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All major currencies have fallen against
gold and silver again today with gold reaching new record nominal highs in
most fiat currencies including U.S. dollars. Gold reached a new record of
$1,894.80/oz - just shy of $1,900/oz.
Cross Currency Table
Gold is trading at 1,870.10 USD, 1,296.40
EUR, 1,132.40 GBP, 1,470.90 CHF and 143,670 JPY per ounce and has risen some
1% in all currencies. Gold is particularly strong against the yen and Swiss
franc which have fallen in international markets on concerns of debasement.
The London AM fix was a fourth
consecutive record nominal high in US dollars. Gold’s London AM fix
this morning was USD 1,877.75, EUR 1303.17, GBP
1139.55 per ounce (from Friday’s USD 1,862, EUR 1299.28, GBP 1126.91
per ounce).
Silver is in all major currencies and has
risen another 1.4% in dollars after last week’s 8% gain.
Gold’s 6.2% rise last week and
silver’s 8.2% rise was barely reported in the press and media in Europe
over the weekend – with all the focus continuing to be on equities and
to a lesser extent bonds. The usual suspects in stockbrokerages and banks warned
about gold being a bubble again.
Silver was not reported at all and
remains almost completely taboo in the non specialist
financial press. Besides the very occasional article warning that it is a
bubble.
According to Bloomberg, the central bank
of Venezuela has sent a statement by e-mail requesting its 99 tons of gold
holdings from the Bank of England, citing the institution’s president,
Nelson Merentes.
GOLD SPOT $/OZ
“We’ve contacted the Bank of
England and the corresponding protocols have been initiated to complete this
operation as soon as possible,” Merentes
said, according to the statement. “Once that’s done, the
shipments will begin by sea.”
Chavez ordered the central bank on Aug.
17th to repatriate $11 billion of gold reserves held in developed
nations’ institutions. Chavez fears 'hostile countries' may seize the
national patrimony.
Venezuela holds 211 tons of its 365 tons
of gold reserves in U.S., European, Canadian and Swiss Banks.
40 shipments will be needed to carry the
17,000 400 ounce bars by sea. Piracy must be a real concern given the value
of the bullion and Venezuala should ensure that the
shipment is well protected.
While physical demand remains robust,
sentiment in the trading pits remains muted. An indication that speculative
sentiment remains lukewarm was seen in the U.S. Commodity Futures Trading
Commission data released Friday evening.
Hedge-fund managers and other large
speculators decreased their net-long position in New York gold futures in the
week ended Aug. 16, according to the CFTC data.
Speculative long positions, or bets
prices will rise, outnumbered short positions by
200,086 contracts on the Comex division of the New
York Mercantile Exchange, the Washington-based commission said in its
Commitments of Traders report. Net-long positions fell by 3,487 contracts, or
2 percent, from a week
The opposite was the case in the silver
market where sentiment appears to be heating up somewhat with the risk of
another short squeeze developing.
Hedge-fund managers and other large
speculators increased their net-long position in New York silver futures in
the week ended Aug. 16, according to U.S. Commodity Futures Trading
Commission data.
Speculative long positions, or bets
prices will rise, outnumbered short positions by
21,928 contracts on the Comex division of the New
York Mercantile Exchange, the Washington-based commission said in its
Commitments of Traders report. Net-long positions rose by 3,540 contracts, or
19 percent, from a week earlier.
The dumb money continues to warn that
gold and silver are bubbles.
Their simplistic bubble thesis is based
almost exclusively on the nominal US dollar price and recent price movements
and on the assumption that (to paraphrase) ‘gold has gone up in price a
lot - therefore it is a bubble’.
There is a continuing failure to look at
the important supply and demand fundamentals of the gold and silver markets
which leads to unsound reasoning and irrational conclusions. There is also a
failure to adjust for inflation.
There is little knowledge of the very
small size of the physical bullion markets vis-à-vis the stock, bond,
currency and other markets.
There is also very little knowledge of
financial, economic and monetary history and a continuing ignorance regarding
‘investment 101’ which is diversification.
Being prudent and having an allocation of
10% to gold will protect no matter what economic and monetary scenario
develops in the coming months. If one is not leveraged and is prudently
diversified and owns gold bullion (coins and bars in the safest way
possible), it does not matter if gold is a bubble or not as you own a range
of other quality assets.
From a purely investment point of view -
an allocation of 5% to 10% makes sense.
From a financial insurance or store of
wealth point of view – having a higher proportion of your overall net
worth makes sense.
Especially given the risks posed to the
dollar, euro, pound and fiat currencies and to deposits
“guaranteed” by insolvent states.
Not putting 10% of your wealth in gold is
extraordinarily imprudent today and a recipe for further financial
destruction.
For the latest news and commentary on
gold and financial markets please follow us on Twitter.
SILVER
Silver is trading at $43.22/oz,
€29.98/oz and £26.19/oz.
PLATINUM GROUP METALS
Platinum is trading at $1,882.50/oz, palladium at
$755/oz and rhodium at $1,800/oz.
NEWS
(Bloomberg)
Gold Seen Heading for Biggest Gain in 32 Years on
Investment
(Financial Times)
Bulls pounce on European stocks as gold hits record
(Reuters)
Gold soars to record high on economic woes
(Financial Times)
Summer malaise helps gold to fresh record
(Businessweek)
Hedge Funds Buying Corn to Silver to Soy as Commodities
Tumble
BLOOMBERG WIRE
- Thai Exchange Temporarily Halts Silver Futures After Price Jump (20%)
- China’s July Silver Imports Were 284 Tons, Customs Says
- Venezuela Gold Repatriation Won’t Mean Metal Scramble, UBS Says
- Gold is strong in all currencies and is entering a stage when prices go
“parabolic,” Dennis Gartman says
COMMENTARY
(ZeroHedge)
Things That Make You Go Hmmm.... Such As A Venezuelan
Dictator Bringing Down The Global Gold Cartel
(King World News)
Interview with Sponsor of Utah Legal Tender Act”
Recognizing Gold & Silver as Legal Tender
(GoldSeek)
Gold, Silver SOAR, Gold Cartel In Shambles
(ZeroHedge)
The Battle For Libya Is Almost Over... As Is The Battle
For Its 144 Tons Of Gold
(The Sunday Business Post)
David McWilliams: The Future - Tax the Rich
(Moneyweek)
Should You Sell Your Gold Now? – Dominic Frisby
(Financial Times)
Gold Standards: FT’s Lex
Column
Mark O’Byrne
Goldcore
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