Editor’s note: Mark Leibovit is one of the investment world’s top-rated gold timers, and helps investors anticipate and benefit from both the ups and the downs of the precious metals markets with his Leibovit VR Gold Letter (available to WND readers at a huge discount).
From the International Business Times:
India’s central bank chief warns of another market crash
India’s central bank governor, renowned for forecasting the 2008 financial meltdown, has warned that the world economy faces risk of another market crash as asset prices surge.
Increasing global financial instability stems from investors chasing ever higher yields, Raghuram Rajan, a former International Monetary Fund chief economist, told the Central Banking Journal.
Another financial-sector crisis “may not happen if we can find a way to unwind everything steadily,” Rajan, who is famed for predicting the 2008 market crash years in advance, said in the interview, posted late Wednesday on the journal’s website.
“But it is a big hope and prayer,” said the Reserve Bank of India (RBI) governor, adding there is a risk of sudden price reversals and sharp spikes in financial volatility.
Rajan, author of the acclaimed 2011 book “Fault Lines” on how hidden financial fractures threaten the world economy, added he feared central banks globally “may be exhausting room” in their monetary-easing arsenal to cope with any economic crisis.
Rajan compared today’s state of affairs as similar to the 1930s which was the era of the Great Depression.
Rajan left his post as professor at the prestigious University of Chicago’s Booth School of Business and returned to India in 2012 to serve as government financial adviser and last September took over the Reserve Bank.
Sanctions against Russia hasten risk to dollar’s dominance
U.S. and European Union sanctions against Russia threaten to hasten a move away from the dollar that’s been stirring since the global financial crisis.
One place the shift has become evident is Hong Kong, where dollar selling has led the central bank to buy more than $9.5 billion since July 1 to prevent its currency from rallying as the sanctions stoked speculation of an influx of Russian cash. OAO MegaFon, Russia’s second-largest wireless operator, shifted some cash holdings into the city’s dollar.
Trading of the Chinese yuan versus the Russian ruble rose to the highest on July 31 since the end of 2010, according to the Moscow Exchange.
While no one’s suggesting the dollar will lose its status as the main currency of business any time soon, its dominance is ebbing. The greenback’s share of global reserves has already shrunk to under 61 percent from more than 72 percent in 2001. The drumbeat has only gotten louder since the financial crisis in 2008, an event that began in the U.S. when subprime-mortgage loans soured, and the largest emerging-market nations including Russia have vowed to conduct more business in their currencies.
In addition, rich Russians are looking to move funds to banks in Hong Kong, Singapore and Dubai, Danilo Lacmanovic, chief executive officer of Moscow-based Third Rome LLC, which manages $400 million on behalf of high net-worth individuals, said in a phone interview.
Since the U.S. currency replaced gold as the bedrock of the financial system after World War II, the greenback has weathered numerous crises. It emerged from the collapse of the Bretton Woods system in 1971, endured the introduction of the euro almost three decades later, and maintained its status as a haven currency even when the 2008 collapse spread from Wall Street to economies around the world.
From the Gold Report:
Manipulation by central banks keeps gold down, equities up
Market manipulation by central banks has been keeping the gold price down and equity markets up, Gold Stock Bull newsletter editor Jason Hamlin says in an interview with The Gold Report.
From King World News:
‘Gold is in backwardation, signifying scarcity’
Gold in London is in backwardation for the first time since May – at least the first time since May for small orders, GoldMoney founder and GATA consultant James Turk tells King World News. But, Turk adds, gold likely has been in backwardation for longer for large orders, with the market being supplied – and manipulated – by central banks affiliated with the United States.
“Backwardation cannot predict what the gold price will do,” Turk says. But it does “give a strong signal that gold is undervalued. That means gold is cheap and a good buy at current prices here at around $1,290. That conclusion is also supported by the strong rebounds we have seen the past few weeks whenever gold drops below $1,300.”
From King World News:
Legend warns 1987-style crash coming, says hold gold
A legendary trader and investor warned King World News that a 1987-style crash is coming, and for now he says investors need to hold on to their gold. Last week he warned that we would see an “avalanche of selling.” The next day the Dow plunged more than 300 points and has continued lower ever since. Victor Sperandeo has been in the business 45 years, and has worked with famous individuals such as Leon Cooperman and George Soros.
