25 April 2010, 4:01 p.m. Kitco News http://www.kitco.com/
(Kitco News) - Margins needed to trade Comex silver futures are being increased by the CME Group and will take effect after the close of business on Tuesday, the exchange said Monday in a press release.
The move by the CME Group to raise the margin needed to trade – also known as performance bonds – silver futures on the Comex division of the New York Mercantile Exchange likely won’t come as a surprise given the heavy volume and more than $4 an ounce price swing in the metal on Monday. Futures traders had talked about the possibility this would occur because of Monday’s volatility. The CME Group is the parent company for the Comex and Nymex.
China Imports 245 Tonnes of Silver in February and Qatar SWF “Interested” in Buying Silver
Gold and silver rose on the open in Asia and have continued those gains so far in European trading with the Libyan military conflict leading to a safe haven bid and falls in the dollar and yen. The all time and multiyear nominal dollar highs set on March 7th ($1,444.95/oz and $36.75/oz) look set to be challenged as gold is less than 1% from its record high and silver less than 2% from its nominal recent high.
Safe haven demand continues especially in Asia and macroeconomic and geopolitical risk remains elevated. The tragedy in Japan and possibility of an ecological catastrophe has clouded the economic picture and created even more uncertainty which will lead to continuing physical demand.
In Japan, many ATMs have not been working for days now and this is leading to safe haven demand for gold. Should efforts to sort out the ATM problem not be resolved this week it could out pressure on the already strained Japanese financial system.
Iran and Other Central Banks Secretly Increasing Gold Reserves
News that Iran and other nations with large dollar currency reserves have greatly increased their gold reserves (see News) will not come as a surprise to our readers. It stands to reason that they would given the degree of exposure which most creditor nations have to the U.S. dollar. It also stands to reason as some of them do not have cordial relations with Washington and may be reluctant to fund the U.S. continuing imprudent fiscal policies.
Gold was not the only precious metal being bought with the FT reporting that the sovereign wealth fund of Qatar, the Qatar Investment Authority is reportedly interested in acquiring both and gold and silver.
The QIA has assets estimated to exceed $65 billion and this one sovereign wealth fund alone could easily corner the very small physical silver market which is worth some $36 billion at today’s prices (1 billion ounces of above ground, investment grade refined silver bullion multiply by $36 per ounce).
China Imports 245 Tonnes of Silver in February and Qatar SWF “Interested” in Buying Silver
Central banks and sovereign wealth funds with massive exposure to the dollar, such as the Russians and Chinese, are not going to shout from the roof tops their intentions to diversify into gold and silver bullion as this would lead to a surge in bullion prices and an even greater depreciation of their dollar holdings.
China imported 245.6 metric tons of silver in February. The figure is close to the 260.6 metric tons imported in February 2010 and suggests that the Chinese are more than willing to buy silver at over $30 per ounce. It also suggests that the record Chinese imports of 3,475,394 kilos seen in 2010 (a massive four fold increase from 2009) may be again attained in 2011.
This demand is likely from the private sector rather than official but it is quite possible that there has been official buying in recent months. This may have come from the Chinese State Administration of Foreign Exchange (SAFE) which manages nearly $3 trillion of currency reserves. The Chinese has experienced the collapse of a paper currency and hyperinflation as recently as 1949 and therefore appreciate the value of gold (and silver) as currencies which cannot be debased.
(Financial Times) -- Iran bought gold to cut dollar exposure
Iran has bought large amounts of gold in the international market, according to a senior Bank of England official, in a sign of how growing political pressure has driven Tehran to reduce its exposure to the US dollar.
Andrew Bailey, head of banking at the Bank of England, told an American official that the central bank had observed “significant moves by Iran to purchase gold”, according to a US diplomatic cable obtained by WikiLeaks and seen by the Financial Times.
Mr Bailey said the gold buying “was an attempt by Iran to protect its reserves from risk of seizure”.
Market observers believe Tehran has been one of the biggest buyers of bullion over the past decade after China, Russia and India, and is among the 20 largest holders of gold reserves.
