Oct 31

Tea Leaves & $2000 Gold

Gold Price Comments Off on Tea Leaves & $2000 Gold
Yes, some people are still forecasting $2000 gold by year’s end…
 

BOB and BARB Moriarty launched 321gold.com over 10 years ago, adding 321energy.com the better to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy as well as precious metals.
 
Previously a US Marine fighter pilot, and holding 14 international aviation records, Bob Moriarty here tells The Gold Report why he’s 100% certain that a market crash is looming… 
 
The Gold Report: Bob, in our last interview in February, we had currency devaluation in Argentina and Venezuela, interest rate hikes in Turkey and South America, and a cotton and federal bond-buying program. Just eight months later in October, we’ve got Ebola, ISIS and Russia annexing Crimea plus a rising US Dollar Index. We’ve also got pullbacks in gold, silver and pretty much all commodity prices. With all this news, what, in your view, should people really be focusing in on?
 
Bob Moriarty: There is a flock of black swans overhead, any one of which could be catastrophic. The fundamental problems with the world’s debt crisis and banking crisis have never been solved. The fundamental issues with the Euro have never been solved. The world is a lot closer to the edge of the cliff today than it was back in February.
 
About ISIS, I think I was six years old when my parents pointed out a hornet’s nest. They said, “Whatever you do, don’t swat the hornets’ nest.” Of course, being six years old, I took stick and went up there and swatted the hornets’ nest, which really pissed off the hornets. I learned my lesson.
 
We swatted the hornets’ nest when we invaded Iraq and Afghanistan. What we did is we empowered every religious fruitcake in the world. We said, “Okay, here’s your gun, go shoot somebody. We’ll plant flowers.” We are reaping what we sowed. What we need to do is leave them to their own devices and let them figure out what they want to do. It’s our presence in the Middle East that is creating a problem.
 
TGR: Will stepping back allow the Middle East to heal itself, or will there be continued civil wars that threaten the world?
 
Bob Moriarty: We are the catalyst in the Middle East. We have been the catalyst under the theory that we are the world’s policemen and that we’re better and smarter than everybody else and rich enough to afford to fight war after war. None of those beliefs are true. The idea that America is exceptional is hogwash. We’re not smarter. We’re not better. We’re certainly not effective policemen.
 
The Congress of the United States has been bought and paid for by special interest groups: part of it is Wall Street, part of it is the banks and part of it is Israel. We’re just trying to do things that we can’t do. What the US needs to do is mind its own business.
 
TGR: You’ve commented recently that you’re expecting a stock market crash soon. Can you elaborate on that?
 
Bob Moriarty: We have two giant elephants in the room fighting it out. One is the inflation elephant and one is the deflation elephant. The deflation elephant is the $710 trillion worth of derivatives, which is $100,000 per man, woman and child on earth. Those derivatives have to blow up and crash. That’s going to be deflationary.
 
At the same time, we’ve got the world awash in debt, more debt than we’ve ever had in history, and it’s been inflationary in terms of energy and the stock market. When the stock and bond markets implode, as we know they’re going to, we’re going to see some really scary things. We’ll go to quantitative easing infinity, and we’re going to see the price of gold go through the roof. It’s going to go to the moon when everything else crashes.
 
TGR: How are you looking at the crash – short term, before the end of this year? How imminent are we?
 
Bob Moriarty: Soon. But I’m in the market. Not in the general market, but I’m in resources. There’s a triangle of value created by a guy named John Exter: Exter’s Pyramid. It’s an inverted pyramid. At the top there are derivatives, and then there are miscellaneous assets going down: securitized debt and stocks, broad currency and physical notes. At the very bottom – the single most valuable asset at the end of time – is gold. When the derivatives, bonds, currencies and stock markets crash, the last man standing is going to be gold.
 
TGR: So the last man standing is the actual commodity, not the stocks?
 
Bob Moriarty: Not necessarily. The stocks represent fractional ownership of a real commodity. There are some really wonderful companies out there with wonderful assets that are selling for peanuts.
 
