The Daily Nugget: Waiting For Jackson Hole?

Whilst the gold price has still not crept past last week’s highs it has still held its ground near $1,667 as data released shows US consumer confidence is at its lowest for 9 months.

Apparently we are all still waiting for Jackson Hole and Bernanke’s speech on Friday. Bearing in mind gold hit $1790 in February when the Federal Reserve announced interest rates would be kept extremely low until at least 2014, it will be interesting to see where gold will go at the end of the week.

Jackson Hole is, however, according to many commentators, turning out to be a bit of a damp squib. Not only are many wondering if Bernanke will even take the opportunity to announce further easing, but now not even Super Mario is turning up. Blaming his "heavy workload" Mario Draghi has decided not to attend, and nor will anyone else from the six member executive board of the ECB.

The speculations are already flying on whether or Draghi is staying behind to get a plan sorted to bring down borrowing costs for the struggling EU member states by bond purchases.

It may be that the markets remain in limbo at least until the 6 September ECB meeting and the next FOMC meeting.

The outspoken Jen Weidmann, president of the Bundesbank, will attend. Having warned on Sunday that “central bank financing can become addictive like a drug,” it will be interesting to see how he fares against central bankers who seem almost excited with the anticipation of pressing the "print" button.

Spain’s tragedy
Spain plunged further into the jaws of the crisis as Catalonia received funds from the Spanish state’s liquidity facility. Data shows Spanish citizens are growing increasingly concerned about the safety of their money held by banks. In July withdrawals gathered pace, as deposits fell at a record rate. According to ECB data the drop in deposits, of almost 5%, showed the biggest monthly drop since 1997. The Spanish government blamed it on the holiday season.

Following on from a meeting with Mariano Rajoy, ECB President Herman Van Rompoy felt it necessary to remind everyone that the euro is "irreversible. And let me insist again, Greece’s future is undoubtedly in the euro area." Well that will definitely calm everyone down then.

The euro isn’t reversible. He’s right. To reverse something implies it can be worked back through in an orderly manner – ie. reverse from a car space. In the case of the euro, we are in 5th gear with our foot on the accelerator heading towards the wall in front. It’s a car crash, nothing orderly about it.

Republicans set the gold standard
Yesterday we saw Mitt Romney officially nominated as the Republican party’s presidential candidate at its national convention.

The Republicans made it clear that they were looking to move the focus of this campaign onto economic issues, namely the national debt which was prominently displayed in the "debt clock" hanging above the stage.

The media, are thoroughly enjoying tearing apart the Republicans’ proposal for a gold commission. We’ll talk about this later on in the week but anything which brings the issues of the manipulated monetary system to the attention of the general public is a good thing.

Stockpiling gold
Meanwhile countries watching from afar are quietly accumulating real money – gold. Turkey, whose interest in gold bullion investment is impressive, raised its gold reserves by almost a fifth last month. Russia, Belarus, Sri Lanka, Moldova, Ukraine, Kyrgyz Republic and Kazakhstan also added small amounts to their holdings.

None of these countries have ever been particularly wealthy throughout history. As they are beginning to join the global stage they are realising that everyone already on the stage has got these funny rose tinted lenses on, looking out on a financial world that isn’t so looking so good. Having worked hard to get to where they are these gold buying nations want to be prepared for when everyone realises just how bad things really are.