They estimate it holds more than 300 tonnes of gold, up from 168.4 tonnes in 1996, the date of the most recent International Monetary Fund data.
The cable, dated June 2006, is the first official confirmation of Tehran’s buying.
Last year central banks became net buyers of bullion after 22 years of large sales, helping drive gold prices to all-time nominal highs. Trades by central banks are often kept secret.
Bankers said other Middle Eastern countries had also been quietly adding to gold holdings to diversify away from the dollar amid political tensions and volatility in currency markets.
“The totality of central bank reserves is not what is reported to the IMF,” said Philip Klapwijk, executive chairman of GFMS, a precious metals consultancy. “There’s probably another 10 per cent on top of that.”
Cables obtained by WikiLeaks cite Jordan’s prime minister as saying the central bank was “instructed to increase its holdings” of gold, and a Qatar Investment Authority official as saying the QIA was interested in buying gold and silver.
“There is no question some Middle Eastern countries are very interested in buying gold,” said George Milling-Stanley, head of government affairs at the mining industry-backed World Gold Council.
In the past two months, the political unrest in the Middle East has helped propel gold to a record price of $1,444.40 a troy ounce.
The Bank of England declined to comment on the cables, but did not dispute their contents. The central banks of Iran and Jordan and the QIA did not respond to requests for comment.QIA did not respond to requests for comment.
(MarketWatch) -- Mizuho's ATM crash may last to Tuesday or longer
Mizuho Bank's system-wide breakdown, which has led to millions of Japanese ATM users being unable to withdraw cash or receive salary payments, could have far-reaching implications and put a wider strain on Japan's banking system if its efforts to recover from the glitch fail this week.
The outages have affected so many people that Japan's Financial Services Agency, the nation's regulatory watchdog, is considering disciplining Mizuho, a person familiar with the matter said. The FSA was not immediately available for comment.
Mizuho is now facing its biggest system crisis in nearly a decade, amid a surge in demand for cash on hand as fears intensify from possible radiation leaks from a nuclear plant damaged by Friday's earthquake, coupled with the fact that most companies are increasing transactions toward the end of Japanese fiscal year through March 31.
The system crash, which Mizuho blamed on excessive deposit activity following the devastating earthquake, also comes at a time when other banks and industries are struggling to cope with intermittent power outages around the greater Tokyo region. Most banks have been forced to temporarily shut down some of their ATMs due to blackouts, while others are voluntarily shutting down their ATMs to help save power.
The retail banking unit of Mizuho Financial Group Inc. (8411.TO), Japan's third largest bank by market capitalization, said it aims to fully restore the system after the three-day weekend through Monday, but it remains unclear whether operations will return to normal operations on Tuesday.
On Sunday, Mizuho had operational level talks with its archrivals, the Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corp., over how they could help Mizuho with transaction settlements, in case Mizuho's troubles drag on, another person familiar with the matter said. Underscoring the gravity of the situation, the FSA has asked Mizuho's rivals to help it through this crisis.
The two lenders are considering shouldering some of Mizuho's load of unprocessed settlements. BTMU and SMBC, the core banking units of Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Banking Corp. are looking into how many companies' payments they can handle without overburdening their own systems, the person said. Both banks were not immediately available for comment.
The lender's system glitch, which occurred from Tuesday, affected more than 1 million cash transfer orders worth about Y830 billion ($10.3 billion) so far.
270,000 transactions that were placed at the bank earlier this week, were processed, but 890,000 transactions including salary payments have been not yet processed, Mizuho said Sunday.
All of its 38,000 ATMs at its branches and convenience stores have been shut down between Saturday and Monday to speed up the system's recovery. In its place, Mizuho extended operating hours through the three-day weekend through Monday at its 440 branches for account holders whose salary payments have been delayed by the system problem, allowing them to withdraw up to Y100,000.
Mizuho Bank President Satoru Nishibori earlier said that the bank is still investigating the locations of the branches where the problems originated and establishing why the transactions failed to process, but determining the reason will take some time.
The breakdown is the most serious faced by Mizuho since 2002, when it experienced similar problems that led to delays in processing 2.5 million public utility payments and other account settlements.
