China accused US and EU of supressing gold price

In a recently released US embassy wikileaks cable, China accused US and EU of suppressing gold prices.

The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28):

 "According to China's National Foreign Exchanges Administration China 's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro.
Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."

This clearly goes to show that suppression of gold and silver prices is not just a fantasy of conspiracy theorists and that it`s in fact the true opinion of major players on world stage such as China. Russia also holds similar views.

Source: http://cables.mrkva.eu/cable.php?id=204405

All these developments that are gradually coming to light are extremely bullish signs for gold and silver.

Is media worshipping fake gurus? Nouriel Roubini`s case might present affirmative answer

Nouriel Roubini aka Dr. Doom is well known in the mainstream media circles as "the one who predicted 2008 economic crisis" as this would represent some huge credentials and credibility. There were many others like for eg Ron Paul who predicted the crisis and don`t take the credit they rightfully deserve. Let me give you a few names of people who besides this Dr. Doom predicted the 2008 crisis just as well if not better: Ron Paul, Peter Schiff, John Paulson, Jim Rogers.

However mainstream media doesn`t like or doesn`t want to highlight the so many times when their guru sweethearts are dead wrong.
Back in 2009, a while after the Jedi Master Dr. Doom made the economic crash prediction, he also made this extremely bold and confident statement about gold price:

“Maybe it will reach $1,100 or so but $1,500 or $2,000 is nonsense,” Roubini said. Source here.

Now in 2011, 2 years after we have gold sitting above $1,800 and poised to break the $2,000 barrier.

Back in 2009, Rogers openly contradicted Roubini, saying that Roubini`s idea of "gold bubble" is nonsense.

Now looking back in retrospect; should we stop listening to Roubini aka Dr.Doom!? Or should we at least take his statements with a lot of salt and not view him as the oracle that he`s(obviously) not.

I`ll leave you with some quality entertainment in the company of Dr. Doom.
Enjoy! :)

Gold and silver action yesterday - artificial action of margin calls

What we`ve seen yesterday in gold and silver was artificial action of margin calls in other asset classes, not much justification any other way.

Today we`ve seen gold&silver resume their natural upward trend which perfectly fits current environment.

Sharon calls it like it is. Perhaps one of the few voices on CNBC who do that.

Obama`s 447 billion job plan - great news for gold and silver

President Obama announced a plan to create jobs by putting people to work in infrastructure projects.

While idea has potential to achieve some economic growth(similar measure was taken by Germany back in the 30s with some success), it doesn`t address the core issue. Same issue that made Solyndra solar company, backed by Obama with state funds, go into bankruptcy.

Core issue is lack of cheap labor of course. US should have drastically lowered the minium wage or have it removed altogether. No company will be tempted to hire US workers, when they can do it elsewhere for less than 1/4 the cost. In many places in China such as assembly lines, similar to ones creating Ipads and Ipods, workers get paid 0.5$/hour. Not to mention these people have no holidays and often work the weekends. Dark side some don`t even want to mention is that many such workers get on demand injections to sleep through the holiday, so that they can save money.
Most if not all US citizens will rather go on food stamps than endure such working conditions.

The only reason some companies still hire in the US, is that they`re forced to do so. They`re forced to hire locals in the service industries, such as hotels, fast food chains and retail outlets. However, in the heavy industrial sector(where the real money is) things are much different. Here no company is tempted to hire locally and government so far has totally failed to change that.

Currently China is appreciating its currency, the renminbi, but it`s not nearly enough to make US competitive in the international labor market. EU countries face similar problems which will only get worse.

While President wasn`t very specific on how he`ll be providing the financing for this 447 billion job plan, one thing is pretty sure given the previous track record.
This money will be created out of thin air one way or another. Plan includes Obama`s campaign promise from years ago to cut taxes on low income individuals and small business but increase taxes on the rich and big corporations.

Even if this tax plan is put to work, there`s no way in hell it could cover for 447 billion spending package. It will most likely be the result of money printing. Don`t expect US gov to sell military bases, planes and cruisers or anything like that.

Needless to say that any printing of such huge amounts of money is extremely bullish for gold and silver.

This is why I`m long: AGQ, UGL, DGP

Swiss franc peg - II

More on previous topic...

Swiss franc pegged to euro - More reason to buy gold and silver

Switzerland is becoming less "Switzerland" with each passing day. Following the banking secrecy scandals, which dimmed image of safe haven country, now even more shocking news emerge.

In a desperate bid to stop currency appreciation and protect exports, Switzerland took a drastic measure. They`ve announced pegging their currency to the euro at a minium rate of 1.2 francs per 1 euro.

Investors and some banks preferred to keep their investments in Swiss francs as it used to be one of the last currencies with big gold exposure, Switzerland having an annual inflation rate of just 1%.
Now that the major safe haven currency has gone bye bye, very few alternatives remain. Some say the Singapore Dollar, Norwegian Krona, Canadian or Aussie Dollar might present such safe havens.
However, all countries associated with these currencies run the risk of doing same thing as Switzerland. If their currencies will start to be seriously hunted by safe haven speculators, they`ll just try to devalue in a bid to protect their exports

Now what are the alternatives? There`s only the obvious choice of gold and silver and probably some mining stocks. The latter will be subject to a future piece, as it might present interesting alternative with much upside.

Suggested plays, silver and gold leveraged 2x etf/etns: $DGP, $UGL and $AGQ.