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Posts Tagged ‘ECB’

Peaks and Troughs

February 6, 2012 Leave a comment
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While I was travelling over the Andean mountains soaking in the majestic sceneries and virtually out of touch with the financial world for over 10 weeks, the PMs market seemed to be having its own mountain-valley experience.  Unknown to me, gold and silver took a 15 and 24 percent plunge respectively against the USD towards the end of the year. While they were down against most fiat currencies, it did not affect me, nor others who’ve saved and done their accounting in ounces of gold and silver. Not one bit. Neither did they do us much good when their USD prices soared 11% and 19% respectively in January. Life goes on while the powers that be continue to play their paper shenanigans.

For the benefit of readers who continue to do their accounting in units of fiat currencies, I’ve summarised the performance of gold and silver in several currencies through the charts below. Hope they help to put things into perspective.

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Gold & silver performance relative to various currencies in 2011

In 2011, gold appreciated by an average of 14.3% against all 75 fiat currencies tracked by goldsilver.com, while silver averaged a corresponding loss of 6.8%. Among the selected currencies of interest charted above, only the Indian Rupee recorded a loss against both gold and silver.

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Gold & silver performance over 12 years

Going back to the beginning of this secular bull market in PMs, both gold and silver charted impressive gains against all tracked currencies. If you’ve been earning or saving in Indian Rupees over the past 12 years, you’d have lost over 500% against both gold and silver. If you think the Indian Rupee had it bad, spare a thought for those who’ve saved in Iranian Rial or Argentinian Peso, which depreciated by 3,368% and 2,240% respectively against gold.


Gold & silver performance before April’s price take downs

Silver’s 2011 performance was extremely volatile peaking in late April.  Silver’s peak and subsequent drop in price mirrored what we witnessed in its 2008 price action when the silver spot price dropped 50% peak to trough intra-year. This chart shows how silver has been leading gold’s performance just before the April price take downs.

Be prepared!

If you’ve been following recent geo-political and macro-economics news, you’d be much better informed than me. Doing a quick review of what transpired during the period I left this blog idle, here’s what I consider noteworthy developments:

  • The Fed’s announcement of its zero-rate policy through 2014, requiring it to print more money to buy US Treasuries.
  • ECB engaging on its own campaign of printing money hoping to “solve” Euro zone’s deepening debt crisis.
  • Start of a countdown to the war with Iran.
  • MF Global’s $6.3 billion “repos” saga leading to its collapse and potentially bringing down the Futures/Options (and other derivatives) market along with it.

Bottom line is things are getting worse, not better (as the MSM would have you believe), especially for savers and retirees. 2012 and 2013 are setting themselves up to be potentially disruptive years. Be prepared!

Updates to static pages:

  • GoldMoney Review: Discontinued services, Gold & Silver “Client holdings by vaults” charts as at 30 Dec 2011
  • BullionVault Review: Gold & Silver  ”Client holdings by vaults” charts as at 30 Dec 2011
  • Compare AFE, BullionVault, GoldMoney: Comparative gold & silver holding charts as at 30 Dec 2011 and Alexa comparative traffic rank chart as at 01 Feb 2012.
  • Fees Comparison: Highlighting GoldMoney’s zero-spread trading advantage.
  • Forecasts: All close ended PMs price action forecasts by industry leaders were off target! New ones are being tracked.

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On the lighter side…

Endemic to the Galápagos Islands, these bright golden land iguanas (Conolophus subcristatus) are incredible friendly and approachable. If not for the 2-meter rule, you could easily reach out to touch them!

Categories: Articles by PoliticalMetals Tags: , , , , , , , , , , , , , , ,

Possible mechanisms of central bank market manipulation

September 28, 2011 Leave a comment

By Patrick A. Heller | Numismaster

On the basis of the hard information available early this week, it is highly likely that gold and silver prices were pushed down rather than fell as a result of free market trading.

First, it is entirely possible that European central banks of nations in the eurozone could be liquidating some of their gold reserves as a desperate move to beef up their fiat currency reserves to stave off default on their debts. If this is happening to any degree, that could help explain the why short-term gold and silver lease rates have recently turned negative.