(Bloomberg) -- Gold Climbs in New York as Allied Aircraft Attack Libyan Targets
Gold climbed for a fourth day in New York as investors sought a protection of wealth from air strikes in Libya and on concern unrest may spread in the region. Allied officials said two days of missile and aircraft strikes have effectively grounded Muammar Qaddafi’s air force.
The leader denounced the coalition allied against him, which includes the U.S., the U.K. and France, as “the party of Satan.” Yemen’s President Ali Abdullah Saleh fired his cabinet yesterday and faced a growing internal revolt. Gold futures reached a record $1,445.70 an ounce on March 7.
As “tensions in the Middle East and North Africa region increase, the precious metals, particularly gold and silver, could be poised for further gains as investors seek to diversify towards safe-haven asset types,” James Moore, an analyst at TheBullionDesk.com in London, said in a report.
(Bloomberg) -- China’s Silver Imports in February Were 245.6 Tons
China’s imports of silver in February were 245.6 metric tons, the customs agency said. Imports of platinum were 7.3 tons and palladium shipments were 3.3 tons, it said today.
【on.cc 東方互動 專訊】 《巴倫週刊》稱，標普首席技術策略師 Mark Arbeter表示，美國股市的主要指標，已經突破始於4月初高點的下行趨勢。他在周四致客戶的報告中表示，標普技術分析人員目前認為，美國股市短期內有望創出新的反彈高位。
THE HEAD of a leading precious metals consultancy believes the Silver Price could continue to rise before a correction sets in.
"I think $50 will probably be taken out this year," said Philip Klapwijk, executive chairman of GFMS, quoted in the Financial Times.
Klapwijk does, however, sound a note of caution.
"When you see prices moving up so fast you have to be careful...I can't help but think that if we hit $50 we could see a significant correction driven by profit-taking."
Silver Prices have risen primarily as a result of strong investment demand, according to figures released by GFMS this week. The Silver Price rose 78% last year, with demand for investment the primary driver, states the World Silver Survey 2011 – produced by GFMS for the Washington-based Silver Institute.
The survey reports that a net $5.6 billion was invested in Silver last year, almost twice the figure for 2009. Industrial and jewelry demand also grew.
Supplies of Silver also rose, up 14.6% to 32,870 tonnes. Scrap supplies, net government sales and producer hedging drove much of this growth, with mine production only rising by 2.5%.
2007年《货币战争1》出版之时，书中就已大声疾呼要大幅度增加国家的黄金储备。这不是为了低买高卖投机赚差价，而是为了“谋”后美元时代的“万世”。是为人民币争得新世界货币体系的一席之地。可惜中国金融界缺乏长期的战略思维，对美元的迷恋根深蒂固。在金价从每盎司600多美元一直涨到1400 美元这一过程中，反应迟钝，屡失战机。堂堂央行，仅仅增加了500多吨黄金储备。连温州钞房团都不如。其格局之小，目光之短，悟性之差，令人扼腕。几年来形式的发展果然不出书中所料，次贷危机，金融海啸，美元狂印，世界新货币的讨论等等都一一如期而至。现如今“货币战争”一词已频繁出现于世界各大媒体。对 “货币战争”的忧虑更是各国政经首脑关注的焦点。全球“货币战争”已是战云密布，杀声四起，旌旗在望，鼓角相闻。美联储第一轮大印钞票还不过瘾，接着又来了第二轮。谁能保证它不会再来第三轮，第四轮，第Ｎ轮？作为世界储备货币最重要的就是要稳定，要守信用，美元稳定吗？守信用吗？当年尼克松单边废除布雷顿体系，悍然宣布美元与黄金脱钩，美元一口气对黄金狂贬二十多倍。事先不通知，事后不赔偿，连个道歉都没有。有如此信用记录的货币，让世人如何能有信心呢？如今美国的国力已大不如前了。产业空心化掏空了真实财富的创造力。金融魔术又彻底演砸。其结果是经济严重衰退，债务负担极其沉重。只要这些天文数字般地债务问题不解决，美元的贬值就不会停止，与此相应，黄金冲高的过程就不会中断。中国的黄金储备过少的问题就不可能回避。行动得越早就越主动，损失就越小。行动得越晚就越被动，损失就越大。越往后拖，货币当局的处境就越困难。
With a midnight deadline looming for a government closure, the hard-fought compromise between Obama's Democrats and opposition Republicans requires lawmakers to approve stopgap funding to keep federal agencies running into next week until the budget agreement can be formally enacted.
