Blog Archives

Global Debt Time Bomb Ticks – Puerto Rico Is Next

Global Debt Time Bomb Ticks – Puerto Rico Is Next

- Puerto Rico Governor says island cannot pay its $72 billion debt
- Puerto Rico debt 15 times per capita median debt of the 50 U.S. states
- Complicated arrangements misled bond investors to believe their funds were secure
- Share price of bond insurer exposed to Puerto Rican debt plummeting, possibly on inside information

Puerto Rican Governor Alejandro García Padilla addressed the island's people about $73 billion debt

With all eyes on Greece it would seem another crisis relating to unpayable debt is brewing in the Caribbean. The governor of Puerto Rico, Alejandro García Padilla, has warned that the island is unable to pay its debts of $72 billion. (more…)

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Greece Shows Importance of Gold as Europeans Buy Coins and Bars

Greece Shows Importance of Gold as Europeans Buy Coins and Bars

- Demand for physical gold from Europeans surges
- Greek ATMs limit withdrawals to €60 per day
- Greeks panic buy food, fuel and medicine
- European elites threaten Greece with expulsion
- Gold not subject to capital controls or “bail-ins”

British Gold Sovereign Gold Coin

Demand for gold coins and bars from European investors has increased significantly in the past month as the Greek crisis enters a new phase. (more…)

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Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy

Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy

- Persistent low rates leave central banks with no ammunition to fight next crisis
- BIS says short-sighted central banks and governments contributed to current weaknesses
- Lack of policy options have forced some central banks to stretch “boundaries of the unthinkable”
- Bust in developed economies the main risk facing global economy
- Greece prepares to default
- China markets routed overnight
- Gold will be last man standing when currencies collapse

Greeks line up to an ATM in a run on Greek banks

Greece embarked on capital controls as talks over the weekend between Tsipras’ leftist government and foreign lenders fell apart. (more…)

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Not Owning Gold Bullion Shows “Ignorance of Monetary History”

Not Owning Gold Bullion Shows “Ignorance of Monetary History”

- “Gold remains in secular bull market”
- System is addicted to unsustainable debt
- Persistent deflationary forces threaten system 
- Monetary authorities to take increasingly risky measures to engender inflation
- Debt based monetary system is crux of problem
- “All available means” deployed to prevent global government bond bubble from bursting
- Aversion to owning any gold whatsoever displays “ignorance of monetary history”
- Gold’s qualities as store of value and medium of exchange to be “rediscovered” 
- Have “gold price target of USD 2,300” in three years


The bull market in gold remains intact and may soon reassert itself according to Asset Managers Incremental in their must read yearly “In Gold We Trust” report.

“We are firmly convinced that gold remains in a secular bull market that is close to making a comeback” the report states. (more…)

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“They Can’t Print Money Forever” – Ron Paul

“They Can’t Print Money Forever” – Ron Paul

- Former U.S. Congressman blasts Fed’s role in markets
- Gives scathing analysis of modern economics and markets
- Highlights complete disregard of economic fundamentals in investment decisions today
- As will be the case with Greece, U.S. will eventually be forced to liquidate debt
- Attempts to forecast day of reckoning are futile as it is a function of psychology
- “They can’t print money forever”
- Gold and silver will weather and thrive in currency devaluation

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Ron Paul, former congressman for Texas, laid plain the absurdity of central policy towards the markets in a recent interview with Amanda Diaz on CNBC. He believes a day of reckoning is in the cards because the central banks “can’t print money forever.”

Dr. Paul blasted the role of the Federal Reserve in markets where superficial pronouncements herd speculators to and fro: “I am utterly amazed at how these Federal Reserve Chairman reports can play havoc with the market: one word – what they say and what they don’t say and who’s going to interpret it,” he said. (more…)

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“Being Fed Rubbish Re Gold” and “Complacency Rules… For Now”

“Being Fed Rubbish Re Gold” and “Complacency Rules… For Now”

- GoldCore interview with Kerry Lutz on the Financial Survival Network
- Gradual realisation that central bank “masters of the universe”
-“We all know that bad stuff is going to happen, we just don’t know when it is going to happen”
-“The penny is beginning to drop that … we are coming very close to the end of the road”
- Prevailing wisdom that can print currencies with reckless abandon not being questioned
- We need a free market in currencies, not bail-ins and a war on cash and gold
- People blindly trust “experts” so welcome that some of them giving prudent advice re diversification
- Currencies of creditor nations – Norway, Switzerland, Singapore, Hong Kong will outperform in long term
- Mr Spreadbury of Fidelity “helped a lot of people in the mainstream who would never consider gold and silver”
- Avoid speculation, focus on diversification and owning quality assets for long term

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Interview Transcript (more…)

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Doubts Over City of London’s “Fintech” in Age of Cyber War