TGR: In one of your recent articles, “Black Swans and Brown Snakes“, you were tracking the US Dollar Index as it climbed 12 weeks in a row, and you discussed the influence of the Yen, the Euro, the British Pound. Can you explain the US Dollar Index and the impact it has on silver and gold?
 
Bob Moriarty: First of all, when people talk about the US Dollar Index, they think it has something to do with the Dollar and it does not. It is made up of the Euro, the Yen, the Mexican Peso, the British Pound and some other currencies. When the Euro goes down, the Dollar Index goes up. When the Yen goes down, the Dollar Index goes up. The Dollar, as measured by the Dollar Index, got way too expensive. It was up 12 weeks in a row. On Oct. 3, it was up 1.33% in one day, and that’s a blow-off top. It’s very obvious in hindsight. I took a look at the charts for silver and gold – if you took a mirror to the Dollar Index, you saw the charts for silver and gold inversely. When people talk about gold going down and silver going down, that’s not true. The Euro went down. The Yen went down. The Pound went down and the value of gold and silver didn’t change. It only changed in reference to the US Dollar. In every currency except the Dollar, gold and silver haven’t changed in value at all since July.
 
The US Dollar Index got irrationally exuberant, and it’s due for a crash. When it crashes, it’s going to take the stock market with it and perhaps the bond market. If you see QE increase, head for your bunker.
 
TGR: Should I conclude that gold and silver will escalate?
 
Bob Moriarty: Yes. There was an enormous flow of money from China, Japan, England, Europe in general into the stock and bond markets. What happened from July was the equivalent of the water flowing out before a tsunami hits. It’s not the water coming in that signals a tsunami, it’s the water going out. Nobody paid attention because everybody was looking at it in terms of silver or gold or platinum or oil, and they were not looking at the big picture. You’ve got to look at the big picture. A financial crash is coming. I’m not going to beat around the bush. I’m not saying there’s a 99% chance. There’s a 100% chance.
 
TGR: Why does it have to crash? Why can’t it just correct?
 
Bob Moriarty: Because the world’s financial system is in such disequilibrium that it can’t gradually go down. It has to crash. The term for it in physics is called entropy. When you spin a top, at first it is very smooth and regular. As it slows down, it becomes more and more unstable and eventually it simply crashes. The financial system is doing the same thing. It’s becoming more and more unstable every day.
 
TGR: You spoke at the Cambridge House International 2014 Silver Summit Oct. 23-24. Bo Polny also spoke. He predicts that gold will be the greatest trade in history. He’s calling for $2000 per ounce gold before the end of this year. We’re moving into the third seven-year cycle of a 21-year bull cycle. Do you agree with him?
 
Bob Moriarty: I’ve seen several interviews with Bo. The only problem with his cycles theory is you can’t logically or factually see his argument. Now if you look at my comments about silver, gold and the stock market, factually we know the US Dollar Index went up 12 weeks in a row. That’s not an opinion; that’s a fact. I’m using both facts and logic to make a point.
 
When a person walks in and says, okay, my tea leaves say that gold is going to be $2000 by the end of the year, you are forced to either believe or disbelieve him based on voodoo. I don’t predict price; I don’t know anybody who can. If Bo actually can, he’s going to be very popular and very rich.
 
TGR: Many people have predicted a significant crash for a number of years. How do you even begin to time this thing? A lot of people who have been speculating on this have lost money.
 
Bob Moriarty: That’s a really good point. People have been betting against the Yen for years. That’s been one of the most expensive things you can bet against. Likewise, people have been betting on gold and silver and they’ve lost a lot of money. I haven’t made the money that I wish I’d made over the last three years, but I’ve taken a fairly conservative approach and I don’t think I’m in bad shape.
 
TGR: Describe your conservative approach.
 
Bob Moriarty: The way to make money in any market is to buy when things are cheap and sell when they’re dear. It’s as simple as that. Markets go up and markets go down. There is no magic to anything.
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Sep 03

Conflict-Led Commodity Squeeze Ahead?