A shutdown -- the first in more than 15 years -- would have meant furloughs for much of the federal work force, suspension of some key government services and the closing of many national monuments and parks, while potentially undermining the U.S. economic recovery.
But the biggest incentive for a deal may have been the risks that failure would have posed for Obama, his fellow Democrats and the Republicans amid signs of public frustration with the rancorous budget fight as the 2012 presidential election campaign gathers steam.
"Tomorrow, I'm pleased to announce that the Washington Monument as well as the entire federal government will be open for business," a smiling Obama said in a late-night appearance at the White House.
After days of tense negotiations and brinkmanship, Republican lawmakers said agreement was reached on $37.8 billion in spending cuts in a budget for the rest of the fiscal year, which ends September 30.
"I am pleased Senator Reid and I and the White House have been able to come to an agreement that will in fact cut spending and keep our government open," U.S. House of Representatives Speaker John Boehner told reporters.
Obama's aides and U.S. lawmakers had struggled for days to hammer out a deal, making the threat of a government shutdown look ever more possible. The two sides even had a hard time agreeing on what issues were holding up an agreement.
Democrats said they were at odds over federal funding for birth control. Republicans said spending cuts were the issue.
The Senate on Friday night hurriedly approved a short-term funding bill to keep the government running until the longer budget plan can be enacted into law sometime next week. The House was to approve the stopgap measure later and it will then go to Obama to sign into law.
Without an agreement, money to operate the federal government for the next six months would have run out at midnight on Friday and agencies such as the Internal Revenue Service would begin a partial shutdown.
Despite the apparent resolution of the impasse, the bitter political fight raised questions about the ability of Obama and a divided U.S. Congress to deal with bigger issues looming down the road, from raising the federal debt ceiling to reining in budget deficits.
"They've got to be laughing at us right now" in China, said Senate Foreign Relations Committee Chairman John Kerry. "How terrific that the United States of America can't make a decision."
The leadership of the world's lone remaining superpower has been consumed for days by the budgetary infighting that could bring large swathes of government to a standstill.
香港一邊說殺校減班, 一邊發生呢 D 事件, 搞笑 !
【on.cc 東方互動 專訊】 婦科爆、兒科危，內地孕婦來港產子潮拖垮本港公營醫院外，引發的骨牌效應，連帶提供嬰幼兒防疫注射及健康發展的母嬰健康院亦告「爆煲」，粉嶺母嬰健康院率 先成為重災區，每日服務的嬰幼兒，近8成為內地孕婦在港所生。有本港家長埋怨，同屬新界區的瀝源母嬰健康院要苦候數小時始獲檢查。前線醫護人員怒斥，工作 量及壓力與日俱增，當局卻懶理不加派人手，勢掀起另一股醫護人員逃亡潮。
【on.cc 東方互動 專訊】 早上10時許，大群市民在大埔道一間連鎖式日用品店排隊購買奶粉，期間有人疑因小故發生爭執並互相推撞，情況混亂，警方接報調派多名警員到場維持袟序。
依家去大陸銀行, 一定有人拉你去旁邊 D 櫃位又是問你是否要做某種定期, 而我同老公一定堅持唔做呢 D, 一定要去 counter 前排隊, 排幾耐都要排 ! 個 D 特種定期, 你可以唔曬排隊就可以幫到你, 當然有野啦 ! 所以做人一定要小心 !
