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Updated: 10 hours 33 min ago

Kelly-Ann Kearsey Related

Fri, 07/25/2014 - 08:18

Kelly-Ann Kearsey

Fri, 07/25/2014 - 08:03
About the Author

Kelly-Ann joined GoldMoney in 2007 as a Compliance Associate.

Today she is an experienced Dealing Manager having obtained diplomas in Anti-Money Laundering and Compliance and valuable experience in banking, trading and compliance.

Aside from following and reporting on global economics relating to precious metals, Kelly-Ann’s day to day role ensures the efficient running of dealing tasks, including inventory management and processing of customer orders.

The Coming Slump

Fri, 07/25/2014 - 05:37
Governments and central banks have made little or no progress in recovering from the Lehman crisis six years ago. The problem is not helped by dependence on statistics which are downright misleading. This is particularly true of real GDP, comprised of nominal GDP deflated by an estimate of price inflation. First, we must discuss the inflation adjustment.

The idea that there is such a thing as a valid measure of price inflation is only true in an econometrician's imagination. An index which might be theoretically valid at a single point in time is only subsequently valid in the wholly artificial construction of an unchanging, or "evenly rotating economy": in other words an economy where everyone who is employed remains in the same employment producing at the same rate, retains the same proportion of cash liquidity, and buys exactly the same things in the same quantities. Furthermore business inventory quantities must also be static.

All human choice must be excluded for this condition. Only then can any differences in prices be identified as due to changes in the quantity of money and credit. Besides this fiction, an accurate index cannot then be constructed, because not every economic transaction is reported. Furthermore biases are built into the index, for example to overweight consumer spending relative to capital investment, and to incorporate government activity which is provided to users free of cost or subsidised. Buying art, stockmarket investments or a house are as much economic transactions as buying a loaf of bread, but these activities and many like them are specifically excluded. Worse still, adjustments are often made to conceal price increases in index constituents under one pretext or another.

Economic activities are also only selectively included in GDP, which is supposed to be the total of a country's transactions over a period of time expressed as a money total. A perfect GDP number would include all economic transactions, and in this case would capture the changes in consumer preferences excluded from a static price index. But there is no way of identifying them to tell the difference between changes due to economic progress and changes due to monetary inflation.

To illustrate this point further, let's assume that in a nation's economy there is no change in the quantity of money earned, held in cash, borrowed or repaid between two dates. This being the case, what will be the change in GDP? The answer is obviously zero. People can make and buy different products and offer and pay for different services at different prices, but if the total amount of money spent is unchanged there can be no change in GDP. Instead of measuring economic growth, a meaningless term, it only measures the quantity of money spent.


To summarise so far, governments are using a price index, for which there is no sound theoretical basis, to deflate a money quantity mistakenly believed to represent economic progress. In our haste to dispense with the reality of markets we have substituted half-baked ideas utilising dodgy numbers. The error goes wholly unrecognised by the majority of economists, market commentators and of course the political classes.

It also explains some of the disconnection between monetary and price inflation. Price inflation in this context refers to the increase in prices due to demand enabled by extra money and credit. As already stated, newly issued money today is spent on assets and financial speculation, excluded from both GDP and its deflator.

It stands to reason that actions based on wrong assumptions will not achieve the intended result. The assumption is that money-printing and credit expansion are not having an inflationary effect, because the statistics say so. But as we have seen, the statistics are selective, focusing on current consumption. Objective enquiry about wider consequences is deterred, and nowhere is this truer than when seeking an understanding of the wider effects of monetary inflation. This leads us to the second error: we ignore the fact that monetary inflation is a transfer of wealth from the public to the creators of new money and credit.

The transfer of wealth through monetary inflation is initially selective, before being distributed more generally. The issuers of new currency and credit are governments and the banks, both of which reap the maximum benefit of utilising them before any prices rise. But the ultimate losers are the majority of the population: by the time new money ends up in wider circulation prices have already risen to reflect its existence.

Everywhere, monetary inflation transfers real wealth from ordinary people on fixed salaries or with savings. In the US for example, since the Lehman crisis money on deposit has increased from $5.4 trillion to $12.9 trillion. This gives us an idea of how much the original deposits are being devalued through monetary inflation, a continuing effect gradually revealed through those original deposits' diminishing purchasing-power. The scale of wealth transfer from the public to both the government and the commercial banks, which is in addition to visible taxes, is strangling economic activity.

