#PeterSchiff #China #Switzerland #centralbanks #gold #economics #monetary #policy
Saturday, January 17, 2015
Economics Theory: Will China Pull a 'Switzerland' on the U.S. Dollar?
Peter Schiff Poses and attempts to answer the question, Will China Pull a "Switzerland" on the U.S. Dollar?
#PeterSchiff #China #Switzerland #centralbanks #gold #economics #monetary #policy
#PeterSchiff #China #Switzerland #centralbanks #gold #economics #monetary #policy
Thursday, December 11, 2014
Are We About To See A Historic Melt-Up In Gold & Silver?
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| Are We About To See A Historic Melt-Up In Gold & Silver? |
Rick Rule, who is business partners with billionaire Eric Sprott, also discussed exactly how this historic advance will unfold and why the up-moves will be so incredibly violent
Eric King: “Rick, are we finally seeing the more than 3-year bear market in gold and silver coming to an end?”
Rule: “You and I both believe in higher precious metals prices, Eric, so it’s tempting to say yes. Bear markets end with capitulation selloffs. I think we were on the verge of a capitulation selloff six weeks ago but we didn’t get one. The questions is, do we have to see a capitulation selloff this time? The answer is, of course not
“I said to my Chinese friends that ‘The U.S. dollar is in one way shape or form a lie.’ And they said, ‘Yes, but it’s the most liquid lie on the planet, and from that point of view we are attracted to it.’
When the confidence in the U.S. dollar begins to wane, and I say when, not if, then precious metals will shine. We may be seeing a preview of that today. But if you had bought precious metals in rubles, Eric, or yen, or the Brazilian real, you would be very happy today.
Eric King: “Rick, are we finally seeing the more than 3-year bear market in gold and silver coming to an end?”
Rule: “You and I both believe in higher precious metals prices, Eric, so it’s tempting to say yes. Bear markets end with capitulation selloffs. I think we were on the verge of a capitulation selloff six weeks ago but we didn’t get one. The questions is, do we have to see a capitulation selloff this time? The answer is, of course not
“I said to my Chinese friends that ‘The U.S. dollar is in one way shape or form a lie.’ And they said, ‘Yes, but it’s the most liquid lie on the planet, and from that point of view we are attracted to it.’
When the confidence in the U.S. dollar begins to wane, and I say when, not if, then precious metals will shine. We may be seeing a preview of that today. But if you had bought precious metals in rubles, Eric, or yen, or the Brazilian real, you would be very happy today.
For many people who bought them in dollars this has created frustration because of the strength of the dollar vs other fiat currencies. Gold doesn’t have to win the war against the dollar, it just needs to lose it less badly for KWN readers not to be just happy, but ecstatic.”
Eric King: “In this secular bull market, if we are seeing an end to the cyclical bear market in gold, silver, and the shares, how do you see the advance unfolding off the lows? Will it give people time to get in?”
Rule: “I definitely believe it will. I believe that without a capitulation selloff, the bottom that we see will resemble the market that we saw from July 2013 - February 2014. That is a gradual saucer-shaped recovery, with higher highs and higher lows but plenty of volatility to scare people and also delay investment in the sector. And it may be that we are back into that phase after having been scared to death recently.
Certainly without the capitulation selloff what you will see is a long consolidation period that’s extremely choppy and volatile. And that has been, in my experience in the last three cycles, eventually greeted with a melt-up.
Eric King: “In this secular bull market, if we are seeing an end to the cyclical bear market in gold, silver, and the shares, how do you see the advance unfolding off the lows? Will it give people time to get in?”
Rule: “I definitely believe it will. I believe that without a capitulation selloff, the bottom that we see will resemble the market that we saw from July 2013 - February 2014. That is a gradual saucer-shaped recovery, with higher highs and higher lows but plenty of volatility to scare people and also delay investment in the sector. And it may be that we are back into that phase after having been scared to death recently.
Certainly without the capitulation selloff what you will see is a long consolidation period that’s extremely choppy and volatile. And that has been, in my experience in the last three cycles, eventually greeted with a melt-up.
That’s the only way I can describe it if you remember 2002, Eric. This is where, finally, all of the sellers get used up and the metal gaps higher and the shares gap higher. I’m not saying that past has to be prologue but that’s what has happened the last few times we have been in a similar position.”
Eric King: “You are talking about some pretty violent upward moves.”