Doubts Over City of London’s “Fintech” in Age of Cyber War

- Doubts over City of London’s “fintech” in age of cyber war
- Thousands left in “financial limbo” after tech “error”
- 600,000 RBS customer payments go “missing” in “system failure”
- Glitch comes after bank was fined £56 million in November for 2012 tech fiasco
- Failure is “the latest of many in the industry” – Treasury Committee
- Banks “ageing tech systems” ill-equipped to deal with cyber-terrorism, cyber-war
- Gold coins, bars held outside tech dependent banking system not vulnerable to cyber-attacks

Banks’ “archaic technology systems” are unable to cope with the demands of modern online banking according to the Financial Times. The claim was made over the weekend in an FT article discussing the latest fintech glitch suffered by Royal Bank of Scotland last Tuesday in which payments of 600,000 customers “went missing.”

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It would follow that these same “archaic” systems would not stand up very well in the face of a concerted cyber-attack from hostile terrorists or indeed nation-states.

The latest fintech failure affected RBS customers and customers of ITS , Coutts and Ulster Bank in Ireland.

Customers were left without cash for three days after a computer “glitch” led to 600,000 payments – including wage packets, benefits and tax credits – going “missing.” (more…)

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Hold “Physical Cash,” “Including Gold and Silver” To Protect Against “Systemic Risk” – Fidelity

Hold “Physical Cash,” “Including Gold and Silver” To Protect Against “Systemic Risk” – Fidelity

- Hold physical cash “including gold and silver” says manager in one of largest mutual fund and financial services groups in the world
- “Systemic risk” threat to deposits says respected Fidelity  fund manager
- Record global debt unlikely to be sustained by higher interest rates
- Banks may not be prepared for “shock” of defaults
- Guarantees to depositors unlikely to be honoured
- Savers and investors should hold “physical currencies” “including precious metals”

A fund manager for one of the largest mutual fund and investment groups in the world, Fidelity,  has warned investors and savers to have an allocation to “physical cash,” “including  precious metals” to protect against “systemic risk”.

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Ian Spreadbury, who oversees the investment of over £4 billion of clients money in bond markets for Fidelity told Telegraph Money

“Systemic risk is in the system and as an investor you have to be aware of that.”

He believes that the record debt that has been ballooning since the crisis of ’08 due to interest rates being forced down to near zero by central banks. This debt, particularly where mortgages are concerned, would likely become unsustainable if, and when, rates rise to realistic levels.

“We have rock-bottom rates and QE is still going on – this is all experimental policy and means we are in uncharted territory.”

He points out that in such an environment banks would be unable to sustain the losses caused by defaults on unserviceable debt which would lead to a systemic crisis.

Spreadbury is not the first high profile financial expert to warn of an impending systemic crisis. We recently covered how Stephen King, chief economist at the world’s third largest bank HSBC, likened the global economy to the Titanic. Andrew Wilson, Goldman Sachs Asset Management’s chief executive in Europe recently gave similar warnings.

Spreadbury highlights that the £85,000 guarantee to UK depositors by the Financial Services Compensation Scheme is largely unfunded and that the government has said it will not intervene to rescue failing banks in the future – leaving deposits to be bailed-in.

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The EU and other supra national institutions have been agreeing the architecture for bail-ins in recent years.  Just this month, at the start of June, the European Commission has ordered 11 EU countries to enact the Bank Recovery and Resolution Directive (BRRD) within two months or be hauled before the EU Court of Justice.

11 countries are under pressure from the EC and had yet “to fall in line”. The countries were Bulgaria, the Czech Republic, Lithuania, Malta, Poland, Romania, Sweden, Luxembourg, the Netherlands, France and Italy.

The new bail-in system is largely in place and emergency resolutions can be brought forward in the event of banks failing in the interim period. The “bail-in” will require that shareholders, bondholders and importantly now depositors will all suffer ‘haircuts’ or be burnt if a financial institution is in trouble.

The European parliament confirmed that depositors with more than 100,000 euros ($137,000) would be bailed in after shareholders and bondholders. It is important to note that the 100,000  figure is an arbitrary figure and there is a possibility that this figure could be reduced by an insolvent government faced with an imploding banking system.

To deal with these risks Spreadbury advocates a well diversified portfolio. Cash should be spread out in different banks. Savers should hold physical cash outside the banking system – a remarkable suggestion coming from somebody so well acquainted with the workings of the financial system.

He also suggests that investors hold gold and silver. He says that the unravelling he foresees is more likely to happen in “the next five years rather than ten”.

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Fidelity’s bond manager echoes what we have been advising clients and the wider public for some years now.

Mr Spreadbury concluded

“The message is diversification. Think about holding other assets. That could mean precious metals, it could mean physical currencies.”