Second, it is possible that the U.S. government may have informed the Chinese government in advance that is was preparing a major intervention to suppress gold and silver prices and asked the Chinese to refrain from jumping in to purchase physical metals until the market had been pushed near the bottom.

Last week a longtime reliable source told me that there were massive quantities of Asian buy orders placed in the London market to execute if spot prices dropped to $1,760 all the way down to $1,715. I have every reason to believe that at least a sizable percentage of these buy orders may be have placed by the Chinese government as this would be consistent with their trading activity since 2003. If the Chinese were alerted that they could have the opportunity to purchase gold even cheaper than their standing buy orders, it would be reasonable for them to cooperate by putting their buy orders prices in the $1,700s.

Third, it is possible that the U.S. government may have directly intervened in suppressing prices, through one or more agencies that are not drawing close scrutiny from Congress or the public. The prime suspect would be the Exchange Stabilization Fund, which was established in 1934. The ESF is an emergency reserve, not subject to congressional oversight, normally used to intervene (manipulate) in foreign exchange markets. In 1970, its mandate was changed by Congress to allow the Secretary of the Treasury, with the approval of the President, to use funds in the ESF to “deal in gold, foreign exchange and other instruments of credit and securities.” Thus, it would be possible and legal for the U.S. government to surreptitiously manipulate the gold market. The reason I consider this to be a plausible reason that gold and silver prices were suppressed is that the major beneficiaries of lower prices would be the U.S. government, its trading partners and allies.

On the basis of the hard information available early this week, it is highly likely that gold and silver prices were pushed down rather than fell as a result of free market trading. As I prepare this Tuesday morning, the price of gold is already up more than 7 percent from the bottom it touched in Asian markets early Monday, and silver is up more than 25 percent. Investor sentiment is not that volatile. You just don’t have gold and silver plummet then quickly rebound by such large amounts. However, manipulated markets can be that volatile.

> Read full article at source.

Categories: Articles from external sources Tags: , , , , , , , ,

Greece Nears a Tipping Point in Its Debt Crisis

September 19, 2011 1 comment

By Jack Ewing | NYT

FRANKFURT — Europe appeared to be lurching toward a moment of decision in its sovereign debt crisis Sunday, as Greece struggled to meet conditions for additional  aid amid rising German impatience with the cost.

Prime Minister George A. Papandreou of Greece canceled a planned trip to Washington to meet with his cabinet Sunday, in what looked like an increasingly desperate attempt to show foreign benefactors that the government can keep the promises it made in return for aid. Without the aid, the country would certainly default on its debt, an event that economists have warned could lead to bank failures in other countries and ignite another financial crisis.

“Greece’s imminent default is assured,” Carl B. Weinberg, chief economist at High Frequency Economics in Valhalla, New York, wrote in an e-mail Sunday. “Without an injection of cash within the next weeks, the nation will run out of resources to service its debt.”

Other analysts are less pessimistic, arguing that European leaders will do what is necessary to save Greece once they are confronted with the ugly ramifications of a default. These might include having to rescue banks, particularly in France and Germany, that have large holdings of Greek bonds, as well as putting even more acute pressure on other highly indebted euro zone countries like Italy and Spain. In the worst case, the euro could come apart, setting back the cause of European unity by decades.

When political leaders do the math, they may realize it is cheaper to save Greece than engineer a bank rescue only two years after the last round of bank bailouts, analysts said.

“You can stabilize the banking system and let the sovereign go through the roof, but that is not the most efficient way to do it,” said Guntram B. Wolff, deputy director of Bruegel, a research organization in Brussels.

Still, political leaders outside the euro zone have displayed concern that the European approach to the crisis lacks urgency. Timothy F. Geithner, the U.S. Treasury secretary, attended part of a meeting of European finance ministers on Friday and Saturday in Wroclaw, Poland. It is rare for a U.S. official to attend such a meeting, known as Ecofin, and it was Mr. Geithner’s first time.

