PMs have likely put in a bottom for 2012.
Although returns are not great in bullion, a steady interest is still being generated from the lack-luster metals. The infamous Wednesday put in the other week has done the damage and the correction seems to have consolidated into a solid trading range for PMs. I called 31.50 and 1620 levels as being the strong supporting range for consolidation, which luckily seems correct. There was a marginal breach at those levels, which was expected, but since then the end of the first quarter has stabilized within view. It seems many analysts have been quiet on the western front lately, preferring instead to be absent from commentary, although a few calls of downside have put pressure on markets. This has left me to my own devices to weigh up the pros and cons but the above links somewhat confirm my own view.
My call is still that a 'mass shock' is needed to project gold beyond a record setting 2012. However, this market has had about all the shocks it can expect except a king-size natural disaster. That is certainly not out of the picture with March 21-23 seeing increasing seismic action along the Pacific-Ring. Just like the US economic recovery, the Ring of Fire sits precariously on the edge of reality. Trumped up hopes but shifting baselines still undermine surety on both the economic and natural structure fronts. It seems not a matter of 'if' but a matter of 'when' the foundations will shake. There are even projections of a possible collapse in the USD as it falls from grace.
If the bond market collapses analysts have called a reversal in gold but before that occurs is the hope that the Feds will pump up the volume to extend the deceit. Bernanke was talking it up just recently. I think volatility will still be the order in PMs and average volumes will persist but that current levels will hold strong with 31.50 and 1620 still steadying the ship.
The new player to add support to a potential waning interest in PMs is the growing small investor market across China. The precious metals trading accounts are steadily gaining popularity and are gaining ground across the SOBs. We can see a new and rapid fire small investor pattern kicking in daily. The LBMA and the World Gold Council are both players to support this market and ICBC for one are recruiting bi-lingual experts to further bolster the performance and support the move. As confidence grows it will only be a matter of time before more small investors take note of the opportunities and every man and his bank manager gets on-board a PM rally. It seems distant that a new paradigm can be reached in PMs so a steady interest without the hype should see relief to prevent the bottom falling out.
Deutsche Bank is settling as the innovator and quiet achiever in global banking circles as Ackerman steps down. A 31% increase since Dec 21 lows has seen the global player consolidate its future role within a global reserve network.
China-Australia Agree on Bilateral Currency Swap Agreement
Posted on March 23, 2012 by China Briefing
Mar. 23 – The central banks of China and Australia signed a currency swap agreement yesterday that will allow RMB200 billion (A$30 billion) worth of local currencies to be exchanged between the two countries over three years.
AS we can see the global presence of the CNY is making headway to swing across to Europe with Germany at the centre of a global reserve network. William Rhodes, former Citibank Vice Chairman & CFR stalwart, was on the US-China Business report last week stating that it is a certainty that the CNY will become a reserve currency in the future. That seems like a 'plan' not a 'view' - coming from someone high enough to know.
China Supports London’s Development as Offshore RMB Market
Posted on September 16, 2011 by China Briefing
Sept. 16 – The United Kingdom and Chinese governments recently agreed to jointly work on developing products and services denominated in the Chinese local currency RMB, in a bid to develop the City of London into another major offshore RMB market.
Concerns Grow over China’s Presence in Europe
Posted on September 15, 2011 by China Briefing
By Vivian Ni
Debt-ridden European countries are longing for China’s purchase of their public debt despite fears that the country has motivations of a “reverse colonization” of Europe. Nowadays the message “the Chinese are coming” can often help governments trapped in financial crisis press public refinancing needs and shore up creditworthiness.
Greenfield investments, mergers and acquisitions, and trade as well as cooperation agreements relying on Chinese financing have become major contributors to the surge of Chinese direct investments. Interestingly, in Europeans’ eyes, the myriad Chinese investments often flow to areas that serve China’s geopolitical interest or need for natural resources and technological development.
In general, European countries still welcome Chinese investments, especially when the sizable exports bring people cheaper goods and massive capital injections provide indebted governments with a lifeline. However, many Europeans – who do not want to see their dependence on China grow – are now asking for a level playing field on which both sides can develop a greater degree of interdependence.
As I stated recently, Europe is on sale and 'big money' is acquiring valued assets. With the Euro zone being the chief trading partner with China the US will further need to focus on their domestic economy of scale and abandon the global perspective of dominance. China is the 'great leveller' in economic circles today and global socialism looks to be far from dead to me. Communist China was reportedly chosen by the oligarchy to be the hammer to reduce the 'independent' to 'co-dependence' and to shake the tree until a global interdependent regime can settle on the ashes of a re-birthed Phoenix of global rule.
I am going to draw speculation here that global shifts within the tides of fortune could bolster support for wealth moving across into the assumed security of gold and silver as the USD wanes from the position of power. I think this could be a pure sentiment issue with US cash fast disappearing as the prime means of exchange. I read this morning that cash has almost disappeared from some European countries and even in the US cash is running at 7% with electronic purchases taking more than center stage. If any hint of a cashless society begins to creep into the minds of citizens, the 'land of the free' and its constituent nations of 'free peoples' will no doubt go into a parabolic move of shoring up the secret stash. The old days of burying the loot under the oak tree, stitching a gold sovereign into a hem, or cementing a safe in the wall will no doubt become a treasure trove of possibilities.
There is not too much talk of a 'cashless society' these days but with the likes of Bernanke setting the stage against a 'gold weighted reserve' - the rush to glitter may again take stage as it did at the abandonment by Nixon way back in '71.
Julian Philips has an interesting article which stimulates my view.
Is the US Dollar Headed for a Major Fall?
One of the facts of life over the last 40 years has been that the U.S. dollar is the world’s sole global reserve currency. ... The use of the international monetary system as a war machine has surprised and angered the BRICS nations who are meeting next week to discuss this and, no doubt, to work out ways to prevent the U.S. from exercising such power. If they succeed, they will have formulated a way to bypass the U.S. dollar as the dominant currency with which to pay for oil. Once this hold has been broken, we may see a steady move away from the U.S. dollar as the sole global reserve currency.
Well with all the 'movers and shakers' that are rattling the sabres and moving the foundations across the planet - PMs still look fundamentally sound to me. Fortunately China has no chance of a cashless society so I guess cash in developing countries will be around for a long time yet.
In the meantime - 'Happy Days'