US Interest Rates Driving <b>Gold Price</b> ( along with Ukraine ) |
- US Interest Rates Driving <b>Gold Price</b> ( along with Ukraine )
- Peter Schiff: The <b>gold price</b> is fixed -- so what? | Gold Anti-Trust <b>...</b>
- The <b>Gold Price</b> is Fixed... So What? - Peter Schiff - Townhall Finance <b>...</b>
| US Interest Rates Driving <b>Gold Price</b> ( along with Ukraine ) Posted: 04 May 2014 11:03 PM PDT Sorting out the movements in the price of gold recently has been like guessing at the weather forecast. Geopolitical concerns, ( Ukraine ) are keeping a firm bid underneath gold as safe haven buying is focused on the potential for further escalations in those simmering tensions. Other factors are working to pressure it lower. Having said this, I do want to post up a chart for those who are traders and are tracking fundamental factors driving the price of the metal. I have mentioned many times now that I am of the view that US interest rates, and more accurately, interest rate outlooks, are either providing support to the metal or are working to add to headwinds. Look at the chart below in which a comparison is made to the yield on the Ten Year Treasury Note and to the gold price over at the Comex ( RED LINE ).  Go back to November of last year and notice that as the yield on the Ten Year rose, gold headed lower. When the yield on the Ten Year fell, gold tended to rise. The relationship had not been that close prior to November. If you look at the July - mid-October time frame, you can see that the two markets tended to actually rise and fall in harmony for a while. Clearly in November the market shifted in its perceptions and began looking at interest rates more closely in determining whether or not to allocate capital into gold. For nearly three months, the markets moved in a near perfect inverse manner.  In early February of this year, that began to change and while the yield on the Ten Year moved sideways, gold prices rose. Then in mid-March interest rates began to rise and gold prices resumed their inverse relationship and moved lower once again. In early April, Ukranian events erupted and that brought about a safe haven bid into bonds knocking interest rates lower. Gold responded by moving higher. Then as fears subsided interest rates moved back up again and gold moved lower. So far in May, interest rates have continued moving lower as safe haven plays are still around due to Ukraine and gold has moved back above $1300 as a result. Here is my point in all this - the wild card for gold prices at this time are the events in Ukraine. As long as investors are worried over events there, interest rates are going to stay low due to safe haven flows pushing bond prices higher and thus interest rates lower. If Ukraine events do subside ( and right now that does not seem to be the immediate case ) I would look for interest rates to start rising again meaning that gold will come under renewed selling pressure. Here is the takeaway from all this - as long as US interest rates stay subdued, the US Dollar is going to have trouble rallying and that should tend to support the gold price. Take away any safe haven buying for any reason, and rising interest rates should bring a bid into the US Dollar and that will pressure the metal. What do we get next? Who knows? The truth is no one does. Remember that when the predictions start up again. The market's opinion is the only one that matters.  |
| Peter Schiff: The <b>gold price</b> is fixed -- so what? | Gold Anti-Trust <b>...</b> Posted: 01 May 2014 12:13 PM PDT 3:10p ET Thursday, May 1, 2014 Dear Friend of GATA and Gold: In commentary today Euro-Pacific Capital's Peter Schiff muses about growing suspicion that the gold market is manipulated by central banks and their associated bullion banks. This is progress but Schiff seems unaware of the enormous documentation collected by GATA confirming such suspicions -- http://www.gata.org/taxonomy/term/21 -- and he even argues that investors should welcome gold price suppression as an opportunity to obtain metal at a discount to its true value. Gold investors who died cheated out of a free-market price for their metal and gold investors who are not likely to live forever may not be terribly encouraged by Schiff's rationale. And since the Western central bank gold price suppression scheme is the keystone of a policy of rigging all major markets, adherents of free markets generally and the progress they have accomplished for humanity may not rejoice all that much either. Schiff's commentary is headlined "The Gold Price Is Fixed -- So What?" and it's posted at GoldSeek here: http://news.goldseek.com/GoldSeek/1398957706.php And at 24hgold here: http://www.24hgold.com/english/news-gold-silver-the-gold-price-is-fixed-... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Buy precious metals free of value-added tax throughout Europe Europe Silver Bullion is a fast-growing dealer sourcing its products from renowned mints, refiners, and distributors. Because of a legal loophole that will close soon, you can acquire the world's most popular bullion coins free of value-added tax throughout the European Union. You can collect your order in person at our headquarters in Tallinn, Estonia, or have it delivered in any of the 28 EU countries. Europe Silver Bullion is owned and operated by North American and European experts in selling, storing, and transporting precious metals. We have an extensive product inventory of silver, gold, platinum, and palladium, and our network spans the world. Visit us at www.europesilverbullion.com. Join GATA here: Porter Stansberry Natural Resources Conference Committee for Monetary Research and Education http://www.cmre.org/news/spring-meeting-2014/ Canadian Investor Conference 2014 http://cambridgehouse.com/event/25/canadian-investor-conference-2014-inc... New Orleans Investment Conference https://jeffersoncompanies.com/new-orleans-investment-conference/home * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Safe and Private Allocated Bullion Storage In Singapore Given the increasing risks in financial markets, it is more important than ever to own physical bullion coins and bars and to store them in the safest vaults in the world in the safest jurisdictions in the world. Gold advocates Jim Sinclair and Marc Faber have recommended Singapore. Now, with GoldCore, you can own coins and bars in fully insured, segregated, and allocated accounts in Singapore with the ability to take delivery. Learn more by downloading GoldCore's Essential Guide To Storing Gold In Singapore: http://info.goldcore.com/essential-guide-to-storing-gold-in-singapore And for more information call Daniel or Sharon at +44 203 0869200 in the United Kingdom or at +1-302-635-1160 in the United States. Or email them at info@goldcore.com. |
| The <b>Gold Price</b> is Fixed... So What? - Peter Schiff - Townhall Finance <b>...</b> Posted: 01 May 2014 09:01 PM PDT We can't ignore it anymore - the markets are rigged. The LIBOR scandal broke almost two years ago, and the banks found responsible for manipulating that key index are still dealing with lawsuits. Meanwhile, allegations of gold market manipulation have been simmering for over a decade and grew into an inferno after the spot price dropped dramatically last spring. Yet I'm left wondering what the conspiracy theorists hope to accomplish. Yes, I believe in exposing truth for its own sake and that the individual investor should have the same opportunities in the marketplace as the big institutions. But with these conspiracists, there is often a subtext of, "Because the price is suppressed, buying gold is for suckers." I think this conclusion is precisely wrong. Even if banks and governments are manipulating the day-to-day price of gold, the metal's long-term fundamentals are stronger than ever. In fact, the reasons for them to suppress the gold price are the same reasons for us to buy gold in the first place. Let's examine what large institutions may be doing to the gold price and how that affects the long-term gold investor. Flash Crashes There are two prominent suspected methods of gold price manipulation. The first is through massive short-selling of COMEX gold futures in the United States. Paul Craig Roberts, former Assistant Secretary of the Treasury under Reagan, is perhaps the best-respected voice calling attention to this controversy. Roberts argues that large banks, like JP Morgan and Goldman Sachs, wait for periods of low activity in the gold futures market to sell large quantities of futures contracts. This selling drives down the actual spot price of gold, which in turn scares away weak longs and encourages other short-sellers to join in on the action. These "mini-flash crashes," as they've come to be known, allegedly knock gold down a peg or two right when it is primed for a rally - thereby stealing its momentum. More importantly, Roberts claims, these flash crashes provide support for the US dollar when it looks weak. The most recent example is a series of mini-flash crashes in March, when the US Dollar Index dropped below the key level of 80. Gold was steadily rising towards $1,400, but after the attack, began falling again. Sure enough, the Dollar Index recovered above 80. The Foggy London Fix The other suspected method of gold price suppression is through the London gold fix. This set price is used by large gold owners, including refineries, miners, and central banks, to account for the value of their holdings.The London fix has been around since 1919 and is so old-fashioned it's no wonder it's coming under more scrutiny. Five member banks of the London Bullion Market Association get on the phone every weekday at 10:30 am and 3 pm London time. They discuss how much gold they and their clients want to buy or sell, then adjust the price until the buy and sell orders are within 50 gold bars of each other. The price is then "fixed" for publication in US dollars, British pounds, and euros. The whole process can take anywhere from few minutes to over an hour. At any time, the member banks can pause the proceedings to speak with clients. This basically means that information about the gold price trickles into