Economic Freedom Is Not Bad For Banks

Those who invest in gold will have been looking out for two things over this fortnight, one is of course the U.S. election and the second is the this morning's U.S. nonfarm payroll data, which came in better than expected.

At the moment, the improved nonfarm payroll data comes on the back of positive jobs data released yesterday, an increase in private-sector jobs and a significant improvement in U.S. consumer confidence. The slight uptick in the official unemployment rate is generally seen as a positive sign insofar as it appears to indicate that more Americans may have returned to the market in search of work.

The gold price fell to as low as $1,705 this morning, this prompted selling as it fell back into the key area of $1,701 and $1,712. Technical support is now expected to be seen around $1,698, a level last seen as recently as October 24th. Silver also lost momentum yesterday, falling as much as one per cent.

Whilst gold for immediate delivery and for December delivery fell on COMEX yesterday, holdings in gold-backed exchange traded products continued to reach record levels.

Gold Price And QE3
Gold is falling on the back of this (potentially) positive data as it will cut any further expectations of QE3 going on for an extended period of time. However, as we all know interest rates and other monetary policy measures can take up to two years to follow through.

As I said on yesterday’s Financial Survival Network, governments and markets seem to jump on the back of small data changes whilst the general public feel the impact of their measures before it feeds through to economic reports. Whilst the policy makers are patting themselves on the back, the electorate are wondering if they’re missing something.

Central Bank Is ‘Flawed’
The Bank of England has come under scrutiny today as a report has found the bank’s means of forecasting are ‘flawed’…how much did that report cost? I would definitely have told them that for just half the cash.

Recommendations include hiring more experienced staff to help the economics team and opening up the MPC to more scrutiny. I think if the Bank of England had just opened up London’s City AM, and Allister Heath’s editorials, they would have been able to figure that much out.

Economic Freedom Is Not Bad For Banks
Here at The Real Asset Company free and open markets are something we discuss extensively amongst ourselves; hence why we were interested to see this year’s Index of Economic Freedom.

It showed something we all knew -- those rated with the highest economic freedom globally were the least likely to suffer from a banking crisis.

The only country in the top ten list to suffer was Switzerland. You can read the report here, the main thing I draw from it is that whilst it can’t conclusively prove anything it does suggest there is no direct relationship between light regulations and banking crises. Showing the majority of successful election campaigns run since 2007 have been based on false beliefs.

Open and fair markets are not about exploitative red tooth and claw capitalism, but about liberty in the economic sphere.

New Survey
Following our hugely popular surveys, we have a new one up for this month. Tell us which central banker causes the most damage, Bernanke perhaps? Or maybe Gideon Gono? So far the votes are in favour of Bernanke but who knows where it may stand by the end of the month!

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