Central banks seen becoming net gold buyers-expert
Mon Sep 14, 2009 11:34am EDT
DENVER, Sept 14 (Reuters) - Central banks are expected to buy 6 million to 10 million ounces of gold annually due to currency uncertainties after being net sellers in past decades, Jeffrey Christian, managing director of CPM Group, told the Denver Gold Forum on Monday.
In a keynote speech kicking off North America's biggest gold conference, which runs through Wednesday, Christian gave what he said was a conservative forecast for gold to average $914 an ounce over the next 10 years. Spot gold XAU= was trading at around $1,000 on Monday.
"What we are seeing is that central banks are making the transition from large net sellers to large net buyers," Christian said.
"You will see a net buying of 6 (million) to 10 million ounces per year by central banks, and that is an extremely conservative projection," he said.
Christian said that European central banks appeared to be done with their gold selling, and that central banks in emerging countries which have been building up foreign reserves were now diversifying into gold due to volatility in the dollar and other major currencies.
Recently, China and other emerging
economies have signaled growing interest in gold rather
than stockpiling their currency reserves in U.S. dollar-denominated
assets. (Reporting by Frank Tang; editing by Jim Marshall)
The International Monetary Fund said its executive board endorsed the sale of 403 tons of gold, worth an estimated 13 billion dollars, to boost its lending capacity to poor countries.
The IMF said in a statement the sales would be in a volume strictly limited to 403.3 metric tons, with these sales to be conducted under modalities that safeguard against disruption of the gold market.
The 186-nation institution said the decision was a core element of a new income model to make it less dependent on its lending revenue to cover expenses, such as surveillance of members economic and financial policies, that the board had approved in April 2008.
The Group of 20 key developed and developing countries, at their April summit in London, agreed the gold sales should allow the IMF to offer favorable conditions on loans to the poorest countries.
The IMF decision comes ahead of a two-day G20 summit in Pittsburgh, Pennsylvania, that opens next Thursday.
Hosted by US President Barack Obama, leaders are to discuss efforts to recover from the worst global recession in six decades and financial regulatory reform.
The new income model is designed to provide the fund with more diverse income sources that are better aligned with the variety of functions performed by the fund, with a central component being the funding of an endowment with the profits from these limited gold sales, the 186-nation institution said.
The IMF said the sales will also increase the funds resources for lending to low-income countries, a strategy that won board backing in July.
I am delighted that the executive board has given its overwhelming backing to a strictly limited sale of fund gold to put the financing of the IMF on a sound long-term footing, and enable us to step up much-needed concessional lending to the poorest countries, IMF managing director Dominique Strauss-Kahn said in the statement.
These sales will be conducted in a responsible and transparent manner that avoids disruption of the gold market, he said.
The amount of gold to be sold is one-eighth of the 3,217 tons of gold currently held by the Washington-based IMF, the third-largest official holder of gold after the United States and Germany.
Board approval required an 85 percent majority of the total IMF voting power.
The United States, by far the largest stakeholder, gave its green light after Congress passed legislation authorizing the sale and President Barack Obama signed it into law on June 24.
The fund is required by its founding document to conduct all gold sales at market prices.
The IMF did not state the value of the gold to be sold but based on the current bullish near-record market price for the metal, it is estimated the sale would fetch 13 billion dollars.
Under the approved plan, the IMF would offer to sell gold directly to central banks or other official sector holders if there were to be interest from such holders.
A prime candidate could be China, which is sitting on the worlds largest foreign exchange reserves, topping two trillion dollars, and has been seeking to diversify away from the dollar.
China in early September agreed to buy the first IMF bonds for about 50 billion dollars and has been on a gold-buying streak, increasing its gold reserves by 75 percent from 2003 to 2008, according to official media.
The IMF said that if official demand is insufficient, it could conduct the gold sales on-market in a phased manner over time, in line with an approach already followed by central banks.
The IMF would be constrained by the overall ceilings agreed by the central banks, which currently is 400 tons annually for the next five years, starting on September 27.
The IMF said it will inform markets before any on-market sales commence and report regularly to the public on the progress with the gold sales.
In July, the IMF announced it would increase its lending to poor countries, mostly in Africa, to 17 billion dollars by 2014, including 8.0 billion over the next two years.
