In a stunningly despotic move, France has launched severe new restrictions on cash transactions. After September 2015, French residents cannot make cash payments of more than 1,000 euros, down from the current limit of 3,000. Foreign visitors’ cash payments will be capped at 10,000 euros rather than 15,000. Not only that, but any bank withdrawal of more than 10,000 euros per month will be reported to French authorities for good measure.
The claim is that these restrictions will help to fight terrorism. French Minister of Finance Michael Sapin pointed out that the terrorists who killed 17 people at Charlie Hebdo and a Parisian food store partially used cash to finance their attack.
For the fourth month in a row, Gallup found that Americans named the government as the biggest problem in the United States. Jobs and the economy tied for the second-most worrisome problems. Together, these three issues are the top concerns for almost 40% of Americans.
Though issues such as terrorism, healthcare, race relations and immigration have emerged among the top problems in recent polls, government, the economy and unemployment have been the dominant problems listed by Americans for more than a year.”
In a short article for Casey Research, Jeff Clark observes that the gold price has declined for eight consecutive days for the first time since 2009. However, investors shouldn’t worry too much. As the chart below shows, gold prices often cycle through a low point in March before picking up again.
Since 1975, March has been by far the worst month for gold. In other words, the current price behavior is normal for this time of year. In a world of growing currency manipulations and negative interest rates, it’s only a matter of time before we see the inevitable consequences of these actions. It won’t be pretty—but gold will be a refuge in that fallout. This tells us that gold’s current decline should be viewed as an opportunity to shore up our precious metals portfolios.”
Speaking of historical trends, what about the stock market? Gold is likely to reverse this March slump, but will the stock market continue on its multi-year bull run?
Mainstream analysts continue to tout an economic recovery based upon new jobs, but are now starting to worry about stagnant wage growth. One popular excuse for this is “pent-up wage deflation.” The argument goes that since businesses didn’t cut wages during the financial crisis, they are now refraining from raising them.
A new op-ed in the Washington Post debunks this theory and boils the issue down to the basics: the economy is still lousy. Matt O’Brien points to the same problems Peter Schiff has been warning about for years:
It’s just the unemployment, stupid. Or maybe the underemployment. Between people who can’t find the full-time jobs they want, people who haven’t been able to find any jobs after looking for at least six months, and people who think things are so hopeless that they’ve given up looking for now, there are a lot more people than normal stuck on the margins of the labor force. And these ‘shadow unemployed,’ according to the Fed, exert just as much downward pressure on wages as the regular unemployed. Put it all together, and wages haven’t recovered because the economy hasn’t fully recovered.”
Explore the latest exciting developments in the silver industry with the February edition of Silver News. Its front-page story covers how silver nanowires are being explored as an alternative to widely-used indium tin-oxide. Once testing is complete, silver could become even more essential to the manufacturing of touch-screens, plasma televisions, and other common electronics.
Perhaps even more exciting is the new commercial release of a 3D printer that can simultaneously print conductive silver inks inside plastic designs. Everyday consumers can now print customized electronic devices. This advancing technology could add significant demand to the electronic silver market beyond large manufacturers. You can watch a video about this new printer from Voxel8 below.
Chinese Gold Demand Outpaces World Production
Forbes – More than 315 metric tons of gold were withdrawn from the Shanghai Gold Exchange from the beginning of January to mid-February. During the same period, only 300 tons were newly-mined around the globe. The gold demand came in preparation for the Chinese New Year, the country’s biggest holiday. China is already the world’s second largest gold consumer, but its bullion demand will likely surge with changing demographics. In the next 5 years, China’s middle class is expected to grow 66% to 500 million.
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The US Justice Department has begun to investigate whether 10 of the world’s largest banks have manipulated gold and silver prices. The Justice Department is just the latest in a series of financial regulators to investigate possibilities of precious metals manipulation, including the UK Financial Conduct Authority, Germany’s BaFin, and Switzerland’s competition commission WEKO. On top of that, there are a number of pending civil lawsuits in New York against some of these same banks for gold price rigging.
What should physical gold and silver investors take away from this news?
374 metric tons of gold were withdrawn from the Shanghai Gold Exchange (SGE) in the first 6 weeks of 2015. During the same period, about 300 tons of gold were newly mined in the entire world. Using these figures, China is currently consuming more gold than the world is producing.
The surge in Chinese gold consumption comes from preparations for the Chinese New Year celebrations, which began last week. Gold is one of the most traditional gifts to give during this holiday, but it’s not the only product the Chinese buy. They spend astounding amounts of money during this celebration: $100 billion in 2014, which was twice what Americans spent during the Thanksgiving and Black Friday holiday weekend.
Renowned hedge fund manager John Paulson is committed to gold. A new government filing from Paulson & Co. shows that as of December 31st, it remains the largest holder in the SPDR Gold Trust (GLD). It owns 10.33 million shares of GLD, the biggest gold exchange-traded fund in the world. Paulson’s company has maintained this stake for a year and a half.
Gold-backed ETFs saw nearly 70 tons of gold inflows in January, the largest since September 2012. The majority of that – 49 million tons – occurred in GLD. However, speculative interest in the metal has dropped again in February, and GLD has fallen more than 8% from its January high.
Speculators think the January surge in the gold price was a short-term reaction to volatility in Europe, and many investors are now placing their bets on the supposed economic recovery of the United States. Paulson seems to be looking at things differently and sees inflation looming in America’s future.
Wal-Mart announced yesterday that it is going to raise its minimum wage to $9 an hour, which will affect a half-million employees. Many are praising the company and saying this will improve the lives of low-wage workers, while also providing a boost to the American economy. However, Peter Schiff isn’t so optimistic. He explained to Yahoo! Finance why Wal-Mart’s minimum wage increase isn’t necessarily a net positive for the economy.
The wage increase will cost Wal-Mart about $1 billion this year. Who knows if Wal-Mart will pass along the cost of higher wages to its customers by raising prices? More importantly, Wal-Mart will probably cut back on hiring, which means low-income Americans will have that much more difficulty finding a job.