Swiss Gold Referendum Attracting Attention Two Months Ahead Of Vote

A referendum on Switzerland’s gold reserves is starting to attract some attention outside of the country as a yes vote would have significant implications for the gold market, said one market analyst.

On November 30, Swiss citizens will go to the polls to vote on three areas; whether or not the Swiss National Bank should increase its gold reserves to 20%, that the central bank should stop selling its precious metals and that all its gold should be held within the country….

In a research note published Sept. 24, Analysts at UBS said that if the referendum passes the Swiss National Bank would have to buy about 1,500 tons of gold over the next three years. “1500 tonnes equates to half of the world’s annual production,” they said in the report.

“That kind of gold buying would put what we’ve recently seen in China to shame,” said Hansen.

The UBS analysts also noted that so far the referendum has not attracted a lot of attention outside of the country.

More here…

Wednesday, October 1st, 2014 Precious metals No Comments

To US Fed – thank you for saving the gamblers in 2008. They should have been jailed.

We are told there is no bubble, except in gold, of course. Who would want the barbaric relic?
Since 2009 gold price was determined by the gold/dollar swap rate, which fluctuated between plus or minus 0.1%. When this rate was negative 0.1%, meaning that gold yielded 0.1% (per year) more than USD, gold rallied $100. When it was positive, gold tanked $100. Isn’t it amazing that the difference in Yield of a mere 0.1% causes $100, $200 move in price? Isn’t it great to actually be one of the setters of gold interest rates in London? Think about it!

Manipulation of Libor has been the scandal of the recent years. Why not Gofo? But of course!


Gold forward swap rate

Tuesday, September 30th, 2014 Precious metals No Comments

The King Dollar trade

With the USD experiencing its longest stretch of weekly gains since Bretton Woods, it appears, as SocGen notes, that recent currency movements have triggered nostalgia of the pre-crisis world when dollar strength was synonymous with a prosperous global economy. However, given the extreme positioning and potential for policy-maker complacency, SocGen warns the paradox is thus that a strong dollar tantrum could be a more worrying scenario than a Fed tightening tantrum.


The long dollar trade

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Tuesday, September 30th, 2014 US dollar as a reserve currency No Comments

Kitco Gold survey – a great contrarian indicator.

Kitco gold survey has been a great indicator… in reverse. So, this week’s survey is forecasting a strong advance for gold prices in the week ahead.
Kitco gold survey

A majority of participants forecast lower gold prices next week in the Kitco News Gold Survey as dollar strength and bearish technical-chart formations weigh on the metal.

Out of 37 participants, 20 responded this week. Of those, four see higher prices, 12 see lower prices and four see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Last week, survey participants were bearish. As of 11:30 a.m. EDT, Comex December gold was down about 50 cents for the week.

Those who see weaker prices said there’s little incentive to buy gold in the short-term, with a test of $1,200 an ounce possible.

“It’s got a bit of a negative profile here,” said Charlie Nedoss, senior market strategist at LaSalle Futures Group. “The dollar is weighing on it. It’s still under the 10-day (moving average), which is about $1,224.80 (basis the December futures). It’s ridden that all the way down. I can’t really start to get excited until it can get over that. And the 20-day is at $1240.21.”

More here

Sunday, September 28th, 2014 Precious metals No Comments

USD/EURO short term trends

Here are 30-day channel and 60-day regression trends for USD/Euro currency pair

USDEUR 30-day channel

USDEUR 30-day channel

USDEUR 60-day

USDEIR 60-day

Final Q2 GDP surges 4.6%

The good news in the just released final Q2 GDP estimate soared by 4.6%, just as Wall Street expected, which was the biggest quarterly jump since 2011 Q4 2011, driven by gains in business spending, where mandatory forced Obamacare outlays led to a $17.5 billion chained-dollars increase in Healthcare spending to $1815.9 billion. Nonresidential fixed investment contributed two-tenths to the revision, net exports contributed one-tenth, and consumer spending contributed one-tenth. Also helping were corporate profits which rose 8.4% in Q2, the most since Q3 2010, once again courtesy of adjustment in definitions (recall the IVA vs CCAdj change we discussed previously).