《偵查 NEWS直擊》【本報訊】中國半年內 4度加息，進一步拉闊中港兩地人民幣存款利率差距， 3個月定期存款相距逾兩厘。港人北上做定存賺取高息越來越普及，內地銀行覷準港人好「息」心態，今年開始積極推銷以高息存款包裝的結構性理財產品（由數種金融工具結合而成，回報與相關資產表現掛鈎）。專家提醒，貪一時高息的港人，小心隨時「中招」，因高息結構性產品，恐防是雷曼迷債翻版。
(Kitco News) - The global supply of silver jumped 14.6% during 2010, boosted not only by increased mine output but also by government sales, silver-scrap recycling and producer hedging, according to the World Silver Survey 2011 released by the Silver Institute Thursday.
Data in the report was compiled by the consultancy GFMS. Philip Klapwijk, executive chairman of GFMS, told Kitco News that he anticipates a further supply increase this year.
The World Silver Survey showed that total supply in 2010 climbed to 1.0568 billion ounces from 922.2 million in 2009. The largest share of supply comes from mine production, which rose by 2.5% to a record 735.9 million ounces. However, the biggest year-on-year increases in total supply came from the categories of government and scrap sales, as well as hedging.
“It’s partly price-related because clearly that’s having an impact on scrap supply,” Klapwijk. “We are seeing more scrap come back into the market, given prices as high as they are.”
For 2010, the World Silver Survey listed old silver-scrap supply of 215 million ounces, up from 188.4 million in 2009. Gains from industrial and jewelry recycling exceeded an ongoing decline in recovery from photographic sources.
Prices also played some role in government sales and producer hedging, Klapwijk said. Net government sales of silver rose to 44.8 million ounces in 2010 from 15.5 million in 2009, primarily the result of increased sales from Russia, said the Silver Survey.
The World Silver Survey showed a swing to net producer hedging of 61.1 million ounces, ending a four-year run of de-hedging. “Renewed enthusiasm to hedge silver was essentially limited to a group of by-product, rather than primary, silver miners,” the report said. These by-product producers were looking to “take advantage of higher prices to hedge non-core revenues over multi-year periods.”
Meanwhile, the 2.5% increase in global mine supply to 735.9 million ounces was aided in large part by new projects in Mexico and Argentina, said the World Silver Survey. This was the eighth straight year of annual increases, said the report.
“Growth was driven by increases from the primary silver and lead/zinc sectors, in both cases a result of significant new production capacity,” said the report. “Most importantly, the start of Penasquito’s sulfide (zinc) operation and the ramp-up of Palmarejo (primary silver) in Mexico together accounted for almost all of the country’s 13% increase last year, promoting Mexico to the position of world’s largest producer once again.”
Mexico’s output was listed at 128.6 million ounces. Other top producing nations included Peru, 116.1 million; China, 99.2 million; and Australia, 59.9 million.
Argentina’s silver-mine supply grew 20% to 20.6 million, helped by a full year of commercial production at Pirquitas, a primary-silver operation.
The report listed the following as the top five silver-producing companies: BHP Billiton, 46.6 million ounces; Fresnillo, 38.6 million; KGHM Polska Miedz, 37.3 million; Pan American Silver, 24.3 million; and Goldcorp, 23 million. Fresnillo and Pan American are primary silver producers.
While mine supply is also supported by high prices, Klapwijk pointed out that decisions on new projects were made some time ago and not during the current run-up to the highest silver prices in 31 years.
Global silver cash costs remained largely flat in 2010, said the report. They fell to $5.27 an ounce from a revised $5.29 in 2009, the report said.
The World Silver Survey looks for silver-mine supply to hit another record in 2011.
“Additions to production will come from both the primary and by-product sectors (gold and lead/zinc),” the report said. “The pipeline of projects is robust, with a significant portion of the growth we anticipate coming from the continued expansion of existing mines from 2010 levels, in addition to ‘ramp-up’ gains from properties recently commissioned.”
In particular, GFMS looks for another double-digit increase in Mexican output. The consultancy cited continued ramp-up of processing plants at Goldcorp’s Penasquito and Minera Frisco’s San Francisco del Oro toward design capacity, as well as expanded activities at Fresnillo’s Saucito and the start-up of Minera Frisco’s Concheno.