the general market before the fix is officially set. Economists and academic researchers have begun looking into irregular gold price movements during the afternoon fix, which might indicate collusion to drive gold down. Researchers found that between 2004 and 2013, whenever the gold price made a large move during the afternoon fix, two-thirds of the time it was a decline. The UK Financial Conduct Authority has started investigating the London fix more closely, while earlier this year a US lawsuit was filed against the five member banks based upon this research. Tellingly, Deutsche Bank has resigned its seat on both the gold and silver fixing boards. While such a seat sold for a million dollars during the last transfer a decade ago, apparently it is now given up for free. If That's the Fix, Where's the Catch? I certainly cannot argue that flash crashes and private phone calls between bankers are not suspicious. But what's the real takeaway for the physical gold investor? The evidence of manipulation for both COMEX gold futures and the London fix are large, downward movements in the price of gold at suspicious times of the trading day. More than anyone else, this is going to affect gold speculators who are looking to turn a quick profit. I've always warned serious investors against the risky world of gold futures and other paper gold derivatives. Besides the complexity of the market itself, attempting to become a short-term trader puts the small investor in a league with powerful interests and shady practices. As the father of value investing Benjamin Graham was known to say, "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." This means that short-term, the market is like an election or other popularity contest - with all the corruption that implies. But over time, what matters most is underlying value. [My views on the present undervaluation of gold are well established, so I won't re-hash them here. For those curious, please read through past editions of my newsletter.] The important question is: could these manipulations affect the long-term value of gold? The Big Picture The research suggests that London fix manipulation could have been occurring since 2004. So the claim is that throughout gold's greatest bull market in living memory, banks were colluding to drive the price lower. Clearly they were incapable of stopping gold's rise altogether, if that was truly their intention. I think it is more likely that either they were simply trying to game the market to buy gold at a discount for their clients, or perhaps they had a vested interest in slowing gold's rise. Since gold is still widely recognized as a safe haven, investors use it as a gauge of the health of the underlying economy. If gold shot up too quickly, these banks may have reasoned, it could trigger a panic flight from fiat currencies. In fact, that is what happened in the credit crisis of '07-'08. As we saw, major Western banks quickly turned from highly profitable to completely insolvent. Since then, coordinated government intervention has done its best to re-create the tenuous situation prior to the crash - so the incentive to suppress gold remains. Paul Craig Roberts has made the same point - the gold price is being manipulated to make the dollar appear stronger, rather than to cripple the gold market. If over the last several years, the Dollar Index had continuously fallen and the gold price steadily risen, it would have undermined the Federal Reserve's claims that quantitative easing had saved us from the brink of collapse. Viewed this way, a self-interested collusion between major banks and their patrons in government makes sense. Imagine if you were facing the destruction of your wealth, power, and status - and had the means to forestall it. Fortunately for gold investors, forestalling is not the same as correcting. Just as any manipulation prior to the credit crisis didn't prevent it from occurring, today's tactics will not lessen massive public debts nor return value to an inflated currency. A Second Chance If gold price manipulation is true, then these banks and governments have done a tremendous favor to those who understand the gold market. Unexpected volatility and bull market corrections shake out those speculators who are trying to make a quick buck or who do not have the courage of their convictions. Investors have been given a multi-year free pass to learn about monetary policy, commodities, and investing while gold waits at affordable prices to be bought. Perhaps absent these manipulations, gold would have grown into a frenzied mania as the whole Western world attempted to safeguard their wealth at once. In fact, I believe this is a likely outcome as the various schemes that are keeping the West afloat start to come apart. If you're skeptical of big banks and big government, gold manipulation shouldn't put you off investing in sound money. Instead, consider it as you would a gift horse. Instead of looking it thoroughly in the mouth, smile and graciously accept your good fortune. |
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