The supposed stimulation of an economy by monetary means relies on sloppy analysis and the ignorance of the losers. Unfortunately, it is process once embarked on that is difficult to stop without exposing the true weakness of government finances and the fragility of the banking system. Governments with the burden of public welfare costs are in a debt trap from which they lack the resolve to escape. The transformation of an economy from no monetary discipline into one based on sound-money principals is widely thought by central bankers to risk creating a major banking crisis.

The crisis will indeed come, but it will probably have its origins in the inability of individuals, robbed of the purchasing power of their fixed salaries and savings, to pay the prices demanded from them by businesses. This is called a slump, an old-fashioned term for the simultaneous contraction of production and demand. Not even zero or negative interest rates will save the banks from this increasingly certain event, for a very simple reason: by continuing the transfer of wealth from individuals through monetary inflation, the cure will finally kill the patient.

There is a growing certainty in the global economic outlook that is deeply alarming. The welfare-driven nations continue to impoverish their people by debauching their currencies. As Japan's desperate monetary expansion now shows, far from improving her economic outlook, she is moving into a deepening slump, for which this article provides the explanation. Unfortunately we are all on the path to the same destructive process.

Market Report: Corrective Action

Fri, 07/25/2014 - 04:58
Precious metals drifted lower over the week in quiet trading. The bears took comfort in the lack of a positive price reaction to political news from the Ukraine and Gaza, and from economic surveys released in the US which disappointed analysts looking for signs of economic growth. Even the IMF downgraded its forecasts for the US economy, and the 10-year treasury yield fell back to 2.46%, having rallied up to 2.65% from the May low at 2.41%. This is shown in the chart below.

If the 2.4% level is breached that will be taken by traders as a sign that the US economy is in trouble. Lower Treasury yields are seen as evidence that the market is demoting inflation risk, given the lacklustre performance of the economy. But this is not the whole story: spreads between US Treasuries and corporate debt are widening, which suggests that the favoured safe-haven play is Treasuries and T-Bills rather than gold.


The gold price has come under pressure as a result. It has not helped that the August future is beginning to run off the board, bringing in some natural selling pressure not fully compensated for by demand for the December contract. This can be clearly seen in the next chart, of the gold price and Open Interest, which has contracted by 6,400 contracts over the last two weeks.


Yesterday the China Gold Association reported a drop in gold demand by a fifth in the first six months this year compared with the first half of 2013. These figures presumably only identify retail demand reported to it, because 962.46 tonnes were actually delivered via the Shanghai Gold Exchange, compared with 1,103.60 tonnes in 2013. We do know that China's demand has slackened from the exceptionally high levels of last year, but when one allows for the artificial boost to demand in the wake of the price smash in April 2013, current levels of demand are still healthy. For what it's worth the latest figures for SGE deliveries show 1,029 tonnes delivered this year so far, up 14.15% on last year.


The silver price has suffered a similar fate this week to that of gold, but volume has been extremely low, suggesting that the price is moving on the bank of gold rather than any material business in silver as such. This is shown in our next chart, and it can be seen that Open Interest is holding up a little better than for gold.


Yesterday the gold price was hit at the start of Asian trading and an hour into New York trading a sell order of some 6,000 contracts was dumped on the market, driving the price down to $1288. It was clumsy dealing, which appeared to be designed to drive the price lower, and the effect was magnified because of the quiet market conditions.
In essence, precious metals are in corrective mode with low volumes, and gold has moved back to its 200 day moving average, where it could find some renewed buying support.

Next week


Monday.

UK: Nationwide House Prices.
US: Pending Home Sales.
Japan: Real Household Spending, Unemployment, Retail Sales.


Tuesday.

UK: Mortgage Approvals, Net Consumer Credit, Secured Lending, M4 Money Supply.
US: S&P Case-Shiller Home Price Index, Consumer Confidence.
Japan: Industrial Production.


Wednesday.

Eurozone: Business Climate Index, Consumer Sentiment, Industrial Sentiment, Industrial Sentiment.
US: ADP Employment Survey, Core PCE Price Index, GDP Annualised, GDP Price Index.


Thursday.

