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Gold is trading at USD 1,615.20, EUR 1,132.70,
GBP 991.92 and CHF 1,293.10 per ounce. Gold’s London AM Fix was USD
1613.75, EUR 1129.76, GBP 991.67 (10:41 GMT).
Gold is set to finish a turbulent July higher showing its safe haven
attributes again. Gold is higher in all fiat currencies month to date and is
7.6% higher in U.S. dollars.
Gold is flat in dollars and slightly higher in
euros and British pounds. The pound is weaker after poor UK consumer
sentiment figures underlined the risk of another UK recession. Global
equities have remained reasonably robust despite the continuing drama in
Washington regarding the debt ceiling negotiations.
Cross Currency Rates
Asian equities were quite resilient and only had
marginal losses overnight (Nikkei -0.69%, Hang Seng
-0.53%, STI +0.1% Shanghai -0.3%, Sensex -0.19%, Kospi
-1.05%).
Similarly European equity indices while lower are
reasonably robust despite the continuing political failure in Washington
overnight to reach a deal. The FTSE is 1.02% lower and the CAC and DAX 1% and
1.4% lower respectively.
The Italian 10 year has risen to 5.91% and Irish
10 year yields have risen to 10.83%.
While US debt markets remain calm with little
move up in yields, it must be remembered that the Federal Reserve has been
buying US treasuries (with digitally created money) to lower overall interest
rates and thus stimulate lending and this may be artificially depressing US
interest rates.
XAU-US Dollar Exchange Rate
A U.S. default remains highly unlikely –
unless American politicians continue to play Russian roulette for the sake of
power.
The more challenging and real risk is that posed
by the coming downgrade or downgrades of US debt, the threat to the dollar as
global reserve currency and continuing currency depreciation and
debasement.
IMF Chief Warns America on
“Exorbitant Privilege”
New IMF
Chief Christine Lagarde has warned overnight that
the global reserve currency status of the dollar is at risk due to the
“worrisome” US debt debate.
XAU-EUR Exchange Rate
Failure by the United States to raise the debt
ceiling would likely lead to a decline in the U.S. dollar and raise
"doubts" among those using it as a reserve currency, Lagarde said.
"One of the consequences could be a decline
of the dollar as a reserve currency and a dent in people's confidence in the
dollar."
The U.S. currency has had an “exorbitant
privilege because it was the reserve currency that most central banks
had,” Lagarde said in an interview on
PBS’s “Newshour” yesterday.
“If there was a dent in this exorbitant privilege and the confidence
that most people have towards the dollar, it would probably entail a decline
of the dollar relative to other currencies.”
The use of the “exorbitant privilege”
phrase by the former French finance minister is important and not an
accident.
It echoes the former French President, Charles de
Gaulle’s comment regarding the dollar being “America’s
exorbitant privilege” at a landmark press conference in 1965 that led
to the end of the London gold pool or government cartel which attempted to
keep the gold price fixed at $35 per ounce.
The Bretton Woods Agreement had conferred upon
the U.S. significant economic and monetary advantages (which it enjoys
to this day) when it was agreed that the US dollar would be the world's
reserve currency replacing the British pound, which performed this function
for over 100 years due to the classical gold standard.
XAU-GBP Exchange Rate
This made the dollar “sovereign”
among currencies and conferred significant privileges deniedother
currencies.
French President Charles de Gaulle challenged
America’s exorbitant privilege in 1965 and extolled the virtues of gold
as money and as a reserve currency: "Any workable and acceptable
international monetary system must not bear the stamp or control of any one
country in particular. Truly, it is hard to imagine any standard other than
gold. Yes, gold, whose nature does not alter, which may be poured equally
well into ingots, bars, or coins, which has no nationality, and which has,
eternally and universally, been regarded as the unaltered currency par
excellence ..."
Lagarde’s comments echo those of
President Sarkozy in 2007 when he told George Bush and the Congress that
"the dollar cannot remain solely the problem of others.” . .
. “If we're not careful monetary disarray could morph into
economic war. We would all be its victims."
Lagarde’s comments suggest that the
IMF is considering or has plans for an alternative reserve currency.
The comments echo those of other G10 leaders and
especially the Russians and Chinese who have been increasingly vocal about
the risks posed to the dollar. Indeed, Putin recently called the US a
“hooligan” for flooding the world with printed dollars.
Leading international financiers such as George
Soros and Warren Buffett have also warned about the risks posed to the
dollar. Although Buffett has remained quiet about the risk more recently.
Cazenove’s Griffiths Says
“Essential to Own Gold” - $8,500/oz Is
Possible
Interviewed
yesterday by King World News, Cazenove Capital's
highly respected strategist, Robin Griffiths, remarked that you “have
to own” gold. He said that the real inflation adjusted high from 1980
(using the more accurate RPI) was over $8,500 per ounce and gold could reach
that level in the coming years.
He said that silver was volatile but would likely
outperform gold.
Griffiths said in January that fiat currencies
were being "printed into oblivion," and so not owning gold is
"a form of insanity."
He continued saying that not owning gold
“may even show unhealthy masochistic tendencies, which might need
medical attention."
Robin Griffiths is highly respected. He was
chief technical strategist with HSBC for over 20 years and has 44 years
investment experience and is considered to be one of the top strategists in
the world.
Cazenove Capital is one of the
oldest investment houses in the world tracing its origins back to the 17th
century and the company was founded in 1823. It manages money on behalf of
blue blooded clients and is widely believed to manage some of the British
Royal family’s wealth.
Other News
Citigroup
have said that gold looks like it could go higher and does not look
overvalued. Citigroup said that $5,000/oz was not
likely to be reached unless there was a “meaningful deterioration in
the macroeconomic environment.”
UBS said this morning that gold sales to India
for May are up 161% year-on-year – another sign of robust demand from
India.
For the latest news, commentary, charts, infographics and videos on gold and financial markets
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SILVER
Silver is trading at $39.59/oz,
€27.77/oz and £24.32/oz.
PLATINUM GROUP METALS
Platinum is trading at $1,776.35/oz, palladium at
$821/oz and rhodium at $1,925/oz.
NEWS
(Business Week)
Gold Pares First Monthly Increase in Three After
Rally to Record
(Business Week)
China Gold Demand May Surpass India This Year,
Goldcorp Says
(Bloomberg)
Gold Set for Monthly Gain as U.S. Lawmakers Wrangle
Over Debt-Ceiling Deal
(Google News)
IMF Chief: Dollar Status in Doubt if Debt Crisis
Persists
(CNN)
3 Ways Obama Could Bypass Congress - Treasury Could
Create $1 Trillion in Platinum Coins
COMMENTARY
(King World News)
Robin Griffiths Audio - $8,500 Gold & What the
Super Wealthy are Doing With Their Own Money
(Finanical
Times)
Gold not as stretched as you might think, Citi says
(NY Magazine)
Could We Solve the Debt-Ceiling Crisis With
Trillion-Dollar Coins?
(Financial Times)
Britain isn’t just in very deep trouble.
It’s doomed
(MoneyWeek)
How to take advantage of the US debt ceiling hysteria
(MoneyWeek)
When will it be time to sell your gold?
(MarketWatch)
Platinum’s a Precious Metal, Too
Mark O’Byrne
Goldcore
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