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overtheedge
Member since May 2012
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Gold Surges Another 7% This Week – Largest Gain Since 2008 - Mark O'Byrne - gold.ie

"Buyers should be getting into position to buy on the next dip."
Gold is up something like 16% so far this year.
Should'a bought when it was low and rising rather than wait for a 1-2% dip.
Perhaps the buyers have a cut-off price where they refuse to buy any more?

The current trend of shedding junk and buying gold is only effective if the economy stabilizes.
But the harsh reality is the economy can't stabilize and prices in the long term will rise until ...

Gold is a non-producing asset. Effective as a savings vehicle but it still needs a buyer to provide a profit.
Then the seller trades a tangible for fiat that has grossly proven its declining exchange value.
Paper profits aren't worth the price of the paper.

"As a percentage of overall fx reserves, gold allocations remain extremely small."
A silly notion at best.
Foreign reserves are entirely different from gold reserves even though governments lump them together.
Gold has no counter-party risk. Foreign currency/notes in all of its forms carry counter-party risk.
As an example, look at US gold holdings. If gold constitutes 70%+ of the US foreign reserves, that means the US holds less than 30% in foreign currency vehicles.
Run the numbers yourself. See exactly how much fx currency vehicles the USA actually holds.
Gold hasn't been used to settle current accounts (balance of payments) for a long time.
So obviously gold as a foreign reserve is nonsensical at best.
I suspect most of the non-gold foreign reserves held by the USA are in fact just currency swaps.
Effectively the governments trade their currency to one another and then call it a reserve as if it is an unencumbered asset.

Foreign reserves matter little when compared to the external debt for most countries.
We are witnessing a classic example of perception management.
All too soon, everyone will learn that it is always about solvency and liquidity. Always.
So poor China with only 1.8% of it fx reserves in gold (perhaps 1800 tonnes versus 8500 tonnes) could easily have far more solvency and liquidity than the USA.

Commented 2989 days ago

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Beginning of the headline :Gold bullion jumped 4 percent yesterday to $1,244.20/oz, its biggest single-day percentage rally since 2013. For the week, gold is 7.2% higher which is its biggest weekly gain since the global financial crisis in 2008. Asset Performance – 1 WeekGold and silver have benefited along with high credit government bonds from a rush to safety as investors worry about the health of banks, the banking system and the risk of a global recession. Gold is now 16.7% higher year to date. Analysts and traders s... Read More

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