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Eric Sprott: Central Banks Use Accounting Tricks To Hide Lack Of Gold

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Eric Sprott gave an interview on Bloomberg regarding Central Banks using accounting tricks to hide the missing gold from their reserves. Some of the transcript from Silverdoctors are below including link to video. Well worth a look.

Sprott simply destroyed the MSM pundits’ anti-gold arguments, stating that gold has beat the Dickens out of every other asset class over the last 12 years, and questioned whether the Western Central Banks have any physical gold left in the vaults, as the gold listed on their balance sheets includes gold receivables, which has been leased out and is gone for good.

Bloomberg kicked the interview off by asking Sprott whether he is as much a fan of precious metals today as he once was, ”given the fact that they’ve treated you so poorly over the past 18 months?”  Sprott replied:

A little history is probably important here.  Gold has gone from $250 to over $1700.  It’s beat the Dickens out of every other asset class over the last 12 years…To specifically answer your question, am I more optimistic today than I might otherwise be?  Absolutely.   I wrote an article recently questioning whether the Western Central Banks had any gold left.  We simply did a physical analysis of the people that are coming into the gold market and the changes that have happened since 2000, (and the supply of gold has not changed since 2000 on an annual basis, it’s still 4,000 tons).   When you look at the fact that the central banks used to sell 400 tons annually, now they buy 500 tons.  The ETF didn’t even exist in 2000, now they buy 300 tons a year. 

The Bloomberg host then interrupted Sprott to claim that this sounds like a conspiracy theory and asked for another reason to buy gold.  Sprott responded:

I could probably give you 20 reasons.  How about money printing?  QE1, QE2, QE3, LTRO, OMT’s, people are essentially debasing their currencies.  They’re not holding them in the esteem that they should, and it’s reflected in the fact that the price of gold’s gone up.  One of the issues we have with gold is the fact that it hasn’t performed well in the last 18 months…But People are flocking to goldWhen I look at the US Mint statistics for gold sales.  When I look at what the Chinese are doing in terms of imports of gold from Hong Kong into the mainland, they’re up 500 tons in the last 12 months in a 4,000 ton market!!  Imagine if the Chinese bought an extra 12% of the oil or wheat market this year!  Would they get it?  And who’s supplying the 500 tons?  We already had a market that was in balance!

Gold production is flat, and one might even argue that the gold miners may have trouble increasing production this year.  You’ve seen the disappointments of Barrick and Newmont, and many others are having issues.

The Bloomberg host then asked Sprott why the gold price hasn’t responded to those supply and demand factors.  Sprott responded:

Well, there’s two markets for gold.  There’s the paper market, the COMEX futures. You can have the annual gold production trade in two days on the paper market.  I focus on the physical market.  I want to see what people are doing with their money physically.  Are they continuing to buy more and more gold, year after year?  Every indication we have is that they continue to buy INCREASING AMOUNTS OF GOLD.  Sooner or later, (and ask Eric asked, how do the central banks sell gold without telling anybody?), they have a very simple way: Central banks have one line on their balance sheets for gold and gold receivables!  If they lease gold to a bullion dealer, that’s a receivable.  That gold has obviously been sold into the market, but we can’t tell what’s real gold and what’s receivable (on the central bank balance sheets).

Full Video Interview

Source: Silverdoctors

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Faber: Fed’s Monetary Policy Will Destroy The World

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Faber gave a scathing response to Bernanke’s QE3 announcement. On his blog his left the message

If I had messed up as badly as Bernanke I would for sure resign. The mandate of the Fed to boost asset prices and thereby create wealth is ludicrous — it doesn’t work that way. It’s a temporary boost followed by a crash. – in CNBC

Faber gave an interview this morning with CNBC,

Central bankers are “counterfeit money printers” and Federal Reserve Chairman Ben Bernanke should resign for messing up the U.S. economy so badly, Marc Faber, author of the Gloom, Doom and Boom, told CNBC on Friday.

 

Bloomberg | Getty Images
Marc Faber, managing director of Marc Faber Ltd. and publisher of the Gloom, Boom and Doom Report

He said Bernanke was one of the main proponents of an ultra-expansionist economic monetary policy that was to blame for the latest financial crisis. “If I had messed up as badly as Bernanke I would for sure resign. The mandate of the Fed to boost asset prices and thereby create wealth is ludicrous — it doesn’t work that way. It’s a temporary boost followed by a crash,” Faber said.

“QE helps rich people whose asset prices go up and whose net worth then increases but it doesn’t flow to the man on the street who is faced with higher costs of livingwith price rises. You just have a small economy that is booming but the majority of the economy is damaged by QE,” he said.

Bernanke announced on Thursday that the Fed would buy $40 billion a month in MBS, giving the impression that this time around there would be no time limit to the program, which would only stop once a sustained uptick in employment is visible.

