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Gold Demand in Greece, Italy, Spain, Russia, Germany, UK and U.S. – Reuters Interview GoldCore

Gold Demand in Greece, Italy, Spain, Russia, Germany, UK and U.S. – Reuters Interview GoldCore

Jan Harvey from Reuters interviews Mark O'Byrne, Director of GoldCore Research

Jan Harvey thomsonreuters.com We were hearing quite a bit about rising physical demand in Europe earlier this year, as a confluence of factors (euro zone QE, SNB scrapping franc peg to euro, Greek election outcome) came together to support buying. Here to discuss how that has developed in February is Mark O’Byrne, executive director of Goldcore. Welcome, Mark!
Mark O’Byrne goldcore.com Happy Friday Jan and thanks for having me on the forum

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Greece Buys Gold Sovereigns as New Greek Drachmas Unveiled

Greece Buys Gold Sovereigns as New Greek Drachmas Unveiled

- Greece warns may default on IMF loan next week

- Greek bank runs continue and deposits flee

- German Bundestag votes for bailout extension

- Syriza agree to a bailout extension of four months, in return for concessions yet to be approved by the EU

- Questions over Syriza negotiating a weak deal despite it’s strong position

- Greece and EU buying time to arrange orderly “Grexit”?

- Greece has printing presses poised to print newly designed Greek Drachmas

- Greeks buying gold bullion

The Euro Working Group discussed Greece’s imminent funding problems yesterday amid mounting concern about how the country will meet its massive obligations.

Minister of State for Coordinating Government Operations Alekos Flambouraris suggested yesterday that Greece might delay payment to the IMF if it cannot find the necessary money.
Greece is due to pay the IMF 1.6 billion euros next month but the Greek Minister said that Athens might ask to delay this payment for two months.

Proposed New Greek Drachmas

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“Emperor Has No Clothes” – EU Warns of Debt Dangers Facing Ireland and EU

“Emperor Has No Clothes” – EU Warns of Debt Dangers Facing Ireland and EU

- High “structural” unemployment, high levels of public and private debt and a still vulnerable banking sector are weighing on the Irish economy

 - Report further casts doubt on the “recovery” narrative being touted by governments, banks and vested interests across the world

 - Levels of spin and denial not seen since before the crash of 2008

A report by the EU to be published today reviewing the economies of European countries has identified various problems in the most European economies – including Ireland.

In-depth reviews initiated by the European Commission (EC) found no “excessive macroeconomic imbalances” continue in 16 countries, identified in November as experiencing “macroeconomic imbalances”.

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The EC on Wednesday sent a strong signal to Member States to carry out structural reforms and to continue consolidating their public finances. (more…)

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12 Reasons Why Ritholtz and Many Experts Are Mistaken On Gold

12 Reasons Why Ritholtz and Many Experts Are Mistaken On Gold

 Being involved in the fairly niche business of an international gold brokerage for nearly 12 years now, we find ourselves continuously engaged in conversation with people who demonstrate an incredible lack of understanding of the function of gold and the importance of gold as a DIVERSIFICATION and as a SAFE HAVENasset.

Barry Ritholtz

This lack of understanding is not confined to the public but also prevalent with some financial experts. One example of this is one of the more vocal anti gold experts in recent months – leading Bloomberg columnist Barry Ritholtz.

This lack of understanding results in many investors being very exposed and at risk of financial losses due to their significant over exposure to paper assets and fiat digital currencies and complete lack of any allocation to gold whatsoever. (more…)

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Gold Holdings of Eurozone Rise to 10,792 Tonnes – ECB’s “Reserve of Safety” Accumulated

Gold Holdings of Eurozone Rise to 10,792 Tonnes – ECB’s “Reserve of Safety” Accumulated

The Euro zone raised its gold holdings by 7.437 tonnes to 10,791.885 tonnes in January, International Monetary Fund data released overnight showed.

The rise in gold holdings was small in tonnage terms and in percentage terms  – especially when viewed in the light of the recently launched ECB’s EUR 1 trillion QE monetary experiment.

goldcore_bloomberg_chart2_24-02-15
Nevertheless, the rise in Euro-area gold holdings shows how the ECB continue to view gold as an important monetary asset. Mario Draghi said of gold in October 2013 that gold is a “reserve of safety” that “gives you a value-protection against fluctuations against the dollar.”

Draghi told an open forum at Harvard’s Kennedy School of Government, why central banks want gold and what value it offers. He said that there were “several reasons” to own gold including “risk diversification”.

The increase in reserves came at a time, January, of rising gold prices amidst the reemergence of the Greek debt crisis.

It may signal that the ECB and Eurozone are set to embark on a gold accumulation programme. More likely, it is simply a way to bolster confidence in the euro due to increasing doubts about the viability of the single currency.