Japan: Housing Starts, Construction Orders.
Eurozone: Flash HICP, Unemployment.
US: Initial Claims, Chicago PMI.


Friday.

Japan: Vehicle Sales.
Eurozone: Manufacturing PMI.
US: Core PCE Price Index, Non-farm Payrolls, Personal Income, Personal Spending, Private payrolls, Unemployment, Construction Spending, ISM Manufacturing Index.

Dealing Desk: Shine comes off gold price but GoldMoney customers still buy

Thu, 07/24/2014 - 12:56
The gold market has had a relatively quiet week, nevertheless, GoldMoney has seen some significant purchases from its customers.

Dealing Manager at the online precious metals trader, Kelly-Ann Kearsey said the yellow metal has definitely been the most popular: 'Over the past week, we've seen an increase in buyers with our most popular vault Via Mat, Switzerland.

'Throughout the week the buying has mainly been safe haven motivated as events in the Ukraine and in Gaza have escalated. This morning's drop of gold below its 1300 support level shows that the general market's worries have eased, and good economic data has been one of the catalysts.

'Strong Chinese manufacturing data has helped this morning, while on the 22nd, the USA Consumer Price Index figures showed inflation is creeping up as the economy becomes more durable. The US dollar has also strengthened since the beginning of July as the Federal Reserve Bank is on course to end its bond purchasing by December. This has resulted in investors becoming more optimistic about the dollar as the American economy appears to be recovering faster than expected.

'We haven't seen a reaction from our customers yet to today's drop in price below 1300, but it could prompt some bargain hunting over the coming week if the price stays lower.

'Summer is always quieter for the majority of the precious metals, but the safe haven worries aren't far away as the geopolitical issues continue. We will have US GDP figures out next week, as well as the employment situation and the Federal Open Market Committee meeting announcement, which might provide further direction for the gold price.'

16:00 24/07/14: Week on week performance: Gold down 0.9% to $1,290.70; Silver continued its slide, falling 1.2% at $20.51; Platinum slipped 1.9% to $1,462.90 while Palladium edged down 1.4% to $867.72.

Ends

NOTES TO EDITOR

For more information, and to arrange interviews, please call Gwyn Garfield-Bennett on 01534 715411, or email gwyn@directinput.je

GoldMoney is one of the world's leading providers of physical gold, silver, platinum and palladium for retail and corporate customers. Customers can trade and store precious metal online easily and securely, 24 hours a day.

GoldMoney currently has over 22,000 customers worldwide and holds $1.4billion of precious metals in its partner vaults.

GoldMoney has offices in Jersey and Hong Kong. It offers its customers storage facilities in Canada, Hong Kong, Singapore, Switzerland and the UK provided by the leading non-bank vault operators Brink's, Via Mat, Malca-Amit, G4S and Rhenus Logistics.

GoldMoney is regulated by the Jersey Financial Services Commission and complies with Jersey's anti-money laundering laws and regulations. GoldMoney has established industry-leading governance policies and procedures to protect customers' assets with independent audit reporting every 3 months by two leading audit firms.

Visit www.goldmoney.com.

Follow the GoldMoney Dealing desk team on Twitter: @goldmoneyupdate

What is with the silver fix?

Wed, 07/23/2014 - 05:05
GoldMoney's Alasdair Macleod joined Financial Services Network to discuss the impending demise of the London Silver Fix.

Will it force the LBMA to become more transparent and to modernize? Alasdair believes they need to do this to remain the center of the world's precious metal trade. He also believes that the latest slam down in gold prices was due to profit taking and not an organized take-down.

Click here to listen to the full interview

Historic Shift In The Gold & Silver Markets

Mon, 07/21/2014 - 05:46
With continued turmoil in major markets, today James Turk told King World News that we are witnessing a historic shift in the gold and silver markets.  Turk also discussed what the implications of this historic shift in these markets means as well as what investors should expect next.

Click here to read the full interview on King World News.

Forget the gold standard, it's all about silver bugs these days

Fri, 07/18/2014 - 06:26
With the global economy seemingly revived, you wouldn't expect silver to have many cheerleaders as an investment. Think again: its time to shine is now, says Christopher Silvester.

