Market Report : March 2012
The recent price correction on the gold and silver markets brings about (as usual) its lot of gloomy comments on the end of the bull market.
All this media “noise” visibly ignores the numerous indicators and important facts being reported at an accelerated pace throughout the international press, which prove that we are in the process of progressively changing the current monetary system.
The present crashing of the system is quite real, and it will lead to what the system should have never stopped from being in the first place, i.e. a system based on a currency that is convertible in tangible assets, making it impossible to over-print money and to create inflation. You and I are all paying indirectly for it by losing our purchasing power with those fiat currencies.
So, let’s get to those recent indicators in the news that let us remain confident in this period of correction (corrections are the norm in bull markets).
(This correction has also to be analysed in the context of price manipulation and of actual confrontation between two monetary systems. Read about it here here).
The first criteria we have to watch for is: What are the Asian governments doing with their vast reserves of currencies ?
- China is reducing its exposure to the US dollar: Read about it here
- China is hoarding colossal amounts of gold, whether from its national production (350 tons/year), or by acquiring mining societies and discreetly buying on the international markets.
- China is also encouraging its enormous population to invest in physical gold and silver.
Could it be that China would have the project of asserting its economic power by making the yuan the first gold-convertible currency, at the time that trust in the fiat currencies (dollars or euros) is at its lowest ? There is an excellent article (in french) about this subject here.
- Singapour is looking to become an important trading center for physical gold in Asia: Read about it here.
2) Central banks bought a record 4067 tons of gold in 2011 (source)
The purchasing power of the dollar and the euro is being destroyed by the actual inflationary monetary policies. The central banks are all trying to protect themselves by buying physical gold.
Since last December, an amount close to 1 trillion euros has been injected in the economy through loans and bailouts. That money didn’t exist in the economy, it was created out of thin air.
3) The on-going loss of confidence in the US dollar as a world reserve currency :
- Iran trades petroleum for gold (Read about it here).
- Myret Zaki wrote an article on the end of the dollar as the world’s reserve currency, in which he states that “ come the end of 2013, the US dollar will have lost its statute of dominant currency in commercial transactions”. Read about it here.
4) Another proof that gold is regaining its strategic interest: both Germany and Switzerland are looking to repatriate their gold from the FED’s vaults in New York.
The media are talking about it, and rather with a little panicky side, because of the talk of gold price manipulation. The European and US central banks are alleged to have leased gold to the commercial banks which, in turn, sold it on the open market, thus pushing the price down.
Is that true ? Have the sovereign gold reserves been leased to commercial banks which afterwards sold it on the market ? A 50-year veteran specialist of the gold market, Jim Sinclair, asks the same question (Read here).
Switzerland wants to repatriate its gold (Zerohedge).
We are seeing more and more articles in the press worrying about the localization of the gold reserves and the actual amount of said reserves since February and March.
The French media, in an election year context, seems to want to reassure their readers by publishing this article on the gold reserves stocked in the Banque de France (Read Le Figaro).
The timing of this article is a little bizarre, just at the time there are many doubts expressed around the world about the actual gold reserves of many countries… Is it possible that the French central bank has something to hide about the actual size of its reserves, when we know that the price manipulation has, in part, been made possible by the sale of physical gold to the bullion banks ? On that subject, please read the well-documented theses from GATA.
Should we worry about the recent correction, taking into account the facts pointing to the long-term trend ?
I don’t think so, because the road ahead is clear and well defined. The world population is becoming aware of the breakdown of the system and is moving toward the only assets that can protect their purchasing power.
I’m convinced that the only way a massive uncontrolled rush on the precious metals can be avoided is by having certain financial interests creating enormous volatility on the market.
It is that volatility that scares away potential investors, due to a lack of understanding of those complex markets.
Owning physical gold and silver in your name, outside of the banking system, must be a priority in protecting your assets on the road that will lead to the change in the international monetary system.
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