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Russia sold a very small amount of gold in January for the first time since March. Russia lowered its reserves to 1,207.7 tons from 1,208.2 tons, ending nine months of consecutive purchases, the IMF data showed.

Russia, the world’s fifth-biggest gold holder, had been adding to its holdings for many years in order to bolster the rouble.

Before last month, Russia had bought at least 18 tons a month since September and more than tripled its holdings since 2005.

Turkey’s gold reserves fell marginally last month along with Mexico and Belarus, the data showed.

Kazakhstan increased gold reserves for the 28th straight month, while Ukraine added to holdings for the first time since August, the data showed. Kazakhstan boosted holdings to about 193.5 metric tons from 191.8 tons a month earlier as Ukraine’s rose to 23.9 tons from 23.6 metric tons.

Kazakhstan’s hoard rose 33 percent in the past year alone and more than doubled in the past three years.

Ukraine’s assets dropped in November to the lowest level since 2005 as its foreign currency reserves contracted and the hryvnia slumped amid the conflict and collapsing economy. There were also concerns that the newly installed government had acquired the gold and moved it offshore, out of Ukraine.

Central banks are some of the largest buyers of gold today – see table above. Central banks have been adding to their gold reserves for the past five years, a reversal from two decades of selling since the late 1980s. They were net buyers in 2014 and are set to be net buyers again 2015.

Governments bought 477.2 tons of gold bullion in 2014, the second-biggest increase in 50 years, and purchases will be at least 400 tons this year, the World Gold Council has estimated.

The smart money will continue to follow the lead of central banks internationally and gradually accumulate gold and dollar, euro or pound cost averaging into an allocated and segregated physical gold position.

Daily and Weekly Updates Here


MARKET UPDATE
Today’s AM fix was USD 1,195.50, EUR 1,057.97 and GBP 774.59 per ounce.
Yesterday’s AM fix was USD 1,193.50, EUR 1,055.17 and GBP 777.12 per ounce.

Gold rose 0.09% percent or $1.10 and closed at $1,202.10 an ounce on yesterday, while silver climbed 0.56% percent or $0.09 closing at $16.32 an ounce.

Gold in US Dollars - 5 Years (GoldCore)

Spot gold was down 0.4 percent at $1,196.80 an ounce in late morning in London, after prices were flat in Singapore. Silver was down 0.3 percent at $16.24 an ounce, platinum slipped by 0.2 percent to $1,158.55 and palladium fell 0.2 percent to $783.15.

Gold slipped below $1,200 an ounce today but recovered from its 7 week low hit yesterday as optimism is abound that the Greek bail-out deal will be finalized today.

The close above $1,200/oz yesterday was encouraging from a technical perspective.

Some speculated that Federal Reserve Chairperson Janet Yellen’s pending congressional testimony added some pressure on the yellow metal and strengthened the U.S. dollar.

Yellen will address the Senate Banking, Housing and Urban Affairs Committee at 10 a.m. on Tuesday (EST) and the House Financial Services Committee on Wednesday.

Market participants are looking for any further guidance on the timing of when the U.S. Fed may raise interest rates.

Yellen’s European counterpart ECB chief Mario Draghi is also set to make a speech today at 3 p.m. CET unveiling the new €20 banknote in Frankfurt.

The world’s second largest consumer of gold, China, is still celebrating its Lunar New Year holiday today and returns tomorrow which should be gold supportive.

Gold had its biggest monthly advance in three years in January prior to giving up those gains in recent weeks.

Gold climbed 8.4 percent in January in London as policy makers in Europe and Asia signaled more stimulus to battle slowing economic growth and investors speculated that Greece may be forced to quit the euro.

Bullion traded at $1,195.80 an ounce on today. With gold being some 37 percent below the nominal record high set in 2011, contrarian investors continue to accumulate on weakness.

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“Global System Catastrophe” Is Key Threat To Human Civilization

“Global System Catastrophe” Is Key Threat To Human Civilization

 – Oxford Scientists Cite “Global System Catastrophe” Among 12 Plausible Threats To Civilization

- “Global System Catastrophe” More Of A Possibility Than Most Western People Suspect

- Study Described As A “Scientific Assessment About The Possibility Of Oblivion”

- Other Threats Include Nuclear War, Environmental Degradation, Geological Events and Out of Control Technology

Recent research undertaken by scientists in Oxford University to identify possible threats to human civilisation has identified “system-wide failures caused by the structure of the network” as one of twelve major threats.

