Market Developments This Week Very Gold Bullish; Bears Focus on Price, Not Value

Tyler Durden's picture

Submitted by GoldCore

Market Developments This Week Very Gold Bullish; Bears Focus on Price, Not Value

Gold is trading at USD 1,655.70, EUR 1,232.18, GBP 1,065.81, JPY 126,856.60, AUD 1,703.34 and CHF 1,523.38 per ounce.

Gold’s London AM fix this morning was USD 1,651.00, EUR 1,229.52, and GBP 1,063.10 per ounce. 

Yesterday’s AM fix was USD 1,649.50, EUR 1,234.19, and GBP 1,065.43 per ounce. 

Cross Currency Rates

Asian equities rose overnight with the notable exception of Chinese equities which again displayed weakness. European indices have given up tentative gains after Moody’s downgrade of British banks.

Gold Spot $/Oz (G14 5 Days)

Markets await the key US jobs report and the expectation is that the US economy will likely show its fifth straight month of slight or no job creation.

Mervyn King’s warning that the current financial crisis is the worst ever and could be worse than the Great Depression may also be impacting market sentiment and should result in further safe haven demand for gold. 

XAU-GBPExchange Rate (G14 5 Days)

As expected the BoE and ECB kept interest rates ultra loose and the BoE embarked on a new round of QE. The ECB announced QE ‘euro style’ with an expanded round of covered asset purchases, bond buying and long term financing operations in the euro zone.

Trichet’s retirement and the succession of Italian Mario Draghi may prove to be bullish for gold as Draghi is believed to be more dovish than Trichet and may be more likely to tolerate inflation and allow the euro to be debased.

XAU-EUR Exchange Rate (G14 5 Days)

The continuation of ultra loose monetary policies and new rounds of QE is supportive of gold in all currencies.

Negative real interest rates mean that there continues to be no ‘opportunity cost’ to own gold which is a key driver of gold’s bull market.

In time, quantitative easing will be seen for what it is - bailing out banks and financial institutions and a form of currency debasement.

Developments in gold and wider markets this week are bullish. There are continuing signs of very significant demand in the Middle East, India, Vietnam and China. There are reputable reports of shortages of gold bars in Hong Kong, Singapore and Vietnam, of shortages of silver bars in India and delays in delivery and rationing of silver coins internationally.

The CME decision to increase the amount of gold accepted as collateral and the LCH. Clearnet decision to allow gold bullion to be used as collateral shows the financial system is increasingly seeing gold as an asset on a par with cash and bonds.

XAU-CHF Exchange Rate (G14 5 Days)

The increasing acceptance of gold as collateral in the financial system is likely to continue and accelerate especially given the uncertainty regarding cash and government bonds.

This should create a new source of demand from institutions in the financial sector which would be bullish.

We are gradually seeing the remonetisation and indeed the ’financialisation’ of gold, as gold is gradually being reincorporated into the modern financial and monetary system.

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Silver is trading at $31.92/oz, €23.75/oz and £20.53/oz 

Platinum is trading at $1,515.70/oz, palladium at $598/oz and rhodium at $1,525/oz. 

(Financial Times)  
Vietnam’s jittery gold bugs 

Gold heads for biggest weekly gain since September

‘Resilient’ Gold May Rally to Record as Economy Slows, Morgan Stanley Says

(Wall Street Journal)
Clearinghouse LCH Plans to Take Gold as Collateral

(Financial Times)
LCH.Clearnet to accept gold as collateral

Hiding Gold in All the Unusual Places

(The Telegraph)
Ian Cowie: Gold shines amid gloom of "worst economic crisis ever"

BBC Does It Again: "In The Absence Of A Credible Plan We Will Have A Global Financial Meltdown In Two To Three Weeks" - IMF Advisor

Peter Cooper: Physical silver running out because its spot price does not reflect true investment demand

Julian Phillips: Why Gold Isn’t $2000 yet…

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bullionbaron's picture

I was reading through some old articles the other day and came across a couple from the last bull market which briefly described a crisis that on the surface appears similar to the one that we face today. The similarities are only skin deep though, there is no way the US can bump up their interest rates at this point like they did in 1980 to stem curb the inflation and speculation... articles and more here:

CapitalistRock's picture

Exactly right. The US cannot raise interest rates and strengthen the dollar like they did in 1980. Back then we had just washed out debts with a decade of high inflation. Today we are saddled with debt and are only solvent when borrowing costs are under 6%. A scary thought!

bullionbaron's picture

Which really begs the question... what is the endgame? It seems the Fed can either let the deleveraging/deflationary forces take hold or once again try to pump the economy full of QE (still only a temp solution). There is no sensible solution to the crisis like they had in the 1970s/1980. Whatever path they do take, you would be a mad fool to believe they will be able to guide us through the financial minefields that await us.