Rule: “Yes. It’s funny that we have been, in effect, punished in this market since 2012 and subjected to several violent down-moves, so we forget that the thing which attracted us to this sector originally was the fact that in recovery this market exhibits very violent up-moves.
Remember, people’s expectations of the future are set by their experience in the immediate past. And everybody’s experience in the immediate past going back to the tail end of 2011 has been negative. What that means is that our expectations are all negative.
Eric King: “You are talking about some pretty violent upward moves.”
Rule: “Yes. It’s funny that we have been, in effect, punished in this market since 2012 and subjected to several violent down-moves, so we forget that the thing which attracted us to this sector originally was the fact that in recovery this market exhibits very violent up-moves.
Remember, people’s expectations of the future are set by their experience in the immediate past. And everybody’s experience in the immediate past going back to the tail end of 2011 has been negative. What that means is that our expectations are all negative.
What moves a market is a market that exceeds expectations, and expectations for the mining industry are pathetically low, which means we will exceed those expectations.
And when we exceed those expectations the market will move significantly higher and perhaps very violently to the upside. If you remember back to the 1993 melt-up, or the 2002 melt-up, or going back even further to the melt-up of the late 1970s, which was the most violent melt-up I’ve ever experienced in my life, these are truly spectacular events. If past is prologue, and it normally is, this will happen again.”
And when we exceed those expectations the market will move significantly higher and perhaps very violently to the upside. If you remember back to the 1993 melt-up, or the 2002 melt-up, or going back even further to the melt-up of the late 1970s, which was the most violent melt-up I’ve ever experienced in my life, these are truly spectacular events. If past is prologue, and it normally is, this will happen again.”
Wednesday, December 10, 2014
Swiss Franc No Longer a Safe Haven and a Possible Bottom for Gold
Peter Schiff responds to the results of the "Save Our Swiss Gold" initiative this past weekend. He explains why he thinks it is bullish for gold and might have even marked gold's bottom.
0:17 – “Save Our Swiss Franc” would have been a more accurate description of the Swiss gold initiative.
0:59 – Switzerland used to have more than 40% of its reserves in gold and was very prosperous.
1:47 – The Swiss gold initiative was a threat to the powers-that-be, because it limited the ability of the Swiss National Bank (SNB) to create inflation
2:35 – If the initiative had passed, Switzerland would have been an example of a strong economy in a sea of European inflation.
3:34 – How is it crazy to have only 20% of your assets in gold, but sensible to have 100% of your assets in fiat currencies?
4:30 – The Swiss originally didn’t want to adopt the euro, but now they’ve embraced a de facto euro standard.
5:30 – Gold and silver dropped dramatically after the vote, which was surprising since no one had really expected the initiative to pass.
6:23 – Gold and silver recovered their losses quickly once the United States started trading.
7:10 – Peter believes the “no” vote is more bullish for the long-term price of gold.
7:43 – If the Swiss had adopted the referendum, it would have slowed down Swiss money printing and Swiss inflation.
8:28 – When the world realizes the United States is going to return to quantitative easing, the Swiss franc will no longer be a safe-haven option. This would mean greater demand for gold.
9:36 – If the SNB won’t be buying gold on behalf of its people, the Swiss will buy gold individually to protect their purchasing power.
10:49 – Looking at historical actions of central banks, there’s a chance that gold’s low price on Sunday could end up being gold’s bottom.
0:17 – “Save Our Swiss Franc” would have been a more accurate description of the Swiss gold initiative.
0:59 – Switzerland used to have more than 40% of its reserves in gold and was very prosperous.
1:47 – The Swiss gold initiative was a threat to the powers-that-be, because it limited the ability of the Swiss National Bank (SNB) to create inflation
2:35 – If the initiative had passed, Switzerland would have been an example of a strong economy in a sea of European inflation.
3:34 – How is it crazy to have only 20% of your assets in gold, but sensible to have 100% of your assets in fiat currencies?
4:30 – The Swiss originally didn’t want to adopt the euro, but now they’ve embraced a de facto euro standard.
5:30 – Gold and silver dropped dramatically after the vote, which was surprising since no one had really expected the initiative to pass.
6:23 – Gold and silver recovered their losses quickly once the United States started trading.
7:10 – Peter believes the “no” vote is more bullish for the long-term price of gold.
7:43 – If the Swiss had adopted the referendum, it would have slowed down Swiss money printing and Swiss inflation.