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Gold Down 1.5% This Week – Massive Complacency Regarding Greece as Geopolitical and Debt Crisis Loom

Gold Down 1.5% This Week – Massive Complacency Regarding Greece as Geopolitical and Debt Crisis Loom

* Greek Bank Runs Accelerate as Possible ‘Grexit’ Looms
* Fatigue with Greek Crisis Breeding Massive Complacency
* Government in Kiev Forced to Take Diplomatic Approach
* Ukraine a Significant Setback for NATO
* Regional War in Eastern Europe Averted for the Moment
* Middle East, Israel and Iran Timebomb Ticking
* India Demand To Rise To 35 – 40 Tonnes This Month
* Gold Oversold – Fundamental and Technical Position Good 

The Greek debt saga continues and financial tragedy seems increasingly likely as the deadlock between Greece and the Eurogroup continues today.

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Gold Bars Worth EUR 450,000 Robbed From Pensioner By Fake Cops in Paris

Gold Bars Worth EUR 450,000 Robbed From Pensioner By Fake Cops in Paris

  • Story of pensioner in Paris who has had €450k of gold stolen by fake police highlights risks of storing gold in home
  • Criminals impersonating cops gained access to home claiming to be investigating gold robbery
  • 13 kilogram bars worth €450,000 taken, pensioner unharmed
  • Gold owners must take precautions
  • Greek depositors taking precautions by taking cash out of banks

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Gold Essential “Safe Haven” Due to Greece … Spain, Italy, Ukraine and “Bad Stuff”

Gold Essential “Safe Haven” Due to Greece … Spain, Italy, Ukraine and “Bad Stuff”

Newstalk interviewed GoldCore’s Mark O’Byrne this morning about the investment asset that is not well understood – gold.

The interview began with Nick Bullman of Newstalk asking Mark to explain the poor performance of gold in recent years as it has underperformed since 2008.

goldcore_bloomberg_chart1_18-02-15
Click here to listen

 

Gold prices rose every single year from 2000 to 2013 responded O’Byrne.

It had “massively outperformed” due to many risks and on the expectation of major financial crisis and had as such had priced in the financial crisis of 2008 and protected investors during and after the crisis.

Mark said that it was a matter of a classic bull market which frequently see “two steps forward and one step back” and lengthy periods of correction and consolidation.

Gold in US Dollars - January 2007 to February 2015 (Thomson Reuters)

He pointed out that Goldcore had warned in 2013 that a sharp correction might be due as is normal in all bull markets. He referred to the severe retracement of the gold bull market of the 1970s where gold prices fell over 50% between 1975-76 before rising a further 800% in less than 4 years.

Similar price performance could be seen in the coming years.

Gold had not performed very well in recent years but he believes that the unfolding crisis in the Eurozone and the very uncertain economic picture globally would likely lead to higher gold prices in the coming years.

He explained that the cost of mining one ounce of gold was, on average globally, $1,200 per ounce and that prices therefore could not fall below that level for any extended period of time He acknowledged that lower oil prices may bring costs of production down to some extent but that the cost of protection should stay above $1,000 per ounce.

At the same time the current low prices relative to costs of production had caused some mining companies to fold or postpone production which will lead to tighter supply in the future.

When asked why one should buy gold in a strong dollar environment and with deflation taking hold around the world he said that gold acts as a hedge against dollar and all paper currency devaluations.

Monetary policy across that world is still incredibly loose with interest rates near 0% and with the EU about to begin its QE money printing program or “experiment”. He used the example of Russia whose gold owners have been very well protected during that country’s recent painful economic and currency crisis.

He referred to recent academic research and the views of asset allocation experts like Ibbotson and Mercer who have shown gold is a classic “hedging instrument.”

He said that gold’s ideal conditions are not those of deflation but that the degree of uncertainty in the world today was a compelling reason to own gold. Gold does in well in deflation as gold cannot go bust – “that’s why central banks are the biggest buyers of gold today.”

The interviewer questioned gold’s hedge status referring to the brief fall in the gold price during the 2008 crisis, suggesting that investors used liquidity in gold to cover their losses.

Mark responded by clarifying that it was not gold investors selling physical gold but speculators and hedge funds who deal in futures contracts liquidating all positions en masse.

The paper price of gold fell in the very short term after the Lehman crisis but within weeks prices had recovered and closed the year higher – from $838 at the start of 2008 to close the year at $872 per ounce for an annual gain of 4 per cent.

Gold in US Dollars - Full Year 2008 (Thomson Reuters)

Other assets were sharply lower in 2008 and so in a deflationary environment, gold outperformed and that outperformance continued in 2009, 2010, 2011 and 2012 prior to a sharp fall in 2013  (see chart above).

He added that gold had already anticipated and begun to price in the crisis. He clarified that gold is not an “absolute hedge” and that no such thing exists, but in the medium to long term gold always serves it’s purpose as essential financial insurance and a vital safe haven asset.

The short Newstalk interview can be listened to here  (From 7th minute to 15 minute, 20 seconds)

MARKET UPDATE

Today’s AM fix was USD 1,206.50, EUR 1,059.36 and GBP 781.77 per ounce.
Yesterday’s AM fix was USD 1,221.75, EUR 1,072.56 and GBP 793.86 per ounce.

