Tuesday, May 25, 2010

In Fiat Money We Do Not Trust "Chinese Edition"

Perfect follow up on In Fiat Money We Do Not Trust ... I think it´s safe to assume that China will be a net buyer of GOLD for some time to come......Especially when you consider the tiny FX to GOLD Reserves Ratio from the Central Bank......

Paßt hervorragend zu In Fiat Money We Do Not Trust .... Denke man kann ohne Übertreibung sagen das China bzw die Chinesen auf Sicht der nächsten Jahre sicher zu den Nettokäufern von GOLD gehören werden.....Gilt besonders wenn man sich das aktuelle Verhältnis der Fremdwährungen zu GOLD der Chinesischen Notenbank ansieht.....

H/T The Mess That Greenspan Made

I just wanted to add that it was illegal to buy GOLD as an investment vehicle in China for decades and with negative real interest rates & very few alternatives this kind of "GOLD FEVER" is probably less surprising...Since Greece has made headlines here in Germany the same store would have been almost as packed in Hamburg or Munich ;-)

Looks like Sorros knows this chart and wants to frontrun the "ultimate bubble".... Otherwise the 100% increase of his GOLD investment would make little sense.......

Ergänzend sollte man wissen das es in China bis vor kurzem verboten gewesen ist GOLD für Investmentzwecke zu erwerben und das es dank der seit Jahren notorisch negativen realen Guthabenzinsen & fehlender Alternativen nicht weiter verwunderlich ist das solche Läden so prosperieren....Seit Griechenland in Deutschland die Schlagzeilen beherrscht bin ich mir sicher das ein identischer Laden in Hamburg oder München ähnlich erfolgreich wäre.. ;-)

Sieht ganz so aus als wenn Sorros diesen Chart in Verbindung mit dem "ultimativen Bubble" vor Augen hat... Ansonsten würde es wenig Sinn machen das er sein GOLD Investment inzwischen verdoppelt hat.......

Gold Report China H/T ZH

The following chart won´t hurt their appetite for GOLD either......

Der nachfolgende Chart dürfte den Appetit in Sachen GOLD nicht gerade mindern.....

RBS on central banks’ underwater EUR positions FT Alphaville

Because over half the reserve accumulation in this period took place in the last 3 years, Chinese acquisition of reserves has been at relatively high EUR/USD levels. There is no data in the public domain on how much of China’s purchases were in EUR, but presumably diversification to lower the share of USD holdings may have pushed EUR purchases to close to half of all acquired reserves, and a majority of these purchases are well ‘out the money’.

The chart above shows that as much as 77% of Chinese reserves were accumulated at levels above EUR/USD 1.25. This does not discriminate between EUR purchases and USD purchases.

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Blogger jmf said...

Excellent news....

Sprott Physical Gold Trust Announces Follow-On Offering of 18,000,000 Trust Units

The Trust intends to use the net proceeds of this Offering to acquire physical gold bullion in accordance with the Trust's objective and subject to the Trust's investment and operating restrictions described in the prospectus related to this Offering.

2:35 PM  
Blogger jmf said...


A well balanced GOLD piece in the WSJ.....

Times are changing.... ;-)

Is Gold the Next Bubble? WSJ

There are other reasons to think that gold is still a long way from that point.

Like the futures market. It is predicting gold will rise by just a few percent a year over the next few years. That's less than you'd get from municipal bonds.

When the market thinks an investment is going to underperform munis, it's safe to say we are not in the midst of euphoria.

And take a look at the coverage of this industry. At the peak of a bubble, the Wall Street analysts covering a sector are usually all bullish. This time around? Far from it. Of the analysts covering gold-mining giant Barrick Gold, only about two-thirds are publicly bullish, according to Thomson Reuters. By Wall Street standards, that's very restrained. Among those covering Newmont Mining and Randgold Resources, it's about half.

And on an anecdotal level, this doesn't feel like the peak of a bubble. Taxi drivers and bartenders may be talking about gold. But they aren't yet handing out mining tips.

There is, of course, no guarantee gold will turn into another mania. But the fact that we now seem to live in Bubblonia—the land of perpetual bubbles—would suggest there is a current opening for the role. And in many ways, gold may be well cast.

It has a "This time is different" story line: The world's central banks are flooding the market with liquidity. That should inevitably devalue the currencies. Gold is the only "currency" they can't just print.

Dylan Grice, a strategist at SG Securities in London, thinks global conditions today could unleash another gold boom like the one in the 1970s. Then, as now, the world lost confidence in the U.S. dollar as a store of value. Back then, central banks started hoarding gold instead. Today, he notes, they are net purchasers of gold for the first time since 1988.

And although gold has risen a long way, so has the U.S. money supply. Mr. Grice calculates that even at today's prices, the bullion that the U.S. government holds in places like Fort Knox is still only worth enough to back 15% of the U.S. monetary base. That is near a record low.

10:49 PM  
Blogger jmf said...

Once more the WSJ.... Scary....

A Billionaire Goes All-In on Gold WSJ

But Mr. Kaplan is the bull of bullion. He has gone further than perhaps any other major investor, betting the majority of his wealth on gold and other precious metals. And it reflects his deeply held conviction that global economic instability could bring rising demand for gold.

Through his firm, Tigris Financial Group, and affiliates, Mr. Kaplan has loaded up on bullion and bought up properties in 17 countries on five continents, where geologists are exploring for more. Tigris subsidiaries have taken stakes in mining companies, including tiny firms that have yet to produce an ounce.

