Gold Investment

Reuters: The International Monetary Fund and European policymakers sought to calm investor concerns over tumbles in global stock and commodity markets that continued on Monday. The Central Banks can calm the nerves of investors by leaving the money supply and interest rates markets alone. Investors base their judgement on what the Central Banks are doing now, but most of them are avoiding the fact that the Central Bank’s sole purpose is to devalue money over time. No Central Bank in history has ever made their currency stronger in the long run — the power of the printing press is just too appealing.

Bloomberg: Brazil’s Real Has Biggest Loss Since 2002 on Rates, Commodities Brazil’s economy is tied to the U.S.’ consumption of their resources, and investors internationally are concenred that Brazil might purposely default on their internationally held debts. While Brazil is a small player in the world economy, watching what they do should be a good indication of what other small players may do as well. If many small beans in the soup go bad, we’ll end up with an international stew of money poison. I can’t see any stability in the stock markets at this point, especially with the knowledge that all currencies are chasing each other to the toilet. Which one sinks last will be of little concern when the entire world market is underwater equally.

Investors.com: Dollar down vs. euro, flat vs. yen, awaits data later in the week. Considering that all 3 of these currencies are all down versus gold in the past 30 days, 90 days and 365 days, I’m not sure what this news really means. The dollar is down versus the euro, but flat versus the yen? So what if all 3 are down versus gold and silver. Comparing their “independent” stock markets shows that all 3 are also weak versus bullion. Look at which race loser comes in last place isn’t very important if they’re all losers.

ForexTV shows that international central banks are definitely diversifying from the dollar as the main reserve currency. As central banks sell US dollars for other commodoties and currencies, this increases the amount of dollars in circulation that were previously removed from the supply by being a reserve currency. Those dollars in circulation only mean more price inflation and more currency devaluation — something that no U.S. investor should be happy about (except those who find strength and security in bullion).

Resource Investor: Private Saudi Al Othaim Jewellery Factory Group said it had bought 36 tonnes of raw gold from an African central bank for $480 million. Half a billion in bullion isn’t a significant number in the grand scheme of things, but with a possible long term supply shortage in coming years, watching the jewelry industry now should give bullion bugs notice that buying at the current price by a major player should be reason to believe that bullion will only get stronger versus the world currencies.

ForexTV: European Central Bank board member Lorenzo Bini Smaghi said central bankers need to take account of the risks some households face as a result of their increased debt, particularly mortgage debt. For an ECB board member to warn against a housing market failure is big news, I’m surprised we’re not seeing the bigger media outlets reporting this yet. Might be too early, but definitely something to watch later in the day and the week. By going on record that mortgages might be a huge risk versus real assets, we could see some more market downturns in the various housing market stocks, as well as in inflation concerns as the profits from previous home sales circulates into new markets.

Bullion Market Recap:
As of 12:30 PM CST

Gold US$657.10
Silver US$12.46
Oil US$68.95
DJIA 11,080.34

Gold to Oil Ratio: 9.5301 (up)
Silver to Oil Ratio: 0.1807 (up)
Gold to Silver Ratio: 52.7368 (down)
DJIA to Gold Ratio: 16.8625 (down)

Gold Futures:
Vol Int: 154,270 (down)
Buy: 17,627 (up)

Silver Futures:
Vol Int: 57,672 (down)
Buy: 3,980 (down)

Comparison Chart:

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