World Bank Whistleblower Sees Precious Metals As Currency

Yesterday gold finished lower as news that ETF holdings are at their lowest since August 2009. However overnight buying in China, where demand remains strong, has seen the price make some gains this morning. Physical buying in China, India and other parts of Asia continues to provide hope that support for the gold price will be provided – particularly against the sea of ETF outflows.

At the moment, strong physical buying is not expected to provide the momentum to push gold out of its current narrow range. Many analysts see gold trading between $1,435 and $1,485 in the short-term. Premiums in Hong Kong, an across China, remain high as physical supply continues to be tight.

Markets fell for Australia’s rate cut (to a new 2.75% low) and helped create the surge in the stock market yesterday which saw a dramatic bounce. The Dow closed above 15,000 for the first time, up by 129% since 2009. Japan’s stock-market also performed well, hitting a five year high. Given, also, the FTSE’s strong performance of late, many believe that this is a sure sign that the global economic recovery is well under way.

However much of the global recovery is fueled by cheap money, the most recent example of which is Australia’s rate cut. This cheap money, such as Japan’s efforts to reflate, the UK’s credit subsides, and the Eurozone’s delicate position, is propping up asset prices. However the results, on the face of it, seem positive and hence why many investors are choosing to liquidate their gold-backed ETFs as they no longer feel the need for ‘alternative’ investments.

The decision by Australia’s central bank, to reduce cut its key interest rate, is a bullish sign for gold investors – yet another major bank working to weaken its currency and joining in on the race to debase.

India’s gold imports look set to exceed 100 tonnes for May as investors continue to stock up on low-priced gold, ahead of central bank curbs and the Akshaya Tritiya festival. The festival is considered by the country’s Hindus as the traditional day to buy precious metals. The RBI is set to issue guidelines on gold imports towards the end of the month.

John Paulson, hedge fund billionaire, told investors on Monday that his gold fund was down 47% in the year-to-date, having lost 22% in April thanks to the gold sell-off. He continues, however, to stand by gold. Not surprising given that the yellow metal remains 50% above where it was when the hedge fund manager first started investing in the metal.

And lastly, Tekoa da Silva, spoke to Karen Hudes, Former Senior Counsel to the World Bank—now turned whistle-blower. During the interview she acknowledged that the BRICS nations are slowly accumulating political and economic gravitas, whilst a currency transmission will favour precious metals.

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