I still can't believe how few hold Gold, understanding it's role in the crisis as the only safe haven.

Smiddywesson's picture

Which really begs the question... what is the endgame? It seems the Fed can either let the deleveraging/deflationary forces take hold or once again try to pump the economy full of QE (still only a temp solution).

They are walking a fine line between inflation and deflation in a bid to stall while they acquire gold and prepare for a new gold referrenced monetary system.  To have a chance at balanced trade, that system will require the West to be poorer and Asia to be richer, so the Asians are encouraging their citizens to buy gold and we are being discouraged to own it.  Obviously, gold would skyrocket without collusion between these central banks to suppress prices while they buy.  We have seen China coordinate their margin hikes with the West.  We have also seen China acquire gold faster than Western nations.  This must be by agreement, so there's your evidence that TPTB want you poorer, and Asia richer.

Everything being done has been to stall, and absolutely no attempts have been made to fix the old system.  In fact, there has been no evidence of concern on the part of TPTB that they are making things worse by stalling.  That tells me they have no intention of salvaging the old system.  The only thing central banks are doing that has long range implications, the only thing of note being done that is not related to stalling, is central banks, all over the world, all at the same time, are buying gold, and they are letting China buy up the lion's share. 

JOYFUL's picture

very weird.  Tried to thumbs up. Does not work for your comment, but all others are functional.

u must be on to something bud.

Strike Back's picture

Yes.  Balancing a seesaw between international currencies, commodities, stock markets, and PMs.  We saw it with the swiss pegging of the CHF to the euro.  When the dollar gets too weak or the euro too strong, there is negative news from Europe.  When the dollar gets too strong or the euro too weak there is negative news from the US.  When gold rises too much there are coordinated margin increases and a stall in buying from Asia, ultimately leading to the depletion of Western gold reserves.  And on and on.  All to perpetuate the raping of third world industrial workers (who all of this debt flows back to) and impoverish the Western middle class (the indebted).  I must admit that I am getting confused.  They know this cannot last and one spinning plate will fall, knocking down all others.  What is their exit plan?

DaveyJones's picture

questions aren't the only thing that will get begging. Having no financial background, it has taken me a while and listening to bright (more importantly honest) people including ones on this site to determine the endgame is the first half of that word. These self destructive policies leave no way out. They will inflate the currency until it blows up. They will never admit this of course but they will behave like all other players in history. The fact that we are the fiat makes no difference, Actually it makes it worse. They have backed themselves into a lose lose situation and have no political character to face or tell the truth.  I hate them.

Martenson had a good interview with Paul Tustain (BullionVault) on some of these subjects in April

aus_punter's picture

pretty tough for Chinese equities to go up when the market is closed all week


DosZap's picture


 The similarities are only skin deep though

Yep, and topical. There is a completely different Paradigm shift between then and now.

Same w/'08,v.s an '11 crash(when and if it comes).

Wakanda's picture

Gold bears about to be bit hard in the ass by the bulls.

11 days until Black Monday II

bigwavedave's picture

errr... GoldCore?

slewie the pi-rat's picture

hey, b_w_dave!

i don't usually go thru their daily summaries of everything (including a lotta msm stuff) but tyler's (?): "Clearnet decision to allow gold bullion to be used as collateral shows the financial system is increasingly seeing gold as an asset on a par with cash and bonds." got me here even tho i figured it was goldCore

gold is an asset on a par with bonds!  that's funny!

jekyll island's picture

I guess gold is not real money, until it is....

Debtless's picture

Good morning. Here comes the PM hit squad.

Hearst's picture

Lately you can set your watch to it.  Just before the US markets open there seems to be strong selling pressure on both kingly metals.

Kiwi Pete's picture

Farewell Steve Jobs. I hope that as you stand before God he gives some weight to your $7 billion. Alas I fear not.

Still I'm sure there is much kindness, compassion and love on the plus side.

