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From the London Guardian:
Fears that 'dangerous' Switzerland referendum could spark gold rush
TRENDING: America's most dangerous demographic
The Swiss like referendums: there were 11 last year and there have been nine more this year, on subjects ranging from who pays for abortions to whether the state should buy a certain type of new fighter aircraft.
This Sunday there are three more, but one has attracted more attention than most – because there are fears that if it wins majority support it could trigger a worldwide gold rush.
Five million Swiss voters are to decide on a proposal that would force the central bank to triple its gold reserves. The vote is being watched closely by financial markets and governments around the world.
Under the "Save Our Swiss Gold" initiative the Swiss National Bank (SNB) would be obliged to hold at least a fifth of its assets in gold within five years. The bank would be required to repatriate all Swiss gold held abroad and be banned from selling any of its holdings in future.
A fifth of Switzerland's 1,040 tonnes of gold reserves are held with The Bank of England and nearly a third with the Canadian Central Bank.
The organizers say they are motivated by wanting "security and independence for Switzerland in times of uncertainty."
They argue a policy change is necessary because attempts to constrain the strength of the Swiss franc to boost national exports have meant the SNB has too many euros at a time when that currency is losing value.
The slogan for the initiative – which has gripped Switzerland and been displayed on posters showing hands holding a grinning piggy bank decorated with the Swiss flag – urges voters to "protect the people's wealth" by voting yes.
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From ZeroHedge.com:
Gold shortage Worst in 21st Century
Zero Hedge reports that the gold forward offered interest rate (GOFO) has sunk to the lowest level in history, signifying that market participants are paying to borrow gold and that there is a great shortage of metal among commercial and central banks. According to Zero Hedge:
"But how, the skeptics will ask, is it possible that there is a shortage of gold when gold prices keep tumbling day after day? Simple: The shortage involves gold 'available' in the repo market - that is, gold that already has been rehypothecated one or more times. Keep in mind that central banks rarely if ever purchase gold outright in the open market, unlike Russia, of course (and perhaps China), which has been engaging in an unprecedented gold-buying spree over the past year. The rest of the commercial and central banks merely rely on shadow banking conduits and other repo channels to satisfy their gold needs, all of which merely demand the 'presence' of synthetic if not actual physical gold. ...
"Then there is of course the wild card of the Swiss gold referendum on Sunday, where a yes vote would lead to the immediate collapse of the gold price suppression mechanism as the swap-based gold shortage breaks through merely shadow conduits and finally makes its way to the real market. Which, of course, is why it will never be allowed to happen."
Indeed, one has to wonder if the attack on gold in the futures markets this week has been engineered to encourage Swiss voters to keep trusting their central bank.
Zero Hedge's commentary is headlined "Gold Shortage, Worst In 21st Century, Sends 1-Year GOFO To Lowest Ever ... and India Just Made It Worse" and is posted here.
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From Bloomberg.com:
Citing risks, Fed may limit Wall Street role in commodities
WASHINGTON – The Federal Reserve may curtail Wall Street commodity businesses after lawmakers said banks' role in energy, power, and metals markets spurred unfair trading advantages and could threaten financial stability.
At a Senate hearing, Fed Governor Daniel Tarullo said curbs under consideration include ownership limits, restricting how much revenue can be derived from commodities, and requiring Wall Street firms to boost capital. He said the new rules, to be proposed early next year, could restrict banks from investing in oil tankers, coal mines, and other businesses involved in physical commodities.
"We are focusing on the risk to safety and soundness presented by specific activities and on whether those risks can be appropriately and adequately mitigated," Tarullo said at the hearing held by the Senate Permanent Subcommittee on Investigations.
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From The Associated Press:
Report: Iran opens gold plant, doubling production
Iranian state television is reporting that the country has inaugurated a new gold-processing plant that will double the country's annual production to six tons.
The report says First Vice President Ishaq Jahangiri attended the inauguration Saturday of the plant near Takab in northwestern Iran.
It says the new processing facility, built next to Iran's Zarshouran gold mine, also will produce an estimated 2.5 tons of silver and one ton of mercury a year.
State television says Iran previously produced an estimated three tons of gold a year.
This is part of Iran's "economy of resistance" to counter sanctions imposed over Tehran's contested nuclear program. The Islamic Republic is currently negotiating a final deal over its atomic program with world powers.
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From GATA.org:
Gold called part of Russia's defense against U.S.
Russia's steady acquisition of gold is part of the nation's defense in the international currency war, where, in the Russian view, "all freely convertible currencies are today under American control."
