Best of the Week
Most Popular
1.Gold Price Target of USD 2,300 - GoldCore
2.Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - Nadeem_Walayat
3.Why British Muslims Are Leaving Elysium Paradise for Syrian Hell - Nadeem_Walayat
4.Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - Nadeem_Walayat
5.Extreme Gold/Silver Shorting - Zeal_LLC
6.European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - Nadeem_Walayat
7.Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - Michael_Noonan
8.Gold and Silver Price Headed for Breakdown - Jordan_Roy_Byrne
9.Greece Crisis OXI - Raul_I_Meijer
10.Flatline Investing and Dead End Debt Schemes - Doug_Wakefield
Last 5 days
Greece Referendum Vote Result Forecast Yes Win, But Depression Will Continue - 5th July 15
The Great Greek Economic Depression - 4th July 15
Happy 4th of July Stock Market Analysis - 4th July 15
The Most Pressing Reason Yet You Want to Avoid Investing in Retail Stocks - 4th July 15
Fed’s Full Normalization and the Stock Market - 3rd July 15
The U.S. Dollar's 2014-2015 Rally: Wave 3 in Action - 3rd July 15
Stock Market Where are we? And where are we Going? - 3rd July 15
Xi’s Anti-Corruption Campaign Is Key to China’s Prospects - 3rd July 15
How the New Iranian Nuclear Deal Will Impact Crude Oil - 3rd July 15
China's Stock Market Rollercoaster Ride Continues - 3rd July 15
Gold Stocks Cheap to Buy but Not for Long - 3rd July 15
Capital Controls and a Bank Holiday in Greece… Here’s How You Can Profit - 3rd July 15
Greece's Varoufakis: I will Resign if there's a 'Yes' Vote - 2nd July 15
The Student Loan Bubble: Gambling with America’s Future - 2nd July 15
Inflation Is Lurking, but This Asset Can Protect You - 2nd July 15
Three Total Wealth Stock Investor Tactics You’ll Need Because Greece Isn’t Over - 2nd July 15
Why This $5.6 Trillion Investor Profit Boom Is Set To Take Off - 2nd July 15
Greek Debt Crisis: "Too late to prepare now" - Video - 2nd July 15
Guaranteed US Dollar Death Dynamics - 2nd July 15
The Greek Stress Test & The Reality Of Incremental Changes - 2nd July 15
Forget Drachmas Greece Syriza Government Could Instruct Central Bank to Print Euros! - 2nd July 15
Greece Debt Crisis Trigger for Stock Market Crash or Bull Rally? Video - 1st July 15
Gold Stocks Break Below 2008 Low - 1st July 15
SPX Stock Market Retracement May be Over - 1st July 15
Silver Tunnel Vision 'Experts' - 1st July 15
Gold And Silver - Monthly, Quarterly Ending Analysis - 1st July 15
Europe’s Controlled Demolition - 1st July 15
The End of Dow 18,000; Bailouts No Longer Extended  - 1st July 15
Athens Mayor: Greek Government Should Resign - 1st July 15
China Stocks - This Is What a Bubble Looks Like - 30th June 15
Stocks Plunge on Greece Euro-Zone Financial Armageddon Blackmail - 30th June 15
Greece Crisis Shows Importance of Gold as Europeans Buy Coins and Bars - 30th June 15
Stock Investors Express Route to Profits in the Healthcare Sector - 30th June 15
Beyond the Greek Impasse - 30th June 15
Gold GDXJ : Impulse Move Pending - 30th June 15
Fed Interest Rate Increase Could Be Best Thing to Happen to Gold - 30th June 15
Marc Faber - Greece is Basically Bankrupt - 30th June 15
Greece - Shoot the Dog and Sell the Farm - 29th June 15
Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy - 29th June 15
The New "Sharing Economy" May Not Be the Profit Bonanza Everyone's Expecting - 29th June 15
Gold and Silver Greece and Short Positions - 29th June 15
Volatility and Sleep-Walking Markets - 29th June 15
Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - 29th June 15
Stock Market More Decline Ahead? - 29th June 15
China Stock Market Crackup - The Final Trap Looms... - 29th June 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

China Stocks - Where are they going?

We Are Still In The Early Stages Of Major Currency Devaluations

Currencies / Fiat Currency May 17, 2010 - 06:59 AM GMT

By: Miles_Banner

Currencies

Best Financial Markets Analysis ArticleFor the year the gold price is up 10.25% in US dollars, 22.38% in Euros, and 27.85% in pounds (London PM fix). The HUI gold index is up 13.38% and the SPDR gold shares (GLD) is up 9.61%.

In the aftermath of the recent bail out by the IMF and ECB the markets are continuing to undermine the euro.


On Wednesday the Austrian Mint told Reuters that they had sold more gold in the two weeks from 26th April than in the whole first quarter of this year. They went on to say that this demand was coming exclusively from Europe.

Despite this increased demand from Europe the gold price has been held from spiking dramatically as bullion banks have rallied to short it.

The bullion banks go big on shorts

In opposition to Europe’s surge in demand, last week’s Commitment of traders (COT) report showed bullion banks are still building huge short positions, betting against a rising gold price. The producers/merchant net short positions for gold commercials are at an all time high.

Bullion banks have traditionally taken short positions in the gold futures market. This theme has been ongoing for many years. Nonetheless the size of these positions makes us cautious.

The last time they took a similar number of net short positions was back in November 2009, just before the recent correction. With gold prices today at record highs and the problems with the euro and pound driving demand it appears these prices are sustainable.

The problem is the markets seldom move as planned. This past couple of years demonstrate that.

The euro – further to fall?

There is no question that the euro, as a currency, cannot continue to operate the way it has done in the past. It is surprising that there appears to have been a complete lack of foresight and contingency planning that should have accompanied the creation of the Euro.

Argentina, Indonesia, Uruguay and the Dominican Republic are all examples where countries have defaulted after IMF ‘help’.

The new measures are attempting to pull the wool over the eyes of investors. These loans will have to be repaid. There is a day that the ECB and the IMF will demand payment and nothing from what we’re seeing so far from Greece assures us this will happen.

“You cannot make any nation that is unable to service its accumulated debts more creditworthy by extending more credit!” – Jeremy Batstone-Carr, analyst at Charles Stanley.

Hastening the end

Nationalisation of industries, the transference of private sector debt to the public sector and rising debt to GDP have put economies on the road to meltdown. The recent bailouts have sped up the process.

Holders of Greek, Spanish, Portuguese, Italian and Irish debt now have the benefit of being secured by the promise of the ECB. It’s a game changing play. Now banks and bond holders, who had previously worried about the long term security of their businesses, have fresh liquidity with which they can compete for assets. It’s a short term gain… with long term repercussions.

As more US dollars are fed into the markets to patch up the crisis the US look set to deepen their already huge trade deficit. The swap lines between the Federal Reserve and European banks that was stopped in February have now been opened. Pumping more dollars and more Euros into circulation is a last ditch effort to repair a sinking ship.

We’ve been saying for a long time that the gold price will hit new highs, and it carries on to do just that. But, as we’ve also noted before, the market is never as predictable as what it seems. With the bullion banks prepared to raise the level of short positions to record highs we could yet be in store for a short correction. But like the musicians on the Titanic, whatever they do surely cannot change the final outcome.

Regards,

Digger
Gold Price Today

P.S Digger writes a weekly email analysing the gold price and the gold industry. Visit Digger at Gold Price Today (http://goldpricetoday.co.uk).

© 2010 Copyright Gold Price Today - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History