“I can’t remember the last Ecofin meeting a U.S. Treasury secretary has attended,” said Nick Matthews, an economist at Royal Bank of Scotland. “It is a clear signal of how serious the sovereign debt crisis has become and an indication that it has gone beyond Europe and is threatening on a global dimension.”

The finance ministers failed to make substantial progress toward resolving the debt crisis or to make any pledge to recapitalize Europe’s banks.

> More from Source

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… and here’s Andy Hoffman aka Ranting Andy’s take on this crisis

Ranting Andy Special: The Central Banks Can’t Win

RANTING ANDY – It’s another one of those days where I have too many thoughts in my head, making it hard to focus on just one.  The pace of GLOBAL ECONOMIC COLLAPSE is accelerating too rapidly, to the point that at ANY GIVEN MINUTE of ANY GIVEN DAY the final death knell could sound, the commencement of the PANIC that CANNOT BE AVERTED by the stroke of a keyboard (i.e. printing electronic money).

Last Friday we entered the weekend with crashing stock markets (particularly BANKS, despite the best efforts of the PPT), surging gold prices (despite the typical, MASSIVE Cartel suppression tactics), and the prospect of an imminent Greek bond default.  The Bank of Japan had just announced its most blatant (and in hindsight FAILED) attempt to devalue the yen, and the Swiss National Bank had just announced the UNTHINKABLE, an all-out currency devaluation in plain sight of the entire financial world.

That night, the G7 meeting (England, France, Germany, Italy, Japan, Canada, and the U.S.) concluded with a brief, ambiguous communiqué.  I excerpted the key phrases below, which essentially said ‘WE WILL DO ANYTHING, LEGAL OR ILLEGAL, MORAL OR AMORAL, PRACTICAL OR IMPRACTICAL, SO SAVE THE STATUS QUO, IN WHICH WE, THE MOST WEALTHY, POWERFUL, CONNECTED A—HOLES ON EARTH RULE EVERYHING, STEAL EVERYTHING, AND DECIDE WHO LIVES AND DIES.’

Central Banks stand ready to provide liquidity to banks as required. We will take all necessary actions to ensure the resilience of banking systems and financial markets.

In other words:

‘CENTRAL BANKERS ARE ALL-POWERFUL GENIUSES WITH THE ABILITY TO MANIPULATE ANY AND ALL MARKETS INDEFINITELY SIMPLY BY PRINTING MONEY.  IT DOESN’T MATTER THAT NOTHING WE HAVE SAID OR DONE HAS EVER WORKED, THAT SEVERAL OF US ARE VISIBLY BANKRUPT, OR THAT INFIGHTING THREATENS TO DESTROY OUR TREASONOUS UNION AT ANY SECOND.  WE HAVE BEEN PRINTING DOLLARS, EUROS, YEN, POUNDS, AND FRANCS AT AN EXPONENTIAL RATE SINCE THE GLOBAL FINANCIAL CRISIS COMMENCED IN 2008, AND WILL CONTINUE TO DO SO, WITHOUT ANY PRETENSE IN THE SLIGHTEST, UNTIL THE MARKETS DO WHAT WE WANT.’

At that time, interest rates on Greek one-year debt had just passed 100%, while credit default swap spreads were, and still are, predicting a 98% chance of Greek default (tables below):

GREEK ONE-YEAR DEBT INTEREST RATE

GREEK CREDIT DEFAULT SWAPS (COST OF INSURING GREEK SOVEREIGN BONDS) – NOTICE IT CONTINUED TO RISE LAST WEEK!

But these banking geniuses, who cumulatively received $16 TRILLION OF OVERT AND COVERT BAILOUTS over the past three years from the Federal Reserve (ALL WITH FRESHLY-PRINTED DOLLARS), decided they could “save the day” once again if they just PRINT MORE MONEY, coupled of course with a MASSIVE, coordinated effort to SUPPORT BANK STOCKS and ATTACK GOLD AND SILVER PRICES.

> More from Source

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Here’s the initial market reaction in early Asian trading over the weekend’s development

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