That's the outlook of trends forecaster Gerald Celente's new interview with King World News, posted at the KWN blog.
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From Mining.com
India back to being world's top gold consumer
India reclaimed its world's top gold consumer crown from China as demand for jewelry surged almost 60 percent in the third quarter of the year, fresh data from the World Gold Council shows.
Global demand, however, fell to its lowest in nearly five years as Chinese buying slid by a third and gold jewelry, the biggest single area of consumption, dropped 4 percent to 534 tonnes.
Overall, the south Asian nation – which had lost his position as the world’s No.1 gold consumer to China in 2011 – bought 39 percent more gold in the run-up to Diwali and the start of the traditional wedding season.
The WGC said that a weakening of gold prices in rupee terms had boosted demand in India, and that confidence in the new government led by Narendra Modi had also contributed to the rise.
According to the latest withdrawal from the Shanghai Gold Exchange yesterday, gold usage in China is around 1,700 tonnes per year. …
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From Reuters:
'Immoral but not illegal': Metal warehousing games in the spotlight
NEW YORK – Complex deals employed by Goldman Sachs' metals storage unit to build vast stockpiles and then maintain queues test the spirit of the London Metal Exchange operating code, shocking many traders and confirming others' suspicions.
But the intricate transactions that saw Metro International Trade Services shell out millions of dollars to customers to join exit queues to bolster rental income was within the rules, according to two senior warehousing executives and two veteran traders.
An explosive U.S. Senate report released on Wednesday revealed the "imaginative" methods used to lure millions of tons of aluminum into Detroit, Metro's headquarters, and then keep it there over the past four years.
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From the Financial Times:
Bank of England probes whether staff helped rig money auctions
The Bank of England has opened a formal investigation into whether its officials knew of – and even facilitated – the possible manipulation of auctions designed to inject money into the credit markets to alleviate the financial crisis.
The probe, which started in the summer, has been revealed just a week after the UK central bank published a report that criticized its own response to the foreign exchange rigging scandal.
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From Reuters:
Indian central bank cautious on response to gold import surge
MUMBAI, India – The Reserve Bank of India, grappling with a surge in gold imports last month, could support some restrictions for trading houses but two senior policymakers involved in the bank's decision-making said officials were also wary of overreacting.
A senior finance ministry source told Reuters on Tuesday the country would soon announce measures set to center on import restrictions for private trading house that were eased earlier this year. Private jewelry exporters account for the bulk of demand for gold.
But the country has yet to announce any steps, and the two policymakers said on Friday there was no agreement yet. "No decision has yet been taken on curbing gold imports," said one of the policy makers, who declined to be named.
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From the Financial Times:
Financial Times on Greenspan's renewed endorsement of gold
By Gillian Tett
A decade ago, when Alan Greenspan was chairman of the mighty Federal Reserve, he was infamous for delivering ambiguous, Delphic speeches that nobody could understand. No longer. I recently had a chance to interview Greenspan, 88, at the Council on Foreign Relations, regarding an updated version of his latest book.
These days the retired Greenspan speaks so clearly that some of his words are still ricocheting around the blogosphere. For what he revealed on the CFR platform was that he harbors considerable doubts about whether recent Western monetary policy experiments have actually helped economic growth. He also fears that such experiments have been so wild that it will be very hard to exit from these policies in the future – in the U.S. or anywhere else – without sparking huge market volatility.
Indeed, Greenspan is so worried about future turbulence that he apparently sympathizes with investors (and central banks) who are stocking up on gold.
Read the remainder of the commentary.
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From Bloomberg News:
Top-performing gold miner readies war-chest in bust industry
LONDON – The gold industry is a "busted flush," said Mark Bristow, surveying the ruin wrought by a 38 percent slump in the bullion price from a 2011 peak. For the Randgold Resources Ltd. chief executive officer, that's an opportunity.
"This is an exciting time," Bristow said in an interview at his London office near the Savoy Hotel. "The industry blows its brains out every time. The reason we're still in the industry is because the competition isn't that sharp."
The world's biggest gold miners racked up $30 billion of debt during a 12-year-bull run for the precious metal that spurred acquisitions and new mines. That has become a millstone as costs escalate and gold tumbled from a record $1,921.17 an ounce in September 2011 to $1,189.62 in London today.
Randgold, the best performing gold miner in the past decade, is debt free and profitable at current gold prices, said Bristow, who has a war chest of $500 million to $700 million to acquire assets from floundering rivals.
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