CapitalistRock's picture

I think Steve Jobs enjoyed seeing people choose to use Apple products far more than he enjoyed counting the dollar equivalence of his wealth.

Kiwi Pete's picture

I don't think that will cut it with the Big Guy.

oddjob's picture

ipad=future hearing impairment

bigwavedave's picture

Yeah Pete, I just hope that as the days go by someone in MSM has the guts to paint him as he was. A tightfisted corporate facist pig who never gave. The kinda of guy who never buys a round of drinks. The kinda guy who kept all his toys at home. The kinda guy who if he had an ounce of the generosity of the person who gave him their liver, he could have really changed the world. 

jekyll island's picture

The person who gave him the liver was brain dead.  

akak's picture

So the liver came from a congressman then?

Kiwi Pete's picture

Dave, I thought it was interesting to hear that when he brought the Pepsi guy on board to run the company he snared him by asking him if he would be happy selling lolly water for the rest of his life. I wonder if Steve made the best use of the talents that he was given. I think maybe God got exasperated and called him upstairs early for a chat.

Are you kidding's picture

He KNEW people...that doesn't mean he LIKED them.  I don't know him well enough to judge him.  He did make many people happy with his toys...that has to count for something.

msmith's picture

Gold may have some consolidation in the very short term before it continues higher.  Bearish USD Index in the short term though.  The EURUSD may be preparing to resume the downtrend, but the AUDUSD may continue to correct higher.  It looks like some downside consolidation is ahead for the S&P Index but more upside should follow.

Lets_Eat_Ben's picture

when gold gets to $2000 I'm going to get myself I high-quality hooker

CapitalistRock's picture

If gold is still only at $2,000 then you better get you some more gold.

sabra1's picture

janet napolitano's mother?

Sheens Liver's picture

Spend an extra Merc on a high-quality condom.

Debtless's picture

some nice bullshit there.

cowdiddly's picture

On PAR with cash and bonds? BWHAHAHAHAHAHAHAHA Superior to cash and bonds more like. I dont have to worry about the govt debasing my savings or some one giong broke or paying me back. PERIOD

Jimmy Carter was right's picture

I'd like to see some firsthand posts from others in Asia on the shortages of gold or silver to corroborate.  Don't know about shortages, but everything is 25% over spot.

jez's picture

Sir: I live in Thailand and have not noticed any shortages or premium increases, at least of gold. I don't really follow silver.

I admit I haven't bought any gold during this latest dip, but whenever I go into town I usually look around some of the gold shops. There are many of them in my town. I've seen no changes of late. They all have full cabinets of the usual gold jewelry on display -- Thais buy it as investment as well as ornamentation -- with the gold bars stored away in the safe in the back room for customers who want it.

It's a competitive market with plenty of customers, and spreads are tiny. This afternoon, most of the gold shops in my town were selling one baht weight (just under half an ounce) of 96.5 per cent gold (the Thai standard) for 24,300 baht, and buying for 24,200 baht. If you shop around you might get yourself a 50 baht improvement, whether you're buying or selling.

The THB price has fallen a bit less than the USD price over the last month. It peaked at THB 26,900 on September 6 and fell to 23,200 intraday late last month, for about a 14 per cent drop.

Kiwi Pete's picture

Wow, nice pop in silver. Up 62 in 1 second. Did something go bang?

jekyll island's picture

Probably them HFT's again.  Remember, gold and silver aren't backed by anything, unlike the FRN$.  

bigdumbnugly's picture

jobs numbers came out.

slightly better than expected.  lol.

Smiddywesson's picture

I think the events since May demonstrate that trading paper gold is just trading paper.  We now know they can knock the paper price down $300+ and keep prices in a 50 dollar range for more than a month.  So, I don't really anticipate paper prices doing anything at all for the foreseeable future.  Until the system breaks down, the people with unlimited funds will spend those unlimited funds to suppress gold prices.  Hell, they are not even trying to be sneaky about it anymore.  That more than anything else tells me we are nearing End Game.  Another canary in the coal mine is gold vendors seizing up during huge swings in paper prices, experiencing web site difficulties, refusing orders during critical times, and delaying delivery.   

TPTB laid off the suppression of gold prices when we bottomed in the low $1500s.  There's a reason for that.  If prices go too low, or too high, paper gold will decouple from physical gold.  So I think we've put in a bottom, and yes we can rise back up to $1900, but there's no way in Hell they are going to give up that $2000 level.  I see an increasing will to corral gold prices in the $1600-$1650 range (it's $1660 right now but we'll see) and they don't care how obvious they have to be to do it.

