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It’s here, after the Fed’s decision to leave Interest Rates unchanged and to buy $300 billion in Treasuries, plus another $750 billion minimum in buying mortgage backed securities; the markets woke up this morning to the realization Inflation is coming back. Gold which closed down $29 yesterday but immediately shot up after the announcement on spot pricing. Today the market has caught up and as I speak Gold is up $66.90 at $956 oz. I hope you have been listening to this blog and have gotten in. If you were on the sidelines- this is the time to still get in as $1050 first target. After that $1250 oz so get in while you can. We have Lift-Off! – Good Investing- jschulmansr
“Nothing will unnerve the paper gold shorts more quickly and do more to undercut their confidence than to strip them of the real metal and force them to come up with more hard gold bullion to make good on deliveries. “Stand and Deliver or Go Home” should be the rallying cry of the gold longs to the paper gold shorts.” –Trader Dan Norcini
Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out:
· Who’s been driving this record bull-run in gold?
· What Happens When Inflation Kicks In?
· Why most investors are WRONG about gold…
· When and How to buy gold — at low cost with no hassle!
Get this in-depth report now, plus a gram of free gold, at BullionVault
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Where is the Dollar heading? Part 1 — A Must See!
Gold rallies over 7% as Fed move fuels inflation fears
By Moming Zhou, MarketWatch Last update: 1:14 p.m. EDT March 19, 2009
A torrid tale of politics, gossip and a shiny, yellow threat to world peace...Germany in 1944 could buy materials during the war only with gold.Fiat money in extremis is accepted by nobody...- Alan Greenspan, then-Fed chairman, May 1999FOR A WORLD-LEADING MARKET turning over $60 billion per day,London's wholesale gold dealers sure spook easy sometimes."I've just heard central banks have been selling. You hear anything?"asked one breathless contact of BullionVault on Wednesday... justbefore the Federal Reserve's $1.25 trillion shot in the arm gamedthe gold price so hard, so fast, the conspiracy theorists at GATAshould demand a Congressional hearing into Ben Bernanke'slong Comex position.More often than not, however, professional dealers get allaflutter about rumors of central-bank buying, not selling. Inlate 2008, it was supposed to be the Saudis. Last month it wasthe Russians – or so gossip claimed. Gossip that the Kremlinwas only too happy to buoy.Come mid-March, the People's Bank of China (PBoC) fired upthe tittle-tattle – and again, as if on purpose – by forecastingthat despite "safe haven" demand for the US dollar in 2009,gold prices would "fluctuate at high levels...possiblybreaking through previous highs..."Now this week a report by the oh-so-sexily-namedCentral Banking Publications says that out of 39 reservemanagers controlling $3.2 trillion in official currency andbullion hoards – some 42% of the world total – well overone-in-two feels Buying Gold would make a smarter movetoday than it did this time last year.So are the emerging powers hoarding gold today or not?What's a private citizen trying to look after his or her ownto make of this chatter?Well, as a rule, it means little or nothing for the price of goldday-to-day. And like GATA's claims –highly detailed, much derided – that Western governmentsregularly fix the gold market to cap its ascent, rumors ofcentral-bank buying never prove quite as dramatic ascentral-bank action to either defend or debase thecurrencies against which it's priced instead.Raise overnight interest rates to double digits, for instanceas the Federal Reserve's Paul Volcker did in the early 1980sand non-yielding gold will tumble against high-yielding cash.Cut and hold rates at zero, in contrast...while creating, say,$1 trillion of fresh money in a 425-word statement, as BenBernanke did Wednesday...and you'll send Gold Prices higher,just as surely as the Maestro's apprentice strolling into Londonand buying 50 tonnes on his own account.Investment-house analysts, meantime, are more focused onthe possible 400-tonne sale mooted to help save the world-saving International Monetary Fund (IMF). Yet the really bigdriver so far this year remains mutual-fund managers buyingpaper-shares in ETF trusts. Western coin buyers paying10% mark-ups (or more...!) are meantime wrestling with Asianscrap-jewelry sellers as to who can tip the balance of apparentsupply and demand.Large-scale gold