- Gold has set a new intraday record of US$1275/oz. QE 2.0 is a foregone conclusion. The ECB will have to go into full QE mode soon. Who is going to buy all the debts profligate governments are issuing? Greece is threatening to default. The market is unimpressed by all the measures taken. CDS (insurance) on sovereign debts have risen to their April crisis levels.
- Gold is beginning its annual autumn bull run. This time round, gold will go much higher than most people believe possible. Take it from maestro like James Turk:
“We are very close to an upside explosion!…The bottom line is…we can expect higher prices in tangible assets across the board and gold and silver will lead the way…”
- Central banks are no longer selling gold (except for the IMF which is part of the USD-gold price suppression hegemony). Even Bangladesh Bank is buying gold. The latest rumour is that Bank of Thailand is accumulating gold:
Is Bank of Thailand buying gold on the sly?
…Thai customs website, gold imports in July, the latest month for which data is available, hit 55.4 billion baht ($1.8 billion), which is equivalent to a bit less than 45 tonnes and more than 13 times June imports of 4.1 billion baht ($130 million).
The Thai baht is running at 13-year highs, up 8.4 per cent against dollar so far this year, which is not only worrying for exporters, but also for the bank, which holds $157 billion in foreign reserves. The Bank of Thailand won’t say how much of that is held in dollars, but a straw poll of Bangkok economists suggests that it is somewhere between 60 and 85 per cent, and they’ve already said they are trending away from the US dollar.
But if that 60-85 per cent estimate is right, every 1 per cent of appreciation in the baht is costing between $940 million and $1.33 billion in reserve losses on dollar holdings alone. At the top end, that’s close to 0.5 per cent of GDP, or a little more than 2 per cent of the 2010/11 budget passed last month.
So has the Bank of Thailand been in the market? They aren’t saying, but the Thai Customs website might be getting a few more hits than usual in the coming weeks.
- Many central bankers managing their countries foreign reserves are probably sweating blood. China has lost as much as US$400B due to the weakening of the USD against the Yuan. These countries are dumping their USD in favor of hard assets. Gold is the hard asset par excellence!
Hathaway Says Gold Bull Run At Midway Point
The way fund manager John Hathaway sees it, gold may be only halfway through its bull run. The metal is likely to remain supported by worries that government policies will continue to devalue paper currencies, he said Monday during the two-day inaugural Internet-based Kitco Metals eConference.
Hathaway manages the Tocqueville Gold Focus Fund, Tocqueville Gold Fund, Tocqueville Gold Offshore Fund and Tocqueville Gold Partners. New-York based Tocqueville Asset Management manages some $8.5 billion in assets, of which $2.2 billion is gold-related.
“We view gold as being in a secular bull market,” Hathaway said. “The biggest issue out there is paper assets and the lack of trustworthiness of governments both on this side of the Atlantic and elsewhere. At some point, it seems to us, there will be serious devaluation of all paper currencies.” Thus, he said, investors are increasingly turning to gold. “We don’t see this changing any time soon,” he said.
In fact, during his presentation, Hathaway displayed a graphic showing the four stages of a bull market. And, he said, gold is currently at the midpoint between Stages 2 and 3.
“We’re right in the middle,” he said. “We’ve gone through Stage 2 where gold has finally made it to the front pages (of newspapers). And that, of course, has attracted money flows. We’re now set for a much more rapid increase both in the gold price and in the appreciation of gold shares as momentum investors get into the space.”
The initial stage of a bull market is interest from value investors or contrarian investors when the price is at a bottom. In fact, Hathaway said, Tocqueville’s interest in gold began in 1998 when the metal was “the Rodney Dangerfield of investment ideas.” He was referring to the comedian whose punchline is that he gets no respect.
The second stage of a bull run comes when growth investors enter the market and there is an inflow of funds as the price of gold continues to rise, his graphic said. The third, and next stage to come, of the bull market will be interest from momentum-based investors, Hathaway said.
