Gold “Fever” In Asia And Central Bank Demand Could Cause An “Earthquake” In The Gold Market 

An interesting analysis article on gold by Reuters confirms massive and growing demand for physical gold in Asia and the risk of dislocations and rapidly rising prices in the gold market due to central bank demand. The giant middle class populations in Asia, especially China and India are buying physical gold bullion in volume due to concerns about global growth, in order to protect themselves from stubbornly high inflation and concerns about the declining value of their respective paper currencies. Gold demand in China alone is expected to rise about 20% to near 700 tonnes this year from 570 tonnes in 2010. The massive increase in demand from Asia is sustainable. Especially in China where gold ownership was banned from 1950 to 2003 and therefore per capital consumption of gold is increasing from a near zero base. Besides this Asian demand, there is also the continuing and growing central bank demand. Central banks were net sellers for most of the last 30 years and became net buyers in 2010 due to monetary and systemic concerns. The analysis piece reports something experts on the gold market have been saying for some time, which is that “central banks have to tread lightly, as sizable purchases could jolt the relatively small gold market.”

The Global Physical Gold & Silver Reserves Race is the New Nuclear Arms Race

Posted by: smartknowledgeu

Post date: 07/21/2011 - 08:07

The old Cold War USA-USSR nuclear arms race has been replaced by the East-West battle to accumulate physical gold and physical silver reserves. While Western Central Banks and their puppet bullion banks have distracted and goaded private citizens with the invention of fraudulent bogus paper gold and paper silver derivative products, they themselves have been diving headfirst into real physical precious metals. 

 

 

 

 

 

Pentagon Seeks to Manipulate Social Media for Propaganda Purposes

Posted by: George Washington

Post date: 07/20/2011 - 19:12

The Pentagon tries to take over social media to prevent any memes which challenge any of the policies of Helicopter Ben, Turbo Timmy, O-Bomb-a or the rest of the boys ...

 

 

 

 

 

EUR Tumbles As Juncker, De Jager Say Selective Greek Default Still Possible; European Economic Data Deteriorates 

When observing the latest "hope" based rally in the EUR last night we said that we "can't help but be extremely skeptical that this short-lived bounce will promptly reverse." Sure enough, 8 hours and 110 pips lower, this appears to have been the case driven primarily by remarks by Eurogroup president Jean-Claude Juncker and Dutch FinMin Jan Kees de Jager, both of whom said that a selective Greek default "cannot be excluded." Specifically, Dutch Finance Minister Jan Kees de Jager said on Thursday he had seen willingness at the European Central Bank (ECB) to discuss the possibility of a selective default on Greek debt. "The ECB is continuously involved in talks about private sector involvement... We have recently seen some room at the ECB to discuss this topic. This is something different than a credit event. I am talking about a selective default," De Jager told the Dutch parliament. Juncker said essentially the same thing earlier, which precipitated the EUR tumble, as this shows that with the summit starting (11 am GMT), once again nobody in Europe has any idea what they are doing. Furthermore, horrible PMI data out of Europe (following last night's Chinese contraction) overnight certainly did not help. And lastly, a Spanish auction of 10 and 15 Year bonds for which the country had to pay record prices even as the Bid To Cover barely moved (and in the case of the 10 Year declined) also took away from any risk on sentiment. 

 

 

 

 

 

 

Goldman On The Just Commenced Europarliament Summit: "Decision Time" 

For what it's worth, and probably not much, here is Goldman's Francisco Garzarelli on why it is "Decision Time or bust" for Europe. With the just commenced summit, the market has very high expectations of a favorable outcome. Should the proposed resolution end up being disappointing, and it likely will upon a close read between the lines as it can not possibly be anything more than merely another can kicking exercise, look for the EUR to tumble after this final relief rally. From GS: "We said at the start of the week that Euro-zone bond markets would be volatile, caught between attractive valuations and expectations of a deal, and the uncertainties surrounding PSI. On light flows, some of the sell-off has reversed over the past 48 hours. If our baseline case above plays out, we would expect more upside and almost all of the widening in intra-EMU spreads seen since Moody’s downgrade of Portugal could be corrected. We doubt we will see more upside than that, at least for a while. It will take some time for the new policies to be articulated and implemented, and all decisions taken today will need to be put before national Parliaments, probably at the start of September. Moreover, concerns over the pace of global growth remain in the background weighing on weaker borrowers. Last but not least, investors have been heavily affected by recent events and thus may want to reduce risk in a recovering market."

  

Today's Economic Data Docket - All Headlines With Some Claims, Philly Fed and LEIs Thrown Into The Mix 

While the entire world is focused on political developments, namely the rescue of the Eurozone, and the extension of America's credit card borrowing limit, there are some economic updates to keep track of in the US, namely initial jobless claims and the July Philadelphia Fed Index. As Goldman observes below, a weaker than expected initial claims number will be lamed on the ongoing Minnesota shutdown, while it appears that as expected yesterday the surge in M2 has been completely ignored by the economists, and thus expect a massive beat in today's 10am LEI. That said, the only thing that will drive the market once again will be headlines from both sides of the Atlantic. 

 

 

 

 

 

Blame It On Minnesota: Initial Claims Print At 418K, 16th Week Above 400, Worse Than Consensus 

The economic disaster continues with the next target of Europe's reverse Marshall Plan likely being the US itself. Initial claims just prolapsed to 418K, the 16th week over 400K, a 10K increase from the upward revised 408K last week (naturally before it was 405K), and a miss to expectations of 410K. Keep in mind this number will be further revised higher next week. Continuing claims was slighly better than expectations of 3,705K, printing at 3,698K, down from 3,748K. The ongoing 99 week cliff problem is hitting more and more people as 132K dropped off EUC and Extended benefit rolls for the week ended July 2. And while 9,681 of the claims were associated with Minnesota shutdown, nothing explains why there was a surge in 20,599 new claims out of New York of all places. 

 

 

 

 

 

 

EUR Surging On Draft EU Proposal Which Sees "Marshall Plan" For Greece 

Headlines out of Reuters:

• Draft EU summit conclusions call for "Marshall plan" of investment, growth stimulation for Greek economy
• Collateral will be part of new Greek aid deal according to Eurozone draft
• Draft EU summit conclusions says three options for private sector role in second Greek bailout remain on the table; debt buyback, rollover and swap
• Draft EU summit conclusions says EFSF will be able to recapitalise financial institutions through loans to governments,including non-programme nations
• Cost of recapitalising Greek banks estimated to be total of EUR 25bln according to Eurozone document
• Draft EU summit conclusions see rate of around 3.5% on new EFSF loan for Greece
• Draft EU summit conclusions says EFSF will be able to intervene in a precautionary basis
• Draft EU summit conclusions see extension of EFSF loans from 7.5 years to at least 15 years, according to a Eurozone document

The Rubicon has now been crossed: Europe goes all or nothing on Greece. When this latest bluff fails it is all over.

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