Must Read Guides:

Protecting Your Savings In The Coming Bail-In Era

From Bail-Outs To Bail-Ins: Risks and Ramifications –  Includes 60 Safest Banks In the World


MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,193.70, EUR 1,052.14 and GBP 752.53 per ounce.
Friday’s AM LBMA Gold Price was USD 1,198.15, EUR 1,058.86 and GBP 755.65 per ounce.

Gold closed at $1,200.06 an ounce on Friday and silver was down 0.4 percent and closed at $16.10 an ounce. Palladium lost 1.9 percent to $705.25 after touching a 16-month low.

Gold climbed 1.8 percent in dollar terms last week, its second successive week of gains. Silver prices surged 1.8% last week and increased their year-to-date gain to 3.4%.

Gold in USD - 1 Month

Gold in Singapore for immediate delivery ticked lower 0.3 percent to $1,196.60  an ounce near the end of the day,  while gold in Switzerland was lower and fell to $1,193 an ounce.

Greek Prime Minister Tsipras submitted a new list of reforms last night in a last ditch attempt to appease creditors. Crisis negotiations are taking place today in Brussels  with Greece’s creditors to see if a deal can be reached after 5 months of stalemate.  Greece owes 1.6 billion euros to the IMF by June 30th.

Euro zone leaders meeting in Brussels later on Monday are unlikely to be able to take a formal decision on whether to provide aid to Greece but there is still time this week to finalise an agreement, German Chancellor Angela Merkel said earlier.

“There are still a lot of days in the week in which decisions can be taken,” Merkel said, speaking to reporters in the eastern city of Magdeburg. She noted that without an agreement between Greece and the so-called institutions – the EC, EBC and IMF – the summit on Monday evening could not be more than a discussion forum.

The markets are irrationally exuberant again this morning on hopes for a Greek deal and European stocks have surged higher despite continuing uncertainty.

Chinese markets are closed today.

Platinum and palladium saw losses last week which have been extended today. Platinum is down another 1.3%  and edging back towards last week’s more than six-year low at $1,066.50/oz. Palladium has reached its lowest in 18 months, at $696.47/oz this morning.

In late morning European trading, gold is down 0.44 percent at $1,194.53 an ounce. Silver is up 0.50 percent at $16.17 an ounce and platinum is down 0.68 percent at $1,075.68 an ounce.

Breaking News and Research Here

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Russia Buy Gold Bullion For “Diversification” – Central Bank Governor

Russia Buy Gold Bullion For “Diversification” – Central Bank Governor

- Russia “bought gold” for “diversification” – Russian Central Governor Nabiullina
- Russian central bank prefers gold bullion to euros or dollars
-  Russia points out that other countries have a  “bigger share of gold in their reserves”
- “Can’t imagine a situation where bitcoins would be considered a reserve currency”
- On bitcoin – sees “mobility”, “expediency” and “low cost” but may regulate

Russian Central Bank Governor, Elvira Nabiullina

The Russian Central Bank Governor told CNBC this morning that Russia has bought and will continue to buy gold bullion for “principles of diversification.” (more…)

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“People Can No Longer Buy Retail Gold Coins”

“People Can No Longer Buy Retail Gold Coins”

- Armstrong and blogosphere on shortage of gold coins in Europe
- No shortage of gold whatsoever at retail level in Europe
- Gold demand in most of Europe quite mixed despite significant risks
- Germany, Switzerland, Greece seeing strong demand but no shortages
- Alarmist warning that governments to make gold “illegal”
- Poor data and research or disinformation?

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A rumour has been making its way around the blogosphere suggesting that gold coins are not available for purchase from retail outlets across Europe. As one of Europe’s larger gold brokerage and storage providers, GoldCore can can confirm that this information is misleading and incorrect. (more…)

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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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Cyberwarfare Threat To Nuclear, Banking and Financial System

Cyberwarfare Threat To Nuclear, Banking and Financial System

- Legacy of stuxnet is risk posed to technology dependent world
- 20 countries have launched cyberwarfare programmes since exposure of stuxnet in 2010
- Stuxnet virus targeted safety mechanisms in Iran’s nuclear reactors in 2010
- Virus launched to sabotage Iran’s nuclear program was also used for mass spying
- All types of digital systems at risk, including financial, banking and gold providers
- Direct ownership of physical gold, unlike digital currency, not vulnerable to cyber warfare

20 Countries Have Announced Digital Warfare Programs

A new book detailing the development, operation and ramifications of the deployment of the notorious Stuxnet virus shows that it has created a far more risky world.

The book, Countdown to Zero Day, by Wired magazine writer Kim Zetter, shows that – apart from being an extremely irresponsible and dangerous act of sabotage – the deployment of Stuxnet against Iran has led to an acceleration in development of cyberwarfare. (more…)

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