The fourth and final stage will occur when investors are buying gold and mining shares at such a frenzied pace that “irrational exuberance” is the result, his graphic said. Hathaway described this scenario as a “silly season when everybody and his brother is talking about their favorite gold stocks, just as they were talking about Internet stocks back in 2000” before a bubble burst in the technology sector. “Frankly, we have a long way to go before we see that kind of craziness,” Hathaway said.
Levels of public debt are accelerating, Hathaway said, and this will continue if the economy does not “miraculously” grow solidly for three to five years. Meanwhile, the countries that supply goods to the U.S. economy have a small exposure to gold in their reserves. “There is no doubt in my mind that they view this as a problem and they will be gradually adding to their gold holdings, whether it’s in the form of official holdings or unofficial,” Hathaway said.
Overall, the supply/demand picture for gold remains favorable, he said. “The big change in the supply/demand picture is the investment demand has become more and more powerful at the same time that mine supply is stagnant or even declining,” Hathaway said. Meanwhile, there are negative real interest rates in the U.S., in which rates are below the level of inflation.
“So there is really no penalty for anyone to have gold,” Hathaway said. “They’re not missing out on any sort of return for holding liquid assets.” Gold in particular has more upside potential since it is a relatively small market, with total capitalization of mining companies only $300 billion or so, a speck compared to total worldwide equity assets in the trillions, the fund manager said.
“Physical gold is equally small,” perhaps $2 trillion, Hathaway said. “So it doesn’t take a big movement of financial assets into gold to have a dynamic impact on the gold price. We think that the upside potential from here is substantial and it’s not too late to make an allocation to gold and gold shares.”
- Will Greece default on its debts? Yes, without a doubt. Nothing has been resolved. More debts have been added on since April. It is now a bigger problem. Greece is not the only country who cannot repay its debts. All of the PIIGS are in trouble. If you were to add in all the off-balance sheet items western European government use to hide their debts, it is clear: they are all bust! There is simply no way these debts will be paid back.
- The solution is debt forgiveness. The criminal banksters who engineered this situation should be made to take their losses. Why should the public be made to pay back debts which these Illuminist banksters generate by corruption and fraud? The whole privately owned central banking system is a fraud perpetrated on the sheeple. These central banks print money out of thin air and charge the sheeple interest for it.
- The world is heading towards a financial, monetary and economic meltdown. Trust in fiat currencies will be eroded. When one region collapses it affects all region. When Greece defaults it will set off a cascade of falling dominoes worldwide. Most of Greece debts are held by the French and Germans. These 2 European powerhouse will be rocking as the financial tsunami knocks on their door. Many countries hold debts in other countries. Think US treasuries, the toxic debt held by everybody. When it becomes worthless, many otherwise financially healthy countries will go bust.
Greek debt crisis fuels fears of European sovereign default
Figures released this month on some of Europe’s weakest economies, including Greece, Ireland and Spain, point to the threat of a second continent-wide recession.
New figures from the Greek statistics agency show that the country’s recession deepened in the second quarter. This was the seventh successive quarter registering a decline in economic growth. Growth fell by 1.8 percent, compared to the first three months of the year. This was worse than the 1.5 percent forecast in official estimates. In the first quarter of the year, gross domestic product (GDP) contracted 0.8 percent. Over the second quarter, public consumption declined 8.4 percent and private consumption by 4.2 percent. Over the past year, GDP has fallen by 3.7 percent.
Tax increases on fuel, alcohol and tobacco have helped drive the inflation rate to a 13-year high of 5.5 percent. Unemployment year-on-year to June rose by 3 percent to 11.6 percent, according to official figures. Among 15-to-24-year-olds, the rate is significantly higher, at 32.5 percent. This is even before hundreds of thousands of public sector workers set to lose their jobs join the dole queues.
Elected last October, the Greek social democratic PASOK party government is imposing a €30 billion austerity programme in return for a €110 billion bail-out package agreed in May with the European Union and International Monetary Fund.
