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Gold coin purchases gained 13% last year and will increase 2.7% in the first half. Purchases of gold bars increased by 36% to nearly 2,000 (1,194) metric tonnes, concentrated in China, Germany, Switzerland and Austria. East Asia demand for gold bars rose 53% to 456 metric tonnes. India rose 9% to 297 metric tonnes and western markets demand for gold bars rose 41% to 335 metric tonnes. Central banks increased net purchases by a massive fivefold to 430 tons last year, and may buy another 90 tons in the first half, GFMS said. Combined official holdings stand at 30,788.9 tons, data from the London-based World Gold Council show. “Attitudes among central banks haven’t really changed,” Thomson Reuters GFMS annual survey said. “There’s still that desire to come into the gold market to diversify some of the assets away from foreign exchange and to boost gold holdings.” The Thomson Reuters GFMS annual gold survey also predicts that gold will struggle in the first half of the year, increasing in the later half towards $2,000. It also says the gold bull market is losing steam and predicts an end to the run as economies recover next year and interest rates begin to rise.

Although gold had its largest drop in the last 2 weeks on Friday, (-1.6%), it was 1.3% higher on the week and trading higher this morning.  Many analysts feel that current sovereign, macroeconomic and geopolitical risks are not reflected in gold's price. Friday's news of France's loss of its AAA rating has put the European Financial Stability Facility (EFSF) at risk. The Eurozone economy resembles a large ship sailing in rough seas since France fund's 20% of the EFSF fund and 8 other members were also downgraded. This will almost certainly lead to the EFSF's downgrade which would result in the fund too paying more to borrow as credit costs rise.  There are icebergs lurking in increasingly murky Eurozone waters. The European downgrades were long expected and may have been priced in the markets. The risk of a non orderly Greek default and of contagion in the Eurozone remains and is not priced into markets. It would lead to the euro falling sharply against other fiat currencies and particularly against gold.

Business school curricula today completely lacks the necessary knowledge to survive the deepening and widening global monetary & economic crisis. We offer a video and a few thoughts below regarding the type of knowledge that will help you prepare.

Mario Draghi once again mistakes a Solvency issue for one of Liquidity

“An alien collectivist (socialist) philosophy, much of which came from Europe, crashed onto the shores of our nation, bringing with it radical changes in economics, politics, and education, funded - surprisingly enough - by several wealthy American families and their tax-exempt foundations.

Demand in Asia continues to be strong.  China remains the world’s largest producer of mined gold. Premiums for gold bullion bars in Asia are rising again and are at their highest since October in Hong Kong and Singapore. Premiums are at $2.15/oz in Hong Kong and $1.65/oz in Singapore.  Bullion’s strength was also attributed to the euro’s 16 month low, with Fitch warning the ECB to purchase assets to try to stabilize the euro.   Spot gold was up 0.6 percent at $1,650.34 an ounce at 1009 GMT, having earlier touched a one-month high at $1,652.30. U.S. gold futures for February delivery were up $12.60 an ounce at $1,652.20.  A stronger rupee has boosted the purchasing power of gold bullion consumers in India.  This is in the run up for the Indian Wedding Season which resumes January 15th and continues until April, leaving a  few weeks break for a period that is considered bad luck for nuptials.  Chinese demand will weaken next week as many factories and businesses are set to close for the Lunar New Year’s celebrations.

Chris Hedges, a Pulitzer Prize winning American journalist, author, and war correspondent, nails the reason that explains why it is so difficult to change a person’s mind when they are committed to believing something even when they are confronted with a mountain of evidence that points to the contrary. Chris states that universities have stripped away humanities and other courses that develop critical thinking skills and instead, due to the historical influences of men like Andrew Carnegie and John D. Rockefeller, focus on teaching young men and women “what to think” instead of “how to think.”

The run into Chinese Lunar New Year has again seen higher than expected Chinese demand for gold and China's voracious appetite for gold is surprising even analysts who are positive about gold. As Chinese people's disposable incomes gain and concerns grow over inflation and equity and property markets, Chinese consumers and investors are turning to gold as a long term investment hedge. There is informed speculation that commercial Chinese banks may have taken advantage of the recent price dip to build stocks of coins and bars and accumulate bullion. China's demand for physical gold bullion has rocketed past India with the country now overtaking India in the third quarter as the largest gold jewellery market according to the World Gold Council. There is also informed speculation that some of the buying was from the People's Bank of China with one analyst telling Bloomberg that “there is always the possibility that some purchases were made by the central bank.”

How much further might gold fall? Market momentum is a powerful force and therefore further weakness is quite possible.  Support is at the 200 day moving average at $1,619/oz. Below that is the psychological level of $1,600 per ounce and the 250 day moving average of $1,571/oz. Price resistance was seen at the $1,570/oz level between late April and July 2011 (see chart) and this level could become support as is often the case in bull markets. It is important to note that gold’s falls have been primarily dollar related and gold has fallen by a lot less in pound and in euro terms. Most analysts of the gold market remain of the view that this is another correction and that the medium and long term uptrend will continue due to significant investment, store of wealth and central bank demand due to geopolitical, macroeconomic, systemic and monetary risk. One analyst who appears to have a very different view regarding gold is world renowned economist Nouriel Roubini.  The Chairman of Roubini Global Economics has again taken to Twitter to engage in some name calling and to appear to question gold’s recent price action and whether gold may reach $2,000/oz.

Social media has become the new job fair for the 13.3 million still unemployed Americans.  Some insight on that based on a recent survey by Jobvite.  