Read the full article by clicking here

Monetary discord

Fri, 07/18/2014 - 06:18
Last Monday’s Daily Telegraph carried an interview with Jaime Caruana, the General Manager of the Bank for International Settlements (the BIS). As General Manger, Caruana is CEO of the central banks’ central bank. In international monetary affairs the heads of all central banks, with the possible exception of Janet Yellen at the Fed, defer to him. And if any one central bank feels the need to obtain the support of all the others, Caruana is the link-man.

His opinion matters and it differs sharply from the line being pushed by the Fed, ECB, BoJ and BoE. But then he is not in the firing line, with an expectant public wanting to live beyond its means and a government addicted to monetary inflation. However, he points out that debt has continued to increase in the developed nations since the Lehman crisis as well as in most emerging economies. Meanwhile the growing sensitivity of all this debt to rises in interest rates is ignored by financial markets, where risk premiums should be rising, but are falling instead.

From someone in his position this is a stark warning. That he would prefer a return to sound money is revealed in his remark about the IMF’s hint that a few years of inflation would reduce the debt burden: “It must be clearly resisted.”

There is no Plan B offered, only recognition that Plan A has failed and that it should be scrapped. Some think this is already being done in the US, with tapering of QE3. But tapering is having little monetary effect, being replaced by the expansion of the Fed’s reverse repo programme. In a reverse repo the Fed gives the banks short-term US Government debt, paid for by drawing down their excess reserves. The USG paper is used as collateral to back credit creation, while the excess reserves are not in public circulation anyway. Therefore money is created out of thin air by the banks, replacing money created out of thin air by the Fed.

Interestingly Caruana dismisses deflation scares by saying that gently falling prices are benign, which places him firmly in the sound money camp. But he doesn’t actually “come out” and admit to being Austrian in his economics, more an acolyte of Knut Wicksell, the Swedish economist, upon whose work on interest rates much of Austrian business cycle theory is based. This is why Caruana’s approach towards credit booms is being increasingly referred to in some circles as the Mises-Hayek-BIS view.

With the knowledge that the BIS is not in thrall to Keynes and the monetarists, we can logically expect that Caruana and his colleagues at the BIS will be placing a greater emphasis on the future role of gold in the monetary system. Given the other as yet unstated conclusion of the Mises-Hayek-BIS view, that paper currencies are in a doom-loop that ends with their own destruction, the BIS is on a course to break from the long-standing policy of preserving the dollar’s credibility by supressing gold.

Caruana is not alone in these thoughts. Even though central bankers in the political firing line only know expansionary monetary policies, it is clear that influential opinion in many quarters is building against them. It is too early to talk of a new monetary regime, but not too early to talk of the current one’s demise.

Market Report: Sharp consolidation

Fri, 07/18/2014 - 05:56
Before yesterday's (Thursday) rise in bullion prices, precious metals were in corrective mode this week after recent rises. There were two big stand-out sales of gold contracts on Monday, estimated to be about 5,000 contracts at the European opening, and 15,000 on the US opening. The combination of the two sales drove gold down over $30, and on Tuesday a further sale of 15,000 contracts drove the price down to a low of $1293 for a total fall of $45.

This negative action occurred at the same time as a new banking crisis was developing in Portugal, with Banco Espirito Santo getting into financial difficulties. For many gold traders, this suggested these large sales were price intervention to maintain confidence in the financial system. For this to be true, Open Interest would have expanded on Comex reflecting new opening bear positions. As the chart below clearly shows this cannot have been the case.

 

With Open Interest contracting, the only conclusion has to be these large sales were speculators taking profits. This is an extremely important signal, because the sales are evidence that big speculative money is now accumulating gold positions on price dips instead of shorting gold on price rises. While there can be little doubt that the sales were done in such a way that they drove the price lower, what we did not see was the gentle accumulation of long contracts that preceded them. And why would these speculators drive the price lower? To accumulate long positions again.

It does not appear to have been a bullion bank, because bullion banks have been going short in recent weeks: we know this from the Commitment of Traders reports. More likely it was a managed fund, which I expect will be confirmed on the Commitment of Traders numbers tonight in UK time. I shall tweet the evidence on @goldmoneynews when available. This being the case, we can expect growing numbers of speculators and hedge funds to accept that the trend has finally turned bullish, so we can climb the "wall of worry" that is the early stages of a decent bull market.