Contrary to the claim that the worst of the economic crisis is over as a result of the bailout, leading economists have warned that Greece will be unable to pay back its mountain of debt, with some forecasting that it will ultimately be forced to abandon the euro currency.
Speaking to the European House Ambrosetti forum at Lake Como earlier this month, German economist Hans-Werner Sinn, head of the IFO Institute in Munich, said, “This tragedy does not have a solution.” Greece would have defaulted in the period between April 28 and May 7 had the money not been promised by the EU, he said:
“Greece would have been bankrupt without the rescue measures. All the alternatives are terrible but the least terrible is for the country to get out of the eurozone, even if this kills the Greek banks.”
Sinn warned, “We are in the second Greek crisis right now, today. The policy of forced ‘internal devaluation’, deflation, and depression could risk driving Greece to the edge of a civil war. It is impossible to cut wages and prices by 30 percent without major riots”.
Critical to establishing the €110 billion bailout was the fear among European governments that a default by Greece on its debt obligations might result in financial “contagion” in other countries, such as Portugal and Spain. Crucially, the money lent to Greece would go back to pay the banks, particular those in France, Germany and the UK, which collectively hold 80 percent of Greek sovereign debt. The UK is not part of the eurozone, but UK-based banks have lent money to Greece.
A report issued in July by the Washington-based Centre for Economic and Policy Research explained this fundamental aim of the bailout plan:
“Europe and the IMF are not so much providing Greece with fresh finance but, most of all, shielding the European financial system from up to 200 billion euros of losses that could result from a Greek default. Curiously, almost one quarter of Greek debt is located in the UK (and Irish) financial sector. The obvious beneficiaries of the Euro Area governments’ package are not Greek workers and citizens, who will suffer from severe budget cuts and recession, but financial centres such as the City of London.”
The Greek government hoped that the bailout would safeguard the economy against further pressure from global capital markets. Within the space of a few months, this strategy has already failed. The markets have continued to speculate that Greece will default on its debt and “spreads” on longer-term Greek government debt have continued to lengthen. Ambrose Evans-Pritchard warned in the Daily Telegraph September 3, “Spreads on longer-term Greek government debt have surged back to crisis levels of about 800 basis points, implying a high risk of default.”
Further speculation against Greece and its banks took place last week following the announcement by the National Bank of Greece (NBG), the country’s top lender, that it needed to raise €2.8 billion (£2.3 billion) in fresh capital. The NBG is planning to raise the funds with a share issue and by selling part of its holding in Turkish subsidiary Finansbank.
US business and economics analyst, Megan McArdle, commented on the decision, “It’s not a good sign when the government has to intervene to prevent a run on a bank that is already owned by the government, but apparently, that’s what it’s doing with Anglo-Irish bank”.
Commenting in the Irish Times, Fintan O’Toole, wrote in apocalyptic tones, “The choice is now stark: do we go on being ‘good Europeans’ at the cost of destroying our own society or do we become ‘bad Europeans’, lose the trust of our European partners, but save ourselves?”
“There comes a point of existential crisis when even the meekest of countries has to put its vital national interests (first). We are at that point now.”
In a September 8 Daily Telegraph column on the sovereign debt crisis, Evans-Pritchard drew attention to the crisis in Ireland and stressed that this was a critical European-wide problem. “Credit default swaps (CDS) for Portugal, Spain, Italy, and Belgium have all surged this week,” he noted. According to Markit, the international financial information services company, the “stress gauge for the [eurozone] group is now higher than during the debt crisis, when the EU launched its €440 billion bail-out fund and the European Central Bank began buying eurozone bonds.”
The article cited the comments of Joachim Fels, the chief global economist at Morgan Stanley, who concluded that “one or several governments” may soon have to resort to the rescue mechanism. Fels warned that the stress testing of the European banks had failed to instil any lasting confidence, and concluded, “Neither the European sovereign debt crisis nor the banking sector crisis has been resolved, and both continue to mutually reinforce each other”.
