Recent Gold Headlines
Always A Time To Buy And Also A Time to Sell
2nd June by IPM Group
As we have noted here many times at IPM Group, gold is considered a tier 1 asset class, the currency that has no liability attached to it.
Gold is genuine wealth; it is real money. Throughout history no paper currency has survived in its original form. Paper currencies are normally inflated away until they are worthless. Hence World Central Banks have been ‘net’ buyers of gold every year since 2010 and hold gold as reserve requirements on their balance sheets.
There is ALWAYS a time to BUY and there will come a time to SELL precious metals (but that time to sell is definately not with us now). Gold is the hedge against government and economic collapse. Gold performs in extreme economic environments.
As a side note: The low in terms of US dollars is still probably not in place. Keep in mind that we may see a major rally in the dollar as the debt markets come under considerable selling pressure and that will help gold decline in US dollars in the short term, before the final low is achieved. However against the world currencies that is a different picture altogether.
Armstrong Cycles suggest....
From the longer-term perspective, gold rallied perfectly in line with our long-term cyclical models bottoming in 19 years during 1999 following the 1980 high at $875. From there, Gold rallied for 13 years, which was also precisely on track establishing the highest annual closing at $1675.80 in 2012 with the intraday high remaining during the previous year 2011 at $1920.80 in line with the low in the Economic Confidence model.
Switching into a long-term perspective gold is poised for its final high on this run in the year 2032. New highs should also be seen in 2017 and 2020 against the US$ from cycle lows in 2015. Panic Cycle Models suggest that higher volatility is due the year of 2017.
So as the world economic macro trends continue to deteriorate quite rapidly now across the USA, South America, Europe, Middle East, Asia and China. Policy makers go to ever more extremes to keep the 'titanic from sinking without any lifeboats' (see here). The world stock markets trading on extreme valuations with world trade and corporate profits dropping off precipitously, the bond markets trading at levels that have never been seen before in history and the 'world drowning in debt' according to Goldman Sachs , I thought we should have a quick look at just some of the latest major headlines affecting gold, please see below....
I could supply a stream of charts but thought this one is quite clear.
• Texas To Create Own Bullion Depository, Repatriate $1 Billion Of Gold.
House Bill 483 would let the Texas comptroller’s office establish the state’s first bullion depository at a location yet to be determined. State Rep. Capriglione’s changes to the bill must be approved by Monday, the last day of the 84th legislative session.
The goal is to create a secure facility that would allow the state to bring home more than $1 billion in gold bars that are owned by the University of Texas Investment Management Co. and are now housed at the Hong Kong and Shanghai Bank in New York.
“The depository would be an agency of the state located in the Office of the Comptroller, directed by an administrator appointed by the Comptroller with the advice and consent of the Governor, Lieutenant Governor and Senate,” according to a fiscal analysis of the bill. The depository could also hold deposits of gold and other precious metals from financial institutions, cities, school districts, businesses, individuals and countries.
“This will allow for bullion to be deposited here, as well as any other investments that … any state agencies, businesses or individuals have,” State Republican Capriglione said.
• German physical gold bar and coin demand for 1st Qtr of 2015 is up 20%.
According to the World Gold Council, total German physical gold bar and coin demand during Q1 2015 was 32.2 metric tons (mt), Switzerland ranked second with 13.8 mt and the U.S. came in third at 9.9 mt. Interestingly, German physical gold investment increased 20% compared to the same period last year while U.S. gold coin and bar demand fell 12%.
Courtesy of SRSrocco and one of his latest pieces.
• China Creates Gold Investment Fund for Central Banks.
China announced a new international gold fund. Over 60 member countries have already invested. The fund expects to raise 100 billion yuan ($16 billion). It will develop gold mining projects in the new Silk Road economic region.
• China Could Send Gold Up At Least $200.
Saxo Bank’s Steen Jakobsen says China’s multibillion-dollar Silk Road Initiative will prompt Beijing to pull money out of Europe and the United States for infrastructure investments elsewhere. This could send commodities higher and push Europe into recession. As a result, his 2015 price for gold is $1,425 to $1,450, more than $200 higher than its current level.
• Red Kite Launches New Base and Precious Metals Fund.
The fund has already deployed almost $1 billion in equity, loans, and royalty streams into at least 17 junior mining firms. It hired a physical metals trader to handle all the supply. The fund will likely fund underserved juniors that have struggled to get funding.
• Texas Senate Passes Bill to Establish Bullion Depository for Gold and Silver Transactions.
A bill to make gold and silver legal tender in Texas passed in the state senate by an overwhelming 29–2 vote. The bill essentially creates a way to transact in precious metals. It will allow citizens to deposit precious metals in the state depository and then use the electronic system to make payments to any other business or person who also holds an account.
• Gold Smuggling in India at All-Time High.
Customs agencies seized over 3,500 kilograms of gold (112,527 ounces) in 2014–15, the largest stash ever confiscated in Indian history. The report says gold smuggling has grown by 900% in just two years. It also estimates that seizures could be less than 10% of actual smuggling.
• Russia Boosts Gold Holdings to over 40 Million ounces as of May 1st, as a Defense Against “Political Risks.”
Dmitry Tulin, monetary policy manager at the Russian central bank, said it is increasing its gold holdings because “it is a 100% guarantee from legal and political risks.” Part of the motivation is certainly that their overseas assets could be frozen if sanctions over the Ukraine crisis tighten.
Official Central Government Holdings
• Austria Repatriates 110 Tonnes of Gold from UK.
Austria is repatriating 110 tonnes (3.53 million ounces) of gold from the Bank of England. It eventually wants to have 50% of its holdings stored at home. The country has reportedly been transferring its official gold reserves from unallocated to allocated accounts in recent years, and also reduced its leased gold by 60%.
• D.E. Shaw Buys $231 million of GLD.
D.E. Shaw & Company bought $231.07 million worth of SPDR Gold Trust last quarter. This is a new position for the company.
• Canadian Fund Makes $700 Million Bet on GLD.
Canadian asset manager CI Investments purchased a whopping 6,117,900 shares of GLD last quarter, worth $703.6 million. GLD is now the single largest holding of the fund—bigger even than its position in Apple.
• More Funds Increase Their Shares in GLD…
A Swiss investment bank increased its position in GLD by 490%, to over 4 million shares. Lazard Asset Management doubled its holding to over two million shares. Morgan Stanley increased its holding by 8.3%, and Blackrock Group added 167% more to its position.
• Traders Buy Gold and Silver at Fastest Pace in Over a Decade.
Large speculators haven’t bought silver this aggressively since September 1997. Net speculative longs in gold also added over 45,000 contracts, the most since July 2005.
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