8:28 – When the world realizes the United States is going to return to quantitative easing, the Swiss franc will no longer be a safe-haven option. This would mean greater demand for gold.
9:36 – If the SNB won’t be buying gold on behalf of its people, the Swiss will buy gold individually to protect their purchasing power.
10:49 – Looking at historical actions of central banks, there’s a chance that gold’s low price on Sunday could end up being gold’s bottom.
Saturday, August 30, 2014
2015 Chinese Panda Silver and Gold Coins No Longer Display Weight
Commencing from 2015, according to the People’s Republic of China national’s “Measurement Law” and the People’s Bank of China’s requirement, the gold and silver coins will be issued under the legal measurement of Metric System, i.e. grams, Kilogram and etc.
The issuance of the gold and silver coins under the measurement of the Imperial System “Ounce” will be discontinued. Furthermore, from 2015 onward, the weight of the Chinese Panda Gold coins will no longer be stated on the coins.
This has made the 2014 Chinese Panda Gold Coins with “Ounce” to be even more significant for collection.
Since Bank of China (Malaysia) Berhad’s announcement for the pre-booking on 21 May 2014, the Chinese Panda Gold Coins was overwhelmed by the market, registration has been increased rapidly.
In order to fulfill customers’ needs, Bank of China (Malaysia) Berhad has made a soft launching on 6 June 2014 for the registered customers. And now, the Bank is proud to announce the official launch for the 2014 Chinese Panda Gold Coins to the public.
The Chinese Panda Gold Coin is a legal tender Coin issued by the People’s Bank of China for 33 years continuously. It has the investment and memorable value, and potentially high collectible value.
Being very unique in the coins mintage world, it has been awarded both locally and overseas recurrently and appreciated by the collectors from all the countries. The theme of the Chinese Panda Gold Coins is the national treasure of the People’s Republic of China, setting the bamboo as the background well demonstrated the harmonious and happy life.
2015 Panda Changes - Summary:
2015 Gold / Silver Pandas will no longer have the weight stamped on the reverse. It will be Panda motive as it is currently but without stating its weight.
The China Mint will be marketing the Panda Bullion Coins in grams and kilos (Kilograms) instead of ounces.
At this stage it is unknown if they will introduce new sizes such as 25/50/100/1000 gram or stay with the current 3.1, 31.1g, 155.5g, 311g
2015 Panda Changes - Summary:
2015 Gold / Silver Pandas will no longer have the weight stamped on the reverse. It will be Panda motive as it is currently but without stating its weight.
The China Mint will be marketing the Panda Bullion Coins in grams and kilos (Kilograms) instead of ounces.
At this stage it is unknown if they will introduce new sizes such as 25/50/100/1000 gram or stay with the current 3.1, 31.1g, 155.5g, 311g
In order to better reveal the lively and playful character and the black and white colour of the panda, designers using the white and black effects that generated from the glossy and dark appearance of the gold refraction and reflection to invent the intaglio refraction method, at the same time using the drum opposite sandblasting technology to make the black and white colour of the panda become more three-dimensional.
Welcome all to visit any of Bank of China (Malaysia) Berhad branches to place your order.
Thursday, June 6, 2013
China To Buy $344 Billion Worth of Gold?
As economic conditions in the U.S. and the global economy deteriorate, and as central banks around the world print more money in their misguided attempts to spur growth, more and more analysts are saying that gold bullion’s best days are behind it.
Their reasoning: the economy is improving, the Fed will cut back on its monetary stimulus, the worst is behind us, and there’s no more crisis, so there’s no more reason for gold to rise—this is the exact opposite of what I’m saying!
The gold bears fail to realize there are fundamental forces at play behind the gold bullion bull market.
Central banks around the world are looking at gold bullion as an alternative to the currencies they hold in their reserves. It is well documented in these pages how major central banks like the ones from Russia and Turkey
Then there is the central bank of China. Its official reserve reached a value of $3.44 trillion in the first quarter of 2013—similar to the size of Germany’s economy. China increased its reserve by $128 billion in the first quarter, making it the biggest increase in reserve since the second quarter of 2011. (Source:Financial Times, April 11, 2013.) My bet is that most of that reserve is in U.S. dollars, which China would desperately like to get rid of.
With that said, China doesn’t have as much gold bullion to back its reserves as countries like the U.S., Germany, and France have. As a matter of fact, the Chinese central bank only holds 1.6% of its reserves in gold bullion, compared to 75.6% for the U.S. and 72.0% for Germany. (Source: World Gold Council, May 2013.)
