Silver Doctors

Anonymous reader comment at 9:54 am yesterday (Tuesday) morning:
Im just about ready to admit the forces of evil have won.
I’m not so sure we’ll see $41 silver again in our lifetimes.

We sure hope your lifetime was longer than about 21 hours and you are still alive to see $41 on the silver ticker this morning.

MARKET IS OPEN (Will close in 8 hrs. 11 mins.)
		Metals	Date	Time (EST)	Bid	Ask				High
		SILVER	08/03/2011	09:04	41.11	41.21				41.25

Silver bugs need to learn patience. Long term, silver is headed much higher.
Learn to embrace the sell-offs and the consolidations…THESE ARE YOUR BUYING POINTS!

For more than 3 years – since gold rose above its nominal high of $850/oz in February 2008 – there has been much talk about gold being a bubble.
Nouriel Roubini, professor of economics at New York University’s Stern School of Business, is one of the more prominent financial and economic experts who said gold was a bubble and many other experts internationally echoed his sentiments.
On December 10th, 2009, with gold at $1,100 per ounce, Roubini, said, “all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense”. Roubini went on to say ,”I don’t believe in gold.”
Gold has now risen 50% since then and Roubini has been silent on the gold price.
We believe that he was wrong regarding gold as he, like many in the western world, is simply not aware of the facts and the fundamentals driving the gold market. He also is not aware of gold’s diversification benefits.
From Goldcore:
Gold is higher and is trading at USD 1,668.90 , EUR 1,167.10 , GBP 1,018.40 and CHF 1,287.70 per ounce. It is slightly lower in euros but higher in U.S. dollars, Swiss francs, the Japanese yen, and the Australian and New Zealand dollar. Gold’s London AM fix was USD 1,667.50, EUR 1,167.50, GBP 1,016.77 (10:43 GMT).

Cross Currency Rates
Gold reached new record nominal highs in majors yesterday and remains close to these record highs today and close to record highs in most fiat currencies. Gold surged 4.2% in Australian dollars yesterday – from $1,478 to $1,540 AUD to 1516 AUD. Gold is up nearly 12% in Australian dollars since July 1st – from $1,380 to $1,551 AUD today.
This shows that gold’s rally is broad based and is not solely a U.S. dollar phenomenon. It shows that markets and currency markets in particular are concerned about slowing economic growth, growing inflation pressures and continuing currency debasement.
After all the noise and theatre of the US debt ceiling debate and the botched deal and kicking the mother of all cans down the road, it is important to again focus on the primary fundamentals driving the gold market.
Is Gold a Bubble? 14 Charts, the Facts and the Data Suggest Not
Introduction
For more than 3 years – since gold rose above its nominal high of $850/oz in February 2008 – there has been much talk about gold being a bubble.
Nouriel Roubini, professor of economics at New York University’s Stern School of Business, is one of the more prominent financial and economic experts who said gold was a bubble and many other experts internationally echoed his sentiments.
On December 10th, 2009, with gold at $1,100 per ounce, Roubini, said, “all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense”. Roubini went on to say ,”I don’t believe in gold.”
Gold has now risen 50% since then and Roubini has been silent on the gold price.
We believe that he was wrong regarding gold as he, like many in the western world, is simply not aware of the facts and the fundamentals driving the gold market. He also is not aware of gold’s diversification benefits.
The fundamental drivers of the gold market are not appreciated by most and rapidly get forgotten by many due to the daily barrage of noise and fear emanating from the markets.
The facts and charts below strongly suggest gold is not a bubble.
However, even if it were a bubble, those calling gold a bubble should acknowledge the diversification benefits of owning gold and urge diversification rather than vainly trying to predict the future and the future movement of asset prices.
Gold Drivers
The precious metals of gold and silver are driven by a wide variety of factors, including money supply, debt levels, currencies, CDS spreads, interest rates, inflation and fabrication demand from downstream sectors such as jewelry, electronics, and solar applications.
Investment demand has been one of the primary drivers more recently as investors have used precious metals as a store of value in the face of dollar and currency depreciation as well as a general hedge against inflation.
Investment demand includes significant and growing demand from store of wealth buyers in Asia, investment and diversification demand from hedge funds, pension funds and central banks and monetary demand from central banks.
This demand is due to concerns about the global economy, growing inflation risks and the real risks posed by currency debasement being seen globally.
Gold remains the preserve of the smart money, many of whom predicted the current financial and economic travails.
Risk aversion and concerns about wealth preservation due to currency depreciation remain the primary demand drivers.
Demand is due to ‘risk aversion’ hedging and diversification and can be broadly characterized as ‘prudent diversification’ rather than the ‘fear trade’ that some have called it.
There is no irrational exuberance or broad based belief amongst journalists, analysts, experts and the public in general that gold is a one way ticket to being rich. Indeed, there continues to be very little coverage of gold in local media and only the occasional coverage in the non specialist financial press. This is especially the case in the UK and Ireland and in the European Union.
There is no “greed trade” or buying of gold by the general public in the belief that making a return or a profit is guaranteed.
This was seen in the Nasdaq bubble and more recently in the property bubble that afflicted western countries.
Thus, retail demand, contrary to some hype and silly talk of people “piling in”, remains negligible but is gradually increasing from a very small base.
Increasing global demand (especially from Indian and Chinese savers, investors and their central banks) is being confronted with anemic supply as mining supply is marginally lower than the record levels seen in 2001 (see chart below).
This year scrap supply (due to the global ‘cash for gold’ craze) will be much lower than last. Hard pressed consumers internationally, and especially in the western world, have already misguidedly parted with the ‘family gold’.
All of the gold in the world that has ever been mined, if refined (0.9999 pure), would fit into a 21 metre high cube and is very rare. Thus, if even a fraction of flows in global capital and currency markets flows into gold, prices could rise very sharply and go parabolic.
Another factor, not known by most, is the massive concentrated short positions held by a few Wall Street banks.
The Gold Anti-Trust Action Committee (GATA) has gradually amassed evidence of market manipulation and a covert attempt to keep gold and silver prices low. Its London conference is this week and will hear from very astute analysts that there is now the real risk of a massive short squeeze that will lead to a gold cartel losing control of prices and a parabolic surge in the gold price and significant dislocations in financial markets.
GoldCore does not endorse GATA but has always found its work thorough and thought provoking. Indeed, its key contention has never been refuted or rebutted by the banks in question or in the media.
Should gold go parabolic, it may be time to reduce allocations to gold – but we appear to be a long way from there yet.
This is not the end game which unfortunately looks increasingly like an international monetary crisis – centered on either the U.S. dollar or the euro or both.
Having looked at the reality of supply and demand in the gold market let us now look at some important charts courtesy of Bloomberg Industries.
Gold Charts
These 14 charts from Bloomberg Industries strongly suggest that gold remains far from a bubble.

