Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Gold Demand Explodes as Volatility and Fear Stalk Market

Commodities / Gold and Silver 2015 Jan 20, 2015 - 01:00 PM GMT

By: GoldCore

Commodities

Although the extent to which the surprise move by the Swiss National Bank last week has damaged financial institutions will not be apparent until the end of the month, it is already clear that enormous damage has been wreaked on many businesses exposed to the foreign exchange markets.

GoldCore has seen significant increase in gold demand from investors in the first weeks of January 2015 as compared to the same period in 2014. Gold bullion volume amongst buyers was 3 (365%) times level last year, with particular emphasis being placed on safe secure storage vaults in Zurich and Hong Kong and Singapore.


On Thursday the SNB unpegged its currency from the euro without warning. The peg was put in place three years ago during the height of the euro crisis to prevent the Swiss franc from rising too much relative to its EU neighbours and damaging its exports.

The shock move caused the Swiss franc to rally almost 30% against the euro and 28% against the dollar. To maintain the peg, the SNB had been forced to accumulate around €500 billion leaving it very vulnerable to a euro devaluation.

It would seem that the move was not coordinated with the ECB or the Fed and may be endemic of a new low phase in global central bank communications. Many times throughout the financial crisis central banks have coordinated efforts to stabilise market volatility and to manage stimulus programs in concert.

The SNB shock announcement seems to have happened in isolation and could mark the start of a far less accommodative stance by national central banks. This is not surprising as with a strong dollar, the U.S. is able to reduce the costs to foreign markets of its goods and services, thereby producing a massive competitive advantage. Now that the euro is going to start debasing itself too, it is natural that the Swiss also abandon a peg which is about to become indefensible. The question “Who next?” will break ranks. Currency wars and related volatility are now in full swing.

According to Bloomberg, Citigroup, the largest currency dealer globally, lost around $150 million on the move. Deutsche bank also lost $150 million and Barclays are reported to have incurred losses of €100 million.

Some funds and FX brokers and their customers were severely hit with funds closing and other businesses going under or getting bailed out by larger institutions.

Everest Capital had to close it’s Global Fund.

“Marko Dimitrijevic, the hedge fund manager who survived at least five emerging-market debt crises, is closing his largest hedge fund, which had about $830 million in assets at the end of the year, after losing virtually all its money on the SNB’s decision, a person familiar with the firm said last week.”

Other companies have failed completely such as Alpari in the UK and Global Brokers NZ in New Zealand.

Banks in Croatia and Poland may yet feel the pinch as many of the mortgages taken out by house-buyers were in Swiss francs. This was done to avail of low interest rates but now many homeowners will find themselves in negative equity.

The Croatian government is considering pegging it’s kuna to the Swiss franc for one year to give borrowers time to adjust. Poland’s deputy prime minister, Janusz Piechocinski, has suggested that Poland will support borrowers caught in the maelstrom if the Swiss franc remains above the 4-zloty level for an extended period.

So far there have been no reports of national governments being exposed to the move as happened when Brazil and Mexico’s treasuries had shorted the dollar before its rally.

The unsignaled move by the SNB suggests an acceleration of the currency wars. Many analysts expect similar moves from other central banks who have been maintaining a peg with the euro or dollar. As central banks increasingly act unilaterally and defensively it may be that confidence in the central banks themselves will be eroded.

Dr. Marc Faber of the Gloom, Boom and Doom Report believes that such an environment will be conducive to owning gold. At a Societe Generale presentation in London last week he said,

“I’m positive gold will go up substantially [in 2015] — say 30%.” He continued, “My belief is that the big surprise this year is that investor confidence in central banks collapses. And when that happens — I can’t short central banks, although I’d really like to, and the only way to short them is to go long gold, silver and platinum,” he said. “That’s the only way. That’s something I will do.”

Dr. Faber is always very measured in his forecasts. Investors in the UK and around the world would be wise to take note of his suggestion by holding gold in fully allocated, fully segregated accounts in fully audited vaults in the safest jurisdictions in the world.

Dr. Faber’s webinar at GoldCore: Gold and Silver Allocation in an Uncertain World

Goldcore Insight on Currency Wars: Bye Bye Petrodollar Buy Buy Gold

MARKET UPDATE

Today’s AM fix was USD 1,292.25, EUR 1,113.63 and GBP 852.35 per ounce.
Yesterday’s AM fix was USD 1,275.50, EUR 1,099.85 and GBP 841.41 per ounce.

Yesterday’s PM fix was USD 1,273.75, EUR 1,096.07 and GBP 839.87 per ounce. The U.S. markets were closed for a national holiday on Monday.

Gold advanced to its highest in nearly five months as precious metals climbed on safe haven demand amidst concern about sluggish global economic growth.

The International Monetary Fund cut its global growth forecast the most in three years in a note yesterday from Washington. It said slowing growth almost everywhere except the U.S. will more than offset the boost to expansion from the slump in oil prices.

The IMF noted the world economy will grow 3.5 percent in 2015, down from the 3.8 percent rate projected in October. It also revised downward its estimate for growth next year to 3.7 percent, versus  4 percent in October.

Bullion soared last week by the most since August 2013, after the Swiss National Bank ended the franc’s peg to the euro and deepened negative interest rates, causing chaos in markets. The European Central Bank may announce asset purchases on Jan. 22 before a Greek election on Sunday that has increased concern that they may leave the euro.

Spot gold climbed 1.5 percent to $1,294.26 an ounce, the highest since Aug. 28, and was at $1,292.44 early in London. Comex gold bullion for February delivery climbed 1.2 percent to $1,292.50.

Silver rose as much as 1.9 percent to $18.028 an ounce in London, the highest since Sept. 19. Palladium gained 1.1 percent to $766.90 an ounce and platinum added 0.2 percent to $1,268.50 an ounce, after reaching its highest price since Oct. 29.

At a troika conference in Dublin yesterday, Irish Finance Minister Michael Noonan stirred up the pot ahead of Draghi’s ECB meeting in Frankfort, when he said that having national central banks buy government bonds would be “ineffective”.

Mr Noonan’s remarks received a cold response from ECB executive board member Benoît Cœuré, who was sitting next to him on the same panel. However Noonan’s idea was in line with IMF chief, Christine Lagarde, who also attended the conference about Ireland’s bailout. She said, “The more efficient it is, the more mutualisation, the better”.

Lagarde admitted that Ireland had been a “learning curve” as the troika has received renewed criticism of the ECB’s refusal to allow the Irish authorities to impose losses on senior bank bondholders.

This update can be found on the GoldCore blog here.

Yours sincerely,
Mark O'Byrne
Exective Director

IRL
63
FITZWILLIAM SQUARE
DUBLIN 2

E info@goldcore.com

UK
NO. 1 CORNHILL
LONDON 2
EC3V 3ND

IRL +353 (0)1 632 5010
UK +44 (0)203 086 9200
US +1 (302)635 1160

W www.goldcore.com

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

GoldCore Archive

© 2005-2019 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

6 Critical Money Making Rules