDR Gold Trust, an exchange-traded product backed by the precious metal, during the fourth quarter, a filing with the U.S. Securities and Exchange Commission showed.
GLG held no shares as of Dec. 31, down from 94,675 at the end of the third quarter, according to a 13F filing today. SPDR is the biggest exchange-traded product backed by gold.
(Bloomberg) -- Ethiopia Buys More Gold, Fuelling Money Supply, AFDB Says
Ethiopia’s central bank bought more gold from artisanal miners in the 2010-11 fiscal year than it planned to purchase within five years, fuelling money supply growth, the African Development Bank said.
The National Bank of Ethiopia acquired 6,615 kilograms (212,677 ounces) during the period, compared with the 5,250 kilograms it planned to buy over the 2010-15 period, the Tunis- based lender said in an e-mailed statement today. In the first quarter of the current fiscal year, the bank bought $109.5 million of gold from miners, 52 percent more than planned, it said.
“This unprecedented purchase of gold by the central bank has an effect similar to quantitative easing, as the monetary authority is injecting more money into the economy while reallocating its portfolio and building up its gold reserves,” the bank said.
Inflation in Ethiopia surged to 40.6 percent in August, stoked by what the International Monetary Fund said was “excessive” growth in money supply. Monetary expansion accounted for 40 percent of the increase in Ethiopian inflation, the African Development Bank said.
The supply of gold to the central bank increased because of a 5 percent premium over the international market price, the bank said. Ethiopia shipped 11.7 metric tons of gold in the 12 months to July 7, the end of Ethiopia’s fiscal year, according to the country’s Mines Ministry.
Gold for immediate delivery fell 0.3 percent to $1,717.88 an ounce as of 11:12 a.m. in Nairobi, paring its advance during the past 12 months to 26 percent.
SILVER
Silver is trading at $33.49/oz, €25.39/oz and £21.27/oz.
PLATINUM GROUP METALS
Platinum is trading at $1,631.25/oz, palladium at $683/oz and rhodium at $1,500/oz.
NEWS
(Reuters)
Gold slips with euro as Europe jitters remain
(Wall Street Journal)
Gold Falls In Asia; Stronger Dollar Weighs
(BusinessWeek)
Gold Declines as Moody’s Downgrades Lift Dollar, Touradji Sells
(Reuters)
World's first yuan-denominated gold ETF makes weak debut
(AP via Youtube) Obama Unveils $3.8 Trillion Budget
COMMENTARY
(Wall Street Journal)
Gold Has Humbled Smart Men Before
(Jim Sinclair Mineset)
The Lonely Road We Take Together
(BusinessInsider)
Guess How Much It Costs The Government To Produce A Nickel
(The Gold Report)
'Mother of all gold bull markets remains intact'
(ZeroHedge)
Moody's Downgrades Italy, Spain, Portugal And Others; Puts UK, France On Outlook Negative - Full Statement
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Is it true that the Bank of England is the only Central Bank NOT buying Gold ?
We don't need to - we're working on a time machine so that we can go back 10 years and stop Gordon Brown from fucking us all and selling it in the first place.
Did you know that through out the entire Roman banking system,
Interest rates were never lower than 4%? Not even under Nero!
Leave it up to Ben Bernanke and his Furnace Players to out do the whole Roman history.
0% interest rates = FUBAR
no other math needed.
Ok. now rise Good Guys, Superheros and Howard Roark please.
are interest rates anywhere on the planet over 4 percent now?
Australian OCR 4.25%
Australian OCR 4.25%
Its a great deal, until you see your costs for exchanging currency to deposit.
"Sir Mervyn King warns chancellor George Osborne there is a limit to what monetary policy can achieve in getting inflation back to its 2pc target, and says "real adjustments" to the economy are needed."
Mwuhahaha. I remember those English colleagues who were laughing about France....
Brooon really screwed the whole country like no man alive.
"Indeed, not owning gold and those who advise against owning gold are irresponsible and imprudent in the extreme."
Nice job, Goldcore! Very well written article.
Gold and Silver are the only sound money on the planet.
Do the ratings even matter anymore? What's the point of ratings, and for that matter, what's the point of CDS? It seems clear no nation will be allowed to officially 'default'. Ever. So what's the point. I'm not being obtuse or sarcastic. I mean it, why even have CDS when a 'credit event' will never happen? And if all nations will ignore reality until everything blows apart, at which point who gives a shit about CDS paying out since there will be much larger problems, what does it matter if a nation is downgraded? So they pay a little more to borrow money (relatively speaking). Does this matter?