The developing bull-run looks like turning into a squeeze on the bullion banks themselves. The non-US banks, according to the last Bank Participation Report, were net short 62,099 contracts, which compares with a record of 78,564 in October 2012. They got away with their short exposure then, but conditions are very different today and they may be forced to cover.

This morning initial price movements for gold and silver are weaker at the European opening, while most other markets have steadied. If my analysis is right, then we can expect prices to steady during the day, with buyers looking to buy into the dip.

One key metric to watch will be the USD/JPY rate, with a dip below ¥101 putting adverse pressure on carry trades.

Next week

Monday.

No material announcements scheduled.

Tuesday.

Japan: All-Industry Activity Index, Leading Indicator.
UK: Public Borrowing.
US: CPI, Retail Sales, Existing Home Sales.

Wednesday.

UK: BBA Mortgage Approvals, CBI Distributive Trades.
Eurozone: Flash Consumer Sentiment.
Japan: Customs Cleared Trade.

Thursday.

Eurozone: Flash Composite PMI.
UK: Retail Sales.
US: Initial Claims, Flash Manufacturing PMI, New Home Sales.
Japan: CPI.

Friday.

Eurozone: M3 Money Supply.
UK: GDP (3rd est.), Index of Services.
US: Durable Goods Orders.

Dealing Desk: Gold price rises as investors react to Malaysian plane news

Thu, 07/17/2014 - 13:27
Gold prices have risen following news of the potential shooting down of a Malaysian airlines plane in the Ukraine near the Russian border.

Head of Dealing and Settlements, Roland Khounlivong said, 'Up to then, with gold prices at a three week low we'd seen bargain hunting from our customers, with some big purchases from High Net Worth clients.

'The ramifications from today's news are likely to trigger renewed interest in gold buying as worried investors seek out the safe haven metal. Up to this point it had been Palladium which was the only riser this week, partly on the back of fears that the sanctions being imposed on Russia might hit supplies.

'The week had been otherwise relatively quiet with trading volumes as you'd expect for this time of year, and ahead of the summer holiday period in the US. However other geopolitical issues such as the situation in the Gaza strip and Iraq are also causing concern and have been helping support the gold price above the 1300 level.'

16:00 17/07/14: Week on week performance: Gold down 2.7% to $1,301.8; Silver lost 3% at $20.75; Platinum slipped just 1.2% to $1,491.60 while Palladium edged up 1.7% to $880.35.

Ends

NOTES TO EDITOR

For more information, and to arrange interviews, please call Gwyn Garfield-Bennett on 01534 715411, or email gwyn@directinput.je

GoldMoney is one of the world's leading providers of physical gold, silver, platinum and palladium for retail and corporate customers. Customers can trade and store precious metal online easily and securely, 24 hours a day.

GoldMoney currently has over 22,000 customers worldwide and holds $1.4billion of precious metals in its partner vaults.

GoldMoney has offices in Jersey and Hong Kong. It offers its customers storage facilities in Canada, Hong Kong, Singapore, Switzerland and the UK provided by the leading non-bank vault operators Brink's, Via Mat, Malca-Amit, G4S and Rhenus Logistics.

GoldMoney is regulated by the Jersey Financial Services Commission and complies with Jersey's anti-money laundering laws and regulations. GoldMoney has established industry-leading governance policies and procedures to protect customers' assets with independent audit reporting every 3 months by two leading audit firms.

Visit www.goldmoney.com.

Follow the GoldMoney Dealing desk team on Twitter: @goldmoneyupdate

James Turk and John Rubino interview with J Taylor Media

Wed, 07/16/2014 - 05:34
James Turk, John Rubino, Daniel McAdams and David Jensen return as guests on the next radio program. Turk and Rubino discusses their new book, "The Money Bubble. What to Do Before it Pops?" Both men believe, as does your host, that economic pathology is built into our economic system through fiat money and anti-market policies that ruin capitalism.

Listen to the full interview here.

Unique coin hoard event shows secrets and similarities

Tue, 07/15/2014 - 08:15
Supporters of the Jersey coin hoard were able to attend a unique event last week aimed at making history more accessible and immediate.

