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Updated 03:24 12/05/21

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July Gold News 2016

Something quite extraordinary has taken place in the gold market which has not occurred for decades.  For years the U.S. has been exporting gold to Switzerland to be refined before being shipped onto Asia. However, the tables have now turned. In May the U.S. imported 20.7 tonnes of gold from Switzerland, 50 times more gold than their 2015 average.
So why the massive change? Could this be a result of Brexit? Or the recent surge in price? Or are investors demanding physical delivery from an already drained COMEX?

27 Jul 2016, 11:58 a.m.
Peter Walden

The Royal Bank of Scotland has warned customers that they may be charged to deposit money if the Bank of England cuts the base rate.

State own Royal Bank of Scotland has written to its 1.3 million business customers warning them that the group may charge them for holding cash in their accounts. However, the bank confirmed that it has no immediate plans to charge personal customers.

With the solvency of the banking system in question, why would you deposit your life savings in a bank if you are going to be charged for the privilege? It ...

26 Jul 2016, 10:34 a.m.
Duncan Richardson

In three decades China has developed from a poor inward rural economy to a global manufacturing powerhouse. There is no doubt the 21st century will belong to China and at the heart of their ambitions is economic development along the historic silk road. 

China plans to resurrect the ancient trade route between Europe and Asia. The plan will involve massive infrastructure projects, 30 countries and over 50% of the world’s population.

Coincidentally in May 2015, the Silk Road Gold Fund was launched with the specific objective of supporting economic development along the route.  Below is a direct translation ...
25 Jul 2016, noon
Duncan Richardson

Since the 2008 economic crisis global debt levels have exploded. America’s debt to GDP ratio stands at 103%, Japan 240% and Italy 170%. When you take into account unfunded liabilities such as government pensions, the figures are many times worse. In reality there is no chance these debts will ever be repaid. Politicians tell us we are in an era of austerity, yet deficits keep rising. The political class hope we will grow our way out of the problem, but growth is yet to materialise

Since 2008 $60 trillion of debt has been added pushing the worldwide debt load to ...

22 Jul 2016, 11:02 a.m.
Duncan Richardson

Earlier this week the IMF and European commission both lowered their growth forecasts for the UK economy. The decision to exit the European Union has “thrown a spanner in the works” of the global economy according to the IMF. They now believe the British economy will grow by an anemic 1.3% in 2017.  

As the economy grinds to a halt this forecast looks optimistic. It now appears more likely we are heading into another recession. Despite leaving rates unchanged in July the Bank of England is widely expected to slash rates when the Open Market Committee meets next ...

21 Jul 2016, 10:58 a.m.
Adam Pike

The success of a country can be measured by the size and productivity of its middle class. In Britain today, middle income working families are being labelled the “new poor” by the UK’s leading think tank the Institute for Fiscal Studies.

Two out of every three children living in poverty have at least one parent working. The gap between Britain’s poorest households and those on middle income is at its lowest level for 20 years.

The young are suffering the most, with incomes for the under 25’s still languishing at pre-2008 levels. Whilst the over 60’s have experienced a 11% ...

19 Jul 2016, 10:13 a.m.
Duncan Richardson

The gold price retreated during Asian trading as safe haven demand for the yellow metal waned after a failed Turkish military coup.

The U.S. dollar has been the main benefactor as investors reversed safe haven trades with calm beginning to return to Istanbul and Ankara.  In retaliation, President Erdogan ordered the arrest of 6,000 people he believes organised the coup against his government. The gold price fell 2% last week, its first weekly decline in seven weeks.

In other news, better than expected U.S. retail sales clearly got traders to start contemplating the Fed may actually raise interest rates this year. ...

18 Jul 2016, 9:55 a.m.
Duncan Richardson

After eight years of zero interest rates and endless rounds of money printing, central banks are now openly discussing so-called helicopter money. Helicopter money is where money is pumped directly into the economy and not through the banking system.

The Japanese central bank could be the first to pull the trigger. After printing trillions of Yen, the economy is still experiencing low growth and deflation. With options running out the Bank of Japan may be forced to literally hand money out to the Japanese population. Expectations are rising that the Bank of Japan is poised to unleash a ...

14 Jul 2016, 11:24 a.m.
Duncan Richardson

Following three difficult years for the yellow metal the first six months of 2016 have seen gold surge 28%, its best first half return since 1974.

According to analysts from Credit Suisse and UBS the rally has only just begun. In the short term analysts from both banks are expecting the price to reach $1,400 per ounce. The surge is being spurred on by economic uncertainty, loose monetary policy and anaemic yields on government and corporate paper.

Following the UK’s decision to exit the EU institutional money has flooded into government debt, pushing yields to all-time lows. For the first time in ...

13 Jul 2016, 11:44 a.m.
Samuel Gee

Concerns over the health of the Italian banking sector is starting to spook the financial markets. Figures suggest 17% of all loans issued by Italian banks have gone bad, which is equivalent to £300bn.

Market volatility following Brexit has hit the sector hard. A perfect storm of low growth, political instability, corruption and low interest rates is undermining the banking sector.

The political elite in Brussels are opposed to an EU bailout, instead they prefer shareholders and junior bondholders to take a haircut. This will not be politically acceptable in as most of the junior bonds have been sold to ...

12 Jul 2016, 9:56 a.m.
Duncan Richardson

The European banking system needs a €150 billion bailout according to Deutsche Bank's chief economist, David Folkerts-Landau.

According to Folkerts-Landau, Europe is extremely sick and must deal with its structural problems now or there is going to be a financial accident.

In the aftermath of Brexit Italian banks have come under considerable pressure and are reported to need a €360 billion bailout. So far Italian cries have fallen on deaf ears, as German politicians dismiss a taxpayer bailout.

Ironically the crisis has ...

11 Jul 2016, 10:43 a.m.
Duncan Richardson

Deutsche Bank is Europe’s largest bank and according to the International Monetary Fund (IMF) the world’s most dangerous bank. If Deutsche Bank fails it has the potential to collapse the global financial system. So should we be worried?

Deutsche Bank’s share price has collapsed by over 50% in the last 12 months and now trades at 30 year lows. In simplest terms you can value a banks worth by measuring the difference between the bank’s assets and its liabilities.  This currently stands at 60bn euros which is not a lot when you consider the sheer size of Deutsche Bank loan ...

7 Jul 2016, 10:12 a.m.
Duncan Richardson

City experts are expecting the Bank of England to slash interest rates within weeks as the UK economy grids to a halt. Many will blame Brexit, however, economic data indicates that the British economy was stalling in the weeks leading up to the referendum.

Economists believe that Mark Carney will be forced to cut rates to 0.25% in an attempt to maintain confidence the UK economy. In the immediate aftermath of Brexit Carney and Chancellor Osborne both hinted that they would be prepared to reduce interest rates and reintroduce quantitative easing. The pound fell to a new ...

5 Jul 2016, 12:47 p.m.
Duncan Richardson