Jurg Kiener of Swiss Asia Capital talks about paper precious metals market default and gold price spike

October 7, 2008 by · Leave a Comment
Filed under: Videos 

This was a good video on CNBC about the Comex futures market and the possibility of some defaults on precious metals futures contracts because of increase physical demand of gold bullion, especially in the retail weights of 1 ounce gold coins and bars.  Jurg Kiener of Swiss Asia Capital said if this happens, we should see the spot price of gold to double in very short order, suggesting it would be in under 12 months citing how small the market is compared to other commodities like oil.  

Personally, I have talked to a bunch of bullion dealers and they have told me about the huge demand they are seeing and that they are to the point where they are starting to turn certain orders away because they are starting to lack confidence that the other bullion dealers and clearinghouses will be able to deliver as promised.  Watch the video and leave your comments below.

Video Link:

Jurg Kiener of Swiss Asia Capital talks about Paper Gold and Comex

Gold Fields CEO says global gold bullion supply to tighten on lack of mining funds

October 3, 2008 by · 1 Comment
Filed under: Commodities News 

There will be a dip in gold production for sure but I think at investors sniff out this inflation coming down the pipe we will see a major flight to safety and that will be in money being invested in Gold Bullion and mining companies that are in or close to production.  It also doesn’t help that Eskom Power in South Africa has had to reduce power to the mining companies that in turn has reduced production.

Release:

Global gold supply will likely contract as the financial crisis in the United States saps funds away from planned mining projects, Nick Holland, the chief executive of Gold Fields said on Friday.

“Some of the juniors and intermediate companies are not going to be able to develop their projects. And I think what this means is that mine supply in gold is probably going to decline more than what people realize,” Holland told Reuters.

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Barrick Sees `Large-Scale’ Gold Buying on Bailout

September 24, 2008 by · Leave a Comment
Filed under: Economic News 

No surprise that when we decide to increase our debt by $700 billion dollars or more and you are a holder of the dollar as a safe haven, we would see wealth take flight into the proven holder of wealth for the last 6,000 years…. GOLD BULLION. I would call gold a money in times of economic uncertainly, fiat money (unbacked) works great in times where it is properly regulated and not over issued. But in time like now when we are issuing our currency without any meaningful limits, you are losing value by currency inflation alone especially when growth in not keeping up.

Bloomberg Article:

Barrick Gold Corp. Chairman Peter Munk said bullion prices will go higher, driven by large-scale buying by “major, major” holders of dollars who fear the effects of the U.S. government’s bailout plan on the currency.

Central banks or sovereign wealth funds are among those likely to buy gold to diversify their investments and hedge against the risk of a weaker dollar, given the government’s $700 billion plan to support the banking system, Munk said today.

“That impact on holders of U.S. dollars in China or Russia or Abu Dhabi or Kuwait is that they’re going to say, `What is that going to mean for the U.S. dollar, and what alternative are we going to have?’ ” Munk said in an interview in New York. “So gold is going to have very powerful support.” Munk, 80, founded Toronto-based Barrick in 1983 and made it the world’s largest gold producer.

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Gold Coins, Bullion Sales Go `Gangbusters’ as AIG and Lehman Fall

September 19, 2008 by · 2 Comments
Filed under: Economic News 

Bloomberg reported a huge increase in the purchases of physical gold and silver bullion. The matches with my own research in calling a number of bullion dealers that have confirmed a significant increase in sales and a limited availability to delivery on the spot and is creating a 2-6 week delay for delivery on anything except the smallest order (under 10 ounces). After these unprecedented moves by the U.S. federal government in the market to prevent a financial crisis which normally would happen in a free-market system. With this uncertainty on the direction this serious situation is going to take people are taking too the time-test haven for wealth since the dawn of modern civilization….GOLD.

The biggest question I have is will this be inflationary with this huge increase of liquidity in a program to buy these “toxic financial products”. I have a worry that they are going to allow these credit-default swaps or CDS that are unregulated and also unbacked so this could create a situation where we have a huge increase in the U.S. dollar monetary base which will lead to price inflation unless we somehow have growth for the same amount during the same period which seems highly unlikely.

News Piece:

While TV camera crews staked out American International Group Inc.’s Wall Street headquarters following its takeover by the U.S. government, Jules Karp was quietly trading gold coins in “unbelievable” numbers from his basement dealership across the street.

Karp, 61, has traded physical gold, including one-ounce Canadian Maple Leafs, American Eagles and South African Krugerrands, since 1974. Demand has “hit a crescendo,” he said yesterday while an assistant prepared the special packages used to send gold coins to a growing list of mail-order customers.

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