To bring its total gold bullion holdings to 10% of its reserves, the central bank of China would need to allocate about $344 billion of its reserves to buy gold bullion.
Add strong demand from countries like India to the fact that China needs to increase its gold reserves, and the fundamental demand behind gold bullion is clear. According to the World Gold Council’s estimates, demand for gold bullion in India is expected to jump 150% by the end of June as compared to last year. (Source: Wall Street Journal, June 3, 2013.)
The amount of gold bullion and silver imported in India reached $7.5 billion in April—more than double the amount from a year earlier. The Indian government has increased its import tax from two percent to six percent in a matter of just 1.5 years to curb demand. (Source: Wall Street Journal, May 20, 2013.)
The demand for gold bullion is as strong as ever.
What He Said:
“Home-building in the U.S. will
Tuesday, November 20, 2012
2013 Panda Coins to Be Released on November 20th, 2012
The 2013 gold and silver panda commemorative coins are to be released by People’s Republic of China on November 20th, 2012, which include 10 coins, 7 gold and 3 silver.
Patterns
The front side pattern is the Qinian Palace of the Temple of Heaven, Beijing, the country name, and the year; the reverse pattern is the pandas drinking water, face value, weight, and fineness.
Specification and mintage
(1) The 1/20 oz round gold commemorative coins are bullion coins, containing 1/20 oz pure gold, with diameter of 14mm, face value of RMB20 Yuan, fineness of 99.9%, and max. mintage of 800000.
(2) The 1/10 oz round gold commemorative coins are bullion coins, containing 1/10 oz pure gold, with diameter of 18mm, face value of RMB50 Yuan, fineness of 99.9%, max mintage of 800000.
(3) The 1/4 oz round gold commemorative coins are bullion coins, containing 1/4 oz pure gold, with diameter of 22 mm, face value of RMB100 Yuan, fineness of 99.9%, max. mintage of 600000
(4) The 1/2 oz round gold commemorative coins are bullion coins, containing 1/2 oz pure gold, with diameter of 27mm, face value of RMB200 Yuan, fineness of 99.9%, max. mintage of 600000.
(5) The 1 oz round gold commemorative coins are bullion coins, containing 1 oz pure gold, with diameter of 32 mm, face value of RMB500 Yuan, fineness of 99.9%, max. mintage of 600000.
(6) The 5 oz round gold commemorative coins are bullion coins, containing 5 oz pure gold, with diameter of 60 mm, face value of RMB2000 Yuan, fineness of 99.9%, max. mintage of 5000.
(7) The 1 kg round commemorative coins are bullion coins, containing 1 kg pure gold, with diameter of 90mm, face value of RMB10000 Yuan, fineness of 99.9%, max. mintage of 500.
(8) The 1 oz round commemorative coins are bullion coins, containing 1 oz pure silver, with diameter of 40mm, face value of RMB10 Yuan, fineness of 99.9%, max. mintage of 8000000.
(9) The 5 oz round silver commemorative coins are proof coins, containing 5 oz pure silver, with diameter of 70mm, face value of RMB50 Yuan, fineness of 99.9%, max. mintage of 50000.
(10) The 1 kg round silver commemorative coins are proof coins, containing 1 kg pure silver, with diameter of 100mm, face value of RMB300 Yuan, fineness of 99.9%, max. mintage of 20000.
The gold and silver commemorative coins referred above are minted by Shenzhen Guobao Mint, Shenyang Mint, and Shanghai Mint.
Wednesday, November 14, 2012
Where to Next for China's Gold Market?
The annual conference of the London Bullion Market Association - the "premier professional forum for the world's bullion market" as Haywood Cheung of the 100-year old Chinese Gold & Silver Exchange put it this morning - is taking place right now in Hong Kong.
The timing could hardly seem more urgent. Hong Kong has always had great importance to the global precious metals market - particularly since the 1970s, as several speakers noted on Monday, day one of the LBMA's two-day 2012 conference. But while Hong Kong's dominance as Asia's bullion hub may yet be challenged (it beat off "stiff competition" to be this year's Asian LBMA venue, Cheung writes in the South China Morning Post; Singapore removed general sales tax from gold last month, and now its gleaming new freeport vaults are already booked out, with a second facility being discussed), it's Hong Kong which remains "the gateway to China".
