Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Silver Short-Term Trend Analysis - 26th June 19
Iran and the Dying Days Of the US Empire - 26th June 19
Why a Saturated Online Gaming Market Spells Good News for Gamblers - 26th June 19
Natural Gas Sets Up Bottom Pattern - 26th June 19
Has Gold Price Broken Out Or Not? Technicals And Fundamentals - 26th June 19
Stocks and XAU Gold Miners Next Bull and Bear Markets are Now Set Up - 26th June 19
Gold Price Trend Forcast to End September 2019 - Video - 25th June 19
Today’s Pets.com and NINJA Loan Economy - 25th June 19
Testing the Fed’s Narrative with the Fed’s Data: QT Edition - 25th June 19
What "Pro Traders" use to Find Profitable Trades - eBook - 25th June 19
GDX Gold Stocks ETF - 25th June 19
What Does Facebook’s LIBRA New Crytocurrency Really Offer? - 25th June 19
Why Bond Investors MUST Be Paying Attention to Puerto Rico - 25th June 19
The Next Great Depression in the Making - 25th June 19
The Bad News About Record-Low Unemployment - 24th June 19
Stock Market New High, but…! - 24th June 19
Formula for when the Great Stock Market Rally Ends - 24th June 19
How To Time Market Tops and Bottoms - 24th June 19
5 basic tips to help mitigate the vulnerability inherent in email communications - 24th June 19
Will Google AI Kill Us? Man vs Machine Intelligence - 24th June 19
Why are Central Banks Buying Gold and Dumping Dollars? - 23rd June 19
Financial Sector Paints A Clear Picture For Stock Market Trading Profits - 23rd June 19
What You Should Look While Choosing Online Casino - 23rd June 19
INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - 22nd June 19
Here’s Why You Should Drive a Piece of Crap Car - 22nd June 19
How Do Stock Prices React to Fed Interest Rate Cuts? - 22nd June 19
Gold Bull Market Breaking Out! - 21st June 19
Post-FOMC Commentary: Delusions of Grandeur - 21st June 19
Gold Scores Gains as Draghi and Powel Grow Concerned - 21st June 19
Potential Upside Targets for Gold Stocks - 21st June 19
Gold Price Trend Forcast to End September 2019 - 21st June 19
The Gold (and Silver) Volcano Is Ready to Erupt - 21st June 19
Fed Leaves Rates Unchanged – Gold & Stocks Rally/Dollar Falls - 21st June 19
Silver Medium-Term Trend Analysis - 20th June 19
Gold Mining Stocks Waiting on This Chart - 20th June 19
A Key Gold Bull Market Signal - 20th June 19
Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - 20th June 19
Investing in APPLE (AAPL) to Profit From AI Machine Learning Stocks - 20th June 19
Small Cap Stocks May Lead A Market Rally - 20th June 19 -
Interest Rates Square Minus Zero - 20th June 19
Advice for Financing a Luxury Vehicle - 20th June 19
Stock Market Final Blow Off Top Just Hit… Next Week Comes the FIREWORKS - 20th June 19
US Dollar Rallies Off Support But Is This A Top Or Bottom? - 19th June 19
Most Income Investors Are Picking Up Nickels in Front of a Steamroller - 19th June 19
Is the Stock Market’s Volatility About to Spike? - 19th June 19
Facebook's Libra Crypto currency vs Bitcoin: Five Key Differences - 19th June 19
Fed May Trigger Wild Swing In Stock Index and Precious Metals - 19th June 19
How Long Do Land Rover Discovery Sport Brake Pads Last? - 19th June 19
Gold Golden 'Moment of Truth' Is Upon Us: $1,400-Plus or Not? - 18th June 19
Exceptional Times for Gold Warrant Special Attention - 18th June 19
The Stock Market Has Gone Nowhere and Volume is Low. What’s Next - 18th June 19
Silver Long-Term Trend Analysis - 18th June 19
IBM - Watson Deep Learning - AI Stocks Investing - Video - 18th June 19
Investors are Confident, Bullish and Buying Stocks, but… - 18th June 19
Gold and Silver Reversals – Impossible Not to Notice - 18th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy

Stock-Markets / Eurozone Debt Crisis Jun 29, 2015 - 05:25 PM GMT

By: GoldCore

Stock-Markets

- Persistent low rates leave central banks with no ammunition to fight next crisis
- BIS says short-sighted central banks and governments contributed to current weaknesses
- Lack of policy options have forced some central banks to stretch “boundaries of the unthinkable”
- Bust in developed economies the main risk facing global economy
- Greece prepares to default
- China markets routed overnight
- Gold will be last man standing when currencies collapse


Greece embarked on capital controls as talks over the weekend between Tsipras’ leftist government and foreign lenders fell apart.

