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From BullionStar.com:
China continues to drain global gold inventory
TRENDING: St. Patrick's role on the 'external hard drive'
Where is all the gold flowing into China coming from? Bullion vault market analyst and GATA consultant Koos Jansen tries calculating it, starting with the huge amounts flowing from the United Kingdom and Switzerland. His commentary is headlined "China Continues To Drain Global Gold Inventory" and is posted at the BullionStar website.
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From the Gold Anti-Trust Action Committee:
World Gold Council CEO says gold's future is physical
The World Gold Council, creator of the gold exchange-traded fund GLD, announced an agreement in principle with the Shanghai Gold Exchange to develop the Shanghai Free-Trade Zone as a global gold market.
In a press release, World Gold Council CEO Aram Shishmanian said: "The growth of the Shanghai Gold Exchange into the world's largest physical gold exchange provides compelling evidence that the future of gold is physical. As the market shifts from West to East, the expansion of strong gold-trading hubs in Asia will improve price discovery, liquidity, transparency, and efficiency, all of which will transform the landscape of the global gold market. As a major market, accounting for 30 percent of global capacity, this will enable China to take its rightful place in the world gold market."
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From the Tocqueville Gold Strategy Investor Letter:
Gold market has been rigged but trust in the riggers is declining
Gold market rigging by central banks and their investment bank agents is the main topic of the year-end investor letter by John Hathaway, portfolio manager for Tocqueville Asset Management.
Hathaway writes: "We believe that a breakdown of trust in financial intermediaries – including bullion banks, 'synthetic' gold substitutes such as ETFs, and derivatives, as well as the integrity of central-bank custodial relationships – is behind the growing clamor to repatriate physical gold bars owned by sovereign states. ...
"Loss of trust is the genesis of bank runs. Bullion banking is a fractional-reserve system in which large amounts of credit are extended based on a relatively small quantity of physical metal. Sovereign gold bars are a major component of the credit base. We believe this is a story to watch very closely in the coming year.
"It seems to us that the circle of those disparaging gold has dwindled to a rear guard of hard-core, dollar-centric addicts still hooked on a monetary policy designed to herd investors into risky assets. In a truly Orwellian transposition, gold, the safest asset in history, is maligned by the financial media as risky, while financial assets at near-record valuations are viewed as compelling. In the simplistic logic that passes for financial wisdom, if equities are good, then gold must be bad. If there has been a Greenspan/Bernanke put for equities, why not a Yellen cap for gold?"
Read Hathaway's entire letter at Tocqueville.com.
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From Reuters:
Swiss give scary lesson on central banks' limits
By Swaha Pattanaik
Central bankers have to live up to high expectations. Investors and politicians expect them to control inflation, prevent deflation, promote growth and keep the financial system healthy. The Swiss National Bank, an above-average institution, has failed at two simpler tasks: keeping its word and preventing destabilizing currency moves. The lessons for the rest of the world are scary.
After three years, and without either notice or much of an explanation, the Swiss abruptly ditched their cap on the franc's value. The franc promptly surged 40 percent against the euro before giving back more than half its gains. Investors and Swiss firms were in uproar.
The first lesson is never trust a central banker when he or she makes a commitment or gives guidance. ...
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From the (UK) Telegraph:
World deflationary forces have swept away Swiss defenses
By Ambrose Evans-Pritchard
The Swiss National Bank has lost control. It is the latest in a list of venerable central banks to be overwhelmed by deflationary forces and global economic disorder.
The country is already in deflation. The Swiss franc ended Thursday [January 15] 13 percent higher after the Swiss National Bank (SNB) abandoned its three-year efforts to defend a currency floor of 1.20 to the euro. "We have a free exchange rate once again," said the SNB's president, Thomas Jordan.
Indeed, but nobody is fooled by the SNB's attempt to spin this as benign. "This is a huge hit to their credibility," said Deutsche Bank.
The official statement claimed that the exchange floor is no longer needed and that "overvaluation has decreased as a whole since the introduction of the minimum exchange rate."
This is eyewash.
"They have had to throw in the towel. They couldn't hold the line anymore," said David Owen, from Jefferies Fixed Income. "This is going to cause extreme pain for parts of the Swiss economy but the SNB are trapped." ...
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From BullionStar.com:
'Astonishing' heavy withdrawals from Shanghai Gold Exchange
An "astonishing" 61 tons of gold were withdrawn from Shanghai Gold Exchange vaults in the week ending Jan. 9, Bullion Star market analyst Koos Jansen, a GATA consultant, reports. Being the lunar New Year, January is traditionally a period of heavy gold buying in China, Jansen writes. His analysis is headlined "Chinese Lunar Year Gold Buying At Full Steam" and it's posted at Bullion Star.
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From King World News:
Deflation in Europe, hyperinflation in U.S.
Interviewed by King World News, GoldMoney founder James Turk mocks U.S. economic data and says European stock markets are sensing deflation while the U.S. stock market is sensing hyperinflation from money printing. This, Turk says, will be gold's year. An excerpt from the interview is posted at the KWN blog.
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From the Financial Post:
Gold sector's bad bets wiping out lifetime earnings – and investor confidence
Goldcorp Inc. could soon join an inglorious group: large gold miners that have a net loss to show for their entire history as corporate entities.
The Vancouver-based company warned that it expects to record an impairment charge of US $2.3 billion to US $2.7 billion on its Cerro Negro mine in Argentina. Given that Goldcorp's retained earnings were US $2.2 billion as of Sept. 30, they may be completely wiped out in the company's next quarterly report.
That would not be unusual in the gold industry, where write-downs have destroyed historic profits in recent years. Barrick Gold Corp. has retained earnings of negative US $7.8 billion, while Kinross Gold Corp. is at minus US $8.5 billion. AngloGold Ashanti Ltd. has a US $4 billion historic loss, while Agnico Eagle Mines Ltd. has a slimmer loss of US $740 million.
These companies have highly profitable operations that continue to perform well in a tough gold market. But they paid the price for taking risky bets that backfired and crushed shareholder value when gold prices dropped. ...
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From 24HourGold.com:
The end of central bank power? Or the start of more 'financial repression'?
By Chris Powell
Former Wall Street trader and market commentator Bruce Krasting, in an analysis publicized by Zero Hedge, argues that the Swiss National Bank's repudiation of its pledge to peg the Swiss franc to the Euro forever will mark the beginning of the end of central bank power.
Krasting writes: "The Federal Reserve, Bank of Japan, European Central Bank, Swiss National Bank, and other central banks have repeatedly made the same promises over the past half-decade: 'Don't worry! We are here. We will do anything it takes to achieve the stability we desire. We are stronger than the markets. We can overwhelm all forces. We will never let go. Just trust us.' ...
"Anyone who continues to believe in the all-powerful central bank after today is a fool."
Well, maybe.
But arrogant as the Swiss National Bank has been and as humbled as it is now amid the devastation it has wrought, it is actually one of the smaller central banks and its influence has been vastly inflated by an outdated reputation for probity.
And while central bank power suddenly does looks shaky, central banks are not alone in their never-ending war against free markets. No, central banks may be allied with the rest of their governments – indeed, to a great extent central banks control their governments by financing them – and governments may claim even greater power than central banks do.
Because of their power of infinite money creation, central banks can not only manipulate markets and thereby arbitrarily set the value of all capital, labor, goods, and services in the world; as lately has seemed to be their objective, central banks also can prevent markets from happening at all.
But central banks can't prosecute and imprison people and confiscate their property for perpetrating markets. Only the remainder of government can do that – and some governments seem to consider themselves empowered to do that already even in nominally democratic countries.
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