Blog Archives

What If All the Cheap Stuff Goes Away?

One of the books I just finished reading is The Fate of Rome: Climate, Disease, and the End of an Empire. The thesis of the book is fascinating to those of us interested in the rise and fall of empires: Rome expanded for many reasons, but one that is overlooked was the good fortune of an era of moderate weather from around 200 BC to 150 AD: rain was relatively plentiful/ regular and temperatures were relatively warm.

Then one of Earth’s numerous periods of cooling–a mini ice age–replaced the moderate weather, pressuring agricultural production.

Roman technology and security greatly expanded trade, opening routes to China, India and Africa that supplied much of Roman Europe with luxury goods. The Mediterranean acted as a cost-effective inland sea for transporting enormous quantities of grain, wine, etc. around the empire.

These trade routes acted as vectors for diseases from afar that swept through the Roman world, decimating the empire’s hundreds of densely populated cities whose residents had little resistance to the unfamiliar microbes.

Rome collapsed not just from civil strife and mismanagement, but from environmental and infectious disease pressures that did not exist in its heyday.

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Gold Bugs Gear Up For A Potentially Strong 2018

Since February 9th, the price of gold has been working towards a recovery. With the price of the precious metal heading upward, gold bugs have been all over social media, gearing up for a strong 2018 year. However, is this going to be a strong year for gold? Today, we’ll talk about the pressures the commodity faces, why gold bugs believe that 2018 is going to be a strong year for the precious metal, and what we’ll be watching for ahead.

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Pressures Mounting On Gold At The Moment 

While the price of gold has been headed upward as of late, there has been quite a bit of pressure on the precious metal throughout the year thus far. Unfortunately, the news suggests that these pressures will continue. Here are some of the key factors that will likely be sources of pressure in the year ahead:  (more…)

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Iron Mining in the Future – Will it Remain Key to Australia’s Future Economy?

It’s been a lean few years for Australia’s mining sector, as the demand for products such as iron ore has fallen while competing nations such as China have ramped up their own production efforts.

This could all be about to change, however, with activity in Australia’s mining sector set to increase exponentially amid a multitude of factors.

We’ll explore this in greater detail in this post, while asking whether or not iron mining will remain central to the future growth of the Australian economy:

What has Caused Activity in Australia’s Mining Sector to Accelerate?

Mining in Australia

The most recent data sets released by industry analysts BIS Oxford Economics revealed that mining exploration, production and maintenance will see considerable growth between now and the end of 2018. This applies across all niches, including iron ore, coal and even tech metals, which are promising to revolutionise Australia’s economy in the future.  (more…)

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Is This How the Next Global Financial Meltdown Will Unfold?

I have long maintained that the structural imbalances of debt and risk that triggered the Global Financial Meltdown of 2008-2009 have effectively been transferred to the foreign exchange (FX) markets.

This creates a problem for the central banks that have orchestrated the “recovery” by goosing asset bubbles in stocks, real estate and bonds: unlike these markets, the currency-FX market is too big for even the Federal Reserve to manipulate for long.

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Financial System “Will Implode” … “Hold Precious Metals” – Faber

Financial System “Will Implode” … “Hold Precious Metals” – Faber

– “Whole Financial System Will One Day Implode” – Marc Faber
– “I feel like I’m on the Titanic …”
– Arguing over the best assets akin to re-arranging deck chairs on Titanic
– Investors need escape plan and “safety boat”
– Forget Fed rate hike, Fed QE 4 is coming
– Diversify and hold “commodities, precious metals”

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The highly regarded editor of the Gloom, Doom and Boom report, Dr. Marc Faber has warned that “the whole financial system will one day implode”.

Speaking on CNBC’s Squawk Box, he likened the global economy to the Titanic.

Dr. Faber believes that arguing over which assets are best in the current environment is akin to re-arranging deck chairs on the ill-fated Titanic. Only last month, Stephen King – chief economist with HSBC – made the same analogy. (more…)

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Currency Wars – Russia and Netherlands Buy 30 Tonnes Gold In December

Currency Wars – Russia and Netherlands Buy 30 Tonnes Gold In December

Russia and surprisingly the Netherlands were the largest central bank buyers in December – accumulating a significant 30.34 tonnes between them as currency wars intensify.

Demand for gold as a diversification and monetary asset continues to be very robust and central banks remain net buyers of gold which should be supportive of prices.

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The Netherlands, which has the ninth-biggest gold reserves,  raised its bullion holdings for the first time in 16 years. It added  9.61 tonnes to bring total gold reserves to 622.08 tonnes.

Russia raised its gold reserves for a ninth straight month in December as the country continued its multi month gold buying spree, adding to the fifth-biggest gold holdings in the world, data from the IMF showed yesterday.

Russia continues to dollar cost average into gold and increased its bullion holdings by another hefty 20.73 tonnes to 1,208.23 tonnes in December.