All banks and the Greek stock exchange are closed today. Greek citizens cued in long lines at ATMs or cash machines over the weekend and a run on the banks left most ATMs empty. There is a €60 limit on withdrawals from cash machines under strict capital controls. The ATMs will reopen tomorrow. Citizens are also lining up for petrol and food.

Central banks have run out of options to deal with the next global financial crisis the Bank of International Settlements (BIS) has warned so in its annual report. Failure to make difficult policy decisions and raise rates throughout the “recovery” have left central banks with no stimulus options with which to juice the economy when the next downturn arrives.

The BIS, which is central bank of the central banks based in Basel, Switzerland, points to the short-sighted policies of governments and national central banks over the past few years who preferred to try keep their economies afloat using excessive debt rather than take unpopular steps to reform their economies.

Dangerously low interest rates for too long by Central Banks

The Telegraph puts it thus:

“The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies. These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates.”

“Rather than just reflecting the current weakness, they may in part have contributed to it by fuelling costly financial booms and busts and delaying adjustment. The result is too much debt, too little growth and too low interest rates…In short, low rates beget lower rates,” according to Claudio Borio, who heads the monetary and economic department at the BIS.

The BIS is critical of the low interest rate environment and is, apparently, appalled by the actions of some central banks – namely, those of Switzerland, Sweden and Denmark – who have introduced negative interest rates which it describes as “stretching the boundaries of the unthinkable”.

The organisation rejects the argument that the current status quo of very low rates is some kind of “equilibrium”. Jaime Caruana, General manager of the BIS says:

“True, there may be secular forces that put downward pressure on equilibrium interest rates … [but] we argue that the current configuration of very low rates is neither inevitable, nor does it represent a new equilibrium”.

Low rates are gradually whittling away the balance sheet of banks as low rates are a disincentive to savers, particularly when the cost of many necessities is rising.

The greatest threat facing the global economy today is another bust in developed economies according to the bank. Persistent low rates may “inflict serious damage on the financial system”.

Economies driven by excessive debt, rather than productivity, has caused labour to migrate into less productive sectors of the economy which would not have survived the bust had authorities not intervened. Productivity in the west is therefore weaker than it should be in a recovery.

The report cites Greece as an example of this type of mismanagement where a “toxic mix” of “private and public debt being used as a solution to economic problems, rather than making the proper commitment ‘to badly needed’ structural reforms” as the Telegraph puts it.

The release of the report coincides with Greece preparing to default and a major stock market correction in China. Indeed the crisis to which the BIS says the central banks have no solutions may already be upon us.

An acknowledged default of Greece will trigger credit default swaps in the opaque derivatives market. If a major bank – such as Deutsche Bank, with its enormous derivatives exposure that dwarfs the GDP of Germany – were caught on the wrong side of a trade, we would be immediately in the midst of a truly unprecedented global crisis.

At the same time China is experiencing major difficulties as its stock markets have doubled in the past year and now has shed over 21% of its value in recent days.

It seems certain that a new crisis is imminent. When the public finally lose faith in central banks and the money they print, currencies will rapidly devalue. Holding an allocation of physical gold outside the financial system will prove to be valuable insurance.

Please Review: Gold Is a Safe Haven Asset

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,176.50 , EUR 1,060.82 and GBP 749.10 per ounce.
Friday’s AM LBMA Gold Price was USD 1,174.40, EUR 1 ,048.38 and GBP 745.89 per ounce.

Gold rose $1.00 or 0.09% percent Friday to $1,174.10 an ounce. Silver slipped $0.07 or 0.44 percent to $15.80 an ounce. Gold and silver both fell last week at 2.22% and 1.92 percent respectively.

Gold in U.S. Dollars – 5 Day

Gold in Singapore for immediate delivery climbed 0.7 percent to $1,183.18 an ounce near the end of the day.

The yellow metal rose today as investors piled into safe haven assets as the Greek debt crisis took a turn for the worse over the weekend and a Grexit appear imminent.

U.S. gold futures also climbed 1 percent to a session high of $1,187 before capping gains. Silver rose nearly 1 percent along with gold.

Riskier assets fell such as U.S. equity futures, Asian stock markets and the euro fell as investors made a beeline into safe-haven assets like gold and silver.

Friday’s U.S.CFTC data showed speculators upped bullish bets in COMEX gold futures and options and switched to a net short position in silver for the week ending June 23.

In Asia, the People’s Bank of China slashed its one-year lending rate by 25 basis points to 4.85 percent,  and lowered the amount of reserves certain banks are required to hold by 50 basis points. This has been its fourth cusince November. The central bank also decreased its one-year deposit rate rate by 25 basis points to 2.0 percent.

In late morning European trading gold is up 0.09% or $1,176.38 an ounce. Silver is up 0.05 percent at $15.80 an ounce, while platinum is off 0.94 percent at $1,067.88 an ounce.

This update can be found on the GoldCore blog here.

Stephen Flood
Chief Executive Officer

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