We believe that the “Save Our Swiss Gold” campaign has the potential to be a game changer in the gold market – both in terms of the ramifications for the current global monetary system and in terms of higher gold prices.
There has been a lack of coverage of this important story and there is therefore a lack of awareness about the possible implications for the gold market. Thus, in the weeks prior to the referendum on November 30th, we are going to analyse the referendum, the important context to the referendum and the ramifications of a yes or a no vote. Mark O’Byrne, Head of Research GoldCore (Essential Guide To Gold and Silver Storage In Switzerland)
There is huge volatility in stock markets and European bonds have seen sharp selling again, with Greek 10-year interest rates surging to nearly 9% and Irish bonds rising over 20 basis points to over 1.9%. Spanish 10-year government bond yields rose 26 basis points to 2.37 percent, while equivalent Italian yields were 28 bps up at 2.68 percent. Portuguese yields rose 27 bps to 3.57 percent.
Irish 10 Year Bonds (Thomson Reuters)
As we have warned for many months now, the Eurozone and indeed global financial crisis is far from over. We had a brief interlude after the starter but the main course is soon to commence.
Many commentators believe that the central banks and regulators have become captive to political and specific industry interests, we would agree. What is even more troubling is the degree to which the markets themselves have become centralised in their outlook. For example, In the last number of years an enormous amount of the world’s capital market asset basis is increasingly be managed by ONE single company and or directed by the services provided by Blackrock’s “Alladin” system. Indeed The Economist magazine believes that “Alladin” monitors and supports upwards of 30,000 investment portfolios and assists in the direction of over 17 Trillion dollars in assets. That is 7% of the worlds total. This is sheer lunacy.
For more than 5 years now the Fed has been ‘jawboning’ markets and threatening to rise interest rates and return to more normal monetary policies. We have consistently warned that it is important to watch what central banks do, rather than what they say – as they frequently conflict. Indeed, even what they say can conflict and it is often dissembling and some would say designed to confuse and mislead market participants.
Copious amounts of monetary whiskey have been downed in the global economy and yet the recovery remains weak at best. The mother of all monetary hangovers awaits us all and will likely manifest in stagflation and sharply higher inflation. This underlines the vital importance of having an allocation to gold in a diversified portfolio.