Physical is all that will matter when this is over.   


apberusdisvet's picture

The key fact with silver is that above ground stocks are at least only 1/10 that of gold;  so the disconnect of the GSR at any number above parity is rediculous and totally artificial.  According to Mineweb, corporate geologists and other sources, grades of silver being mined today have decreased every year for the past decade; the looming scarcity is palpable.  If the MSM reported the true facts instead of purposeful disinformation propaganda, we would see daily price increases rather than manipulated downturns.

Just buy and hold.

zorba THE GREEK's picture

If everything is so bullish for gold, why is it still under $1700. 

Smiddywesson's picture

Mervyn King’s warning that the current financial crisis is the worst ever and could be worse than the Great Depression may also be impacting market sentiment and should result in further safe haven demand for gold. 

Nope, sorry, that has definitely NOT been my observation.  Any safe haven trading of gold will most certainly draw the manipulators in to crush the paper gold bulls.  We've seen them allow the price to drift up, but anything likely to elicit a safehaven response instantly attracts the central banks into paper gold to play wack a mole.  (Even in the middle of the night as was the case with the SNB peg to the Euro).  It should be clear by now, their golden taboo is gold cannot be money, and cannot act as a safehaven.  That's why you need physical. 

Trading paper gold/silver is just trading paper.  I'm not saying don't do it.  I'm saying don't confuse paper gold with real gold because you will lose all your money. 


Kiwi Pete's picture

The SNB must truely be desperate to have whacked gold like that. And so blatently too. Some very serious dudes hold gold (and in Switzerland too I bet) and they won't have been to happy to see their wealth being mucked around.

JonNadler's picture

OK, here's my illegitimate som whom I now am glad to acknowledge as my own calling for gold to go to 800.

That's my boy!

And while you watch don't get stuck on the pretty anchor's charming female gestures and curbs, pay attention to the kool aid...errrr....I mean....

with winning lines like

"gold is a reflection of investor demand" "gold is not built on solid rock but sand"

"it's a  trade of desperation"

and last but not least

"cost of production $200 (where's mathman)"


Next up, how Dennis Gartman and I are half brothers ....


am proud of that boy!



akak's picture

Still sportin' that full bouquet of gin blossoms, Jonny ol' boy?

With gold apparently permanently above $1500, I imagine you have been hitting the bottle pretty seriously over the last few months.

Smiddywesson's picture

Physical gold has bullish fundamentals.

Paper gold has no fundamentals, bullish or bearish.  It's just paper.

Sure, physical demand has an effect upon paper prices, but that effect has been so badly upstaged by the suppression scheme that nobody can predict what paper prices will do.  The minds behind that price manipulation machine have shown no lack of desire to continue forcing the equity markets in general, and paper gold and silver in particular, to continue to channel.  (Oops, back down to $1655).  It's going to take some titanic forces to overcome this.



SRSrocco's picture

SILVER PRODUCTION To Peak soon as Demand Soars

Very few people realize that the silver they buy today will be some of the cheapest silver they will ever get their hands on.  Currently global silver production is flat.  It has been increasing a little each year but this is about to change significantly.

When the avalanche of investors stampede out of US Bonds, Annuities, Dollars and etc, there is no limit to where the price of silver will go.


PulauHantu29's picture

"Roach Motel of currencies..." WSJ

"Greece would be in much better shape now if it had never joined the euro zone, or if it had been kicked out in 2004 when it admitted that it had lied about its finances to join the club. So would the rest of Europe.

So why not get out now?

One answer is the same one that was given when Greece’s cheating was revealed: Legally, there is no way out. The euro was designed to be the Roach Motel of currencies. Once you enter, you can never leave. There is no provision for departure."

I read some are suggesting some European countries go on a quasi gold standard or currency backed by gold like Germany did to stabilize the Weimar inflation. Even though you can't eat that barbaric metal, gold (or a basket of hard assets) may be the answer to their problems.

Davalicious's picture

>or currency backed by gold like Germany did to stabilize the Weimar inflation. 

Weimar solved it's problems with psychology. The new currency was backed by nothing but hot air. 

I am poised to buy into gold on bullionvault. Annoyingly I'm selling pounds to buy gold, and Melvyn King just announced quantitative slaughter of the pound.