German Bundesbank Will Sell Only a Few Grains of Gold 2009/10

Tuesday, September 29, 2009

The German Bundesbank has announced it will sell a maximum of 6.5 tons of gold in the current fiscal year under the Central Bank Gold Sales Agreement (CBGSA.)
Germany sits on a hoard of 3,408 tons, the second largest gold stash behind the USA.
The Bundesbank has always fiercely rejected all attempts by politicians to close budget gaps through selling gold. It is the first CBGSA member to publicly announce its intentions for the running year.
The small sale of 6.5 tons will be almost exclusive used by the German mint to produce collectors gold coins.
A few weeks ago the German government admitted that part of Germany's gold hoard is on US soil, creating a minor tussle whether this is the right policy.
On a historical note France's ex president Charles de Gaulle sent a warship to New York in 1971 to pick all of Frances's gold holdings there and repatriate them to France.
Dubai had started repatriating its 114 tons of gold in May from London to Dubai.
According to German gold website Goldseiten.de Germany will offer its sales rights to other member nations or the IMF which wants to sell 403 tons of gold in the next few years. Ther IMF is not a part of the CBGSA.
Both China and Russia announced earlier this year that gold will play a vital part in its foreign currency reserves, fundamentally shifting the global importance of gold to the upside. During WW2 Germany was only able to fund its international purchases with gold as the Reichsmark was not honoured by any other government anymore.

Weekend Viewing: Creeping Corporatism/Fascism: Police Attacks Pittsburgh Students

Saturday, September 26, 2009

Pls somebody shake me awake and tell this is not ther USA 2009.


VIDEO: Pittsburgh students are attacked with non-lethal sound canons. But look at the martiality of these government's goons. The whole scene reminds me of junta-like regimes that quell any and all democracy (which is the right of the ither to speak his mind.)
Is the whole world coming to an unprecedented state of chaos as these defense expenses trillions are neither in the pockets of Congress nor in those of taxpayers? The bankrupt US(S)A has other priorities, way more pressing than to terrorize its own citizens. How many computers for school kids bought only for the total tab of this show of homemade terror paid for by tax payers who certainly have more vital agendas on their minds these days?
Their mid term most challenging task will be to find foreign nations buying bonds from a government that has been trampling on human rights for centuries now and looks maybe even ready for segregation. CHeck out some old world maps: America is only around for 400+ years. The first Iraqi chiefdoms, Chinas's emperors or the Roman empire had ruled much longer and fell for the same reasons:
Too much debt
A public standing up against either bread prices or new "taxes" has always been the breeding ground for very sudden movements of the public. As I have not come across a piece of history that would disprove of this theory, here a may-be version about the first signs that will hit citizens: ATM's won't work, banks telling will only allow maximal daily amounts.
A systemic failure would mean financial and economic chaos within 2 weeks where we may come across a new Tsunami that bankrupts companies and families bankrupt because the credit system cannot keep the money going round anymore
Enough for a late Saturday blog post. I will elaborate more on this in a timely fashion.

Fed Attorney Wants to Clarify "Yes" and "No", Does Not Rule Out Fed's Direct Intervention in All Sort of Markets

Tired of the Simpsons on morning TV for a first shot of eye-blinking humour and irony? Well, then better change to the REAL REALITY LIVE TV C-SPAN. Another good source for the best soundbites from idealess politicians is youtube.com
I normally see video as a time consuming habit. Better utilize time to read 3 hardcopy studies than listen to one of them. Well - er - there may be one adult-only TV news station designed to represent the truly booby info ;-)
Unfortunately this doesn't work in the case of a live transmit from some government venues where every irony writer/comedian will at least have leg-cramps because he could not come up with better satire.
Check out this video where Republican Congressman Alan Grayson slams Fed Attorney Alvarez for the Fed's apparent posture to block off any information claims and does not rule out that the Federal Reserve actively intervenes in all kinds of markets!!!

VIDEO: Rep. Congressman Alan Grayson owns Fed Attorney Alvarez, whose biggest skill is probably to revolutionize science about the meanings of such conundrum-like words like "yes" and "no" Video courtesy of BreakThe Matrix.
This involuntarily comedy reminds me of George Orwell's newspeak where war is peace and yes is no.
Find 100s of such inferior appearances of politicians recorded somewhere on the Web.
TV is dead. (First coz'of too many ads, now coz'of not enough ads) I prefer to get unedited cellophane (sorry, digital whatevers) versions of what had happened on the Web e.g.
Twitter has become faster than any newswires who themselves jump the bandwagon in order to show presence among millions of micro-bloggers.
The web begins to scare execs of traditional media who relied on ad incomes that now mostly go to Go Ogle ads. I cannot imagine that the traditional printed press will survive by holding on to the wrong strategy which is just another continuation what we heard n times before.

