Gold Bullion Reserve lending by central banks has “almost completely stopped”

October 8, 2008 by · 1 Comment
Filed under: Commodities News 

This is a sign of the financial community is reigning in all good assets and preparing for the coming storm which most media outlets and analyst are finally acknowledging.  I am still surprised that central banks actually lease gold and we let that show on both balance sheets when in reality it only exists in one physical location.  In the article, they mention that they are worried that banks will not be able to fulfill their bullion lease terms and this is why central banks are not leasing to any banks.   I am watching a gentlemen (Mr. Blanchard) from the International Monetary Fund (IMF) stating that we will not see any turn around til mid-2009.  He even made sure to state that this was based on current estimates which in my opinion are still far too optimistic.  He said industrial countries will see zero or negative growth and emerging markets will have limited growth.

News Piece:

Central banks have all but stopped lending gold to commercial and investment banks and other participants in the precious metals market, in a move that on Tuesday sent the cost of borrowing bullion for one-month to more than twenty times its usual level.

The one-month gold lease rate rocketed to 2.649 per cent, its highest level since May 2001 and significantly above its five-year average of 0.12 per cent, according to data from the London Bullion Market Association.

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IMF Says U.S. Faces `Sharp Downturn’ as Market Crisis Worsens

October 4, 2008 by · Leave a Comment
Filed under: Economic News 

Personally I think some of the commentary on our current economic crisis has not had what I would call “baseless optimism”. They have been warning people on our current situation and I believe I have not read any statements that have called for a premature end to our crisis but a more gradual modification of their outlook that looks to be more realistic compared to what is actually happening in the market. Today it was surprising that the bailout bill finally found the votes it needed to pass and the Dow Jones shed 157 points of its average. What was most frustrating was seeing our politicians keep saying the market was sending a message, what message is it sending now?

News Piece:

The U.S. may fall into a recession as the financial rout deepens, the International Monetary Fund said in its most pessimistic outlook for the world’s largest economy since the credit crisis began last year.

“The financial turmoil that began in the summer of 2007 has mutated into a full-blown crisis,” the fund said in a section of its semiannual World Economic Outlook released in Washington today. There is “a substantial likelihood of a sharp downturn in the United States,” the fund said.

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