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Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (9256)	9/21/2014 9:52:20 AM
From: Goose94	Read Replies (1) \| Respond to of 202757

Gold: Afraid Of The Plummeting Gold Price? Russia Certainly Is Not The Russian Central Bank recently added 300,000 ounces of gold to its reserves in August.This large gold purchase came despite a falling Ruble and a weak gold price.Russian's September gold purchase numbers will be very interesting for investors as the gold price has dropped another 5% since August.Russia has recently warned it may unload its Western debt securities and investors may get an early sign of this if Russia increases the pace of its gold purchases. Russia's latest report on its sovereign gold reserves show that the country added to its gold reserves significantly in August by purchasing another 300,000 ounces (a little under 10 tonnes). (click to enlarge) Source: ShareLynx This shouldn't be a surprise for gold investors because Russia has been consistently buying gold since 2007. But at a time where the gold price has been hammered and investor sentiment in gold is the most bearish in years, this should tell investors that some of the serious buyers (central banks) are still accumulating gold and believe there is value in it at these price levels. Investors should also remember that these purchases occurred in August when the gold price was significantly higher, and according to the London Bullion Market Association, it averaged around $1297 per ounce during the month of August. Throw in the fact that the Ruble was dropping during August (which makes gold more expensive for Russia) and that 300,000 purchase number is very healthy. We will be very interested in seeing how many ounces of gold Russia purchases in September when those numbers are released next month - will the central bank increase purchases at a lower gold price? What is the Take-Away for Investors?The main thing we take from this recent data release on Russian sovereign gold holdings is that the Russians continue to see value in accumulating gold despite its falling price. This should be a bit of comfort for gold investors that are disappointed at the falling gold price. However, what we are interested in is what Russia will be doing with its excess dollar reserves - as the country's finance minister Anton Siluanov has recently announced that Russia is considering diversifying away from Western debt securities. Speaking on the sidelines of an annual investment forum in the Black Sea town of Sochi, Mr. Siluanov said the Finance Ministry wants to diversify its investment basket, and is looking for higher yields without too much risks. He said the ministry will consider buying papers issued by Brazil, India, China and South Africa, which along with Russia are known collectively as the Brics countries. "[We would like to] walk away from investing in papers of the countries that impose sanctions against us," Mr. Siluanov said, adding that the reshuffle would be carried out gradually. He didn't elaborate on when the first purchases of Brics debt may take place. Mr. Siluanov referred to Russia diversifying into other debt securities, but all the aforementioned debt securities are relatively crude and all of those securities have a degree of risk much higher than US debt securities in both liquidity and quality. This was obviously a message that Russia was trying to send to the United States warning about offloading the $115 billion or so of US securities that the country holds. Given that $115 billion of extra treasuries could be easily swallowed up by the Fed in a matter of months, the impact of this would be relatively minor. But what would have a huge impact on the financial market, and the standing of the US dollar, would be if Russia decided to put an oversized bid into the gold market with these dollar securities. Investors should remember that the gold market is actually very small compared to the amount of money that the government holds in its reserves -with over $100 billion of US treasury holdings Russia could buy every single ounce of gold produced in 2014. We've mentioned this before, but investors should remember that it wouldn't be unthinkable for Russia to cause some financial market chaos - especially if Western sanctions continue. Hank Paulson, former US Treasury secretary,said that at one point during the financial crisis: Here I'm not going to name the senior person, but I was meeting with someone… This person told me that the Chinese had received a message from the Russians which was, 'Hey let's join together and sell Fannie and Freddie securities on the market.' The Chinese weren't going to do that but again, it just, it just drove home to me how vulnerable I felt until we had put Fannie and Freddie into conservatorship [the rescue plan for them, that was eventually put in place]. For me this is pretty jaw-dropping stuff - the Chinese told Hank Paulson that the Russians were suggesting a joint pact with China to drive down the price of the debt of Fannie and Freddie, and maximize the turmoil on Wall Street - presumably with a view to maximizing the cost of the rescue for Washington and further damaging its financial health. The point is that not only would gold make a very good diversifier for Russian monetary assets, but also it could cause quite a stir in financial markets if those financial assets were used to purchase physical gold. Investors shouldn't sleep on this because it seems that the Ukrainian situation is not solved and has been flaring up recently - even though markets have been ignoring the situation. We don't think gold needs more fundamental reasons to own it in the current environment, but a large sovereign nation looking to unload treasuries (and possibly EU debt as the tit-for-tat response to sanctions grows) and find alternative reserve assets seems to be a pretty good reason to own gold. Thus we believe that investors should consider having a large exposure to gold with positions in physical gold and the gold ETF's SPDR Gold Shares (GLD-NY). Additionally, the miners that have been underperforming gold over the last few weeks may offer investors considerable leverage to any rise in the gold price. Investors looking for this leverage may want to consider evaluating gold miners such as Goldcorp (G-T), Agnico-Eagle (AEM-T), Newmont (NEM-NY), or even some of the explorers and silver miners such as First Majestic (FR-T) (we're not suggesting these companies specifically - only suggesting them for further investor research). It may not be an important factor at this time, but if we start to see large increases in Russian gold reserves in the upcoming months, it may mean that gold has just become a weapon in the sanctions war as Russia unloads its Western debt securities - that would be extremely good for gold investors.

To: Goose94 who wrote (9256)	9/21/2014 9:55:14 AM
From: Veteran98	Respond to of 202757

Let's hope the bubble guys have it correct.... J.K. thinking otherwise and sounding extremely bearish on his blog John Kaiser saying... Difficult times in the junior resource sector are about to get horrific..... Once gold drops through $1,180 it will unleash the final capitulation within the junior resource sector as shareholders totally disgusted with the conventional ideologically tainted gold bug narrative liquidate every resource junior still in their accounts. more... kaiserresearch.com