STAFF NEWS & ANALYSIS
When Central Banks are Forced to do What They Hate…
By Daily Bell Staff - May 12, 2016

Central banks are loading up on gold … This has been a great year for gold.  The precious metal is up 19%, and recently crossed $1,300 per ounce for the first time in 15 months before pulling back into the $1,265 area. – Yahoo, Business Insider

Yesterday, we wrote about two simple, powerful factors boosting gold.

First, the equity “bull” market is at least seven years old now and can’t be counted on much longer.

Second, the amount of money printed by central banks around the world is reportedly approaching or exceeding $100 trillion – with no real letup predicted.

Thus the world’s liquidity is sure to continue the process of currency debasement. As currencies become worth less, savers and investors consider assets worth more.

And gold is the logical candidate.

There is a third factor boosting gold, however, as we can see from the article excerpted above.

Central banks are loading up on it.

Ordinarily, bankers do not like gold. Wall Street does not encourage its purchase. Mainstream media rarely writes positively about it.

This is because gold is not easily controllable. Like cash, it is apt to flow to anonymous buyers from anonymous sellers

In an age when authorities are fixated on ridding the economy of anonymous transactions, gold and silver (and bitcoin, too) remain stubbornly resistant to the trend.

Ordinarily central banks are more apt to shed gold than buy it. The Canadian central bank has recently sold all its reserves.

But now is not a normal time. We’ve argued that the world’s financial controllers, the bankers and globalists, have embarked on an aggressive campaign to create a new, international currency.

As part of this strategy, they are raising the value of the non-dollar currencies. Eventually, the dollar itself may be lose serious value on the world’s markets.

As currencies grow more unstable, central banks will seek a “bridge” that holds value in the midst of currency volatility.

That bridge seems to be gold.

There is no doubt, from what we can tell, that gold and silver both were manipulated down from their highs several years ago.

But now Deutsche Bank has admitted to metals manipulation. And this surely makes it more difficult for other forces to manipulate money metals.

One can speculate that the Deutsche Bank admission was intended to discourage additional manipulation.

Perhaps top money have temporarily decided to allow gold and silver a little breathing room.

Alternatively, they have no choice: The gold market is simply too strong right now and will rise regardless.

Certainly it doesn’t seem as if many other logical asset choices exist.

More from the article:

Data from the World Gold Council showed that central banks scooped up a net 45 tonnes of gold during the first quarter. According to Capital Economics’ commodities economist, Simona Gambarini, central-bank demand in the first quarter climbed 28% versus a year ago …

As for why the central banks are buying, here’s the research firm:  The primary driver of central banks’ gold buying continues to be diversification away from the US dollar with some also looking for a hedge against currency volatility more generally.

Conclusion: So now there are three factors that indicate gold has a logical upward path. First is lack of equity alternatives. Second, is the potential for currency debasement worldwide. Third is endorsement of both yellow and silver metals by central banks that are buying.

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  • Bruce C.

    I actually want to buy some more gold and silver and I was hoping their prices were going to fall back again soon. They may not though because it does seem “obvious” that PM prices should continue going steadily higher as the crazy talk from the CBs gets even crazier.

    The one bit of hope I still have for prices to drop back a bit (say to the previous short -term low) are the ever growing arguments for their bullishness, like the DB presents. The financial markets have been fairly irrational for a long time now, and still are, so PM prices could tank again for no good reason. The COT report is almost always wrong and they have the most long positions on record now, so historically that means PM prices should fall soon. But it may be different this time!

    • You misread the article. We’ve indicated there are some powerful forces at work driving gold higher, but we never indicated that an upward move would be consistent or immediate .

      • Bruce C.

        ok

      • robertsgt40

        Yup One thing we can predict is all fiat currencies have a shelf life.

    • Earn nest

      Me 2 Bruce. I think the equities have about maxed for the next couple of years and gold should do well. I can’t see waiting for much of a pull back.

      • Bruce C.

        Dollar cost average.

