Twitter

A Fed decision to launch QE3 would increase the yellow metal’s appeal as an inflation hedge and bolster prices.  US house prices increased for their 4th month in a row suggesting that the US housing market recovery may be underway which dampened further hopes of any immediate easing in the US Fed’s monetary policy. The markets are playing a waiting game and investors are cautious.  Thursday’s ECB policy meeting will determine if President Mario Draghi will have the backing he needs to embark on significant policy changes to rescue the region’s financial woes.  Yesterday, German Finance Minister Schauble said in an email response to a newspaper, “The rules of the European Stability Mechanism don’t foresee a banking license to allow refinancing at the European Central Bank”.  Schauble’s comments fell like a penny in a wishing well that rippled to curb the market’s enthusiasm. Since Draghi’s initial comments to “do anything it takes” gold has increased by nearly $50/oz.

Some positive indicators have prompted at least one article at Forbes to predict $8.00 natural gas by "the approaching winter."

• Hilsenrath: Heat Rises on Central Banks (WSJ)
• Some at Fed Are Urging Pre-Emptive Stimulus (NYT)
• Obama Warns of Headwinds in Europe; Urges European Leaders to Take Decisive Action on Euro (WSJ) - also needs reelection
• ECB thinks the unthinkable, action likely weeks away (Reuters)
• Games Turn London Into ‘Ghost Town.’ (FT)
• Greek Leaders Seek to Defer Austerity Cuts (FT)
• Hong Kong Builders Unload Properties to Raise Cash for Land Rush (Bloomberg)
• North India Crippled by Power Cuts (FT)
• Euro-Area Unemployment Rate Reaches Record 11.2% on Crisis (Bloomberg)
• Italy's Monti sees hope of end to euro crisis (Reuters)

Gold held steady above $1,620/oz on Monday, as investors wait for the central banks from Europe and the US to give definite signs on their plans for more QE. QE3 would be bullish for gold and increase the inflation outlook which would benefit gold as a hedge against the rising prices. The public is now interested in the yellow metal again, with investors adding to their physical positions. Market watchers will take their clues from the data out this week. More investors are trading euro gold than ever before and  using euro gold as the barometer of internal health of the gold market right now, says analyst Edel Tully of UBS.  Euro gold is up 9% this year versus US dollar gold's +3% performance. The markets await the Fed’s move.  Certainly some form of QE3 is inevitable whether it is announced this week or at the next FOMC meeting scheduled in early September

• Schäuble View on Eurozone at Odds With US (FT)
• Juncker: Euro zone leaders, ECB to act on Euro (Reuters)
• German Banks Cut Back Periphery Lending (FT)
• Monetary Policy Role in EU Debt Crisis Limited: Zoellick (CNBC)
• Bond Trading Loses Some Swagger Amid Upheaval (NYT)
• As first reported on ZH, Deflation Dismissed by Bond Measure Amid QE3 Anticipation (Bloomberg)
• Record Cash Collides With Yen as Topix Valuation Nearing Low (Bloomberg) - but, but, all the cash on the sidelines...
• Greek Leaders Agree Most Cuts, Lenders Stay On – Source (Reuters)
• Chinese Investment in US 'set for record year' (China Daily)

Discussing the bull market in alternative media, a Grecian return to the Drachma, and how savings empower the individual (as opposed to state confiscation)

Things have changed quite a bit. With Facebook's stock now at a 50% loss (measured against its high, set within minutes of the May 18th initial public offering), it's becoming clear that just about every entity - human, corporate, and the way things are going, perhaps even extraterrestrial - that touches Facebook gets the zap put on them. Off the top of my head:

• Bundesbank Maintains Opposition to ECB Bond Buying (WSJ)
• Greek Budget Talks Stumble as EU Urges Samaras to Deliver (Bloomberg)
• Fortified by euro, Finns take bailouts on the chin (Reuters)
• China Job Market for Graduates Shows Stress on Slowdown (Bloomberg)
• China Exports Fade as Inflation Eludes Targets: Cutting Research (Bloomberg)
• Japan Falters as Ito Calls for Euro Buys to Rein in Yen: Economy (Bloomberg)
• Government weighs social insurance reforms (China Daily)
• Colombia’s Split Central Bank to Weigh First Rate Cut Since 2010 (Bloomberg)