Though he won't disclose how much physical gold he owns, Mr. Kaplan, who is 47 years old, controls up to 30% of the shares in some so-called junior miners. Together, his holdings amount to a nearly $2 billion bet on gold, more than the Brazilian central bank's bullion is currently worth.

"I've reached a point where I feel the only asset I have confidence in is gold," Mr. Kaplan said in an interview at Tigris's midtown Manhattan headquarters.

In early March, Mr. Paulson's firm, Paulson & Co., and Quantum Partners, Ltd., an investment fund run by Soros Fund Management, invested $100 million and $75 million, respectively, in NovaGold Resources Inc., a Canadian miner, paying $5.50 a share. Their move came a year after Mr. Kaplan, who has $69 million invested in the company, acquired 30% of the firm for $1.30 a share.

And, he added, he isn't in a rush to cash in on his gold investments. "If I am right about the big picture," he said, "I will be rewarded for my patience."

11:27 PM  
Blogger jmf said...

Chart related to 2nd comment...

Gold Bubble Has More Bubbling to Do

1:20 AM  
Blogger jmf said...

Corporate bonds.... ?

Next Stocks ;-)

Bank of England, corporate bond buyer of last resort FT Alphaville

So the central bank’s corporate bond purchases jumped from about £12m in the previous week to £88m on Tuesday. Before that, they were hovering firmly below £20m, even reaching zero on occasion.

1:47 AM  
Blogger jmf said...

So far only one auction, but nevertheless worth mentioning that you don´t have to only watch Spanish, Italien etc auctions for some time to come.....

Wednesday Unglück: The Bobled German bond auction FT Alphaville

...by UK standards this was pretty much a failed auction. Germany’s debt management office has the option to retain large chunks of any auction, and they did so in this case to achieve a 1.1 bid-to-cover ratio at the cost of an 11 basis point auction tail.

5:31 AM  
Blogger jmf said...

Huge Additions to the GLD Inventory The Mess That Greenspan Made

The popular SPDR Gold Shares ETF (NYSE:GLD) has seen some huge additions to the “tonnes in the trust” in recent days, 16.7 tonnes showing up on Monday and 30.4 tonnes added yesterday, the biggest single-day increase since February 2009.

So far this year, a total of 180 tonnes have been added to the trust, two-thirds of this occurring in the last month. This compares to last year’s record increase of 353 tonnes and here too, the gains were concentrated, nearly all of 2009’s net gains occurring in the first quarter during the height of the financial market panic. Inventory now stands at an all-time high of 1267 tonnes valued at an astonishing $49 billion.

5:51 AM  
Blogger jmf said...

Lots of excellent points ( especially the Chelsea House vs GOLD example is priceless.....)

Besides that he should supress the conspiracy hints....

CNBC Interview with Ben Davies, CEO, Hinde Capital CNBC Interview with Ben Davies, CEO, Hinde Capital

6:06 AM  
Blogger jmf said...

Follow up on comment one....

Sprott Prices PHYS Follow-On At $11.25, No Lack Of Demand ZH

The trust raised $443 million in the initial offering, and the secondary offering will result in gross proceeds of $243 million, rising to $279 million if an over-allotment is exercised.

9:42 AM  
Blogger jmf said...

Usually you have to surf the WSJ for weeks to find one report on GOLD.....

Today three ( to my knowledge ).....

European Debt Crisis Spurs Jump in Sales of U.S. Gold Coins WSJ

Sales of gold coins by the U.S. Mint have risen to their highest levels since December 2008, with coin dealers reporting that business is booming thanks to demand from investors unnerved by Europe's sovereign-debt problems and a sharp decline in stock markets.

So far in May, the U.S. Mint has sold 158,000 one-ounce 2010 American Eagle bullion coins, according to the agency's website. This is already more than double the full-month total of 65,000 for May 2009.

Andrew Schectman, owner of Miles Franklin, based in Wayzata, Minn., said demand for gold coins has been especially strong from Western Europe. There are only a handful of mints around the world that distribute gold coins en masse, with the U.S. being one of them.

12:07 PM  
Blogger jmf said...

Chart Forteen Decades Of Consumer Price Inflation DSHORT

1:42 AM  
Blogger jmf said...

David Einhorn at Sohn Investment Conference: Debts Are OUR Problem Expected Return

"We own gold and some gold stocks for our investors and ourselves. We will worry about the grandchildren later."- David Einhorn

10:42 AM  
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12:06 AM  
Blogger jmf said...

This chart showing the precentage of jewellery & investmebnt demand ( EUROPE!) shift over time is probably the most important.....

World Gold Council Sees Ever Greater Demand For Gold, As "Consumers Become Accustomed To Higher Prices" ZH

6:12 AM  
Blogger Yogi said...

Moin J-M,

This is a little off topic, but you should read Michael Lewis’ latest article in the NY Times. It’s hilarious!


4:16 PM  
Blogger jmf said...

Moin Yogi,


Unfortunately spot on......

10:07 PM  
Blogger jmf said...

IMF Sells 15.1 Metric Tons Of Gold In April, 152.1 Tons For Sale Remaining As Russia Keeps Waving It In ZH

7:50 AM  
Blogger jmf said...

John Hathaway via Barrons

Barron's: You've said "Gold is a bubble only for those who maintain faith in the ability of politicians and financial authorities to swim against the tide of deflation." Explain, please.

Hathaway: There's an intellectual debate about whether we are going to have inflation or deflation, and, in my mind, we have both at the same time.

We have market forces that are deflationary and policy response that is inflationary. The deflationary market forces brought down the housing bubble. And the policy response to that was inflationary. I can't even keep track of the trillions anymore.

10:06 PM  
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