  • Praetor

    China has a big stake in Gold price going-up. Their economy, to be mild, is tanking. More like falling of the highest cliff with no bottom in sight. If the Gold keeps going-up, China like Canada, may use their Gold like a life preserver, to remain afloat, to keep from drowning in a sea of debt. Just saying, because I will buy that Gold!!!

  • BANKSTER SLAYER

    In the past 10 days I have seen a sudden chorus of voices in the Alt-News community raising the curtain on this new international currency that seems ready to launch. The crescendo of voices has reached such a high level that I blogged about it as well earlier this week. Jim Rickards laid it out quite clearly with Max Keiser, and the next day Yanis Varoufakis fleshed out more details. And then came Brandon Smith … I am starting to lose track of all the posts. Thank you for bringing this to our attention. Can’t wait to see who mentions it next. Here is my blog with the embedded interview from Rickards:
    “Banker, Bail Thyself”
    http://www.roguemoney.net/stories/2016/5/10/banker-bail-thyself

  • chrisyew

    The currency game becomes a ponzi scheme if not handled properly. To rescue the banks in 2008, all central banks embarked on QE, buying stocks, overt or covert money printing and other means that alternative news had not discovered. This is destroying currencies to rescue the banks and currencies had turned into a ponzi with good money going into all kinds of assets at values that are only levitated by trillions of printed $. Most assets values are derived from returns on assets and because interest rates are suppressed, the returns are even turning negative. This is stupid. What is the value of an asset giving negative returns, stupid. By keeping asset prices high, productive businesses cannot function well. In the financial world, there are 3 distinct years. 1987 when banks are provided with unlimited liquidity. 1998 when Glass Steagall Act was repealed during Bill Clinton’s reign. 2008 is the point of no return when banks are saved by trashing currencies.

  • Bill Shevick

    How many years does one need to read how Gold Will Explode This Year! before one stops believing it?

    I first began reading it in 1992. Still waiting. It’s always ‘just around the corner’, and ‘this year is different’.

    • Actually gold relative to the dollar has accrued more than almost any other asset in the past decade. So your wait is over.

      • rwmctrofholz

        Give these paid gold bashers a break. They are just trying to make a buck; even if the sad reality contradicts their claims.

    • H_mmm

      Gold per ounce valued in US Federal Reserve Debt notes 1990 = $386.20

      Gold per ounce valued in US Federal Reserve Debt notes to date 2016 = $1266.15

      You were saying…….

      • From 2000 forward what has beaten it?

        • H_mmm

          Nothing I am aware of, particularly when compared in Canadian Dollar equivalence.

          While the Loonie went from parity with the US Reserve Note and crashed down 25% (give or take) my physical gold holdings valued in C$ maintained its purchasing power, which people like Mr. Shevick conveniently ignore.

          It is not the price its the value or purchasing power and that is the only metric that really counts, at least to me.

    • r2bzjudge

      To the gold hawkers, there is never a bad time to buy gold. Gold went on a downward path for 20 years. A recent 4 year bear market and the complaint has been a suppressed market, as if the price of something only goes in one direction. All commodities dropped in price.

      Gold will have its day, then it will crash, like any other market. People who bought the peak in the DOW in 1929, had to wait 25 years for the DOW to reach that price again. people who bought the gold peak in 1980, had to wait a similar amount of time for gold to reach that price again.

      • rwmctrofholz

        Friend,

        Can you name any asset class that has outperformed gold since the turn of the century?

        Neither can I.

        • me again

          Good point! Its funny how all logic flies out the window when we rely on what we are being told….

      • same guy different name

        very interesting commentary… you have a dog in the fight (I know we all hate mel Gibson) or you are a basher…. interesting in general (your commentary and thank you)

    • wutwut

      interesting…. what would you consider an “explosion” and I would imagine you saw what happened in 2011?… (considering you’ve been a devout follower of the metals market since ’92)

  • Tictac

    In South Africa, my gold is apreciating daily, in ZAR. Im a happy camper and looking at adding as much as I can. Measure your savings in Rands, Dollars, Yen, Euro, whatever…. I will measure mine in Troy Ounce gold…

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