Klapwijk said he anticipates total supplies—including those other than mine production—likely will rise as well in 2011, although he also considers this a “tough call” since government sales are difficult to forecast.
“They (government sales) could moderate a bit this year,” he said. “I think scrap supply will be up a little bit and mine production will certainly grow quite significantly. We’re looking for perhaps as much as 14 million ounces more in mine production this year. And there has already been a fair amount of producer hedging in the pipeline.
“I think it’s unlikely supply will fall, and it’s more likely we’re going to see growth in supply, although not on the scale that we saw last year.”
By Allen Sykora of Kitco News; email@example.com
(Kitco News) - The sharp jump in silver prices during 2010 was the result of big increases in both investment and industrial-fabrication demand, according to the World Silver Survey 2011 released by the Silver Institute Thursday.
Global silver investment rose by 40% last year to 279.3 million troy ounces, said the report, for which data was compiled by the consultancy GFMS. This resulted in a net flow into silver of $5.6 billion, almost double the amount from 2009.
Meanwhile, total fabrication demand rose 12.8% to a 10-year high of 878.8 million ounces in 2010, led by industrial uses, said the report.
“The strength of these two areas of demand is clearly illustrated in their ability to brush aside a quite marked increase in supply,” said the report.
Silver posted an average price of $20.19 per ounce in 2010, a level surpassed only in 1980 and well up from the $14.67 average of 2009, said the report. The strength has continued so far into 2011, with the London silver fixing price averaging $31.86 through the end of the first quarter.
In the Silver Survey, GFMS described itself as “positive” on the outlook for silver prices, but “cautiously so.” The consultancy said the economic backdrop for investment remains supportive since monetary policy is unlikely to be tightened “that much” in 2011 and inflation and sovereign-debt concerns will grow. This will encourage investment demand for silver and gold alike, and ongoing gains in industrial demand should be “solid,” GFMS said.
“We are, however, somewhat concerned by the extent to which the white metal has lately powered ahead of gold,” GFMS said. “We are skeptical, for instance, that there is a ‘new paradigm’ at work that justifies a move even lower in the gold:silver ratio. Moreover, we are conscious of the fact that a fair proportion of the recent investment in silver is from more speculative money that could exit the market rapidly if conditions were to change.”
As a result, GFMS said, “we would be wary of any signs that industrial demand is faltering, as this could be a trigger for a major short-term correction in silver prices that would probably bring silver’s path more into line with that of gold.”
In an interview with Kitco News, GFMS Executive Chairman Philip Klapwijk said he looks for a wide range in silver yet this year from marginally below $30 an ounce to marginally above $50. “It’s really dependent upon the investment flow being sustained or growing, or whether that investment flow for whatever reason diminishes,” he said.
ETF, Retail Investment Climb During 2010
The report said much of the silver-investment demand last year came via exchange-traded funds, which trade like a stock but track the price of the commodity. Metal is put into storage to back ETF shares, creating physical demand.
Global ETF holdings hit 582.6 million ounces last year, an increase of 114.9 million from 2009, said the Silver Survey. The iShares Silver Trust accounted for almost 40% of the increase, with notable gains also achieved by Zurcher Kantonalbank, ETF Securities and Sprott Physical Silver Trust.
There was also a jump in retail investment demand during 2010. Physical bullion bars accounted for 55.6 million ounces of new investment last year. Meanwhile, coins and medals fabrication rose 28% to a record of 101.3 million ounces.
In the U.S., over 34.6 million U.S. Silver Eagle coins were minted, well above the previous record of almost 29 million in 2009. Additionally, the Australian Kookaburra, Austrian Philharmoniker and Canadian Maple Leaf all posted record highs in 2010.
“Implied” net silver investment (which does not include coins) recorded an all-time high last year of 178 million ounces, an increase of 47% and the highest level in GFMS’s 21-year data series. Much of this was due to ETFs, the over-the-counter market and investment in physical bars.
Klapwijk said silver “clearly benefited from investors looking for hard assets which they perceived to be safe havens against the potential for higher inflation in the future.” Furthermore, investors have turned to silver due to currency weakness in general and a lack of trust in major currencies, Klapwijk said.
