Precious Metals |

Barro and Schiff on Gold and Inflation

Josh Barro of the New York Times and Peter Schiff of Schiff Gold talk about the yellow metal and how fast consumer prices are rising. The result of the discussion is pretty predictable.

Also see fellow NYT scribe Paul Krugman’s take on the subject here.

For some time now, I’ve thought that it will be instability (and probably much worse) in the global monetary system that eventually pushes the gold price higher, an idea that is not mentioned in any of the above discussion, but which should have been.

Gold, Commodities Routed

Bloomberg puts together lots of opinions (none of them positive) about the recent plunge in the gold price and broader weakness in the natural resource sector.

One Gina Rinehart, Australia’s commodity queen and richest woman, has been smarting, losing nearly $20 billion in net worth recently, according to this story at the Telegraph.

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The Wall Street Journal reports ($) that the Justice Department is hot on the trail of those who have, possibly, manipulated precious metals markets over the years.

Big Banks Face Scrutiny Over Pricing of Metals

U.S. officials are investigating at least 10 major banks for possible rigging of precious-metals markets, even though European regulators dropped a similar probe after finding no evidence of wrongdoing, according to people close to the inquiries.

Prosecutors in the Justice Department’s antitrust division are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, these people said. The agencies have made initial requests for information, including a subpoena from the CFTC to HSBC Holdings PLC related to precious-metals trading, the bank said in its annual report Monday.

HSBC also said the Justice Department sought documents related to the antitrust investigation in November. The two probes “are at an early stage,” the bank added, saying it is cooperating with U.S. regulators.

Also under scrutiny are Bank of Nova Scotia , Barclays, Credit Suisse Group, Deutsche Bank, Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Société Générale SA, Standard Bank Group Ltd. and UBS AG , according to one of the people close to the investigation.

… and that’s probably about the last anyone will hear about this particular investigation.

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Why Bretton Woods Ended

… or at least one of the major reasons why the “gold-backed U.S. dollar” post-World War II monetary system met with a speedy demise in 1971 after the U.S. government embarked on a “guns and butter” spending spree back in the 1960s.

Courtesy of Nick Laird at Sharelynx who once again has managed to produce a chart that says more than words could ever say about the evolving global monetary system that, lately, appears to be getting a little unstable.

Russia Continues to Buy Gold

While their total is likely dwarfed by what goes unreported in China, the Russian central bank was, by far, the biggest buyer of gold during the third quarter as shown below in the World Gold Council’s latest report on Gold Demand Trends.

I suppose if I were Vladimir Putin here in 2014, I’d be trading in U.S. dollars for gold too, particularly given the developments in Ukraine so far this year and after the metal’s price has fallen to such low levels in recent weeks.

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