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Saturday, September 27th, 2014 US dollar as a reserve currency No Comments

How Goldman Controls The New York Fed: 47.5 Hours Of “The Secret Goldman Sachs Tapes” Explain

When nearly a year ago we reported about the case of “Goldman whistleblower” at the NY Fed, Carmen Segarra, who alleged she was wrongfully terminated after she flagged “numerous conflicts of interest and breaches of client ethics [involving Goldman] that she believed warranted a downgrade of Goldman’s regulatory rating” and which were ignored due to the intimate, and extensively documented on these pages, proximity between Goldman and either one-time NY Fed Chairman and former Goldman director Stephen Friedman or current NY Fed president and former Goldman employee Bill Dudley, we said:

as everyone knows, both Bill Dudley and Stephen Friedman used to be at Goldman, and as we noted Dudley and Goldman chief economist Jan Hatzius periodically did and still meet to discuss “events” at the Pound and Pense.

So while her allegations may be non-definitive, and her wrongfful termination suit is ultimately dropped, there is hope this opens up an inquiry into the close relationship between Goldman and the NY Fed. Alas, since the judicial branch is also under the control of the two abovementioned entities, we very much doubt it.

There was hope, but as we said: we doubted it would lead to much more. It didn’t: in April, the NY Fed won the dismissal of her lawsuit:

U.S. District Judge Ronnie Abrams in Manhattan ruled that the failure by the former examiner, Carmen Segarra, to connect her disclosure of Goldman’s alleged violations to her May 2012 firing was “fatal” to her whistleblower lawsuit. Abrams also said Segarra could not file an amended lawsuit.

“Congress sought to protect employees of banking agencies … who adequately allege that they have suffered retaliation for providing information regarding a possible violation of a ‘law or regulation,'” the judge wrote. “Plaintiff has not done so.”

Segarra’s findings that Goldman’s conflict-of-interest practices may have violated merely an “advisory letter” that did not carry the force of law did not entitle her to whistleblower protection under the Federal Deposit Insurance Act, Abrams said.

Continue here…

Saturday, September 27th, 2014 The global financial and economic crisis No Comments

Red Adair, the only solution for derivatives market

Myron Scholes, intellectual godfather of the credit default swap, says blow ‘em all up

Red Adair put out oil well fires by setting off gigantic explosions at the wellhead. “My belief is that the Fred Adair solution
is to blow up or burn the OTC market in credit default swaps,”

Instead of doing what Scholes, the father of LTCM, suggested, we continued to feed the monster through bailouts, QE1, QE2 lite,
and QE2. Until the outstanding contracts are neutralized, the markets will remain a delayed time bomb waiting to explode
as soon as the Fed stops the flow of liquidity. If the Fed keeps printing and kicking the can down the road, the imbalances
and blowups that follow will only get worse.

It seems nationalization and/or cancellation and strict regulation of these contracts is the only solution, similar to treaties
and nuclear arms agreements between countries with nuclear weapons. These are financial WMD, tied to real dynamic
markets, they should be handled in a similar fashion.

Time for Great Depression has arrived

With the decision of “Operation Twist” by US Federal Reserve to rotate 400 billion dollars
from short maturity T-bills to longer maturities and no new printing, the economic recovery
can no longer be sustained. The Keynesian policymakers are out of bullets as we descend
into post credit bubble economic depression. Operation twist was not what the market
anticipated, the market anticipated QE3. Without further printing or stimulus we anticipate very
rough waters ahead for the economy and the markets. The economic indicators point that a
second recessionhas already started.

I expect that even gold could be vulnerable to a further correction, although, compared to other
indexes it should be mild.

September 2011 Fed Meeting Statement

To support a stronger economic recovery and to help ensure that inflation, over
time, is at levels consistent with the dual mandate, the Committee decided today to extend the
average maturity of its holdings of securities. The Committee intends to purchase, by the end of
June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years
and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less.
This program should put downward pressure on longer-term interest rates and help make
broader financial conditions more accommodative. The Committee will regularly review the size
and composition of its securities holdings and is prepared to adjust those holdings as


The printing press goes overdrive

The wait for QE2 is now over, the Federal reserve announced a new money printing program today.
The Fed will print 600 Billion dollars by the end of June 2011,
which is on top of $30 billion or so printed every month related to their QE lite.

The printing effort will drastically increase monetary base and devalue the currency, the US dollar. While
the short term effect is unclear – the market expected as much as $1-2 Trillion in newly minted dollars,
keep buying precious metals on every dip.

The new printing program is unlikely to help the economy, as inflation so created by the Federal reserve will
push prices of assets not backed by debt far higher than assets backed by debt, such
as houses. Nevertheless, this author expects stock prices to close higher for the year, because in the environment
of rapid devaluation of the currency stocks do better than bonds.

Given recent monetary policy decisions, it appears likely that the Fed will keep printing money until the cows come
home, so be aware that the dollar now has a rapidly vanishing value and invest accordingly.

Gold price target for the year used to be 1455, however, it is unclear how high the metal can soar in this tragic environment.