Declining U.S. Dollar Continues to Drive Precious Metals Higher
A declining U.S. dollar has been one of the primary drivers for precious metals. If the historic negative correlation between the dollar and precious metals continues to  persist, further dollar declines will ultimately be positive for precious metals.

Gold Outperforms Currencies as Demand for Hard Assets Rises

Dow-to-Gold Ratio: Financial Assets vs. Hard Assets
The ratio of the Dow Jones Industrial Average to gold displays the cyclical nature of the battle between paper and hard assets.
Paper assets (i.e., financial assets) have excelled when economic growth has been strong. When growth has faltered or the outlook was less certain, hard assets have outperformed.

Gold and TIPS Moving in Tandem Amid Record Low Interest Rates
Record low interest rates have moved gold and TIPS higher in  2011. While the correlation between gold and TIPS declined  earlier in the year, the recent rise suggests investors are more willing to pay more for inflation protection. New highs in the gold  price may be signaling increased TIPS prices and inflation expectations.


World Gold Production – 2000 – 2011

China Consumers Increase Jewelry Purchases at Quickest Pace
China has been the largest buyer of gold jewelry since  2008; its demand has grown rapidly during the past decade,  and it has surpassed India, which had been the largest  buyer for decades.
Chinese consumers are fearful of rising inflation, and have diversified into gold.

China and India Jewelry Demand Rises
Demand for jewelry has increased steadily as individuals buy gold and other precious metals as a hedge against inflation.
China, in particular, has had a large increase in jewelry demand, spurred by a change in government rules allowing easier access to precious metals.

U.S. M2 Growth Expands in June, Correlates High With Gold
The U.S. M2 money supply accelerated in June to a 6.0% yoy pace, the highest reading in 22 months. The U.S. consumer price index (urban consumers) remained at a 3.6% yoy pace in June, in line with May’s results. The correlation between the total U.S. M2 and gold has exceeded 0.90 since November 2004.