The invitation only event was for special guests of Jersey Heritage and customers of GoldMoney, Supporters of the long term care of the Jersey Coin Hoard. The evening saw guests getting up close and personal with the coin hoard by stepping into the conservation lab to talk to Head Conservator, Neil Mahrer. Guests were treated to further in depth talks on the hoard by Curator of Archaeology, Olga Finch. The evening saw the museum rooms based in the Merchant House being used for a drinks and canapé reception, with the opportunity for networking amid the exhibits within the historic house.

Jeremy Swetenham, Director of Commercial Operations, said this was the first event of its kind: 'We wanted to create a unique thank you for those who have supported us and our work with the coin hoard, and it's through events like this that we are being able to make our Island's history more accessible and immediate. Everyone who makes a donation towards the hoard's care is entitled to a series of benefits which reflect their support. We are delighted that GoldMoney is supporting us by sponsoring this Heritage Heroes fundraising appeal.'

The Le Catillon II hoard was discovered in 2012 and is the world's largest Celtic coin hoard with approximately 70,000 coins within it. Guests at the GoldMoney event were told by Mr Mahrer that several pieces of jewellery and jewellery-making items, such as small pieces of sheet gold, have also been found. It's still not known exactly what the hoard contains and each week new finds are being uncovered. Within the first week of the exhibition a coin that dates to 20 years later than the hoard was first anticipated to have been buried was found and that immediately changed the timing of its burial.

The hoard was discovered by Jersey metal detectorists, Reg Mead and Richard Miles and is on display at Jersey Museum & Art Gallery.

Natasha Le Dain-Cyples of GoldMoney said the feedback from the event was excellent, 'It was a thoroughly interesting and enjoyable evening. Guests were spellbound by the story behind the hoard's discovery and what it might contain. They were also treated to the latest thoughts as to why it was put there in the first place. Mr Mahrer told us the coins were not used as daily currency like we use coins today, but were more for a store of wealth. Gold and precious metals are still being bought and stored for wealth protection today, so although it was three thousand years ago, some things have not changed.'

There will be further events throughout the year for those who donate to the preservation of the coin hoard.

Donations are accepted online at www.jerseyheritage.org

GoldMoney is one of the world leaders in providing physical precious metals and secure storage for customers throughout the world.

Ends

NOTES TO EDITOR

For more information, and to arrange interviews, please call Gwyn Garfield-Bennett on 01534 715411, or email gwyn@directinput.je

GoldMoney is one of the world's leading providers of physical gold, silver, platinum and palladium for retail and corporate customers. Customers can trade and store precious metal online easily and securely, 24 hours a day.

GoldMoney stores around $1.4billion of precious metals worldwide for over 22,000 customers.

GoldMoney has offices in London, Jersey and Hong Kong. It offers its customers storage facilities in Canada, Hong Kong, Singapore, Switzerland and the UK provided by the leading non-bank vault operators Brink's, Via Mat, Malca-Amit, G4S and Rhenus Logistics.

Historically gold has been an excellent way to preserve purchasing power over long periods of time. For example, today it takes almost the same amount of gold to buy a barrel of crude oil as it did 60 years ago which is in stark contrast to the price of oil in terms of national currencies such as the US dollar.


GoldMoney is regulated by the Jersey Financial Services Commission and complies with Jersey's anti-money laundering laws and regulations. GoldMoney has established industry-leading governance policies and procedures to protect customers' assets with independent audit reporting every 3 months by two leading audit firms.

Visit www.goldmoney.com.

Follow the GoldMoney Dealing desk team on Twitter: @goldmoneyupdate

Interview with James Turk and Symposium

Mon, 07/14/2014 - 10:16
James Turk, Founder & Director of GoldMoney, co-author of "The Money Bubble – What to do before it pops", and keynote speaker at the 7th Gold Investment Symposium being held in Sydney, 8-9 October 2014.

Listen to the interview here.

The new silver fix

Mon, 07/14/2014 - 08:07
In this interview with GoldMoney's Alasdair Macleod, SGT Report discusses Friday's news that the CME and Thomson Reuters have been chosen to run the replacement for the 117-year old London Silver Fix.

To hear the full interview, please click here.

James Turk - Bank Shorts Orchestrating Gold & Silver Smash

Mon, 07/14/2014 - 06:00
With continued turmoil in major markets, today James Turk told King World News that bullion bank shorts orchestrated today’s smash in the gold and silver markets. Turk also gave some fascinating statistics regarding today’s takedown in the metals and discussed what investors should expect next.