The December figure for Russia, who have the fifth largest reserves in the world, brings their officially stated reserves to 1208.23 tonnes. If this trend were to continue their officially stated reserves would increase 20.6% this year.

goldcore_bloomberg_chart2_27-01-15 (more…)

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Euro Gold Surges To EUR 1,168 After Greek Election Landslide

Euro Gold Surges To EUR 1,168 After Greek Election Landslide

The crushing victory of the Greek opposition party Syriza in yesterday’s Greek elections has added to jitters in already jittery financial and foreign exchange markets.

Head of Syriza, Alexis Tsipras waves after winning the elections in Athens

The euro tumbled and gold in euros surged to its highest level since April 2013, at €1,167.94/oz as markets opened in Asia. The euro has since stablized but remains near a 11 year low against the dollar and is now down 16.7 percent against gold in January alone. (more…)

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Gold Surges As ECB To Print Trillion Euros and ‘Grexit’ Election Sunday

 Gold Surges As ECB To Print Trillion Euros and ‘Grexit’ Election Sunday

Stocks, bonds and precious metals surged yesterday as markets cheered the latest wave of money printing on a grand scale.

Gold surged 3 per cent in euro terms (see chart below) after Mario Draghi in the ECB announced a massive quantitative easing or QE programme of over EUR 1 trillion from March 2015 to September 2016.

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Listen here

The QE programme is even larger than expected at €60 billion every month rather than the €50 billion that had been expected. The euro fell another 0.9 per cent against the dollar to an 11-year low and has shed another 1% versus the Swiss franc. Gold was nearly 1% higher in dollar and sterling terms also. (more…)

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ECB To Print Trillion Euros – Gold Could Surge 40% In 15 Minutes Against Euro, Other Currencies

ECB To Print Trillion Euros – Gold Could Surge 40% In 15 Minutes Against Euro, Other Currencies

Mario Draghi is preparing to unveil QE today as the ECB looks certain to announce it’s much anticipated quantitative easing (QE) programme. The move to print up to €1 trillion euros in the coming months appears to be a fait accompli although it will occur against a backdrop of strong German resistance and many concerns.

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Listen

Following leaks that mainstream news sources regard as credible, the ECB is expected to announce monthly purchases of €50 billion in government bonds of member states.  The scheme is expected to run from March until the end of 2016 – for some 21 months – bringing the total to around 1 trillion euros. The ECB’s balance sheet currently stands at about €2 trillion.

Proponents argue that the move should or will prevent deflation and help revitalise the ailing euro zone economy. (more…)

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SNB Shock Was ‘Icing On Cake’ For Gold Ahead of Draghi’s Euro ‘Bazooka’

SNB Shock Was ‘Icing On Cake’ For Gold Ahead of Draghi’s Euro ‘Bazooka’

Is gold a safe haven? Mark O’Byrne, executive and research director at GoldCore, told CNBC yesterday that yes it is. He said that the Swiss National Bank’s recent decision was “icing on the cake” for gold and shows how gold thrives in a volatile environment.

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Interview:
CNBC’s Seema Mody: Given the lacklustre performance of gold over the past two years, investors have been questioning whether gold is in fact a good investment. But last week’s unexpected move by the Swiss National Bank confirmed that perhaps gold is still seen as a safe-haven by investors during a time of rising volatility. Would you agree?

Mark O’Byrne: I would indeed – yes, absolutely. And I think the SNB decision is actually ‘icing on the cake’ because there were strong fundamental factors in place coming through from 2014 and gold prices had actually started to move up – particularly in Euro terms, but also in dollar and sterling terms – even prior to the SNB decision. (more…)

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Gold Demand Explodes as Volatility and Fear Stalk Market

Gold Demand Explodes as Volatility and Fear Stalk Market

Although the extent to which the surprise move by the Swiss National Bank last week has damaged financial institutions will not be apparent until the end of the month, it is already clear that enormous damage has been wreaked on many businesses exposed to the foreign exchange markets.

On Thursday the SNB unpegged its currency from the euro without warning. The peg was put in place three years ago during the height of the euro crisis to prevent the Swiss franc from rising too much relative to its EU neighbours and damaging its exports.

Swiss Franc images by MadGeographer

The shock move caused the Swiss franc to rally almost 30% against the euro and 28% against the dollar. To maintain the peg, the SNB had been forced to accumulate around €500 billion leaving it very vulnerable to a euro devaluation.

It would seem that the move was not coordinated with the ECB or the Fed and may be endemic of a new low phase in global central bank communications. Many times throughout the financial crisis central banks have coordinated efforts to stabilise market volatility and to manage stimulus programs in concert. (more…)

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Bundesbank Announces Repatriation of 120 Tonnes of Gold from Paris and New York Federal Reserve

Bundesbank Announces Repatriation of 120 Tonnes of Gold from Paris and New York Federal Reserve

The Bundesbank, Germany’s powerful central bank, announced very publicly this morning the further repatriation of some of it’s gold being held in foreign locations – namely in Paris and New York with the Bank of France and the Federal Reserve.

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“The Bundesbank successfully continued and further stepped up its transfers of gold,” the central bank said in a statement. “Implementation of our new gold storage plan is proceeding smoothly. Operations are running very much according to schedule,” said Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank. (more…)

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