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Gold Price Set to Soar!
(Editor's Note: More people are waking up to the reality of what is about to happen. The possibility of a US debt default is no longer unthinkable. Even Japanese investors are of the opinion that there is a significant likelihood. This is the most important Financial Market News - JSB) Bloomberg reports in Barclays Says 40% of Japan's Investors See Risk of U.S. Default : Jan. 30 (Bloomberg) - Forty percent of Japanese investors said there is a risk that the U.S. government will default on its debt, a survey published by Barclays Capital showed. Almost 34 percent of the 66 respondents in the poll sent to Japanese institutional investors from Jan. 26 to Jan. 28 said there is a "significant" or "slight" risk that the U.S. will lose its AAA sovereign debt rating this year. Twenty-two percent said they were concerned about the credit risk of German government bonds. China surpassed Japan in September to become the biggest foreign holder of U.S. Treasuries. "Sovereign risk related to national debt has been a recent topic of discussion among market participants," Lhamsuren Sharavdemberel, a Tokyo-based analyst at Barclays, wrote in the report published yesterday. She confirmed the details today. The cost of protecting $10 million of U.S. five-year bonds from default has surged $53,000 to $60,000, near the highest since Bloomberg started tracking the data on Jan. 28, 2008. Investors are pricing in a larger risk premium as U.S. President Barack Obamaseeks Senate approval for an $819 billion stimulus package aimed at lifting the economy out of recession. There is a lot of "concern about an expanded budget deficit under the Obama administration," Sharavdemberel wrote. The yield on 10-year U.S. Treasuries surged 61 basis points this month, the largest jump since April 2004, on speculation investors may have trouble absorbing as much as $2.5 trillion in debt the U.S. is likely to issue this year to pay for a $1 trillion budget deficit and programs to spur the economy.ForeignDemand Falls International demand for long-term U.S. financial assets fell in November as foreign investors sold Treasury, agency and corporate debt, a government report showed on Jan. 16. When US defaults on its debt, it means that treasury bonds and USD will collapse. What will investors with USD do? They will quickly exchange their USD for assets that is a great store of value. For the past 6 months investors have fled stocks and all kinds of financial paper instruments into USD and treasury bonds. When these collapse, investors will undoubtedly flee to the historical store of value: GOLD ! Nick Gardner writes in Gold rush erupts over financial crisis : The global financial crisis has sparked a new gold rush. Worried investors seeking a safe home for their money are ploughing billions of dollars into the precious metal in a bid to preserve their wealth, ... Demand has now reached such unprecedented levels that the Perth Mint, Australia's biggest wholesaler of gold coins and bars, has been forced to ration its sales.Think about what happened when investors flooded into treasuries in Oct and Nov 2008. The irrational herd instinct sent bond prices skywards and yields to zero! The same think will be repeated in the Gold market. Gold prices will rocket upwards to the stratosphere. Impossible? That is what happened to bond prices. My feeling is that the effect for Gold will be even more stunning. When the USD collapses, everyone is affected worldwide and not just a certain investor class. The man on the street will look at his USD and quickly seek to exchange it for Gold! Do you smell monetary collapse? USD is the world reserve currency. When it collapses it affects all other currencies. This means worldwide financial instability and panic. The current financial system based on USD will topple! Do you smell worldwide fiat money collapse? Gold is real money. Governments cannot print it out of thin air. The illusion of paper currencies will be obvious to all. Central banks around the world can only deceive citizens for so long. The financial system is breaking down. Adrian Ash writes in Gold Boosted by Zero Yield, as World Currencies Devalue on Negative Real Interest Rates :
The inimitable and insightful Jim Willie writes in Gold Price Disconnects from the U.S. Dollar :
The very paradoxical event of the USDollar rising this past autumn amidst truly horrendous news, one disaster after another, one major bank failure after another, one nationalization of a large financial institution after another, makes the disconnect all the sweeter for gold investors. That set the stage for a powerful gold price move. Imagine a notable rise in the buck, based upon broad negative news in August and October! The gold price withstood the counter-trend US$ rally. While the buck has undergone a retest, gold has risen and not looked back, as though the US$ has become an irrelevance . IT HAS! This is great news! We are at the doorstep of a powerful gold rally, one that will see a silver rally accompany. New highs are soon to come! We are the doorstep of a powerful gold rally on a global scale, where gold rises in ALL currencies. The gold move in US$ terms is last, but guaranteed! The fundamentals of the US$ are fifteen steps beyond miserable. The technicals in the chart are looking tremendous. The psychology is aligned for a powerful move on a global scale, undeniable even to the most ignorant commentators in the financial press.Gold Breakout in Foreign Currencies This is the biggest story in England not told, the gold breakout. True to form, the gold price has seen a powerful breakout in the nation whose financial foundation has been destroyed more rapidly than any other nation on the planet, except the Untied States of America. After a serious hesitation in December, when the gold price in London experienced a spastic episode, unsure of its direction, probably endofyear squaring, gold has launched into a powerful breakout. The most vivid and strongest breakout for gold in foreign currencies has been in terms of the British. One should begin to ask the question whether England, the Untied States, and Mexico will be the next failed states behind Iceland!!! The combination of unfettered usage of federal printing presses to create (and thus debauch) its money, together with abusive bilateral hostile actions directed at creditor nations (like China), together with bailouts & rescues soon to reach $10 trillion, together with continued Wall Street control of the USDept Treasury (see Goldman Sachs), together with a steady stream of major monster fraud cases (see Bernie Madoff), will send gold and silver north in price. Many astute analysts have declared that the Corrupt Powerz that control the vast manipulated machinery cannot conceivably keep both the US$ and USTBond levitated for long. One had to fall. My conclusion was simple. Any strong selloff of the USTreasurys, pushing bond yields higher, would trigger a credit derivative sequence of events that would result in overnight bank failures and collapse of entire financial markets, starting with a JPMorgan meltdown. It would occur much like a financial nuclear bomb. So the victim will be the USDollar, clearly, by default. As the US$ falls to unthinkably low levels.... America had better make preparations for the Third World, where credit strangulation carries a bitter cost. This will occur only after new global currencies are introduced in January 2010. ..... The rise in the gold price during a US$ counter-trend rally foretells of a strong message.THE GOLD PRICE IS HEADING TOWARD NEW HIGHS. ALSO, THE USDOLLAR IS SOON TO EXPERIENCE SHOCK WAVES.The leaders of many countries are openly denouncing the current USD financial system. Russian president Putin openly attacked the USD in Davos Switzerland. China is turning its RenMinBi into a trade settlement currency quickly. Now the Persian Gulf oil powers are coming out with their currency: Then there is the planned launch of the new Persian Gulf gold-backed currency in early 2010, which should act as a nuclear bomb against the USDollar in less than one year. That is the hidden motive for unprecedented attack of hedge fund crude oil positions by the sponsored Wall Street gangster bankers, aka banksters.A new Gold backed monetary system for the world? Don't be surprised! Gold has always been real money. The question isn't whether you should invest in Gold or not. The question is: Are you going to protect yourself from the collapse of fiat money and turn to real money: Gold ! USD is ultimately just a piece of paper which the FedRes can print without limit out of thin air! How high will go soar? It is anybody's guess. Here is 1 opinion : Gold price could treble if China divests dollars, warns mining boss |
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"One day the price of gold will be higher than the Dow Jones." - Marc Faber 5 Feb 2009.