Today’s AM fix was USD
1,321.25, EUR 969.87 and GBP 771.53 per ounce.
Friday’s AM fix was USD 1,336.50, EUR 981.78 and GBP 779.39 per ounce.
Gold climbed $1.90 or
0.14% Friday to $1,337.70/oz and silver rose $0.05 or 0.23% to $21.43/oz.
Gold and silver were both up for the week at 1.37% and 1.42%.
Gold pulled back from its
recent highs from $1,340/oz to $1,316/oz. There are a number of factors supporting
gold’s price level and we believe will likely give it a boost in the near
term.
Quantitative Easing or
money printing and ultra low interest rates have flooded the market with cash
and that cash is seeking yield. As a result equity
markets at are near all time highs, bonds are on the floor and mad
speculative bets on anything that moves, are on the rise. Risk is being
ignored on an industrial scale, with corporate bonds yields at risk defying
lows.
The U.S. dollar as a
reserve currency is increasingly under review. With the removal of dollar
clearing access from parts of the French bank BNP the U.S. government has
scored a spectacular goal. A cornerstone to U.S. economic strength is the
reserve currency status given to the old greenback. By tinkering with the
currency clearing for whatever reason the U.S. has opened Pandora's box of
uncertainty. The fact that these measures against BNP smack of nationalism,
by conveniently ignoring the illegal actions of U.S. corporations in foreign
jurisdictions over the last decade or two or three, is not even the biggest
concern. No, the biggest issue is this; it creates doubt. Now every financial
entity worth their salt will ask themselves "But what if?"
You see gold has no
master, it answerable to no one. It is no one else's liability and as such
the greenback pales in comparison to gold as a true safe haven asset.
We wonder if China, and their
4 Trillion in Foreign Currency exchange reserves, will have their U,S, treasury "trading wings" clipped because
they have broken U.S. laws, but what if..?
Conflict is again on the
rise with Israel launching upwards of 1,200 sorties on Gaza in the last few
days. This is in response to Hamas's rocket attacks. In recent days Hamas has
started launching drones, marking a step up in sophistication. So far in is
estimated 166 civilians (including 30 children) have died in the conflict,
almost all Palestinian. Unemployment is at 86% in Gaza. A shell from Ukraine
fell on small Russian border town, killing one person. Russia warned of
"irreversible consequences".
Bail-ins are a
reality and they are likely to figure greatly in future financial crisis's as
one of the chief tools in global regulatory arsenals. Cyprus was of the first
modern economy to undergo "the procedure" in 2013. Depositors had
47.5% of their deposits, over €100,000 "removed" from their bank
accounts and in return they were given shares in the bank as compensation. A
small number of these holders have sought to sell their shares fearing that
their holdings will become diluted if the Bank of Cyprus seeks to raise a
possible €1 Billion in fresh capital buy issuing shares in advance of the
forthcoming European bank Stress tests. Debt has become endemic in western
economies and bail-ins will be come the new normal unless the debt mountain is
curtailed.
Total Public debt is
growing at an enormous rate. Public Debt as percentage of GDP in the U.S. has
swelled from 36.2% in 2004 to 83.9% in 2014, this is unsustainable.
(Source: http://www.economist.com/content/global_debt_clock)
When governments become
over indebted they tend to raise taxes and or confiscate wealth and capital.
Consider holding a portion of your wealth in gold bullion in safe segregated and allocated
storage accounts.
NEWS
Germany Oks Bail-ins
BERLIN--Germany's cabinet Wednesday approved plans to force creditors into
propping up struggling banks beginning in 2015, one year earlier than
required under European-wide plans that set rules for failing financial
institutions.
The new bail-in rules are
part of a package of German legislation on the European banking union--an
ambitious project to centralize bank supervision in the euro zone and, when
banks fail, to organize their rescue or winding-up at a European level
Germany's new bail-in rules
BERLIN—Germany plans to force creditors into propping up struggling banks
beginning in 2015, one year earlier than required under European-wide plans
that set rules for failing financial institutions, according to a senior
German finance ministry official.
From next year,
struggling bank creditors, in addition to shareholders, will have to help
financial institutions, covering up to 8% of liabilities, before the banks
can tap Germany's financial markets stabilization fund SoFFin, said the
official, who declined to be identified.