Gold Price Comments Off on Conflict-Led Commodity Squeeze Ahead?
Tumultuous times in Europe and the Middle East point to tight supply…
 

The GEOPOLITICAL EVENTS of summer 2014 may go down in history as a decisive turning point in world affairs, writes Amine Bouchentouf – partner at Parador Capital LLC, author of the best-selling Commodities For Dummies, and also founder of Commodities Investors LLC – at Hard Assets Investor.
 
Tensions across the Middle East and the European continent are reaching a high point and may soon reach a point of no return.
 
In this report, we examine the global macroeconomic scenario and what impact this will have on the performance of commodities. This will allow us to pick our investment spots as we move into the final quarter of the year.
 
A storm is brewing in Europe and the Middle East that could drag the world’s superpowers into regional conflicts that could escalate into a much broader war encompassing several countries across several continents. Let’s start in Europe.
 
The last time events similar to those in 2014 happened in Europe were right before the outbreak of World War II in the late 1930s. In the summer of 2014, Putin-led Russia annexed Crimea, a province that had been part of Ukraine for decades.
 
The annexation took most of the international community by surprise, as much by its speed as by its effectiveness. Almost overnight, Russian troops entered the Crimea, and Moscow declared it a part of the Russian Federation. The annexation was so swift and complete that a few months later, Vladimir Putin signed a law legalizing gambling in the Crimea.
 
The response from NATO countries was to issue warnings and targeted sanctions against Russian individuals and companies. Those sanctions seem to have done nothing; in fact, the situation has only deteriorated since then.
 
During the last week of August, Russia sent 1,000 Russian soldiers into Eastern Ukraine, well inside Ukraine’s international recognized borders. This 1,000-man army came in with tanks and antiaircraft and heavy artillery military equipment.
 
Furthermore, Russian-backed militants have been inside of Eastern Ukraine for some time now. These militants shot down a Malaysia Airlines civilian aircraft that was flying from the Netherlands to Malaysia, claiming more than 200 victims.
 
The response from NATO has been to increase sanctions which, in a previous column, I argued didn’t have any real teeth and would do little to spur a change of behavior from the Kremlin.
 
The rhetoric has become so heated that Vladimir Putin explicitly warned to “not mess with Russia” because of its status as a nuclear power with thousands of nuclear warheads at its disposal.
 
While tension is increasing on Europe’s eastern borders, troubles in the Mideast are also continuing. There are so many regional conflicts that it’s quite hard to decide which one to begin with, or which one is more important.
 
Let’s start with the conflict that garnered the most international media attention. The Israeli-Palestinian conflict reached a dangerous point in the third quarter of this year as fighting erupted in Gaza. Israeli warplanes pursued a campaign of heavy bombardment into the Gaza territory, while Hamas-led fighters attacked targets inside of Israel.
 
In the meantime, the conflict in Syria only continued to escalate; so much so that the United Nations now estimates that there are more than 7 million Syrian refugees in a conflict that has claimed hundreds of thousands of lives. At the same time, rebels in Libya have continued disrupting oil supplies amid continued civil strife. Iraq is no better, as fighting has erupted between Sunni and Shia.
 
Troubles in the region are so high that the United Kingdom raised its threat level to “severe,” meaning a terrorist attack on British soil is “likely” as a result of all the regional infighting. Amid the backdrop of all these regional conflicts has been the rise of the terrorist organization ISIS, which is wreaking havoc across the Mideast, and which many are now calling Al-Qaeda 2.0.
 
Aside from a full-fledged world war, the global geopolitical situation could not be bleaker as we move into the fourth quarter. The United States, which has played the role of regional policeman since the end of World War II, decided to retreat from its traditional posture in world affairs earlier this year when it did not act in Syria and allowed events in Eastern Europe to escalate. That policy is now under urgent review as these regional conflicts threaten to push countries into a heightened global conflict.
 
The bottom line is that the geopolitical situation is very bleak, and this will have a direct impact on markets, economies and commodities. As the situation continues to escalate regionally and globally, I expect investors to pile into gold. Gold has stabilized in recent months and may hit $1400 per ounce in the coming weeks. Investors still see gold as a safe-haven asset, especially during times of conflict.
 
