The Message from Last Week’s Headlines: Don’t Dare Sell Your Gold!
by Jeff Clark, Casey Research
Have you noticed the trend in mainstream headlines over the past week?
The gold price may be stagnant, but forces behind the scenes signal that something big is gelling.
What conclusion would you draw from this rundown of recent headlines?
China Creates Gold Investment Fund for Central Banks. China announced a new international gold fund. Over 60 member countries have already invested. The fund expects to raise 100 billion yuan ($16 billion). It will develop gold mining projects in the new Silk Road economic region.
China Could Send Gold Up At Least $200. Saxo Bank’s Steen Jakobsen says China’s multibillion-dollar Silk Road Initiative will prompt Beijing to pull money out of Europe and the United States for infrastructure investments elsewhere. This could send commodities higher and push Europe into recession. As a result, his 2015 price for gold is $1,425 to $1,450, more than $200 higher than its current level.
Red Kite Launches New Base and Precious Metals Fund. The fund has already deployed almost $1 billion in equity, loans, and royalty streams into at least 17 junior mining firms. It hired a physical metals trader to handle all the supply. The fund will likely fund underserved juniors that have struggled to get funding.
Texas Senate Passes Bill to Establish Bullion Depository for Gold and Silver Transactions. A bill to make gold and silver legal tender in Texas passed in the state senate by an overwhelming 29–2 vote. The bill essentially creates a way to transact in precious metals. It will allow citizens to deposit precious metals in the state depository and then use the electronic system to make payments to any other business or person who also holds an account.
Gold Smuggling in India at All-Time High. Customs agencies seized over 3,500 kilograms of gold (112,527 ounces) in 2014–15, the largest stash ever confiscated in Indian history. The report says gold smuggling has grown by 900% in just two years. It also estimates that seizures could be less than 10% of actual smuggling.
Russia Boosts Gold Holdings as a Defense Against “Political Risks.” Dmitry Tulin, monetary policy manager at the Russian central bank, said it is increasing its gold holdings because “it is a 100% guarantee from legal and political risks.” Part of the motivation is certainly that their overseas assets could be frozen if sanctions over the Ukraine crisis tighten.
Austria Repatriates 110 Tonnes of Gold from UK. Austria is repatriating 110 tonnes (3.53 million ounces) of gold from the Bank of England. It eventually wants to have 50% of its holdings stored at home. The country has reportedly been transferring its official gold reserves from unallocated to allocated accounts in recent years, and also reduced its leased gold by 60%.
D.E. Shaw Buys $231 million of GLD. D.E. Shaw & Company bought $231.07 million worth of SPDR Gold Trust last quarter. This is a new position for the company.
Canadian Fund Makes $700 Million Bet on GLD. Canadian asset manager CI Investments purchased a whopping 6,117,900 shares of GLD last quarter, worth $703.6 million. GLD is now the single largest holding of the fund—bigger even than its position in Apple.
More Funds Increase Their Shares in GLD… A Swiss investment bank increased its position in GLD by 490%, to over 4 million shares. Lazard Asset Management doubled its holding to over two million shares. Morgan Stanley increased its holding by 8.3%, and Blackrock Group added 167% more to its position.
Traders Buy Gold and Silver at Fastest Pace in Over a Decade. Large speculators haven’t bought silver this aggressively since September 1997. Net speculative longs in gold also added over 45,000 contracts, the most since July 2005.
HSBC Warns Titanic Global Economy May “Collapse.” The chief economist of the world’s third-largest bank, HSBC’s Stephen King, has compared the global economy to the Titanic. “We may not know what will cause the next downswing, but at this stage we can categorically state that in the event we hit an iceberg, there aren’t enough lifeboats to go round. The world economy is like an ocean liner without lifeboats.”
Global debt has soared by 40% since the Great Recession. It’s now $200 trillion, almost three times the size of the global economy. “It would be a truly titanic struggle for policymakers to right the economy,” King said. He doesn’t specifically mention gold, but…
IMF Says China’s Currency Is “No Longer Undervalued.” The International Monetary Fund declared that China’s currency is “no longer undervalued.” The statement is a major vote of confidence for Beijing and the renminbi. Recall that China wants its currency to be included in the IMF Reserve basket.
I predicted China would update its gold holdings to increase the likelihood of getting that acceptance. And that they could surprise the market by announcing a higher amount than the mainstream expects.
It’s one reason I bet Harry Dent that gold won’t fall to his predicted $700 level. I’m so confident I put up my own gold. He did, too.
Check out our 17-page report, where we each argue our case. You can read it free of charge—just enter your email address here, and you can access it immediately.
The report includes eight “proof points,” along with the details of our wager and the date the winner will be announced.
Which headline will you read in early 2017—Jeff Clark Wins Two Ounces of Gold, or Harry Dent Bests Gold Bull Jeff Clark? I invite you to read our debate and decide for yourself. Enter your email address, and see who wins!