…. The study researchers concluded that many countries are now running unsustainable levels of debt and have virtually no “fiscal space”. Fiscal space was defined by the IMF as the difference between the current level of public debt and a debt limit implied by each country’s own record of fiscal adjustment. The fiscal space indices essentially measure how much scope a nation has to borrow from financial institutions before the markets shuts off the supply of funds by demanding unsustainable interest rates.
“In particular, Greece, Italy, Japan, and Portugal appear to have the least fiscal space, with Iceland, Ireland, Spain, the United Kingdom, and the United States also constrained in their degree of fiscal manoeuvre” the study said.
The risk of Greece or another indebted European nation defaulting on its debt looks increasingly likely, as the CDS traders at major banks and hedge funds target them to take advantage like vultures to a decaying corpse.
Even if Greece meets all the obligations of its austerity programme, the IMF has calculated that it will have a rising sovereign debt ratio of 145 percent of GDP by 2014. This compares to a ratio of 115 percent in 2009.
- As I write this the Japanese government has asked the BOJ to intervene in the forex market and the USDJPY has rocketed from 83.0 level to 84.11 in a matter of minutes. The Japanese economy is in trouble because of the strong Yen. At 83-84 to the USD, their economy is slowing because they are not competitive.
- As the United States weaken the USD many countries have to decide what forex rate their currencies have to be at. If the currency is too strong, like the Japanese Yen, the economy will go into recession. Asian export economies like Korea, Taiwan, Japan… are most vulnerable. Although, a weakening of the USD is inevitable, most countries do not want a forex rate that will set them on the road to recession. Thus, there will be a certain forex level where the countries will start to follow the USD down in its devaluation. ie competitive devaluations.
- All fiat currencies are on the competitive devaluations route to toilet paper status. This is to make their economies competitive vis-a-vis their neighbours/competition. For America, since the USD is the world reserve currency, they cannot devalue against a specific currency. It will be a political tinder box. At some point in time when QE fails, my belief is that America will devalue the USD against gold.
- Here is how it will work. The treasury department in conjunction with the FedRes will announce that they are revaluing gold price from say $1250/oz to $10,000/oz. Effectively, they are saying, they will buy gold at a floor price of US$10,000/oz. This will be highly inflationary. The rest of the world will then decide what they want to do next. Most countries will follow suit because if they don’t their economies will collapse (due to unfavourable exchange rate). This will stimulate inflation worldwide. Fiat currencies will be bashed by gold and there will be a flight to hard assets: commodities, precious metals…
Currency wars set to break out as volatility grows
GET set for an outbreak of currency wars with the potential to shake global confidence as markets move towards the volatile October period. The long-standing debate between China and the US is again at a flashpoint, while Japan is aggrieved that China’s central bank is pushing up the value of the yen.
The investors’ flight from the euro may also gather speed under renewed concerns over the sovereign risk. The Australian dollar, which is being pushed higher as investors assess the strength of Australia’s economy and the prospect of further rate rises, is set to be buffeted by changing market assessments of risk.
A confluence of international meetings over the next six weeks will elevate market concerns into the political domain. The International Monetary Fund is meeting in Washington early next month, followed by the G20 finance ministers and central bank governors later in the month, and the G20 leaders’ summit in Korea in early November.
An attendee at a G20 meeting of finance ministry and central bank officials in Korea last week says the US and China appeared to be headed for a clash, with little sign at the meeting of compromise on either side. On the eve of the last G20 summit, held in Toronto in June, China defused a crisis by announcing it would abandon its rigid peg to the US dollar in favour of a return to a managed peg against a basket of currencies. However, after an initial rise of about 0.4 per cent, the renminbi then retraced half the move.
Westpac chief currency strategist Robert Rennie says the US may be underestimating Chinese irritation with the US Federal Reserve, which announced a fresh bout of quantitative easing shortly after the G20 summit. “China doesn’t like quantitative easing and what it does to the dollar, and there is a sense of frustration from China that this was outside the background gentlemen’s agreement.”
