Michael J. Kosares (USAGOLD) Shanghai stock crash shot of adrenaline for Chinese gold demand “Shanghai stocks have fallen nearly 30% since mid-June. The
equivalent in U.S. terms would be for the DJIA to fall 6000 points to the
11,000 level – a crash by any definition. Most of the commentary on this
important subject has centered around the potential contagion effect for
stock markets in the rest of Asia and beyond. There is another aspect to the
crash worth considering though, and that has to do with the effect it will
have on Chinese gold demand. The Chinese people, it is well known, already
have a cultural affinity to gold. That attachment just received a shot of
adrenaline.”
Note: There was very strong demand for gold as stocks
plummeted and regulators scrambled to implement measures to stem to rout.
Mohamed El-Erian (Bloomberg) 10 Consequences of Greece’s ‘No’ “By heeding their government’s advice and voting “No” in the
referendum on Sunday, Greek citizens sent an unambiguous message. Much like
the fictional Americans portrayed in the movie “Network” who threw open their
windows and shouted out, “I’m as mad as hell and I’m not going to take this
anymore,” the Greeks are demanding that the rest of Europe acknowledge their
distress.”
Note from MK: The gamesman’s strategy is revealed. The
psychological war begins. Finance ministries, treasuries and central banks
the world over will be pulling all-nighters. The markets will begin voting
shortly.
Matthew Cowley (Wall Street Journal) Gold Dips Despite Greek Debt Crisis and China Stocks Slump “Gold prices were lower on Tuesday, as concerns about Greece’s
potential exit from the eurozone as well as the slump in Chinese equities
failed to have much impact on the traditional safe-haven asset. ‘Gold has
surprisingly not reacted to the events, but that could change as worst-case
scenarios crystalize,’ said Nitesh Shah, associate director of research at
ETF Securities.”
Note: I’m skeptical rate hike expectations are
outweighing Greece and China concerns. Zerohedge suggests that mounting
margin calls in other markets may actually be the primary reason for today’s
retreat in gold and silver. You may recall that gold initially sold off in
the early stages of the financial crisis as investors liquidated anything and
everything (including paper gold) to raise cash to cover margin calls.
(Reuters) U.S. Mint sold out of silver coins due to strong demand “The U.S. Mint said on Tuesday it temporarily sold out of its
popular 2015 American Eagle silver bullion coins due to a “significant”
increase in demand, the latest sign plunging prices have spurred a resurgence
of retail buying.”
Note: Typically, these production shutdowns translate to
higher premiums for contemporary bullion products. At this time, we have
limited availability of American Silver Eagles, priced right and our normal
quick delivery times are still in place. Please call if you have an interest
in reserving items from the remaining inventory.
Ambrose Evans-Pritchard (Telegraph) Europe is blowing itself apart over Greece – and nobody seems able
to stop it “Like a tragedy from
Euripides, the long struggle between Greece and Europe’s creditor powers is
reaching a cataclysmic end that nobody planned, nobody seems able to escape,
and that threatens to shatter the greater European order in the process.”
Note: While late in the week it appears that a 13th-hour
deal might be struck, it’s important to remember that a 3rd bailout for
Greece is unlikely to solve anything. It’s just another kick of the can down
the road.
Myra P. Saefong (MarketWatch) China wants to steal gold-market ‘reins’ from New York, London “China has been making it very clear that it wants more control
over the global gold market, but it’ll have to go through New York and London
first. ‘Given that China is the epicenter of the physical gold market, it
does make sense that the Chinese government would want its physical Shanghai
gold market to supplant the Comex derivative market (and others) as the
primary global price-setting mechanism,’ said Anthem Blanchard, chief
executive officer of online precious-metal retailer Anthem Vault.”
Note: The shift in the control of the gold market from
west to east seems to be gaining momentum.
Michael J. Kosares (USAGOLD) The Shanghai stock crash and China gold demand “This emphasis on physical pricing in Shanghai, particularly when
the new Shanghai Fix comes into play later this year, could signal the birth
of a whole new gold market unlike anything we have experienced since the
United States detached the dollar from gold in 1971.”
Note: An important an insightful piece about how gold
trading in China may result in some major changes to the global gold market. It’s
a must read!