“The money printers are responsible for this crisis. If we continue with this expansionist monetary policy we won’t be facing a fiscal cliff it will be a fiscal grand canyon,” he added.

Faber then responded to Mike Konczal’s comments that this latest round of QE would expand the scope of Federal Reserve policy and was “great for main street”

Faber poured scorn on the notion that QE helps the economy, declaring that commentators like Konczal would have said the same in 2001 when low interest rates led to the biggest housing bubble in the United States. That in turn led to the financial crisis of 2008.

“If we have an economic crisis in the Western world it’s because the government makes up 50 percent or more of the economy. This is a cancer that is taking away people’s freedom,” he said.

Faber went on to say on an interview on Bloomberg that the Fed monetary policy will destroy the world.

Click here for Faber’s interview on Bloomberg 14 September 2012.

 

George Soros: Euro T-Bills Solution

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 George Soros proposes his temporary solution for the euro, until the EU goes for a full fiscal and political union. Of course he uses the dramatic line that the EU has only 3 days before the sky falls in and the whole world will end or words to that affect. He also sees Greece must exit the euro, but then again we all knew that.

What you need is a European fiscal authority that will be composed of the finance ministers but would be in charge of the various rescue mechanisms, the European Stability Mechanism, and the one that preceded it and it would be empowered to issue treasury bills, to set up a debt reduction fund and actually buy up the excess stock of that that has accumulated in the hands of particularly Italy and Spain and finally combine issuing treasury bills. Those treasury bills would yield 1% or less and that would be the relief that those countries need in order to finance their debt.”

Click for full interview on Bloomberg.

Greek Drachma Appears On Bloomberg Ticker

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Russia Today have reported signs of the Greek Drachma appearing on Bloombergs Ticker while Bloomberg themselves have said that its a test. It has since been removed.

Traders around the world have been staring at their Bloomberg screens, hardly believing their eyes. The electronic information platform has been showing details for possible Greek Drachma trading.

The Bloomberg helpdesk described it as “an internal function which is set up to test.”

The news comes in the wake of the heated discussions over the future of the euro zone and the membership of Greece. While many experts insist that Greece should leave the Euro and default, some suggest it should remain the union and introduce a parallel currency to the Euro to repay the country’s debt.

The Head of the European Investment Bank Werner Hoyer said on Tuesday that Greece will be able to remain a member of the union. “Greece will have the opportunity to solve the huge problems that it is facing. Continuing support from the EU will contribute to this, in case, of course, the very Greeks would want that,” Hoyer said.

And a survey at the weekend showed that Greeks prefer to stick to the Euro and not revert to the old drachma.

The Greek Drachma details have now been taken down from the Bloomberg service.

 

 

 

Bloomberg Debate Bringing Back Gold Standard To US

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Amazing to see the progress gold has made as now we witness a debate on MSM about Gold  Standard which largely ignores the call for gold.

Japan In worse Shape Than Greece

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Originally reported by Bloomberg is the admission by an official at the Ministry of Finance that Japan is in worse shape than Greece. More disturbing is the line about Japan being extremely vulnerable to energy price rises. I think we all know where they are going when you look at the prospect of war in Syria and Iran this year.

In a stunning turn of events, a Japanese Ministry of Finance official admits to Richard Koo’s worst nightmare “Japan is fiscally worse than Greece“. Bloomberg is reporting that, at a conference in Tokyo, Yasushi Kinoshita says Japan’s 2011 fiscal deficit was up to 10% of GDP and its debt-to-GDP has soared to over 230%. What is more concerning is the Kyle-Bass- / Hugh-Hendry-recognized concentration risk that Kinoshita admits to also – with a large amount of JGBs held domestically, the Japanese financial system is much more vulnerable to fiscal shocks (cough energy price cough) than Europe. Of course, the market is catatonic in its reaction to this – mesmerized by the possibility of buybacks and hypnotized at big-banks-passing-stress-tests – though we do note the small reverse stronger in USDJPY has reversed as this news broke and the USD pushes modestly higher.

Source: ZeroHedge

Mohamed El-Erian: US Recession Chances

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Mohamed El-Erian is the CEO and co-CIO of PIMCO,[1] a global investment management firm and one of the world’s largest bond investors with approximately US$1.34 trillion of assets under management was reported on an interview with Bloomberg today to have said

Let me tell you what I find most terrifying: we’re having this discussion about a risk of recession at a time when unemployment is already too high, at a time when a quarter of homeowners are underwater on their mortgages, at a time when the fiscal deficit is 9%, a time when interest rates are at zero. These are all conditions coming out of a recession, not going into a recession.

We put the chance of a recession at one-third to one half, which is really high given initial conditions.e 

The full article can be found on Bloomberg.

 

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