purchases by Beijing or the Kremlin wouldanyway come at the pit-head, rather than on the open market,as they look to "slow and steady accumulation" in the wordsof UBS's highly-regarded John Reade recently, quoted by theBuying gold direct from domestic miners washow South Africa more than doubled its official reserves in thelate 1960s. China and Russia now stand first and fourth amongthe world's gold-producing nations. Why announce theirintentions, sticking a premium onto their dealer's offer,by going through the open market?But behind the dealing-room noise, however, the cold factsof Asian, Middle East and Russian gold hoarding point to adeeper trend – an ugly if grand historical shift that finds itslast cyclical turn almost 10 years ago to the day.In mid-1999, the Swiss, European and UK central banksannounced gold sales that did indeed shake the market.Back then, the Gold Price had been tumbling for the bestpart of two decades – thanks first to those double-digit USrates, and then to the fast-growing number of high-returnalternatives for investment cash that sprouted worldwideas interest rates began to fall back but remained well northof the rate of inflation.Prompted by investment-bank advisors and analysts, thelate 20th century's heavy selling by West Europeangovernments coincided not only with both a multi-yearlow in the gold price and a bubble in earnings-free tech stocks.It also came together with Francis Fukuyama's "end of history"and Tony Blair – the UK prime minister then guilty of bombingneither Belgrade nor Baghdad – declaring his to be "the firstgeneration [in Europe] that may live our entire lives withoutgoing to war or sending our children to war."Put Blair's cant to one side (if you're not retching). Why didEurope's central banks have so much gold to sell in the firstplace? As BullionVault has noted before, the continent's 30-year scrap between its big nation states was preceded andworsened by frantic gold hoarding amongst the major players.Because a government must trust in another's long-term survivalwhen accepting its paper as payment. Whereas gold bullion, asformer Fed chief Alan Greenspan famously said – and just beforethe UK announced its 415-tonne sales back in May 1999 as ithappens – "still represents the ultimate form of payment inthe world."Germany in 1944 could buy materials during the war only withgold. Fiat money in extremis is accepted by nobody. Gold isalways accepted."Why else did the Nazis march straight to seizing the central-bankvaults on reaching Vienna, Prague and Warsaw? Why else did theUnited States grow its hoard from 500 tonnes in 1900 to almost20,000 by the eve of World War Two...nationalizing privately-heldgold on pain of a $10,000 fine or imprisonment when F.D.R. tookoffice at the depths of the Great Depression? (SeeHoarding for War, Vaulting for Victory for more...)Now, two generations later, China's official gold reserves remainunknown and unknowable to outside observers. But it has becomethe world's No.1 gold-mining state thanks to the collapse in SouthAfrican output. And the fresh deluge of US money debasement onlyconfirms why Beijing's bankers "hate you guys" as one policy-maker,Luo Ping – director-general ofChina's Banking Regulatory Commission – put it last month."Once you start issuing $1 trillion or $2 trillion," he said to theFinancial Times, five weeks before the Fed issued...ummm...$1.25trillion of new cash..."we know the Dollar is going to depreciate."So we hate you guys but there is nothing much we can do. Except forUS Treasuries, what can you hold? Gold? You don't hold Japanesegovernment bonds or UK bonds. US Treasuries are the safe haven.For everyone, including China, it is the only option."Further west (but only a little, politically), Russia's official gold reserveshave swelled by one-half this decade on the IMF's data, with newpurchases peaking in August 2008 – just as the 58th army rolled intoGeorgia to defend South Ossetia's illegal, breakaway republic.Under Vladimir Putin, the Kremlin said it wanted gold to grow from2.5% to fully one-tenth of its foreign currency reserves, meaningfour-fold growth of its bullion hoard if not a collapse in its paper assets. Just last month, the central bank stated that it was Buying Gold.On the available data, it had already added 109 tonnes to its hoard in the15 months starting Jan. 2007 at a cost of some $27 billion.Oh sure, that's peanuts compared to the total $4 trillion-worth of goldnow thought to be above-ground at today's prevailing prices. But thevast bulk of that gold is held as jewelry, not