Click here to read the full interview on King World News

Unwinding unallocated gold accounts.

Fri, 07/11/2014 - 08:25
The debate in precious metal markets today is whether or not the three-year bear market is over and a new uptrend is establishing itself. But assuming for a moment that the gold price has turned the corner, will the bullion banks be able to keep a lid on it? Given the recent jump in their short positions as recorded in the Bank Participation Report on Comex, they presumably think so, and unallocated accounts in London will play an important role.

With an unallocated account the customer doesn't have an entitlement to any specific bullion bars, and is a creditor of the bullion bank. So long as the customer is happy with the counterparty risk, this is the cheapest way for him to have exposure to gold. From the bank's point of view, there is no need to hold more gold than required to meet customer withdrawals. Furthermore, even this gold doesn't have to be bought, merely leased from a central bank, remaining in the Bank of England's vault unless needed. There can be little doubt that the increase in the quantity of gold held in the Bank's vaults between 2006 and 2013 reflected, among other factors, physical backing for increasing unallocated accounts during the 2000-2012 bull market.

In the past a bullion bank's risk to a rising gold price either went unhedged, or was managed through derivatives, using forwards futures and options. Therefore, so long as systemic risk is not regarded as a material factor, the bullion banking community can absorb significant gold demand from investors by expanding unallocated accounts without any physical buying required. However, the investing public's greater awareness of risk to bank deposits from bail-ins could change this in future. And it was only this week that wealthy German citizens were reminded of deposit risk when its government approved the introduction of bail-in procedures for bank insolvencies.
Increasing awareness of systemic risk by the rich and ultra-rich is likely to lead to a preference for allocated accounts or for vaulted gold held outside the banking system, over unallocated accounts. This being the case, the gold price is likely to rise more quickly for a given degree of increasing demand than it has in the past. For tangible confirmation of this conclusion we need look no further than the action of gold this week, which rose strongly at the same time as European bank shares fell sharply.

There is little evidence that dealers fully appreciate these developing dynamics. The sharp increase in the banks' net short position on Comex reflected in the current Bank Participation Report suggests not.

Of course, it is possible the gold market is only rallying in an ongoing downtrend, in which case this analysis should be put on ice, but not forgotten. But anyone who believes that gold is still in a bear market should bear in mind that the only time gold has been cheaper relative to the total quantity of fiat dollars in circulation was in the late 1960s when the gold pool failed, and in 1999/2000, when the Bank of England sold half the UK's gold reserves at the behest of Gordon Brown.

Market Report: The ghost of bail-ins past returns the financial stage

Fri, 07/11/2014 - 08:15
Gold and silver had a good week after the US holiday last Friday. From a low of $1312 on Tuesday, gold rose to a high point of $1345 yesterday, and silver from $20.84 to $21.60. Open interest is climbing too for both metals, as shown in the following charts.

 

 

This is healthy and indicates that the uptrend has some wind behind it. However, the Bank Participation Report for 1 July shows a sharp deterioration in the banks' positions, illustrated in our third chart.

The net long position of the US banks for the past year have gone, and they are now short a net 12,324 contracts, while the Non-US banks are short a net 62,099 contracts.

Neither position is extreme, but how should we read this? Well, trading patterns altered this week, with the gold market strong outside US trading hours and softening during New York's trading. This obviously indicates demand is from Asia and Europe, giving some short-term traders in the US an opportunity for profit-taking. Buying is therefore likely to be for physical metal rather than derivatives, which should tighten the market overall.

Additionally it should be noted that platinum has been exceptionally strong, rallying nearly $200 (15%) from its December low. In practice there is little or no short-term correlation with the gold price, but platinum often leads the precious metals group over the medium term. Platinum this year is shown in our last chart, which is refreshingly bullish.

So overall, precious metal markets feel better based, but beware of whipsaws in New York trading because the banks will want to close their bears by marking gold and silver prices sharply down to trigger stops. But gold has now broken above resistance at $1320-30, which should now offer some support before a possible attempt on the $1355+ territory.