However, Democrat congressmen are in search of scapegoats for the continuing malaise in the US economy and China is an inviting target. Although the US monthly trade deficit reported last week was slightly smaller than previously, there was no change in its monthly deficit with China, which, at $US26 billion, was the second biggest since the financial crisis. The cry that the “Chinese are taking our jobs” is going up in US industries ranging from solar panels to aluminium.
The US is under pressure to retaliate, with its Department of Commerce maintaining the option of declaring China a currency manipulator. However, there are concerns within the US administration about China’s reaction to any such move.
The US is annoyed that Australia will not back its campaign to get China to raise the value of the renminbi, believing its case would be strengthened if it could rally more allies. However, Treasury does not believe a revaluation of the Chinese currency would achieve much. It holds that China’s surpluses are the result of it saving more than it invests. Australian officials say it is more productive to encourage the Chinese to improve social safety nets so that individuals have less need to self-insure, and note that Beijing is taking some steps in this direction.
China is also under pressure from Japan. As part of its campaign of diversifying its holdings of foreign reserves away from the US dollar, the Chinese central bank has been buying Japanese government bonds, adding to the upward pressure on the yen.
As with the US, Japan is also under political pressure to do something and a weakened government makes its response unpredictable. “While China can buy Japanese bonds, Japan can’t buy Chinese government bonds using its foreign reserves. I feel that’s unnatural,” Finance Minister Hoshihiko Noda said last week.
The yen rose to a 15-year high against the US dollar last week, and a nine-year high against the euro. In the perverse world of foreign exchange, the prospect of deflation in Japan, and the evident reluctance of the Bank of Japan to embark on forceful quantitative easing to avert it, makes the yen an attractive safe haven. In a deflationary world, a given amount of currency buys ever more goods.
The Swiss franc is also suffering safe-haven inflows on fears of deflation, hitting a record high against the euro last week. The Swiss National Bank suffered paper losses equivalent to about $15bn trying to stop the rise of the currency earlier this year.
The Australian dollar also touched a record high against the euro last week. However, it is fast money coming here rather than refugee investors in search of a safe haven. The Australian dollar, like equities, remains the risk-seeker’s play. If you think the world economic recovery is going to stabilise and that the Asian region will retain healthy growth through 2011, then the Australian dollar will do well. Another assault at parity with the US dollar would be in the offing.
- The ruler, ‘god’ of this world is Satan. Many people have bowed down and worshipped him throughout history for wealth, power, fame … success etc. Do you really believe that Satan will give his kingdoms and their glory to born again Christians? I don’t think so. The rulers of this world are closet Satanists. The Luciferians are getting more brazen, they are confident their plan for a One World Luciferian Police State will be successful. Unfortunately, the sheeple are pretty much asleep.
Matthew 4:8-10 (New King James Version)
8 Again, the devil took Him up on an exceedingly high mountain, and showed Him all the kingdoms of the world and their glory. 9 And he said to Him, “All these things I will give You if You will fall down and worship me.”
10 Then Jesus said to him, “Away with you,[a] Satan! For it is written, ‘You shall worship the LORD your God, and Him only you shall serve.’”[b]
- Who does Julia Gillard believe in? I seriously doubt it is the God of the Bible. Is it a honest mistake that the Governor General and Julia are making the Masonic handshake? Draw your own conclusions!
Masons shamelessly flaunt their power
The Australian Governor-General, Quentin Bryce, is probably a member of the Order of the Eastern Star, as is the Governor of the state of New South Wales in Australia, Marie Bashir.
As you would be aware, the Order of the Eastern Star is an organisation which women can join, whereas, as far as I’m aware, women are not permitted to join the Freemasons. This next URL, which is the website for the Order of the Eastern Star, is unbelievable. In the top left corner on the homepage is an inverted pentagram in a circle, which is a blatant and primary satanic symbol: http://www.easternstar.org/