In yet another example of just what a farce our market has become, it appears that HFT algos, no longer able to freely frontrun the market courtesy of counter HFT-measures offered by major banks and an SEC which has started sniffing around illegal HFT activity, have stooped to the second-lowest rung in the ladder: scouring through momo trader tweets on Twitter, particularly those from the StockTwits network and somehow converting that into actionable "intelligence." Because while until now some amusing attempts at money management using the garbled noise of Twitter had been implemented, all of them relied on human eyes to translate content, going forward it will be robots doing the actual analysis, not to mention sarcasm translation. STM reports: "A Boulder, Colo., collector and redistributor of comment expressed on social media networks Thursday will launch a pair of streams of data from Twitter and the securities discussion site StockTwits that are 'normalized' and ready to be fed to computers for analytical processing. Gnip said it has prepared the streams as part of the launch of a product it calls MarketStream, that is designed for use by hedge funds and high-frequency traders. The move follows the launch in May of a social-media-based hedge fund in London. In that launch, Derwent Capital Markets said the fund it created would try to achieve consistent above-market returns from real-time analysis of comments on social data." Well actually if they really want above market returns they should also add Yahoo Finance message boads to StockTwits: that will really put the bind on Steve Cohen to come up with new and improved ways to generate information arbitrage. At that point the entire momo crowd in the whole world will be swaying the market like an explosive-laden boat full of news reactive lemmings, who believe they move the market, only to receive terminal margin calls within days. But, yes, the safety of the crowd is soooo nice.... Until it isn't. As for the algos, we can bet what side of the trade they will be vis-a-vis the prudent investor subsegment that chases market heatmaps in a market in which VIX 30 is the new normal.

Classic method of FUD - fear, uncertainty and doubt.

Literally moments ago, Barack Obama tweeted the announcement of the start of his 2012 campaign. In a surprise to nobody in particular, the president stated that he plans to file the necessary papers with the Federal Election Commission today in order to begin campaign fundraising, further tweeting: "While I stay focused on the job you elected me to do, the work of laying the foundation for our campaign must start today." Perhaps this finally means that the USD is due for a bounce as the concerted effort at destroying the US currency will be slightly delayed among all the takes for various campaign clips like the one below. As for his competition, a poll by Farleigh Dickinson university has the President outperforming most competitors except for Mike Huckabee, with whom he is locked in a dead heat: "The president steamrolls former Alaskan Gov. Sarah Palin by a 20-point margin, 54%-34%. The president also wins easily - 48%-34% - over the only major Republican to have formed an exploratory committee for the 2012 election, former Minnesota Gov. Tim Pawlenty. And the president handily beats the former Speaker of the House, Newt Gingrich, by 15 points, 52%-37%. The president runs even with former Arkansas Gov. Mike Huckabee 46%-46% and about even with former Massachusetts Gov. Mitt Romney, 44%-43%." Of course, what happens to Obama's reelection chances is directly proportional to just three factors: jobs, the price of gas, and the stock market. Alas, while the jobs number is improving courtesy of the continued exodus of disgusted former workers from the workforce, the latter two factors are now mutually exclusive, and any further gains in the RUT will necessarily come at the expense of further cuts in affordable transportation distance, and vice versa, which naturally leads us to the question of what Goldman will order its subordinate at the FRBNY Bill Dudley to do: as usual it all boils down to this: "To QE or not to QE. That is the question."

As we reported two months ago, the DOJ had secretly subpoenaed the personal information of several "twitters" who may have had a relationship to Wikileaks. Among the people to discover they were the subject of a secret subpoena was Iceland Member of Parliament Birgitta Jonsdottir. Furthermore the only reason those being investigated even realized this was the case is because Twitter notified them, unlike other social networks which may have been also subpoenaed, yet have remained quiet so far. Twitter had said: "We're not going to comment on specific requests, but, to help users protect their rights, it's our policy to notify users about law enforcement and governmental requests for their information, unless we are prevented by law from doing so." Alas, today AP reports that while this inititial request had been challenged by objects of the inquiry, "a federal magistrate ruled that prosecutors can demand the Twitter account information of certain users in their criminal probe into the disclosure of classified documents on WikiLeaks." Simply said this means that virtually anybody's electronic communication on Twitter, and most certainly elsewhere too, can be intercepted by the DOJ for whatever reason, without anyone having to be notified of this gross privacy breach. It makes one wonder just how many additional benefits is JPM getting from its 10% investment in Twitter?

The FT reports some disturbing news for lovers of free information everywhere: JP Morgan's Digital Growth Fund is rumored to be in talks to acquire 10% of Twitter for $450 million, or a $4.5 billion valuation (for a service which we have yet to get confirmation is generating any more than token revenue whatsoever). "It is not clear if the JPMorgan fund will make a direct investment or buy out existing investors and shareholders with Twitter’s approval. But the fund does not intend to buy shares on the secondary market, the people said. The deal has not closed." For those unfamiliar with the DGF, it is merely JPM's way to copycat Goldman into "allowing" its high net worth clients to put their money into the latest tech bubble frenzy. "JPMorgan’s Digital Growth Fund was established this month to give rich clients exposure to fast-growing private tech companies, and follows a similar effort by Goldman Sachs to invest in Facebook. The fund has raised $1.22bn to date, according to a filing with the Securities and Exchange Commission. But it plans to raise $1.3bn in total, and will have a maximum of 480 investors, say the people. JPMorgan expects to earn commission of at least $13m from the fund." And since none of these company are quite public, and all of them supposedly trade on a shadow secondary market, the frenzy for which bank can open up the tech bubble market to most high net worth investors, a race for now headed by Goldman with its Facebook investment, has certainly marked the tech top. One thing that is certain is that those who mostly enjoy using twitter as a free information conduit will now aggressively seek to find a replacement that is not backed, and thus at the mercy, of the Fed's favorite bank.