There is no point in recapping the ongoing vendetta between former SIGTARP Neil Barofsky and former head of the NY Fed, and current Treasury secretary and resident TurboTax expert Tim Geithner. One need but follow the former on Twitter for a quick and concise sampling of the sentiments harbored vis-a-vis the latter. However, in the following interview Barfosky does touch on some points which in the context of the recent Liborgate, should be brought front and center, especially since the increasingly apathetic US audience seems to not care about one bit (as opposed to their distant cousins across the Atlantic for whom Lieborgate has become a daily distraction). Namely, what Barofsky says is that Geithner and other regulators who allowed Lieborgate to proceed should not only lose their job but we should "see [Geithner] in handcuffs."  Sadly that will never happen as it would actually be a deterrent to future crime among the highest echelons of America: something which is just not allowed to happen in a system whose very survival is increasingly reliant on rampant criminality.

In Hong Kong they are completing work on its largest gold vault due to open in September which can hold 22% of the gold that is in the US facility Fort Knox.   The new secure storage facility will compete with services set up by the Airport Authority Hong Kong in 2009 that serviced governments, commodity exchanges, bullion banks, refiners, wealthy individuals and exchange-traded funds. The new facility is within the international airport compound and its capacity is 1,000 metric tons. This signals the growing interest from China currently the world’s second largest consumer of gold in owning physical gold bullion.  

When Paul first introduced his bill a decade ago, it was written off as another piece of his far-flung libertarian worldview is how Politico juxtaposes today's (now successful) vote on Ron Paul's Fed Transparency Bill. "I want to appreciate and congratulate Dr. Ron Paul for his tireless pursuit of openness and transparency," said Rep. Jason Chaffetz (R-Utah). "Without his leadership, we wouldn’t be at this point today." Via Bloomberg:

• *FED AUDIT BILL OPPOSED BY BERNANKE GAINS APPROVAL BY U.S. HOUSE
• *FED AUDIT BILL NEEDS SENATE APPROVAL, PRESIDENT'S SIGNATURE
• *FED AUDIT BILL SPONSORED BY REPRESENTATIVE RON PAUL OF TEXAS

"I’m pleased. It’s something I’ve worked on for a long time, and it’s a good first step," Paul told POLITICO. "It’s coming to the floor as a response to the American people, because I don’t have a whole lot of clout around here." Never mind that the Fed audit is dead in the Senate — Majority Leader Harry Reid’s office has said he won’t bring it up.

Gold edged down on Monday due to the pressure from a stronger dollar, as worries about the Eurozone debt crisis grew after Spain looked like the next candidate for a sovereign bailout. Spain has two regions seeking aid from the central government and El Pais reported that six Spanish regions may ask for aid from the central government while Spanish bonds yields continue to rise. As the 4th largest economy in the Eurozone Spain looks likely to follow Greece, Portugal and Ireland seeking an international bailout. Greece’s creditors meet this week as many doubt they will meet their bailout commitments. German Vice Chancellor Philipp Roesler said he’s “very skeptical” that European leaders will be able to rescue Greece.  China’s economic expansion may fall for a 7th straight quarter to 7.4% in the three months to September, said Song Guoqing, a member of the People’s Bank of China monetary policy committee.

The World Gold Council have just published their commentary on gold’s price performance in various currencies, its volatility statistics and correlation to other assets in the quarter - Gold Q2, 2012 - Investment Statistics and Commentary. It provides macroeconomic context to the investment statistics published at the end of each quarter and highlights emerging themes relevant to gold’s future development. One of their key findings is that gold will act as hedge against possible coming dollar weakness and gold will act as a "currency hedge in the international monetary system." The key findings of the World Gold Council’s report are presented inside.

Consumers are paying an easy $35 dollars per barrel over what they would otherwise dole out for a barrel of oil if fund managers didn`t use the benchmark futures contracts as their own personal ATMs.