Gold Investor

Aaron Task from Yahoo Finance interviewed economist and NYU professor Nouriel Roubini to talk about his views on the defacto "currency wars" that are being undertaken by several countries, all trying to devalue their currencies to gain an export advantage. Roubini talks about the Bank of Japan's actions in particular and also comments on where he sees the price of gold heading. Hint: he sees gold going lower even as central bankers try to outdo each other with currency debasement via interest rate cuts or money printing.

On November 30th, the Swiss people will embark on a national referendum tackling three issues, one of which relates to gold. They will vote on whether their country's central bank (Swiss National Bank) should hold at least 20% of its reserves in the form of gold and also repatriate all existing Swiss gold held in the United Kingdom and Canada. This has been on the radar of almost all the gold bugs and gold, silver and financial sites have been talking about this potential move for weeks, if not longer. It should not come has a huge surprise that the Swiss central bank head, Thomas Jordan, is not in favor of any such moves as he believes that it would hinder his ability to conduct monetary policy moves. But it seems that the Swiss people definitely have something of a bone to pick with their government and the SNB considering the current economic climate and the latter's Euro peg, which as resulted in a huge increase in Euro holdings just as the Euro has weakened considerably against the US dollar.

The Russian Central Bank had been buying gold on a steady clip. They have significantly increased their purchases this year (one assumes under Vladimir Putin’s direction), since the annexation of Crimea and the subsequent weakening of the Russian ruble due to Western sanctions; especially those imposed on its financial system. Russia has purchased 150 metric tons of gold bullion so far in 2014 bringing its total reported gold holdings to 1,150 tons. The positioning provided by the Russian Central Bank Governor Elvira Nabiullina on the increased purchases should have warmed the cockles of every gold bug’s heart, especially when she said:

“We are able to buy enough gold to diversify our gold and currency reserves…”

If gold were to end this year at its current price, it would be the first time in over 15 years that it would have seen two back to back years of annual price declines. And this is now being used by many of the (investment) commentators to further question the pricing power of gold. Ron Ensana of CNBC/MSNBC presents his commentary on gold as an investment and why it is under performing (video may auto run on the CNBC page). Ensana is of the view that the price of gold heads to $800 - same as ABN Amro - rather than $4,000 per ounce.

"While it's true the nation's money supply has ballooned, along with the Fed's balance sheet, and other broad measures of money, the velocity of money (the speed with which money circulates through the economy, continues to fall. That is a factor that restrains inflation and augurs poorly for gold going forward. While gold might be good for a trade, if the dollar pauses from its recent, and rapid, ascent … to me, the longer-term view remains bleak."

Leaders of several Islamic countries have dipped their toes in past monetary discussions of bringing back a gold backed Dinar. But these previous initiatives tended to eventually die out (sometimes quite literally). Now with ISIS/Islamic State being front and center when it comes to world news and trying to act like an official empire/Caliphate, we should have been expecting talk of a circulating currency. So queue a rebirth of the gold dinar (and silver dirham). The Daily Mail is reporting that ISIS is apparently looking to introduce its own currency in the Syrian and Iraqi territory under its control - and this currency will be based on gold and silver coins as defined by historic Islamic rules.

"The currency known as the dinar, which once consisted purely of gold and silver coins, is today used by a variety of countries, but the coins are created from different materials to the originals. However, the jihadi group is understood to be planning to return to the original gold and silver coins, which were first introduced during the Caliphate of Uthman in 634 CE. The original Islamic dinar was a gold coin which was the weight of gold equivalent to 4.3 grams. Its silver counterpart, known as the Islamic dirham, was a silver coin equal in weight to 3 grams of silver. Both were round in shape and one side of the coin was typically stamped with an Islamic message, while the other side featured the date of minting and the country’s ruler."

Former Federal Reserve chairman Alan Greenspan gave a downright endorsement of gold as an unmatched currency during a talk at the Council on Foreign Relations. We added the (2014) tag because many have looked at Mr Greenspan's early missives and believed that he was a gold bug. But as is often the case with high ranking officials and public servants, what they do during their terms in office does not always reflect their (previous) views. And they often have their own versions of "Come to Jesus" moments AFTER they leave office and are suddenly able to see the light. Make what you may of this CFR sponsored discussion with Alan Greenspan.

And so it begins. Official Wall Street forecasts for the price of gold should now start appearing in the sub $1000 range. The strength of the US dollar has seen gold, silver and other commodities hammered over the past month of so and this could very well continue into the near future. Bloomberg reports today that Georgette Boele of the Dutch (state owned) bank ABN Amro NV forecasts gold closing this year around $1,000 per ounce and continuing its decline to $800 per ounce next year.

"Don’t try to catch a falling knife,” analyst Georgette Boele wrote in an e-mailed report received today. “The U.S. dollar rally has further to run, especially if the Fed turns more hawkish this year."

If you follow this site, you would have read our story from last year where Jim Rogers presented a pretty good rationale in the summer of 2013, for why we are likely to see gold hit $900 (approximately 50% correction from the top) before it consolidated and went back up. So this drop in the gold price is all expected, right?

There is an interesting article by Axel Merk on the Value Walk site recounting a panel discussion at the New Orleans Investment Conference from last Saturday. This conference featured the views of several investment professionals, newsletter writers, reporters, market commentators and one, Mr. Alan Greenspan - who made the prophetic comment which serves as the title of this entry. In a back and forth with Marc Faber, the former Federal Reserve Chairman lay the responsibility of the expanding welfare state on the United States Congress and their fiscal policies.

Though Greenspan did not (and understandably so) comment on the current policies of the Federal Reserve, the "Maestro" provided plenty of, one assumes candid and certainly typical Greenspanesque, opinions to question fielded during the panel discussion.

On the price of gold:
Greenspan: Price of Gold will rise
Q: “Where will the price of gold be in 5 years?”
Greenspan: “Higher.”
Q: “How much?”
Greenspan: “Measurably.”

It has been a while since we've featured market commentary from Jim Rogers but here he is in a recent interview with Erin Ade of RT where he continues to be in top form. Jim seems quite bearish on all assets; including we assume gold and silver. He is still long agriculture and is an especially big fan of sugar, though we hope that his confession of swiping sugar packets from the RT studio's green room was only meant to add more colour to his investment views.



"I know another bear market will come....the next bear market will be much worse than the last one because the debt is much higher...This is the end of the bull market. (US) Stocks will fall 20%."

"We are all going to pay a terrible price for all this money-printing."

If you happen to be in Singapore and have an urge to purchase a PAMP Suisse gold bar or two, you can swing by a brand new gold dispensing ATM to get that immediate gratification. Two "Smart Gold ATMs" were installed at the Resorts World Sentosa and Marina Bay Sands, earlier today. This initiative is being lead by a local company from Singapore, Asian Gold ATM. Their ATM will dispense gold bars/pendants ranging from one gram to one ounce which will be priced based on the daily global price of gold.



Hope these ATMs are well anchored into the ground with adequate security around.