monetary units like coinsor bars. And according to Tsar Putin himself back in 2007, before thisburst of gold-hoarding really got started, the ratio ofstronger than for any other state in Europe.Never mind how wide of the mark that metric was; Putin's claim showshow much Gold Bullion matters to Russia's political confidence – aswagger only called into use when debt and foreign currencies slideinto crisis. And then this week, the current Kremlin incumbent, DmitryMedvedev, goes and announces that he's "rearming" Russia, using thevery word – "rearmament" – that Europe fretted over and feared allthrough its short 20-year peace between the first and second world wars.Specifically, "[I will] increase the combat readiness of our forces, firstof all our strategic nuclear forces," Medvedev declared Tuesday, pilinghistorical weight onto Monday's more Cold-War-style news thatRoscosmos, the Russian space agency, is planning a manned lunarmission for 2015.Oh, and then there was Sunday's news from Venezuelan socialistcrackpot Hugo Chavez that Russia's long-range Tu-160 "Black Jack"bombers – each capable of carrying 12 nuclear warheads – are welcometo use the Caribbean island of La Orchila. You know, just for re-fuelling,cleaning the windscreen, emptying the ash-trays...but not ever as apermanent base.So this isn't the Cuban missile crisis. Not yet at least. But the Kremlin'snew saber rattling must still have caused a shock at the White House –just as it shocked anyone not tracking Russia's fast-growing gold reserves.Either that, or Team Obama is so smart, they were expecting some kind ofpre-emptive strike ahead of the Fed's nuclear blast in the T-bond market."Foreign demand for long-term Treasuries has disappeared over the lastfew months," writes Brad Setser – an ex-US Treasury and IMF official,former economist for Nouriel Roubini's doom-and-gloom funsters at RGEMonitor, and a visiting or associate fellow pretty much everywhere worthhaving deep thoughts on big subjects. Studying the latest official data(released Monday) in his blog for the Council for Foreign Relations, "It isstriking that for all the talk of safe haven flows to the US, foreign demandfor all long-term US bonds has effectively disappeared," he explains.In particular, "Over the past three months, almost all the growth inChina's Treasury portfolio has come from its rapidly growing holdings ofshort-term bills, not from purchases of longer-term notes...and it is alsostill selling [mortgage] Agency bonds."All told, China continued to buy US Treasury debt; it is "the onlyoption" for China, Russia and everyone else at this stage of the game,as Luo Ping wailed to the FT last month. But of the $12.2 billion Chinapurchased in January, fully 95% were short-term bills. "Russia also,interestingly, added to its holdings of short-term Treasury bills," Setsersays.And then, with the latest Treasury fund-flow data revealed...BOOM!The Federal Reserve explodes the Dollar by printing $300bn to buy30-year US debt, plus another $750bn to buy mortgage-agency bonds.Someone's got to buy this stuff, and the forced buyers of this decade-to-date are starting to tire. They might just be looking to Buy Gold formuch more than "portfolio diversification" as well.There. How's that for a gold-market rumor...?======================================================== Claim a gram of FREE GOLD today, plus a special 18-page PDF report; Exposed! Five Myths of the Gold Market and find out: · Who's been driving this record bull-run in gold? · What Happens When Inflation Kicks In? · Why most investors are WRONG about gold… · When and How to buy gold — at low cost with no hassle! Get this in-depth report now, plus a gram of free gold, at BullionVault ======================================================== Where is the Dollar heading? Part 1 - A Must See!======================================================== My Note: Rumors or not Gold is up $69.70 On the Day! -Good Investing - Jschulmansr Follow Me on Twitter and be notified whenever I make a new post! Schedule automatic tweets, Thankyou for following me messages and much more! Be More Productive- Free signup… TweetLater.com ======================================================== Nothing in today's post should be considered as an offer to buy or sell any securities or otherinvestments; it is presented for informational purposes only. As a good investor, consult yourInvestment Advisor/s, Do Your Due Diligence, Read All Prospectus/s and related informationcarefully before you make any investing decisions and/or investments. – jschulmansr