China M2 Money Supply: M2 Growth is Decelerating, Yet Still Rising

Gold Moves Higher with Chinese Inflation

China’s M2 money supply has been rising by 20%, Switzerland’s by 25%, Russia’s by 30%, and the world’s by 8%-9%. Japan’s M2 is expected to move higher after recent events. In order to fight economic and debt issues, paper currency has been printed at historically high levels.

Rising Debt Levels Drive Gold and Silver Higher

Precious Metals Outperform Other Asset Classes
Institutional investors have avoided precious metals during the last decade. Comparable performance from other assets such as stocks and bonds has been poor and as this gap widens and the need to diversify intensifies, institutional ownership in precious metals could increase driving prices higher.
Conclusion
As a percentage of assets, gold ownership remains negligible vis-à-vis assets such as equities and bonds. Ownership of gold is likely to be less than 2% of global investable assets. This is in marked contrast to the end of gold’s last bull market when gold and gold stocks accounted for over 20% of global assets.
Gold remains badly analysed, under-owned and under-appreciated. This will change in the coming months and years when the importance of gold as an investment and currency diversification and as a store of wealth is appreciated again.
For the latest news, commentary, charts and videos on gold and financial markets follow us on Twitter.
NEWS
Business Week
Gold Rallies to Record as Economic Concerns Spur Haven Demand
The Wall Street Journal
Risk Aversion Pushes Gold Higher
Reuters
Gold hits record on global growth worries, Europe debt
CNBC
Europe on Brink of ‘Major Financial Collapse’: Guggenheim CIO
The Economic Times
Credit Suisse recommends more exposure to gold
COMMENTARY
The Telegraph
Ambrose Evans-Pritchard: Europe’s money markets freeze as crisis escalates in Italy and Spain
Gresham’s Law
Is Gold in a Bubble? Was the Rise in the Paper (Deutsche) Mark Price of Gold a Bubble?
King World News
Ben Davies – Look For Another Short Squeeze in Silver
Casey Research
Five Things You Need to Know About the Economy

Too bad for the cartel that Mubarek held $620 Billion in gold rather than silver.
$620 Billion in silver might have helped the COMEX tread water for a few months.

The Egyptian people will have their first glimpse of their former president Hosni Mubarak since his overthrow on Feb. 11 and retirement to Sharm el-Sheikh when he goes on trial Wednesday, Aug. 3 before television cameras with his two sons, Alaa and Gamal. With him wil be the former Interior Minister Habib al-Adli and six other senior officers.
The charges against the ex-president of killing demonstrators during the uprising that ousted him and abuse of power to amass wealth carry sentences ranging from five years in jail to the death penalty. His sons face lesser charges and prison.
After spending seven months at the Sinai resort of Sharm el-Sheikh, the public will see their former president and his sons in a special cage built for the trial. Judge Ahmed Refaat decided the proceedings should be aired live by state television, because, he said, “I believe in the right of the people” to see justice done.
Read more:

Celente discusses the continuing devaluation of the US dollar, and the recent spike in gold.

“The dollar is not worth the digital paper its not printed on.“

We have pointed out numerous times that April’s run higher in silver was not a mania (as Bob Moriarty would have you believe- we set him straight here), but was rather in fact a short squeeze.
BIG DIFFERENCE between the 2.

Ben Davies today stated that he is looking for another short squeeze in silver in the coming months.
We couldn’t agree more.  April’s short squeeze in silver will look like nothing compared to the final short squeeze the day the physical market brings the paper manipulation to a sudden end.
Clearly silver had such a phenomenal rise, we made the analogy that it was like the releasing of a cork being held under water and you release that cork and whoosh up it rushed!  Certainly along with many others in the market we understood the perhaps vile manipulation that was going on by some of the larger houses who, as we know, occupy that space.  Clearly their positioning has been reduced substantially.  I think that after you’ve had such a large move, the market has to acquiesce for a period of time, which is what we’ve been seeing.
There is probably a misinterpretation that the industrial usage for silver will fall.  The reality is that the industrial usage is very much alive and that physical demand will definitely remain strong.  There have been a lot of houses recommending short silver, long gold positions and I wonder if gold continues its move here, as I suspect it will over the coming months, that at some point there will be another short squeeze in silver.
Read more from KWN:

We still don’t know if a financial collapse can be averted in Europe because investors and depositors are not all naïve to reality. The financial malfunction is ongoing and will not be prevented through these continual perverse financial machinations. If Eurozone depositors move their capital – more bailouts will be required, thereby increasing the sovereign debt levels and exacerbating the seemingly hopeless situation that much more.
We believe a growing number of European depositors are transferring their money out of EU banks, and many of them are reinvesting their capital into gold and silver for safety. It does not surprise us to see gold hitting all-time highs in euros and dollars. It’s worthwhile to acknowledge that those investors in Iceland and Ireland who had the foresight to convert their cash to gold before their countries’ respective bank runs have all fared extremely well in both nominal and real terms. We believe that gold and silver are the ultimate alternative for a checking account in a vulnerable banking jurisdiction, and whether the ECB prints more euros or eventually defaults, both outcomes will continue to support a robust demand for precious metals as an alternative currency.

By Eric Sprott & David Baker
The Real Banking Crisis

Although the adjacent questionnaire is facetious, it does ask the right questions. If you’re a wealthy European depositor today, what do you do with your money? Do you really continue to keep cash in a Greek or Italian bank account?

European bank depositors all face a tough decision today – to withdraw their deposits, or not withdraw and take their chances. Their response to that decision may determine the financial future of the Eurozone. Since 2008, EU Government bailouts have transformed a traditional banking crisis into a full-blown sovereign crisis. The European Central Bank (ECB) has managed to keep the Eurozone banking system going for now, but the constant threat of depositor bank runs makes its future extremely uncertain. A bank run on deposits forces banks to liquidate assets to raise cash. Governments and central banks will go to extreme lengths to avert such a scenario, because a liquidation reveals what an asset is really worth – and they are likely worth far less than what the banks are claiming they’re worth on their balance sheets today.

Bank runs have wreaked havoc in Europe over the past three years. In Iceland, it was a UK-led bank run on its second largest bank, Landsbanki, in early October 2008 that led Landsbanki to block over 300,000 UK depositors from accessing their accounts in its online bank called Icesave. Fear of widespread deposit losses compelled the British government to promptly freeze the assets of Landsbanki in retaliation, inciting an effective lock-down of foreign capital in and out of the country.¹ You certainly didn’t want to have an Icelandic checking account when that happened – especially considering that the Icelandic Krona proceeded to lose 58% of its value by the end of November 2008.²

In Ireland, it was the withdrawal of almost €4 billion in deposits in less than three weeks that compelled the Irish government to nationalize Anglo Irish Bank in January 2009.³ Large depositors lost faith in the Irish government’s bank account guarantee and began to pull their cash out of Irish banks in droves. As a Trinity College Dublin professor was quoted at the time, “This is a nightmare scenario for the [Irish] government… they can’t stop further withdrawals from the bank unless we close the borders and turn into Cuba.”⁴

Ireland experienced a second bank run in late 2010, when more than €67 billion was withdrawn from Ireland-based institutions in October alone.⁵ Ireland’s top six domestic banks, two of which are currently in the process of being shut down, have now lost more than €90 billion in corporate deposits since the crisis began in 2008.⁶ And the withdrawals continue – in May 2011 it was reported that Irish resident private-sector deposits had declined by 8.7% over the past 12 months.⁷ Private sector deposits from non-Irish Eurozone residents declined by 9.7% over the same period, while deposits from non-Eurozone residents were reportedly down 28.2%.8 Ireland’s experience makes it fairly clear: when depositors sense danger, and they are free to move their money elsewhere – they typically do.

The Irish deposit withdrawals have left Ireland’s banks in the hands of the ECB, which graciously bailed the country out back in November 2010, and has now lent Irish banks more than €103 billion as of the end of June 2011.⁹ This, in addition to the €55.7 billion the Irish banks have received from their own central bank, is amazingly still not enough to recapitalize the Irish banking system, which at the time of writing still requires an additional €24 billion of capital to remain solvent.¹⁰

In Greece, bank withdrawals have proven equally as damaging. Greek banks have seen deposit outflows of around 8% thus far in 2011, with an acceleration of outflows in May and June. Moody’s recently warned that such flows could cause a “severe cash shortage if they rapidly increased beyond 35% of deposits”.¹¹ Last week’s €109 billion bail-out suggests that may have already happened.