That compares with an annual average of one billion dollars in the 2006-2008 period to poor countries, and three billion dollars in the first half of 2009.
The IMF also had decided to cancel interest payments owed by poor countries through end-2011 and reform lending practices to make loans quickly available, at higher ceilings on amounts and with more flexible conditions.
ALL WARS AND ALL CONFLICTS ARE ABOUT MONEY.... NO EXCEPTION.
AND THE CURRENT ONE IS HEATING UP... BIG TIME. The movement of gold is a symptom of a greater conflict. Can you guess who the players are?
Reasons For Major Gold BreakOut
Before the Hat
Trick Letter was launched, a little splash was made when
a Jackass Nobody wrote 25 Reasons Why Gold Will
Rise in November 2002. It was so many years ago
that the piece no longer appears in archives. The motive
for the article was simple. Just too much pure nonsense
and genuine rubbish had appeared in the financial press
about why gold was rising. THEY claimed the
gold price was rising from MidEast tensions, from new
global tensions due to a False Flag attack on
The original litany of reasons was examined two years later in 25 Reasons Why Gold Will Rise (revisited) + 2 more reasons added from August 2004 (CLICK HERE). A couple mining factors had cropped up, worthy of inclusion. A quick swing to the present, after the insolvent US bank system died in September 2008, after the discredited USFed capitulated to offer near 0% rates, after colossal fraud spewed from Wall Street corner offices, after fraud was compounded by the Goldman Sachs creation of Congressional slush funds for self-dealing banker benefit, after the home mortgages continued to hurtle over the foreclosure cliff, after the USEconomy continued on a path of disintegration. Here we are again with oafish hack apologist morons trying to explain the rise in the gold price. To comprehend the golden factors requires them to leap forward well past their Wall Street marketing pay grade.
GLOBAL MONETARY SYSTEM BREAKDOWN
An acute lack of gold comprehension is evident almost on a global basis. The entire system is wedded to toxic paper. For the most part, so-called experts, industry analysts, and network anchors have absolutely no idea why gold has risen above the $1000 level. They are blind to the Paradigm Shift away from the USDollar and cannot admit the breakdown of the global monetary system. Their jobs might require them to turn a blind eye to such catastrophic events. At best they might have spent their entire careers inside the noxious US$ Greenhouse Dome, unable to see from an external vantage point, in no position to see the Dome from an outside perspective. It will be interesting to observe how long the SYSTEM remains ignorant of the massive changes taking place, as the stages they sit upon and work upon are slowly vanishing. Their claims for golden reasons are vacant shallow factors. THEY miss the major factors. They do notice a staggering amount of fiat money being created without basis, which would fall generally under item#2. The actual reasons are many. The list is somewhat debatable, subject to interpretation. Some argument might even come from within the gold community.
Basically the reasons extend from the many tentacles and ramifications of the Grand Paradigm Shift in progress, the complete overturn of the USDollar global financial system.It is being turned upside down before it goes inside out, and finally fractures into a million pieces. This is an irreversible process that is already one year into the collapse process. Here are reasons according to my analysis and perceptions. They only number 13 this time:
1) PARADIGM SHIFT away from a USDollar centric world manifested as the global revolt against the USDollar in reserves management and transaction settlement, extended from bank structures
2) colossal irresponsibility of major central banks with expanded balance sheets, money creation, and credit growth, endorsing their government profligacy
3) failure of the central bank franchise model, exhibited by the ongoing credit crisis, insolvency of banks, and desperate attempt by the US Federal Reserve to serve as the global bank
4) ruined global monetary system from the complete debauchery of money itself
5) perversion of the USDollar from required USMilitary subsidy, from coerced USTreasury Bond support, and from tacit acceptance of Wall Street corruption (past bond fraud and debt rating agency collusion without prosecution)
6) proliferation of OTC derivatives over $1 quadrillion in value with no prospect of resolution, no hope of regulation, and deep corruption, but with deadly dependence
7) gradual recognition of a financial crime syndicate having taken control of the USGovt finance ministry, that involves official channels of slush funds, bond counterfeit, and narcotics money laundering
8) dishonor of financial contract law, chronic lapses in financial market integrity, and constant intervention in those financial markets
9) expectation of
mammoth price inflation just over the approaching horizon,
unless the central bank balance sheets inflate beyond
10) anticipation of banking system meltdown in at least the United States and United Kingdom, likely to result in bank holidays, useful for a forced Bank Consolidation with dead banks capturing the system or for a climax Wall Street theft event
11) observation of gradual economic disintegration and the decline of global trade
12) trend toward commodity stockpiles, of which gold is the financial commodity core element and crude oil is the industrial commodity core element
13) specter of numerous pockets of armed
conflict, military war, and possible nuclear events, as
chaos spreads and nations desperately exploit the
confusion, and react to lost sponsorship relations, if
not parasite-host pacts.