Incredibly, Sperandeo was interviewed in Barrons in September of 1987, where, with astonishing accuracy, he predicted the stock market would crash. The market crash took place one month later and it just added to his legendary reputation.
Sperandeo: “The stock market was recently at a high and yet there was no strong volume on the buy side. You had late-comers who were weak-handed holders of stock. And because there is no volume, any kind of news can set off a decline …
“We saw a strong GDP print, which will assuredly be revised down, but then we had the unemployment numbers come out worse than expected. Professionals on the Street such as myself were very concerned about the Employment Cost Index. That number came in at .7 percent.
“The Fed may pretend not to care about commodity inflation because they say commodities go up and down, but if you look at the long term, they don’t. Commodities go up. Regardless, the Fed does look at wages as an important indicator of inflation, and they will not like that Employment Cost Index number.
“So we now have a slow-growth economy, but we are seeing signs of inflation in wages. Therefore we have seen some professionals selling and taking profits. This may end up being a simple correction, but a bear market is coming. It’s just that the bear market will be triggered by different news.
“The S&P is down roughly 4 percent from the recent high, and the Russell is now down nearly 8 percent from its high. Also, we are seeing softness in commodities and every currency is down in the past month against the dollar – every one of them. This strength in the dollar has been triggered by the weakness in Europe as well as the banking problems in Europe.
“Tension is also accelerating with the U.K., and there will be a sharp increase in prices in the winter if sanctions against Russia continue. The strategists I talk to are telling me that if the West continues to ‘screw with Russia,’ they are going to get the West back. Meaning, the West cannot win fighting Russia with these silly American-driven sanctions.
“Now Russia is talking about making planes fly around Russia rather than over Russia. Russia is also going to raise gas prices in the winter, so you are going to see a lot of people in the West voted out of office if Russia does that and it hits the consumer really hard in the pocketbook. So the West is getting itself in a real mess with this Russia/Ukraine situation.
“Japan had a horrible economic number and they are getting weaker. All of this weakness around the world is taking place at a time where it is being perceived, whether it’s right or wrong, that the U.S. is getting stronger [financially]. This is why the dollar is moving higher and the gold market has been a bit weaker temporarily.
“At some point, this is going to culminate with a 1987-style crash in the equity markets, but that is going to come from a different event, not what we are seeing currently.”
Sperandeo added: “Gold comprises a substantial part of my long-term portfolio. The entire world has the printing presses going, including the United States, to provide this continued emergency funding in the face of a tremendously weak global economy. This stems from a worldwide movement toward socialism, also known as ‘austerity,’ and increased regulations and taxes, which are really designed to control more people.”
From King World News:
Paul Craig Roberts: The war in the gold market is raging
Former Reagan-era U.S. Treasury official, Dr. Paul Craig Roberts, told King World News the war in the gold market is continuing to rage. Interview excerpts include:
Roberts: “The war on gold continues. The price of gold is fixed in the futures market, which is used for gambling, and which is [also] used to suppress the price of gold. It’s not the market in which people actually take delivery of gold.
“So what has been happening is, as the bullion banks – agents of the Federal Reserve – organize their almost daily attacks on the gold market by selling naked shorts into the Comex, gold is underpriced, and the Asians have been gobbling it up …
“And the question that we have before us is: How much gold is left in the West? How much gold is left even to make deliveries to the Asians?
“And what happens when the fiat currencies crash and gold is simply unavailable in the West? When anyone seeking to preserve the purchasing power of their currency, or what’s left of it, simply can’t purchase because there’s no gold available?
“That’s what I think is the likely outcome. So the gold price could go extremely high in terms of dollars if this crisis hits. But you wouldn’t be able to get any gold at any price because it’s moved into Asian hands.”
Special offer: WND readers can get a huge discount on the insider investor newsletter produced by top-rated gold market timer Mark Leibovit, the Leibovit VR Gold Letter.