It’s often heard that gold takes the staircase up, but the elevator down. A gold rally would then consist in a gradual process of relatively small but consistent daily upward moves. The gold cartel (bullion banks and investment banks, backed by the FED) would not allow gold to rally over 2% daily.
Once ignited, swoons in precious metals are thought to aggravate by forced liquidation of future long positions and the redemption of leveraged products and bullion ETF’s...
All of this is a mixture of facts and myths, causes and consequences, hidden motives and secrecy, misinformation, manipulation and opportunism. While I can do very little about most of those, I will try to clarify some of the facts in order to eliminate a few of the myths.
GEAB index – the Euro is falling and the US dollar is climbing
As our team has explained in many GEAB issues, the traditional Dollar Index (used by the financial markets) is an unreliable indicator for forecasting US Dollar developments. In fact, it’s founded on a basket of currencies which is no longer representative, either of the world’s major monetary balances or of United States trade. This basket of currencies is in fact a “small Western club” even more illegitimate today than the G8.
Of six currencies used in the FED $ index (USDX), we find the Swedish crown, the Pound Sterling, the Swiss franc and the Canadian dollar which appear irrelevant to our team since they are either marginal currencies at international level (Canadian dollar), or currencies of the United States secondary business partners (Swiss franc, Pound sterling), or both (Swedish crown).
The two other currencies are the Euro and the Yen which, on the contrary, correspond to these two criteria which we have decided to retain to calculate the GEAB $ Index. As we have being doing since December 2010, we will publish this index (based at 0 in January 2006) in every third GEAB issue from now on. The other currencies included in this index, in addition to the Euro and the Yen, are the Yuan and theReal.
To us the GEAB $ Index thus appears to be a simple indicator and representative of the
American currency’s development in value at world level which incorporates the decentralized dimension of the changing world. Henceforth, LEAP will also regularly publish the GEAB € Index to give a synthetic and reliable account of the state the Euroland currency.
In May 2013, the GEAB $ Index stands at -16 (i.e. a fall of 16 % in the US dollar’s value since January 2006 compared to the basket of the four world currencies used). It climbed during the last quarter and, at the beginning of May 2013, our index has confirmed the resumption of the US dollar’s bullish trend of the last two years, primarily due to the yen’s strong fall as a result of Japan’s aggressive monetary policy.
GEAB Index.jpg (66.76 KiB) Viewed 13911 times
Everything that needs to be said has already been said.
But since no one was listening, everything must be said again.
2) Grant Williams, Portfolio & Strategy Advisor at Vulpes Investment Management in Singapore, and author of the popular investment letter, “Things That Make You Go Hmmm…”. Grant discusses the recent policy change in Japan, which is now printing massive amounts of Yen to raise inflation and weaken the currency. Grant notes that it didn’t work in the 1930’s for Japan, and it won’t work this time. He does see a coming Asian currency war in response however.
Listen using the link below: http://www.financialsense.com/financial ... g-end-game
Gold mining: the fading away of an industry...
29 Sept 2013
The protracted downtrend of precious metal prices may have run its course, there is however no clear indication of much higher gold and silver prices in the near or medium term future. Gold is moving sideways, unable to uphold $1400 for more than a few days. Producers are scrutinizing their mining sites and not without reason. Production at mines with high total production costs may need to be scaled back. Any new mining development will need to factor in lower gold prices going forward and the internal rate of return will be substantially lower. Especially on sites where investment costs have been spiralling out of control, tough decisions may have to be made. It should be clear that, under these circumstances, the global gold mining output will continue its decline, possibly at an accelerated pace. Gold mining: the fading away of an industry...
Gold price volatility: real swing still to come
The below graph shows the price of gold since the start of 2008, gold was about to break above $1000/oz for the first time in history. We all more or less remember what was to follow, but human memory is selective and often narrows down to the more recent events. Apart from the price of gold (in blue using the left axis), a second graph in red (using the right axis) shows an annualized measure of gold price volatility. It wants to tell a story...