I also expect oil prices to increase as regional conflicts create supply-side disruptions in major producing countries such as Iraq, Libya and even Algeria. While demand from Asian countries remains robust, supply is being curtailed due to armed conflict, and this will push prices higher. In this geopolitical storm, investors can find save haven in traditional hard asset commodities.
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Aug 08

Gold Prices at 3-week High on “Ongoing Geopolitical Events” Amid Rising Safe-haven Demand

Gold Price Comments Off on Gold Prices at 3-week High on “Ongoing Geopolitical Events” Amid Rising Safe-haven Demand

GOLD PRICES reached a weekly gain of 2.2% at $1322.55 per ounce Friday morning in London, amid a drop in European and American stock markets and renewed violence in Ukraine and the Middle East.

The US President authorised limited air strikes against Islamic State (formerly ISIS).

Rocket fire from Gaza across the border resumed after a 72-hour ceasefire, so did Israeli air strikes.

Meantime, the Euro versus Dollar briefly touched $1.3400 Friday morning before falling back under this 9-month low last broken at the end of July.

Geopolitical headlines took the fore and not economic data. “Yesterday, a Ukrainian fighter jet was shot down by rebel forces and this started the rally in gold,” writes David Govett at London metals brokerage Marex Spectron. Then, President Obama authorised military strikes in Iraq and this morning the truce in Gaza ended.

“All in all, pretty much a perfect storm for gold prices.”

Gold prices in USD were set to approach the weekend at a three-week high ending a long run of weekly losses.

“Ongoing geopolitical events in Russia/Ukraine and the Israel/Palestine conflict [gave] support to the precious complex,” says the Swiss precious metals refinery group MKS in a note, adding that traders moved out of falling equities into safe haven assets providing gold with a gain of 9.2% in 2014 so far.

Panic in the equity markets, potential US strikes and the Ukraine crisis offered a safe haven-demand for gold, comments Wing Fung Precious Metals in Hong Kong, adding that “gold could climb quickly up to $1325 per ounce.”

Risks are now tilted to the upside,” confirms another analyst in Asia.

However, seeing enhanced volatility short term, Govett believes that when “situations calm down or resolve themselves, the price will come straight back down again.”

Silver lagged behind gold but crept back up and broke the $20 mark Friday morning, a level it kept from June 19 until last Wednesday, after touching seven-week lows earlier this week. Silver prices were on track for a loss of around 1% on the week so far.

The Bank of England kept interest rates at their 5-year record low of 0.5% on Thursday. Going into the weekend gold prices for UK investors were set to gain 1.7% and reach the highs of mid-April, at around £782.55 per ounce.

Another central bank declaration of note: ECB president Mario Draghi confirmed yesterday the European quantitative easing was in preparation.

Gold prices in Shanghai meantime maintained a premium of $1-2 over and above London prices this week amid falling Asian stocks and China’s trade surplus record high.

The physical gold holdings of the giant gold ETF, the SPDR Gold Trust (NYSEArca: GLD), shed more than 2 tonnes Thursday but remained unchanged Friday for a total of 797.654 tonnes.
 

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Aug 04

Gold Prices "Rangebound" as Global Unrest Trumped by "Improving US Data & Rate Rises"

Gold Price Comments Off on Gold Prices "Rangebound" as Global Unrest Trumped by "Improving US Data & Rate Rises"
GOLD PRICES moved in a $5 per ounce range Monday morning in London, holding below $1295 as world stock markets rallied from last week’s drop.
 
With political leaders and royalty from Western Europe today marking the centenary of the First World War, Russia’s defence ministry said its airforce is holding military exercises near the Ukraine border.
 
Israel offered a 7-hour ceasefire to militants in Gaza as a “humanitarian window”.
 
Silver meantime bucked the slight fall in gold prices, edging 0.2% higher after failing to rally with on Friday following much weaker-than-forecast US jobs data.
 