Speaks volumes about confidence, now doesn't it?!
Gold world mountain is a 20 foot cube says WB. Not enough for the world to drink and all you can do is let it stink in a corner somewhere. Its the perfect ANTICAPITALISTIC hedge. In the age where we all pray to global capitalism.
What a total contradiction. If its a stop gap measure to allow the Augean stables to be cleansed out, where do you go after the deluge? Do you leave your gold refuge. And what currency will then be God of new capitalism?
Oh Keynes and your Bancor, DSK's dream also. Will pax americana allow that?
Or will pax americana have to die along with fiat demise and Oligarchy lies?
A lie becomes a lie in this world not when Socrates says it, not when Jesus says it, but when Caesar says it, by concocting another universal lie!
The ultimate lie of human relativistic truth : Another Caesar, another imperial fiat construct.
Play on Sisyphus, mortals stay mortals.
the bulk of which was mined over the past 20 years. and the stock prices of said miners aren't looking good either--nor have they been for some time. in the meantime Apple will soon be a 500 billion dollar market cap company. and no...i'm not saying this to make some point about "buy, buy, buy"--i'm just sayin' even in the world of gold people still had to make money. and even though we have no idea what money is anymore we still know what profits are, cash flow is, growth prospects, productivity, greed, fear, etc...etc.
credit ratings aré so passe...
like hoping for the sec to regulate the markets...
how quaint
have a nice day!
Warren Buffett makes a case against owning gold. Apparently, all the world's gold is now valued at $9.6 Trillion.
While he makes all kinds of interesting arguments about where $9.6 Trillion can be invested, all these classical stock investors miss the whole point of holding gold - the threat of hyperinflation and currency collapse. If US unfunded liabilities are $61 Trillion today (and likely to rise to several times that later), then all the world's gold today could not wipe out more than 15 percent of US unfunded liabilities today. Then there's Japan, Europe etc etc. You get the picture. These guys never address that stuff.
I've seen ads for buffalo gold plated coins that have a full 14 milligrams of gold in them. According to the ad there is a limited avaiibility and it's hard for them to hold the price with skyrocketing gold. They could always cut it back to 3 milligrams of gold or 31 nanograms.
HurricaneSeason
LOL, Check out the Copper coins on eGay, you can make a killing selling to the sheeple.
$49,000 is pretty misleading with so many not considered to be in the workforce and of the ones still in the workforce, less than 50% pay taxes. More like $250,000 per customer or client.
World impact?...what world impact...there is a one day effect on the markets and then straight back up again...markets are clearly saying that until they see tangible effects on earnings it will ignore the ratings agencies and side with the politicians with rose colored glasses...market does not care about $15T in debt or $30T in debt until it results in less earnings for Chipotle and Apple
The Fed IS the market. There actually would be an impact if this were a free market, but with the Fed and the gubmint on the same team, they're going to steer this sucker wherever they want it to go. Without endless access to newly created fiat multiplied by egregious leverage through derivatives, we'd actually find out where we really are...
Oil $250 soon.
silver $100;
gold $2,500.
Food...who knows?
the big number i saw cross was an absolute decline in production of almost 2 percent in the euro zone "which came in below expectations." this is a truly STAGGERGING number. The incomes lost as a result of production simply "holding steady" is bad enough. An aboslute decline in this number spread throughout the entirety of EU...no matter what the so called expectations are...is simply something you don't recover from. Forget about reversing it as well...
from the reformed broker, Josh Brown:
"When I watch the foolishness of the ratings agencies and their latest downgrades, I get the same mixed feeling of pity and apathy these days. Especially when I see the market's (non) reaction to anything they have to say anymore. Six months ago, if a secretary from Moodys had taken an overlong lunch, the media was there to divine what that might mean for Hungarian credit spreads. Moodys and S&P releases on Europe - or even the hint that a release might come - meant a full-scale stampede for the risk-off exits and a tornado of media coverage and wordles and op-eds and god knows what else.
And poof! Now no one cares at all.
And why should we? This is all rearview mirror, rehashed stuff at this point. We already know that everyone knows how bad things are and that the ECB is going Bernanke - it's simply going to print. So what the hell do we care which country it's printing for on any given afternoon?"
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