MYOPIA & THE GOLDEN TIDE
This process would be almost amusing, observing cartels suffering at the hands of their own financial devices, if not so tragic by the hordes of bystanders and affected citizens. Some respected pundits will soon make fools of themselves as they awaken to explain events and their complicity. THEY do indeed comprehend item #2, but hardly anything more. Some shallow souls like Karl Denninger actually state that one cannot eat gold, and thus is has no structural value. What a truly moronic point of view by a fine forensic analyst. Stick to your knitting, Karl! Then again, he is half blind and a high school dropout from chemistry and physics (see his 911 Event drivel commentary). One cannot eat crude oil, cement slabs, steel beams, or human undergarments, and these surely have structural value to gird a foundation. Before 1971, few financial crises occurred during an era ruled by gold as the foundational scepter. As the tide turns, THEY will expound on the virtues of gold, without benefit of comprehension, in a laughable climb onto a fastmoving bandwagon. Every pundit wants to join a winning parade. Ron Insana of CNBC states he does not understand why gold is rising, in supercilious manner, as though gold is somehow impudent. He had no idea that structured financial assets would implode in 2006 when he left the monopoly CNBC network that acts like a Wall Street marketing platform. He must have expected housing prices to climb without end. He must not have received word that even Goldman Sachs was shorting mortgage bonds heavily. He is neither enlightened nor connected.
Such myopic vision is typical of bright people who have no insight into the current Paradigm Shift, a dismantle of the stage they stand upon. We are witnessing the demise of the US-UK empire, a era built upon banker monopoly, engineered inflation, Wall Street power, economic mythology, and military prowess.The US$-based structures are vanishing, a gradual process to date, but as times passes, more sudden shocks are sure to arrive as entire floors simply crumble beneath the feet of the wizards and their harlots. Some technical analysts, the eerie bunch who follow price patterns, volume trends, and cyclical measures, care little about reasons. They notice extremely positive patterns in the gold stock index and gold futures prices. Such analysts expect much higher prices ahead from power evident to perceive. See the Bloomberg article (CLICK HERE) from the mainstream press. They notice strength and energy building. They care not why! There is genius at times in such simplicity and designed distance from wretched rationalization.
Just a quick aside, for the benefit of half-blind Karl and others. The last command for Major General Albert Stubblebine was head of all Army Strategic Intelligence worldwide. Note his comments about the ridiculous story of an commercial aircraft hitting the Pentagon, a story he mocks openly.
Stubblebine disputes by simply pointing out that the 5000-lb engines would have left a very very big mark on the Pentagon building facades, something that remarkably receives little discussion.
No such aircraft
impact happened, since a missile hit the Pentagon. Just
try to imagine a jetplane that evaporated and incinerated
without any debris, an utterly absurd tale. Imagine an
advanced metal alloy fuselage incinerated and vaporized,
even hundreds of seats turned to dust while strewn.
Lets all hail the first airline crash in modern
hisotry without any debris! It is a miracle! The retired
Stubblebine should be careful, but he must know the risks.
This entire story is an insult to our intelligence. See
the YouTube video clip (CLICK HERE).