Just as with Ireland, the ECB has kept the Greek banks afloat, funding them almost €100 billion in 2010 and an additional €103 billion thus far in 2011.^12,13 The recent bail-out will buy Greece time, but deposit outflows could still derail the ECB’s efforts to save the Greek banking system if they continue unchecked.

Although we don’t have the data for Spain or Italy, it does not escape us that those countries’ governments are likely highly aware of the effect a bank run could potentially have on their fiscal stability. Italy is a much bigger fish than Ireland or Greece. Its €1.8 trillion of borrowing in nominal terms is more than the debt of Greece, Spain, Portugal and Ireland, combined.¹⁴ Italy and Spain are too big to fail and too big to bail-out, so the future of the Eurozone will be seriously compromised if Italian and Spanish depositors take flight with their euros. To that effect, we found it very instructive to read about new provisions that the Eurozone’s rescue fund, the EFSF, recently incorporated into the latest Greek bail-out. Included among them is the ability for the EFSF to buy sovereign bonds in the secondary market, give EU states “precautionary credit lines” before they are shut out of credit market, and “lend governments money to recapitalize their banks”.¹⁵ The sovereign crisis, at its root, is still a banking crisis. The banks hold loads of Eurozone sovereign debt. If depositors withdraw capital, those banks must sell some of those sovereign bonds to stay solvent. The EFSF provisions are there to provide the banks with the liquidity they need to survive deposit withdrawals. The question now is what will happen if the EFSF runs out of the funds to do so.

In our view, the depositors that chose to transfer their money out of their local Eurozone banks deserve some recognition, because they ‘get it’. The EU banks are still the root of this problem, and depositors are right to question the security of their deposits held with them. We have always postulated that the real problem in our financial system is too much leverage in the banking system. We are continually reminded of this fact every Friday when US bank failures are released. When you compare the failed banks’ assets to the cost the FDIC pays to make their depositors whole, it reveals how many times the banks have lost their equity capital. The key to remember here is that banks lend out our money and keep very little in reserve. If we assume they keep 5 cents of capital for every 95 cents they loan out – a 25% ‘implied write-down’ in Chart A would mean that the bank has effectively lost its capital six times over.

The banking situation in Europe is no different from that above – EU banks are also highly levered, but their situation is further complicated by the fact that what was once the most liquid and secure loan on European banks’ balance sheets – sovereign debt – is no longer liquid and secure. This makes EU banks extremely vulnerable to deposit withdrawals as it forces them to approach the ECB for help to maintain liquidity. There is only so much the ECB can do – if a true ‘liquidity event’ takes place, we can all rest assured that there will be no buyers of distressed assets in the sizes that European banks hold today, sovereign bonds, or not.

We discuss the EU banking crisis this month to remind everyone that we have very recently lived through two instances where the entire financial system almost collapsed. The first took place during the height of the 2008 crash. The second transpired in May 2010 when the ECB stepped in with its $1 trillion bailout package to avert disaster. All financial bailouts up to this point have been instigated with a desire to avert the first domino from falling. They have been instituted to avert contagion – a total financial meltdown that would effectively turn the global banking system into an Icelandic money trap – where no money can get in, or out.

We still don’t know if a financial collapse can be averted in Europe because investors and depositors are not all naïve to reality. The financial malfunction is ongoing and will not be prevented through these continual perverse financial machinations. If Eurozone depositors move their capital – more bailouts will be required, thereby increasing the sovereign debt levels and exacerbating the seemingly hopeless situation that much more.

As the questionnaire above suggests, we believe a growing number of European depositors are transferring their money out of EU banks, and many of them are reinvesting their capital into gold and silver for safety. It does not surprise us to see gold hitting all-time highs in euros and dollars. It’s worthwhile to acknowledge that those investors in Iceland and Ireland who had the foresight to convert their cash to gold before their countries’ respective bank runs have all fared extremely well in both nominal and real terms. We believe that gold and silver are the ultimate alternative for a checkining account in a vulnerable banking jurisdiction, and whether the ECB prints more euros or eventually defaults, both outcomes will continue to support a robust demand for precious metals as an alternative currency.

Somewhat of a quiet day yesterday volatility wise according to today’s CME warehouse report.
No changes whatsoever to registered (deliverable) silver, with inventory remaining at 27,336,846 ounces.