Gold fell 1.63 percent or $20.00 and closed at $1,208.50 an ounce yesterday, while silver slid 4.51 percent or $0.78 closing at $16.51 an ounce.

Gold in US Dollars - 2015 Year To Date (Thomson Reuters)

Gold fell to a six week low in the prior session to $1,203.80 after opening at $1,231.30 as some speculators closed out positions ahead of the week long Lunar New Year holiday that began today in China.

Gold in London continued to fall but remained above the $1,200 level.

Spot gold was down 0.1 percent at $1,207.21 an ounce in early London trading and Comex U.S. gold futures for April delivery were down $1.20 an ounce at $1,207.40. Spot prices hit their lowest since early January on Tuesday at $1,203.30.

Silver was down 0.5 percent at $16.48 an ounce. Spot platinum was unchanged at $1,170.95 an ounce, close to the previous session’s 5 and a 1/2 year low, while spot palladium was flat at $779.05 an ounce.

Today the U.S. Fed releases its minutes from their policy meeting from January 27-28th at 1800 GMT. The U.S. dollar rose 0.2 percent against the euro on Wednesday ahead of the U.S. Fed minutes release.

The British pound is close to a seven year high versus the euro after it was reported that UK unemployment figures dropped and earnings rose. The Bank of England commented that it sees inflation climbing “fairly sharply” as the effects of cheaper oil prices fade.

Greece’s government confirmed it would ask for a six month extension to its loan agreement with the euro zone, which it rightfully distinguishes from its ‘bailout’ programme.

Greek Prime Minister Alexis Tsipras told Germany’s Stern magazine an economic war with Russia was in no-one’s interests and that imposing sanctions on Moscow over the crisis in Ukraine was “hypocritical”.

“If you want to punish Russia, you need to punish all the countries where Russian multi-billionaires have invested their assets,” he told Stern in an interview released today.

Currency wars continue as nations continue to seek competitive advantage by devaluing their currencies through QE and now negative real interest rates.

Last week, Sweden’s Riksbank slashed its main policy rate to negative. It thus became the 14th central bank to ease monetary policy so far this year, but the first to actually take its “repo rate” below zero to -0.1 per cent.

Incredibly and some would say insanely, this means that Sweden is now charging its banks to lend money. In Britain, the same interest rate currently stands at a historic low of 0.5 per cent, but could well be cut further according to Mark Carney.

Switzerland and Denmark have already sent their deposit rates into negative territory – to -0.75 per percent to prevent currency appreciation.

All of this is extremely bullish for gold and silver. Prudent buyers will use weakness to accumulate physical bullion.

Breaking News and Updates Here

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International Hacking Group Steals $300 Million – Global Digital Banking System Not Secure

International Hacking Group Steals $300 Million – Global Digital Banking System Not Secure

- Sophisticated “Ocean’s 11″ style heist is one of the largest in history
- Hackers remotely accessed bank computers to manipulate accounts and A.T.M.s.
- Banking groups make no comment
- Details expose incredible systemic vulnerability

An international group of cyber criminals have stolen at least $300,000,000 from over 100 banking and financial institutions in 30 different countries across the world – in a heist that has been described as “much more ‘Ocean’s 11′” than “Bonnie and Clyde” by the company investigating the theft.

Banks in Switzerland, the US, Japan, the Netherlands and particularly Russia were targeted in the past two years.

Sergey Golovanov of Kaspersky Lab (New York Times)

An investigation into the attacks – which was conducted by Kaspersky Lab, a Russian cyber-security company – began following an incident in Kiev where an A.T.M. started issuing cash spontaneously in 2013. (more…)

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Central Bank Gold Purchases Increased In 2014 Says WGC As Sweden Enters Currency Wars

Central Bank Gold Purchases Increased In 2014 Says WGC As Sweden Enters Currency Wars

- Official central bank purchases rose 17% in 2014

- Russia and Kazakhstan dominate purchases

- No official figures for China since 2009 – massive volumes pass through Shanghai

- Sweden’s Riksbank announces negative rates and QE

The Riksbank

The Riksbank

 

 

 

 

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Stalemate At Minsk Summit And Eurogroup Meeting Suggests Tensions In Europe And Globally Are Set To Escalate

Stalemate At Minsk Summit And Eurogroup Meeting Suggests Tensions In Europe And Globally Are Set To Escalate

- Diplomats best hopes for Minsk is for freeze in hostilities

- Russia engages the U.S. in war of words as tensions mount

- Greece and EU buy time – no agreement thus far

- Anti-austerity parties in Spain and Greece may bring down the euro

The Minsk Summit which was called at the urgent behest of Angela Merkel and Francois Hollande seems not to have yielded any tangible outcome despite the high stakes on all sides.

Minsk Summit

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