Switzerland will vote on the “Save Our Swiss Gold” initiative this Sunday, and the news is reminding everyone just why the financial world is watching so closely. USA Today and the Wall Street Journal can give you a good summary of how the Swiss gold initiative would affect the policies of the Swiss National Bank (SNB). The Guardian explains why a “yes” vote on the initiative would be extremely bullish for gold in this article published yesterday:
Its supporters come from the populist right-wing Swiss People’s party (SVP), which says in its mission statement: ‘Most Swiss don’t even know that part of the nation’s gold is stored abroad and that the SNB has already sold over half of the gold reserves.’
As the world waits to see if the Swiss people will force the Swiss National Bank to re-embrace gold on November 30th, there’s another major country that has been buying gold without any pressure from its populace – Russia. We’ve reported on Russia’s currency wars against the West (here, here, and here), but exactly how does gold fit into Putin’s economic strategy? John Butler has published an article at David Stockman’s Contra Corner blog that thoroughly explores the history of the international currency wars and Russia’s role in them.
Like many analysts, Butler recognizes Putin as an extremely shrewd politician and economic rival. More importantly, Butler explains why Western sanctions on Russia might force Putin to play his trump card – physical gold holdings. According to Butler, “at current market prices, Russia’s gold reserves would back a whopping 27% of the narrow rouble money supply”. What would it mean for the world if Russia – one of the largest exporters of oil – started to officially back its rouble with gold? Butler explores this question and more…
A couple weeks ago, Peter Schiff recorded a video appealing directly to Swiss voters to pass their gold referendum on November 30th. You can watch it here. Now, Peter has released a written commentary in the days leading up to the referendum to remind both the Swiss and the rest of the world how important this vote is.
For most of my career in international investing, I had always placed a great deal of faith in Switzerland’s financial markets. In recent years, however, as the Swiss government has sought to hitch its wagon to the flailing euro currency and kowtow increasingly to U.S.-based financial requirements, this faith has been shaken.
You might have noticed that Paul Krugman came out swinging at Peter Schiff and Austrian economics in his New York Times column this weekend. Peter responded to the hit-piece, explaining to Krugman why he’s declaring a Keynesian victory far too early.
The SGT Report recently interviewed Peter Schiff about the US economy and the gold market. This forty-minute conversation covers a lot of topics, including:
Since Janet Yellen’s Federal Reserve has put an end to quantitative easing, the financial media generally believes the United States economy is improving. With an improving economy, the expectation is that Yellen will begin to raise interest rates in 2015. So goes the argument against an improvement in the gold market.
However, many analysts aren’t so optimistic about the state of the economy and haven’t given up on gold yet. In this video, Jim Rickards explains to CNBC why he thinks the US is in the same depression that began in 2007. Even Yellen can’t run from this reality, so Rickards argues that the Fed will be unable to raise rates in 2015.
Coast to Coast AM interviewed Peter Schiff this week. They talked about the real story of the Obama recovery, central bank manipulation of the money supply, and why silver is just important for your portfolio as gold. It’s a long interview that you can find in full here. Highlights of Peter’s responses are transcribed below.
This post was submitted by Erik Oswald, SchiffGold Precious Metals Specialist.
While financial commentators continue to bash gold as an asset that produces nothing and should be left to the pages of history, the real story of the gold market is found at the macro economic and fundamental level. Central banks the world over have been net buyers of physical gold since 2011. On top of this, many sovereign nations have been requesting and taking delivery of their gold holdings from the New York Federal Reserve and London, where a majority of central banks’ gold holdings are stored.
Major news hit today on this front. The Netherlands has become the most recent Western European nation to take delivery of their physical holdings from the NY Fed. The Dutch central bank located in Amsterdam has increased its domestic holdings of physical bullion from 11% of total gold reserves to 31%. The official domestic Dutch gold horde has increased from about 67 tons to nearly 190. While this number is small in comparison to the reserves held by countries like China, Russia, and (allegedly) the US, the act of removing physical bullion from an international depository and returning it to the country of origin represents yet another vote of no confidence in the US financial system.
While interviewing William Rhind of World Gold Trust Services, CNBC asked him why central banks around the world are buying so much gold. Speaking about Russia’s massive purchases this year, one host asked, “How long can you use gold to prop up your currency, ultimately?” Rhind politely set her straight that gold is not an asset used to simply “prop up” currencies. If he’d had more time, he might have pointed out how much value the US dollar has lost since it has been off the gold standard.
Due in part to central bank buying, Rhind believes that the global gold supply is returning to deficit. He predicts that 2014 might turn out to be the second highest year of gold demand on record.
Greg Hunter of USAWatchdog interviewed Peter Schiff last week about the new highs in the stock market and what the positive financial news really portends for the United States economy. Peter also shares his thoughts about a bottom in the gold price.