COMEX SILVER WAREHOUSE INVENTORY REPORT 8/2/2011

*Brink’s received a deposit of 600,316 ounces into eligible vaults
*HSBS had a single bar (1,000 oz) withdrawn from eligible vaults
*Scotia Mocotta had a withdrawal of 92,616 ounces from eligible vaults

Total Registered COMEX silver remain unchanged at 27,336,846 ounces
Total Eligible COMEX silver increased by a net 506,700 ounces to 77,667,597
Total COMEX silver inventories increased to 105,004,443 ounces.

This is Jamie.
Get Blythe on the phone!
WTF is going on right now?
What do you mean she went golfing this afternoon!?!?!

Gold has vaulted nearly $20 today, and has just placed a brand new all-time nominal high at $1645.30, less than $5 from Jim Sinclair’s famous $1650 call!
So much for the debt ceiling hike agreement putting a damper on the gold and silver market….are traders starting to think rationally?
We think more likely its a response to the weak economic data reported in the past week, which has traders realizing QE3 is inevitable, and right around the corner.

MARKET IS OPEN (Will close in 4 hrs. 5 mins.)
		Metals	Date	Time (EST)	Bid	Ask				High
		GOLD	08/02/2011	13:11	1642.40	1643.40				1645.30

Stewart Thomson gives his thoughts on silver in his latest piece.
While Thomson believes silver is headed MUCH higher from here, he believes that when the OTC derivative complex finally completely detonates, silver will crash while gold holds onto its gains.
An interesting perspective, especially as it seems to be shared by Jim Sinclair. (He has never quite come out and said that to our knowledge, yet he emphasizes that gold will not crash like in the early 1980′s at the end of the current bull run, but remains strangely silent about silver’s fate at the end of the current bull).

The public is already nervous right now. What happens if the market drops thousands of Dow points from here? The answer is that the public would move into cash and perhaps bonds, and they would do it in size. Their stock market “marked to 15-20% gains a year forever model” pipedream would finally be buried in a marked to market coffin, in the Dow 9,500–11,500 zone. Since their own stocks have generally performed much worse than the Dow, that final exit would likely be one of substantial loss booking.


The US dollar has to be substantially devalued to make even a portion of the OTC derivatives and unfunded liabilities debt manageable. It makes sense that the public would abandon the stock market and go “all-in” on the dollar just in time for a dollar crisis to explode on the world financial stage.


At the beginning of the year in 1979, gold was trading around $200. About a year later price had quadrupled to about $800. I expect the price of gold to repeat that type of parabolic action, as unprecedented institutional liquidity flows out of the US dollar begin to occur. My ultimate gold price target of $6000 is about 4 times the current gold price, something to keep in mind.


A new bull market was since reborn for both silver and gold stocks, but don’t think you can outperform gold with silver or gold stocks in this OTC derivatives-based crisis….without taking some serious kicks in the financial head on the downside. Focus on enduring those kicks in the head, because you are not going to avoid them, despite what the timers are telling you. At some point, I think silver disconnects from gold and implodes, while gold sits there watching the action with a smile. I think it happens at prices far above $50 an ounce, but I think it happens.
Read more:

Mike Maloney of Rich Dad Poor Dad on $1500 silver.

 Further confirmation in the continuing stealth accumulation of bullion by central banks came overnight with confirmation that South Korea’s central bank bought 25 tonnes of gold  over the past two months. The gold is worth $1.24 billion and resulted in a 17-fold increase in their gold reserves.
Thailand’s gold reserves rose by 15.5% in the two months and rose to about 4.07 million ounces in June, from about 3.523 million ounces in May, according to figures on the Bank of Thailand’s website accessed by Bloomberg this morning.
South Korea is the world’s seventh-biggest foreign-exchange reserve holder and 64% of its reserves are in U.S. dollars. The bank said that it also holds euros and other assets and the move was about achieving diversification.
From Goldcore:

Gold is higher in all currencies today except for the Swiss franc and is trading at USD 1,629.20 , EUR 1,147.30 , GBP 1,000.20 and CHF 1,270.10 per ounce. Gold’s London AM fix was USD 1624.00, EUR 1145.28, GBP 997.30 (10:41 GMT).
Gold reached new record nominal highs in euros and Canadian dollars yesterday at EUR 1,149.60/oz and CAD 1,566.48/oz yesterday and remains close to these record highs today, and close to record highs in most fiat currencies.

