Posted tagged ‘gold’
I scan a lot of econ news every day. Today’s econ news is making me a little nervous, though, because there seems to be an awful lot of reports of very, very bad news. And it’s not just awful predictions from the usual doom & gloom crew. It’s coming from everywhere. And that makes me think it’s very likely that another economic hurricane is on the way.
So take whatever steps you need to take to protect yourself as much as possible. It sounds like whatever is coming could hit any day.
Note: Apparently, the BIS is a sort of uber-central bank. From this article (emphasis mine):
In September of 2009, the BIS reported that, “The global market for derivatives rebounded to $426 trillion in the second quarter as risk appetite returned, but the system remains unstable and prone to crises.” The BIS quarterly report said that derivatives rose 16% “mostly due to a surge in futures and options contracts on three-month interest rates.” The Chief Economist of the BIS warned that the derivatives market poses “major systemic risks” in the international financial sector, and that, “The danger is that regulators will again fail to see that big institutions have taken far more exposure than they can handle in shock conditions.” The economist added that, “The use of derivatives by hedge funds and the like can create large, hidden exposures.”
The day after the report by the BIS was published, the former Chief Economist of the BIS, William White, warned that, “The world has not tackled the problems at the heart of the economic downturn and is likely to slip back into recession,” and he further “warned that government actions to help the economy in the short run may be sowing the seeds for future crises.” He was quoted as warning of entering a double-dip recession, “Are we going into a W[-shaped recession]? Almost certainly. Are we going into an L? I would not be in the slightest bit surprised.” He added, “The only thing that would really surprise me is a rapid and sustainable recovery from the position we’re in.”
As reported at Telegraph.co.uk:
China alarmed by US money printing
The US Federal Reserve’s policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.
Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”.
“We hope there will be a change in monetary policy as soon as they have positive growth again,” he said at the Ambrosetti Workshop, a policy gathering on Lake Como.
“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.
China’s reserves are more than – $2 trillion, the world’s largest.
“Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets,” he added.
In other troubling news, Bloomberg reports that the “UN Says New Currency Is Needed to Fix Broken ‘Confidence Game’”
Sept. 7 (Bloomberg) — The dollar’s role in international trade should be reduced by establishing a new currency to protect emerging markets from the “confidence game” of financial speculation, the United Nations said.
UN countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said today in a report.
China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the financial crisis sparked by the collapse of the U.S. mortgage market led to the worst global recession since World War II. China, the world’s largest holder of dollar reserves, said a supranational currency such as the International Monetary Fund’s special drawing rights, or SDRs, may add stability.
Update: Bloomberg just reported that Gold futures climed to $1000 an ounce for the first time in more than six months.
Time may be running out even faster than anyone anticipated.
Another incredible video from Aravoth. Be sure to note the dates shown during the clips of Peter Schiff and Ron Paul warning of the economic crisis now upon us.
Dow -99.80 (-1.12% )
Nasdaq -10.58 (-0.67% )
S&P 500 -8.76 (-0.96% )
US Dollar Index At 9:38PM ET: 78.57 -2.11 (-2.62%)
Fed Finale = Gold Overture
Yesterday’s Fed rate cut-induced euphoria gave way to sober and more defensive plays among investors. By this afternoon, oil prices slipped to under $41 as OPEC failed to convince traders that its output cut would be effective in generating higher prices in the face of fast-slumping global demand. Stock markets turned negative as financials and utilities dragged and as investors once again showed a preference for Treasurys, gold, and little else as they seek to preserve capital.
The Fed cut rates to a ‘range of from zero to a quarter’ and promised to deploy everything in the way of deflation-fighting weapons available to it, should the conditions show further deterioration. Levels of confidence in the global economy fell this month as the US-led recession spread to the rest of the world and made for an ugly year-end picture for many a hitherto immune country.
The US dollar continued its sharp correction, slipping to just under 79 on the trade-weighted index and gave indications of a growing de-couple from oil (if not yet from stocks). The greenback fell by the most against the euro since that currency was born in 1999. Against the yen, the American currency traded at near 13-year lows.
Gold prices naturally made significant gains in the wake of the aforementioned conditions, with spot bullion trading as high as $882.50 an ounce early in the session. Light profit-taking was then seen developing in the afternoon, with prices easing back to $868.60 per ounce at last check. Caution remains visible and neutral-to-defensive plays are advised by deflation-watchers. Mr. Dennis Gartman comes to mind. Inflation-scouts are at the top of their form in the meantime. Rooting hard.
Silver was up by 17 cents, quoted at $11.38, while platinum added $3 to $866 and palladium fell $2 to $176 per ounce. Carmaker Land-Rover Jaguar was seen fighting for its survival and sought talks with would be surrogate parents.