The tale told for the World Trade Center exploits the
ignorance of Americans, who largely failed physics and
chemistry in high school. See gravity (11 seconds for
demolition freefall, not a pancake staged collapse). See
chemistry (jet fuel burns 2000 degrees too low to melt
structural steel). Next resort to Aesop Fables (third WTC
building fell after saddened by the collapse of its two
big brothers). It is difficult to insult the intelligence
of a nation that has little. If a 2x4 lumber slab were
slammed against half-blind Karls blockhead, my
guess is that it too would leave no mark, just like at
GOLD PRICE BREAKOUT BEGINS
The move to kiss $1000 gold was the foreplay, the first dance, the initial step to capture global attention and to preview the next much bigger move. Some important less visible factors are at work to push the gold price up, somewhat hidden from view. The Intl Monetary Fund and the London G-20 Meeting bear on the gold forces. The full breakout is imminent. It could be days, or a couple weeks, probably not more than a month. Ramadan ends in ten days, and Chinese anger is spilling over. Underlying structures are breaking with each passing week. Bank ripples are being felt. Insolvency is spreading like a disease, while corruption spreads like a cancer. Central bank money creation occurs like from a garden hose. Stories will be told about these days for decades. This is history in the making. They are accumulating gold bullion here. The fools are still selling gold, unaware of its 100% rise in price upcoming. Actually, what comes is a quasi-global 50% currency devaluation. China is cutting deals with the I.M.F. to secure central bank gold in huge blocks, much like geopolitical horse trading amidst grand power shifts for global control. If the West wishes to enjoy the benefits of Chinese credit supply, then China must be given much of what it demands. In short, the gold price will break out past 1100 and past 1200, toward a 1300 target, WHEN CHINA DECIDES TO GIVE THE ORDER.
This has come to a Financial War between China
and the United States, waged in the USDollar and Gold
marketplace. The war chest held by China was essentially
given to it by the United States and other Western
nations, with all the foundation from direct business
investment in factories. The Great Economic Fools within
the United States will be fodder for historians for many
decades. The conflict will inevitably morph into a Big
Trade War, and probably into a military hot war. Few
believed my warnings made in 2005 and 2006 that China and
the US will be locked in a Trade War within two to three
years. Watch the tragedy of armed military conflict
unfold, as the US makes one error after another, mixed
with defiant disobedience of its credit master China. The
Beijing leaders have giving the Obama Administration
orders. The Wall Street (errrr, Obama) decision to
reappoint USFed Chairman Bernanke to another term went in
direct contradiction to Beijing orders. Is it any wonder
that gold hit $1000 in just one month after White House
meeting, and just two weeks after the Bernanke
reappointment? Not here!
Sir Alan Greenspan, architect of the failed central bank franchise system, who offered monetary and political cover for the Rubin-Clinton pillage in the 1990 decade and for the Bush-Paulson pillage in the 2000 decade, has come to the stage to give two messages. He just will not go away! Greenspan seems to be one of his best historical critics, without recognition of his new role. He cannot help but offer criticism, a process that undermines his own legacy. Greenspan warns about inadequate bank capital. He should instead declare most big banks as insolvent, and even cadavers. He spoke via teleconference to the Antique India Markets Conference in Mumbai, an obscure forum.
Meanwhile, closer to home at a US-based economics conference, Greenspan admitted that the gold price gains are strictly a monetary phenomenon in his words, which should send shivers through central banker spines. He believes that rising prices of precious metals and other commodities represent an early move to shun paper currencies. He genuflected before the gold altar, when he said, What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment. He always did love gold! Economists should spend less time at conferences and press interviews and more time learning and studying their own field, so as to develop some expertise.
CHINA DECLARES A SUBTLE FINANCIAL WAR
China made three major announcements in the first week of September, each highly disruptive, enough to add thrust to the Paradigm Shift, enough to usher in the nasty phase (see Trade War escalation). The timing of late August and early September for disruptions and onset of instability has not been a disappointment. Some are disappointed, and will remain disappointed, unless the sun does not rise at all. They will never be satisfied. China has shaken the global system in three key ways, resulting in a grand challenge to the power structure. China announced:
1) permission granted for state owned firms to selectively dishonor OTC derivative contracts by means of self-administered Stop-Losses in reneges
2) Hong Kong demands the return of its gold bullion held in custodial accounts held in London, to make its own airport vault facility (the Zurich Switzerland model)
3) Mongolian rare earth metals will no longer be exported to the West, an assault against hybrid cars, certain electronics, and military weapons (missiles).