Cross Currency Rates
European indices are lower after Asian indices fell (Nikkei -1.2%, Sensex -1.1%, Shanghai -0.72%, Hang Seng -1.07, STI -1.25% and the South Korea’s Kospi was the worst performer falling 2.35%).
The Italian MIB is down another 0.9% and jitters abound about Italian banks and banking sector.

Gold in Euros – 30-Day (Tick)
Spanish and particularly Italian bonds are under pressure today with the Spanish 10-year rising to 6.37% and the Italian 10-year rising to 6.21%. Spain and Italy’s debt markets are beginning to look like Portugal and Ireland’s prior to their bond yields surged to over 10%.

Gold in GBP– 30-Day (Tick)
Further confirmation in the continuing stealth accumulation of bullion by central banks came overnight with confirmation that South Korea’s central bank bought 25 tonnes of gold  over the past two months. The gold is worth $1.24 billion and resulted in a 17-fold increase in their gold reserves.
Thailand’s gold reserves rose by 15.5% in the two months and rose to about 4.07 million ounces in June, from about 3.523 million ounces in May, according to figures on the Bank of Thailand’s website accessed by Bloomberg this morning.
South Korea is the world’s seventh-biggest foreign-exchange reserve holder and 64% of its reserves are in U.S. dollars. The bank said that it also holds euros and other assets and the move was about achieving diversification.
The BOK’s reserves, stored in London in the vaults of the Bank of England, increased 25 tonnes to 39.4 tonnes (from 14.4 tonnes) but remain meager when compared to the size of their foreign exchange reserves.
BOK’s gold holdings, at today’s market prices, account for 0.7% of its reserves, up from 0.2% prior to the purchase.
The BOK reserves were at a record high of $311.03 billion at the end of July which puts this $1.25 billion gold purchase in perspective.
Their gold reserves and those of other Asian central banks, particularly the People’s Bank of China, remain meager when compared to those of western central banks and the U.S.
Earlier this year, Thailand, whose gold holdings account for only 2.9 percent of reserves, bought 9.3 tonnes of gold. Russia purchased 41.8 tonnes and Mexico bought 99.2 tonnes.
China is the world’s sixth largest gold holder and the biggest among Asian banks with 1,054.1 tonnes, equivalent to just 1.6% of their massive currency reserves.
According to the World Gold Council, governments hold an average of 10 per cent of foreign exchange reserves in gold. Larger economies such as the US, France and Germany hold more than 50 per cent.
“As a real safe asset, gold helps us to cope effectively with changes in international financial market,” said Jaehyun Joo of the Bank of Korea.
“We expect that gold would serve as a safety net for official foreign reserve and enhance the stability of the Bank Of Korea’s foreign reserve management,” Mr Joo added.
Mr Joo’s comments reflect the mindset of people and central bankers in Asia who realize gold’s store of value importance and are increasingly concerned about the euro, the dollar and the global financial and monetary system.
The “Asian put” continues to place a very stable floor under the gold market and means that gold is not seeing any meaningful correction.
This is likely to continue for the foreseeable future and means that investors would be advised to allocate to gold sooner rather than later as a meaningful price correction is unlikely.
Some weakness in gold may be seen if we experience another bout of misplaced ‘market euphoria’ and risk appetite once the debt deal is fully completed. However, this will likely be more short term weakness as the medium and long term fundamentals remain sound.
Smart money and official demand for gold remains robust as a very fragile global economic recovery, stubbornly high inflation in many countries and sovereign debt and contagion risks lead to diversification into gold.
For the latest news, commentary, infographics and videos on gold and financial markets follow us on Twitter.
NEWS
Reuters
Gold nears record after US debt deal, Korean purchase
The Financial Times
South Korea lifts gold reserves 17-fold
Bloomberg
Gold May Advance to Near Record as Slower Factory Growth Increases Demand
Reuters
Gold edges up after South Korea buy
The Wall Street Journal
Korean Central Bank Moves Into Gold
BBC
S Korea buys gold as safe haven, first time since ’98
Bloomberg
Gold Coins Sell Out in Lisbon as Biggest Bet Sees 22% Gain
COMMENTARY
Zero Hedge
The Imminent $2.5 Trillion Debt Ceiling Hike Will Unleash A Gold Price Surge To $1,950 And Higher
King World News
‘By every metric’ gold is cheap, Rickards tells King World News
GoldSeek
Ron Paul: When a Cut is Not a Cut
MoneyWeek
It doesn’t matter who is in charge – buy gold