“One slightly negative figure does not a bull market make for gold,” says David Govett at brokers Marex Spectron in London.
 
With gold prices still below the “psychologically” important $1300 level, “Unless there is further serious unrest in any of the trouble spots in the world…we remain pretty much rangebound.”
 
Bandits from the self-proclaimed Islamic State yesterday seized two small towns in Iraq’s northern Kurdish region.
 
Gunmen linked to the same al Qaeda offshoot also traded fire with Lebanese soldiers near the border town of Arsal, Reuters reports.
 
“Good economic data,” reckons Commerzbank’s commodities team in Frankfurt, “are likely to put the subject of interest rate hikes back on the Fed’s agenda. That should reduce the relative attractiveness of gold and silver and preclude any sharp rises in price.”
 
“With the US economy picking up steam,” agrees Edward Meir for US brokerage INTL FCStone, “investors will have to start discounting higher rates down the road [because] the Fed is running out of wiggle room.”
 
Together with that risk of rising rates, Meir concludes, “sluggish investor and jewelry demand does not make the upside case for gold particularly persuasive…Even Chinese intake [is] now flagging.”
 
After new Hong Kong data last week showed a marked drop in gold exports to China’s mainland for June, down to a 17-month low, “a slide in Chinese demand will take away a key supporting factor for gold prices,” says David Levenstein in South Africa for the Rand Refinery, “[which are] already pressured by an improving global economy and US stimulus withdrawal.”
 
Speculative traders in US futures and options last week cut their overall bullish position in gold – net of bearish bets – by 9% from the previous week to a notional 512 tonnes of gold bullion, new data from US regulator the CFTC showed after Friday’s close.
 
Overall, the total number of gold futures and options contracts now open fell at the fastest pace since November to hit a 5-year low.
 
But with the world’s largest gold ETF – the SPDR Gold Trust (NYSEArca:GLD) – adding 11 tonnes to its holdings last month to 801 tonnes, exchange-traded gold notes as a whole rose 15.7 tonnes in July, “the first monthly net inflows since March and the largest since November 2012,” according to one bank analyst.
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Jul 25

Gold Price "Can’t Rise" as Weak Asian Demand, Technical "Correction" Take Out 50- and 100-Day Moving Average

Gold Price Comments Off on Gold Price "Can’t Rise" as Weak Asian Demand, Technical "Correction" Take Out 50- and 100-Day Moving Average
GOLD PRICES headed for their lowest Friday close in 6 weeks in London today, trading sideways at $1295 per ounce as European stock markets failed to follow Asian equities sharply higher on the day.
 
With Shanghai’s stock market closing the week 2.9% higher, Shanghai gold prices ended 1.5% down at the lowest since 19 June.
 
India’s Gems & Jewellery Export Promotion Council said gold bar imports to the world’s former No.1 consumer nation doubled last month from the same month in 2013.
 
But in what Reuters calls “a seasonally slack period”, improved supplies have seen Indian premiums over London gold prices halve this week, falling as low as $5 per ounce vs. late 2013’s record level of $160 when the current import curbs first hit.
 
“In our opinion,” say analysts at Commerzbank in Frankfurt, “the weak gold demand figures out of Asia – not only China – preclude any rise in gold prices.”
 
“Positive economic data put a dampener on the gold market,” reckons an Asian trading desk quoted by Reuters, “as risk assets caught a bid and safe-haven buying dried up.”
 
“It will be political events that provide the market with some potential direction,” says a Singapore dealing note after warning yesterday morning that gold and silver “look[ed vulnerable to a correction lower.”
 
Islamic State fighters seeking a medieval caliphate today claimed they’d over-run a Syrian army base.
 
The Gaza death-toll from the last fortnight’s conflict with Israel was today put above 800.
 
Moscow’s stock market meantime fell hard as Dutch and Australian police reached the crash site of Malaysian flight MH17 in eastern Ukraine, dropping 2.1% for the week – but holding well above this spring’s 4-year lows – after the Russian central bank surprised FX traders with a half-point hike on interest rates.
 
