Monday, September 12, 2011

Markets In Panic Mode?

"The G7 is in full panic mode." This the headline in many economic commentary websites over the weekend.

The reasons are miriad, but according to German Finance Minister Wolfgang Schaeuble, "Greece is “on a knife’s edge". There were even rumours that Greece was about to default on the weekend, however, the Greek Finance Minister specifically came out and denied such rumours.

1 year Greek bonds are at 100%, 3 year 50%, 10 year 10%. Absolutely unsustainable.

A counter response to such bond action came from the monetary authorities via a joint statement from European Central Banks saying, “Monetary policies will maintain price stability and continue to support economic recovery. Central Banks stand ready to provide liquidity to banks as required. We will take all necessary actions to ensure the resilience of banking systems and financial markets."

"Liquidity...as required", read: print as much currency as needed to pay debt. The Madness and downright theft of your wealth will now step up a notch it seems.

But the debt issues are not only affecting Greece. European bank credit risk surged to an all-time high on Friday. Shares worldwide dropped from 2% - 4% on worries that the debt crisis is coming to a conclusion. Money is rushing around the world in huge quantities looking for safe havens. Even some German bonds dropped to a record low as money rushed in. As did US 10 year bonds. What will happen this week is anyones guess.

Further afield, the Japanese have intervened in their currency to bring the value down to help their exporters.

Also, read these statements from various newswires this weekend:

"The (Swiss) franc had the biggest intraday loss ever against the euro on Sept. 6, falling as much as 8.7 percent after the nation’s central bank said it would defend the 1.20 ceiling with the “utmost determination.”

“In circumstances of a continued crisis in the euro zone, we believe that the SNB (Swiss National Bank) may be required to purchase foreign currency of between $500 billion and $1 trillion,” Derek Halpenny, European head of currency research at Bank of Tokyo- Misubishi UFJ Ltd. in London, wrote to clients.
Note: the SNB doesn't have $1 trillion. They will create it.

This too from Ambrose Evans-Pritchard at The Telegraph:

"Central banks and official bodies have parked record sums of dollars at the US Federal Reserve for safe-keeping, indicating a clear loss of trust in commercial banks. Data from the St Louis Fed shows that reserve funds from "official foreign accounts" have doubled since the start of the year, with a dramatic surge since the end of July when the eurozone debt crisis spread to Italy and Spain.

"This shows a pervasive loss of confidence in the European banking system," said Simon Ward from Henderson Global Investors. "Central banks are worried about the security of their deposits so they are placing the money with the Fed."

Debt out of control, bond yeilds at unsustainable levels, inflation rampant, money printing beginning with a vengenace.

What to make of this spiraling, out of control approaching storm? This sort of chatter in the markets is telling us all something. Not all is well. We maybe on the brink of the end of the fiat currency systems as we have known them since 1971.

I need to mention gold here in this context. As I said last week, house prices in gold terms have decreased 60% since the highs of 2005 in New Zealand. How many people in this country actually know what that means? In currency terms, prices have increased in some centres here in New Zealand, but in actual wealth terms most people are 60% poorer in just 6 years.

Gold is waving it's flag to all who will listen right now. Gold is showing highs in GBP and EUROs daily. Gold is the canary in the gold mine, so to speak. (Canaries don't like poisonous gas, so miners used to carry them into mines with them. If the bird died, the miners cleared out, as it meant the presence of poisonous gas in the mine). Gold will always do it's thing to signal what is true value and where.

But don't take my word for it, I urge you to do your due diligence and study this from all angles. If you come up with a different conclusion to mine, please let me know.

Gold in New Zealand dollars: $2263.27 per oz
Previous all time high: $2279.35 per oz (23 Aug, 2011)

Silver in New Zealand dollars: $50.39 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)

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The Anglo-Far East Company
The Original Private Gold and Silver Bullion Custodian
Your reference: an-001
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