And China remains the big prize for the record 700+ delegates from 279 different miners, refiners, banks, dealers and secure logistics providers gathered here from 39 countries.
"China's appetite for gold has increased rapidly," explained Albert Cheng, managing director for the Far East at market-development organization the World Gold Council after lunch today, "with gold demand growing by an average 24% per annum since 2007.
"China's share of global gold demand doubled from 10% in 2007 to 21% in 2011." And as Cheng's chart shows above, China in fact overtook world #1 consumer India in the first half of 2012.
None of this happened by accident. Not according to keynote speaker Xie Duo - general director of the People's Bank of China. Listing China's #1 position in both gold mining production and now consumer demand, "Gold plays a very important role in the formation of the financial market system," he explained - repeating what PBoC governor Zhou Xiaochuan told the LBMA's 2004 conference in Shanghai, and then reminding the grand ballroom of the plan which Zhou then set out:
#1. Transform gold from a commodity to a financial investment market: The Shanghai Gold Exchange now boasts 33 financial members, and 3 million individual clients. Meantime, more than 30 commercial banks are active end-to-end in gold, offering both physical and paper gold, and acting as "an important channel for Chinese citizens to be involved."
#2. Transform it from an immediate-delivery to derivative market
Deferred settlement was launched on the Shanghai Gold Exchange in 2004, in a bid to allow greater trading volumes without being hit by shortages. From 2008 to 2010, it accounted for over 60% of the SGE's volume, rising to 73% in 2011. Compared to other "spot" contracts worldwide, said Xie, it's now the most heavily traded, with turnover of 6,000 tonnes last year.
#3. Transform China's trading from a domestic to an international market
Twenty-four hour trading is crucial today, the PBoC general director said. So in 2005 the SGE launched its night-time session, to overlap with the afternoon in London's physical market and morning trade in New York's Comex gold futures. Now that period - from 21:00 to 02:30 - accounts for a third of total SGE volume. It's particularly welcome for those foreign banks which have become members of the exchange, starting with HSBC in 2008.
All this adds up to "big progress in the Chinese gold market," Xie said. "But there is still a long way to go." And which way is that? Remember, we are in China.
"Frankly speaking, this success is the result of free choice by the market and the support of policy," Xie went on. "The government took effective measures to guarantee smooth development."
In particular, late last year it banned the "illegal" gold market, closing down all trading centers outside the officially recognized and managed Shanghai Gold Exchange and the Shanghai Futures Exchange (SHFE). The concern was that "the gold price rise had led to a surge in domestic demand, and that led to margin-trading businesses using overseas derivatives contracts as the underlying asset. That was very risky because of the leverage. So the government is fighting the underground market."
Laying out his own "proposal" for how China's gold market should develop from here, Xie made this concern - the level of risk worn by China's citizen traders - the basis for 3 steps in his 5-step plan. In fact, together with the parallel aim of "guid[ing] investors to trade on the legitimate platforms", keeping a tight rein on free-market provision of gold products pretty much sums it up:
#1. Ensure development of mature market
#2. Perfect the laws, rules and relative policies
#3. Perfect the mechanism of risk aversion and investor protection
#4. Strengthen the market system & accelerate innovation
#5. Promote further opening to the outside world
That last point is for "later on", Xie added, with China's gold market only "fully opened" to foreign players once the other planks are assured. No, this doesn't yet cut both ways; the giant ICBC bank gained approval to buy a major investment bank's operations in Argentina. Yes, the Communist Party may have long considered it "glorious to get rich", but its brand of capitalism remains very alien to the developed West's idea of financial fun.
Seeing the trouble that has caused, however, you might forgive China's leaders for wanting to marry strict regulation with a boom in financial services. Gold investors everywhere might want to thank the bureaucrats' strong hand, too.
"Is China's gold investment demand sustainable?" asked Albert Cheng of the China/Asia panel this afternoon. Yes, replied Zheng Zhiguang, general manager of precious metals at ICBC. Because over the next 10 years, there will be "very stable, progressive economic development. So household incomes will continue to grow. It's in the government's plan."
Put another way, and again looking at the question of a "hard landing" for Chinese consumers and therefore their double-digit gold demand growth rate, "Beijing has tremendous means to achieve its growth targets," said Professor Yu Yongding, a former PBOC member and now at the Institute of World Economics and Politics, just before the conference's morning break.
Western gold owners should hope he's right.
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