Confirmation of why Europeans might be buying physical gold arises from concerns over the financial health of Portugal's Banco Espirito Santo, which has undermined share prices of the entire Eurozone banking sector. The ghost of the Cyprus bail-in may be returning to the financial stage. Also this week Germany reminded us that large deposits are going to be subject to bail-ins if a bank fails, because the German cabinet resolved to put forward the necessary legislation for the New Year.


Talking of Germany, BaFin, the bank regulator, has asked all German banks and investment intermediaries to hand over details of their clients' dealing in precious metals derivatives, according to Goldreporter.de. This follows its investigation into Deutsche Bank's precious metal dealings which coincided with DB's withdrawal from the gold and silver fix. This may be a developing story worth monitoring.

Next week

Monday.

Japan: Capacity Utilisation, Industrial Production. Eurozone: Industrial Production

Tuesday.

UK: CPI, Input Prices, Output Prices, ONS House Prices. Eurozone: ZEW Economic Sentiment. US: Empire State Survey, Import Price Index, Retail Sales, Business Inventories. Japan: BoJ Overnight Rate.

Wednesday.

UK: Average Earnings, ILO Unemployment Rate. Eurozone: Trade Balance. US: PPI, Net Long-Term TICS Flows, Capacity Utilisation, Industrial Production, NAHB Builders Survey.

Thursday.

Eurozone: HICP. US: Building Permits, Housing Starts, Initial Claims, Philadelphia Fed Survey.

Friday.

Eurozone: Current Account. US: Leading Indicator.

Dealing Desk: Safe haven and industrial demand boost precious metal purchases

Thu, 07/10/2014 - 06:46
After last week's record week of trading, turnover returned to more normal levels among GoldMoney's more than 22,000 customers worldwide. However, Head of Dealing and Settlements at the British based online precious metals trader, Roland Khounlivong said it was still a busy week for buyers of gold, platinum and palladium: 'We had a definite ratio in favour of buyers this week for these metals. Gold interest was mostly for its safe haven qualities. The Israeli tension was one factor, and also we're seeing some investors looking for more tangible holdings amid fears that equities could be topping.

'Platinum and palladium saw interest because of the rising demand from the automobile industry, plus there's still some supply lag from the long running South African strikes. This can be evidenced in the metal reaching its highest price levels for the September delivery since February 2001.

'Silver's seen the biggest price increases in recent weeks and so from GoldMoney customers there's been some profit taking. Silver was our only metal to see more sellers than buyers in the past week.

'The flow into our Malca-Amit vault in Singapore has continued, and we've also had some buy orders this week into Via Mat, Switzerland. The buyer/seller ratio showed far more buyers to sellers in the week overall.

'Next week the focus will be on data out of China, with its GDP and Industrial production set to be released. Plus there will also be Eurozone inflation figures which should give further indication of the state of the economic recovery in the continent.'

16:00 10/07/14: Week on week performance: Gold gained 1.3% to $1,338.15; Silver added 1.3% at $21.40; Platinum rose just 0.5% to $1,509.80 while Palladium edged up 0.6% to $866.05.

Ends

NOTES TO EDITOR

For more information, and to arrange interviews, please call Gwyn Garfield-Bennett on 01534 715411, or email gwyn@directinput.je

GoldMoney is one of the world's leading providers of physical gold, silver, platinum and palladium for retail and corporate customers. Customers can trade and store precious metal online easily and securely, 24 hours a day.


GoldMoney currently has over 22,000 customers worldwide and holds $1.4billion of precious metals in its partner vaults.

GoldMoney has offices in Jersey and Hong Kong. It offers its customers storage facilities in Canada, Hong Kong, Singapore, Switzerland and the UK provided by the leading non-bank vault operators Brink's, Via Mat, Malca-Amit, G4S and Rhenus Logistics.

GoldMoney is regulated by the Jersey Financial Services Commission and complies with Jersey's anti-money laundering laws and regulations. GoldMoney has established industry-leading governance policies and procedures to protect customers' assets with independent audit reporting every 3 months by two leading audit firms.

Visit www.goldmoney.com.

Follow the GoldMoney Dealing desk team on Twitter: @goldmoneyupdate

Golden Years

Thu, 07/10/2014 - 06:15
The recession has not meant gloom for everyone, with a record number of people now classed as high net worth individuals. Geoff Turk, Chief Executive Officer at GoldMoney, looks at the changing face of global wealth.

Read the full article in Business Brief.

Pages

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