North America Takes The Backseat in Prosperity

Thursday, September 17, 2009

Never mind that you lost money in last year's markets. So did Warren Buffett and many other investment legends, publishing losses in the >30% range. But there's always a good thing for some minority in every bear market. If you are European you are now on the top of the world as North America has fallen to #2 in the global comparison of wealth after all markets switched into bear mode after the official beginning of the credit crunch in 2007.
According to a report in EUobserver, my favorite news site for critical EU reporting, Valentina Pop came up with this trend-changing report headlined "Crisis makes Europe richest reagion in the world, study says."
From the article:
Europe has emerged as the richest region in the world, pushing North America, where wealth has declined by more than 20 percent due to the economic crisis, off the top spot, a study has shown.

The world's richest also feel the recession biting, especially in North America, where the financial crisis first unfolded a year ago, reveals a survey on global wealth carried out by the Boston Consulting Group, a global management consulting firm.

North America's wealth, measured in assets under management, plummeted by 21.8 percent, the steepest decline in the world. A lesser fall was registered in Europe, where assets shrunk by 5.8 percent compared to last year, down to €22.2 trillion – a quarter of the globe's total wealth.

The number of millionaire households worldwide fell from 11 million to about 9 million - a drop of 17.8 percent. The decline was steepest in North America and Europe, at 22 percent in both regions, although the United States continues to have the most millionaire households - nearly 4 million.

The crisis also narrowed the gap between the wealthy and non-wealthy. Wealth owned by households with less than €90,000 in assets under management increased by two percent in 2008, but it declined in all other segments. Among households with more than €4.5 million in assets under management, wealth fell by 21.5 percent.

Switzerland remained the largest offshore financial centre, accounting for more than €1.5 trillion or 28 percent of the world's tax havens. But increased regulatory scrutiny is putting pressure on offshores that have based their edge primarily on tax avoidance. "Once their tax and legal advantages evaporate, so too will their appeal," Peter Damisch, co-author of the report, said in a press release.

Some nontraditional offshore centres - including several outside Europe - remain poised for growth. Singapore and Hong Kong, in particular, will continue to benefit from their proximity to other Asian countries, where wealth is expected to stage a faster recovery.

The wealth management industry has weathered the storm better than most other financial-services sectors, but still their profits fell by more than six percent compared to last year. Stung by losses and scandals, clients shifted their assets to basic, low-margin investments.

"Dazzling product complexity is no longer seen as a positive attribute - if it ever really was," said Bruce Holley, another co-author of the study.

In my long term view this will only be a temporary phenomenon as Asia will overtake Europe within the next decade.

Does the Fed Start Thinking Out of the Box???

Friday, September 04, 2009

A screenshot from my web stats. Does the Fed start thinking about something so far unthinkable?


SCREENSHOT: FRB = Federal Reserve Board. Frit= Federal Reserve Information Technology. Click to enlarge.
I presume silver may perform well despite mountains of COMEX short contracts. One can print unlimited amounts of these. But the real stuff requires a lot of labor to dig it out.
Silver has a dual function: It has been the money for many centuries and it is the best electric conductor next to gold, but so far for a fraction of the gold price.
Silver ran from S15.40 to more than $16.20 on Thursday.

FWIW: Fed's Latest Minutes

Wednesday, September 02, 2009

For what it's worth (FWIW), here a link to the latest FOMC Minutes from August 11/12.
As the FOMC (Federal Open Market Committee) has a rather dismal track record, read them, play Klondike or smoke one of those worldwide unseen green shoots that seem to be exclusively available at CNBC. Mental value/gain is about the same.
BTW, gold shot to $978 today.

The Numbers Are Too Big: IMF Research on Euro Policy Without a Single Absolute € Figure

Tuesday, September 01, 2009

On Tuesday the IMF published a research paper that states "Euro Area Monetary Policy in Uncharted Waters".
It is time to ring the bell for the Euro system when the IMF manages to publish a 36-page paper without a single absolute € figure on the size of the mass-printing actions of the European Central Bank (ECB.)
Scroll down the IMF pdf to page 9 to arrive for a guide how to assess efficiency of ECB policy. Ah, forget the download of this paper, just parse the 3 highlights below and save the other time.


GRAPH: Will this formula save the Euro? Source: ECB. Click to enlarge.
Looking for somewhat easier information page 14 delivers the first interesting graph on actual inflation and the daydream of central banks, called estimated inflation expectations.

GRAPH: The black line is actual inflation, the red line is the daydream of Europe's central banks: inflation expectations. Chart courtesy ECB. Click to enlarge.
The executive summary of the paper says this:
We analyze the European Central Bank's (ECB's) response to the global financial crisis. Our results suggest that even during the crisis, the core part of ECB's monetary policy transmission-from policy rates to market rates-has continued to operate, but at a decreased efficiency. We also find some evidence that the ECB's non-standard measures, namely the lengthening of the maturity of monetary policy operations and the provision of funds at the fixed rate, reduced money market term spreads, facilitating the pass-through from policy to market rates. Furthermore, the results imply that the substantial increase in the ECB's balance sheet may have contributed to a reduction in government bond term spreads.
I allow myself to point out that there is not a single absolute currency figure. The IMF now calls money "units."
Well, as we are in the Trillions it does not really matter. All EU banking systems are beyond the breaking point as all economic policies run into descending tax income vs rising social expenditures on global terms.
Fiat money won't do it again. And by the way: markets go up and down.

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