Now at 8.0%, Russia’s key overnight rate is only just ahead of Russia’s latest inflation reading.
 
The Ruble rallied against the Dollar, but the British Pound fell to 1-month lows as UK GDP data met analyst forecasts for 3.1% annual growth.
 
That buoyed the gold price in Sterling at £762 per ounce, down 0.7% on the week.
 
“Gold plunged Thursday,” says London market maker Scotia Mocatta’s New York desk in its daily note, “falling below both the 100-day and 50-day moving averages.”
 
What Scotia’s analysts call “bearish trend and momentum indicators” are now “providing for ample room to the downside.”
 
“The current correction should fetch 1285/81, mid-June highs,” says technical analysis from Societe Generale, after the metal “failed to establish itself” at late-June’s return to April’s high of $1331.
 
Gold prices, the SocGen note concludes, will now need “a break above [July’s] steep resistance line” coming down from the peak at $1345 and now sitting at $1300 “to prompt positive signals.”
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Jul 15

Gold Prices Flat Before Yellen, Asian Trade "Surprisingly Muted" After Sharpest 1-Day Drop of 2014

Gold Price Comments Off on Gold Prices Flat Before Yellen, Asian Trade "Surprisingly Muted" After Sharpest 1-Day Drop of 2014
GOLD PRICES moved sideways in a $7 range Tuesday in London, holding above $1306 per ounce after yesterday’s 2.1% drop while European equities failed to extend Monday’s gains.
 
Israel accepted an Egyptian proposal for a cease-fire in Gaza, but rocket attacks continued.
 
US retail sales missed analyst forecasts, new data showed meantime, growing only 0.2% in May after a better-than-first reported 0.5% rise in April. 
 
Gold priced in Sterling worsened Monday’s drop, the sharpest 1-day fall of 2014 to date, by dropping to new 4-week lows at £762 as the Pound jumped following a surprise rise in the UK’s official inflation rate.
 
Inflation in the average London house price hit a 20% annual record in May, the government’s Office for National Statistics added.
 
“Surprisingly trade flows were quite muted in Asia,” says a precious metals note from refining and finance group MKS’s Geneva HQ.
 
Despite the Chinese gold price starting Shanghai trade 2.2% below Monday’s start, there was “only light 2-way interest,” says the note, and “moves to the topside were quickly sold into.”
 
That suggests “there are still weak longs out there looking to be covered ahead of today’s Yellen speech.”
 
Later on Tuesday US Federal Reserve chairwoman Janet Yellen begins two days of semi-annual testimony to Congress.
 
Silver prices this morning rose and failed 5 times to hold above $21 per ounce – a three-month high when first broken by the surge in precious metals after Yellen spoke following the central bank’s mid-June meeting.
 
Gold prices at one point reclaimed $10 of Monday’s $35 losses, but eased back from $1313.75 as New York opened.
 
Monday saw “a general decline in risk aversion” according to commodity analysts at Germany’s Commerzbank.
 
“Concerns over European banking eased,” agrees Australia’s ANZ Bank, “and equity markets gained…putting gold prices under pressure.
 
“Better than expected Citigroup results” also helped it adds.
 
Tuesday’s earnings report from fellow US banking giant J.P.Morgan also beat the Street, but showed an 8% drop for Q2 from the same period last year. 
 
“Gold may also have had a belated reaction to the selloff we saw in the oil markets on Friday,” says INTL FCStone analyst Ed Meir.
 
But looking at the structure of Comex gold and silver derivatives, “Both metals’ price moves were exacerbated,” say commodity analysts at Macquarie Bank, “by a reversal of the extreme increase in speculative positioning seen in recent weeks.”
 
In exchange-traded funds, Monday saw the giant SPDR Gold Trust (NYSEArca:GLD) add 8 tonnes to the gold bullion backing its shares, extending its best period of growth since October 2012 to two weeks.
 
The GLD’s current holdings of 808 tonnes are the largest since early April, and down some 40% from the peak of late 2012.
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