The U.S. financial position continues to deteriorate badly and in the last 12 months has increased by over $1 trillion dollars.
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Indians Prepare To Buy Gold At Diwali
There has been much speculation this week about how the UK’s gold reserves would be affected if an independence result emerges. The UK Treasury said that all Treasury reserve assets would be up for negotiation. Since this is a very general statement it does not provide much clarity as to whether an independent Scotland would be able to take any of the UK ‘s gold reserves, but this did stop various media outlets from appearing to think that Scotland would get its share of the UK gold. The fundamental reasons to own allocated and segregated gold remain intact.
With increased regulatory scrutiny on the London gold and silver fixings and what looks like a defensive attempt by the LBMA in London to protect their proprietary gold and silver price discovery auctions via the recently introduced CME/Thomson platform for silver and probably soon to be introduced similar CME platform for gold, it will be interesting to see how the Chinese government’s pro-gold strategy pans out.
We may soon see global gold hub wars between London and New York on the one hand and the increasingly powerful eastern hubs of Singapore, Shanghai and Beijing on the other.
The coming inflationary shock is unpredictable, but once ‘shrinkflation’ turns to open price inflation, then it may be too late to insulate financial assets and portfolios. Gold has always acted as a hedge against inflation. That is one of its main properties. That is also why gold should be part of a prudent investment portfolio in the coming high inflationary environment. (more…)