Implications are enormous. The OTC abrogated contracts for crude oil and metal contracts, ripe with corruption and entirely unregulated, could wound deeply Goldman Sachs and JPMorgan. The demand for Hong Kong gold is more a symbolic threat, adding thrust to what already has begun. Germany, Switzerland, and the United Arab Emirates have demanded a return of their gold from US and UK storage locations, the corrupt centers where the gold was routinely leased illicitly. The trend puts considerable pressure on the COMEX, which could be deeply wounded from lack of underlying metal, as its corruption is exposed and shorting without collateral backfires. Neither the USGovt nor the USMilitary have accumulated stockpiles in rare earth metals, a clear lapse. The distraction of profits from bond fraud and narcotics trafficking must be too great. Rare earth metals are critical for weapons programs, and their absence could put further strain on the over-extended and generally strained USMilitary. See scandium (21), yttrium (39), and 15 elements from lanthanum (57) to lutetium (71), whose atomic numbers are cited in paranthesis. Skip over this part, Karl, as the elements up the scale are all just a blur to you. By the way, copper, silver, and gold are all in the same column for the periodic table of natural elements, a key point, since they share unique traits in their valence.
The Chinese actions border on extreme, but are part of a grand mosaic of change, if not rebellion amidst a Paradigm Shift. THE CHINESE ARE EXTREMELY ANGRY.They are angry about amplified USTreasury debt monetization. They are angry about outsized USGovt deficits. They are angry about USFed Chairman Bernanke being reappointed. They are angry about the battle waged by the USGovt against Swiss bankers. They are angry about Yuan currency manipulation charges. They are angry about being given second class seats at the global banker tables. They are angry about being set up as US debt bagholders. They are angry about the slow retreat of USMilitary presence in Asia. The entire foundation will undergo powerful changes from these three salvos, and more to come, likely even more defiant and elevated. The US-UK wizards who wrecked the banking system will soon be driven over the cliff, victims of their own devices, falling into a deep pit, weighed down by their own insolvency. That bank system insolvency grows worse by the month, as fresh credit portfolio losses still outpace USGovt gifts and new capital infusions.
SAUDI BANKS READY TO TOPPLE
Saudi banks are beginning to topple, soon to cause deep ripples across the globe. Meanwhile, Saudi royals are under threat of assassination. The Saudi Arabian central bank announced it will not purchase the debts from two family businesses after a major default. The Saudi Arabian Monetary Agency will not cover the debt from Ahmad Hamad Algosaibi & Brothers and Maan al-Saneas Saad Group. The debt is owed to local banks. Units of the two groups have borrowed at least $15.7 billion from more than 80 regional and international banks. About $5 billion of that is owed to Saudi banks, Standard Chartered stated in an August 26th report. See the Bloomberg article (CLICK HERE). On August 30th, a suicide bomber injured Saudi Prince Mohammed bin Nayef, son of the interior minister and nephew of King Abdullah. The incident took place in Jeddah Saudi Arabia. Reports indicate the motive might be tied to Saudi involvement in the civil war in Yemen. A check reveals that Ramadan ends on September 19th. Expect all hell to break loose in the Persian Gulf after its end. Mayhem will be permitted at that time.
In a Jackass public article entitled US Bank Enemies at the Gates from late August (CLICK HERE), the risk of broad Arab bank failures was mentioned. But the Persian Gulf bank failures represent the clear and present threat A bank panic in the Persian Gulf could ensue very soon, a back door threat. It would clearly have origins in the United Arab Emirates, spread to the entire Persian Gulf like to Saudi Arabia, Kuwait, and elsewhere.From this global toehold, the bank panic could then spread to London, New York, and points in Europe.Perhaps the origin of Persian Gulf bank shocks will be both Saudi Arabia and the United Arab Emirates. The construction project bust in Dubai, rescued by the Abu Dhabi bankers, will deliver massive shock waves soon. They own a boatload of USTreasurys and US bank stocks. The ugly geopolitical secret is that the reign of the Saudi regime has days that are numbered. The Saudi Royals are already constructing their new enclaves in Southern Spain and Los Angeles. The Saudis have even hired the European Aeronautic Defense & Space Company (EADS) to complete a large MidEast security project, to construct a fence which will encircle Saudi Arabia at a cost of $3.5 billion. These are the same geniuses who created the Airbus flying tomb. Can you say Maginot Line? No students of history in that room!
THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.