“Also, the fact that interest rates are low makes putting money on deposit not particularly attractive, and the ‘cost of carry’ of having positions in precious metals is pretty trivial,” he said.
Industrial Demand Climbs 20.7%, Nearly Back To 2007-2008 Levels
Industrial demand accounted for much of the 12.8% rise in total fabrication demand during 2010, the report said. Silver’s use in industrial applications alone grew by 20.7% to 487.4 million ounces. This brought industrial demand nearly back to the levels of 491.1 million in 2007 and 492.7 million in 2008, before it slumped to 403.8 million in 2009 during the global economic slowdown in many Western nations.
“There is restocking and replenishment after the declines suffered in 2009,” Klapwijk said. “There was an element of inventory rebuild going on in the industrial space. Not only that, there was a more sustainable pick-up in industrial production and demand for products that contain silver in one form or another.”
Further, there are secular trends already occurring that means more use of silver in certain applications, including photovoltaic technology (such as solar cells) and electronics, Klapwijk said.
The strong industrial demand continued into the first quarter of this year. Assuming the economy does not tank, GFMS sees this hitting a record in 2011. “I wouldn’t be too surprised if we get above 500 million ounces in industrial demand this year,” Klapwijk said.
Jewelry demand rose 5.1% to 167 million ounces, which the Silver Survey said was the first substantial rise since 2003. This was tied to strong economic growth in emerging-market nations and the improving economic picture in the industrialized world.
The use of silver in photography fell by 6.6 million ounces, which was the smallest loss in nine years as medical centers deferred conversion to digital systems, said the report. Silverware demand fell to 50.3 million ounces from 58.2 million ounces in 2009, mainly due to lower demand in India.
By Allen Sykora of Kitco News; firstname.lastname@example.org
Back in April 2007, I wrote about the three stages that appear in every bull market, and more to the point, that gold was approaching the end of stage one. Gold back then was still trading around $690, and therefore well below its then record high of $850 reached in January 1980. My view was that “gold looks ready to make a new all-time high. When that happens, stage two begins. There will not yet be widespread excitement about gold in the next stage, because that won't occur until stage three. But when gold makes a new record high, and particularly after it breaks into a 4-digit price, people will begin paying attention.”
I wrote a follow-up article in November 2009 entitled Welcome to Stage Two of Gold's Bull Market, just two months after gold broke above $1,000. Focusing on the change in prevailing sentiment, I noted how differently gold was being treated. "During the first stage of a bull market, the media and most investors alike focus on past issues, rather than future potential. Over the past decade one consequently heard all the reasons not to own the gold…But there is a notable difference in this stage compared to stage one. Look how many people are writing and talking about gold. Gold has moved from apathy and neglect – stage one characteristics – to growing attention. But importantly, instead of embracing gold and analyzing it to determine relative value, today’s attention is one of widespread disbelief and skepticism that gold can climb higher. These are exactly the responses one should expect to emanate from stage two." I concluded by noting that at some unpredictable point in the future, gold will enter stage three "when gold no longer is relatively good value."
I did not make any mention of silver in the above two articles. It too has three stages, but silver is still mired in stage one, which began in February 1991 after silver had collapsed to $3.50. It was an astounding 93% decline from its January 1980 peak of $50. But as we can see on the following chart, $3.50 was silver’s low, and its price has been rising ever since.
From its $50 high in January 1980 to its $3.50 low in February 1991, the weak hands were shaken out. At that point, the accumulation by strong hands – who were buying because the recognized that silver was an exceptional bargain – became the dominant force. Their buying power was stronger than the selling pressure of the weak hands, and the price of silver responded by starting to climb. It was classic stage one action, but here’s the important point.
Silver is still in stage one. It won’t advance into stage two until $50 is exceeded, just like gold did not enter stage two until its previous high of $850 was hurdled.
I expect that silver will exceed $50 this year, which is a point of view I first mentioned in my outlook for 2010.
Admittedly, I was a little early with my forecast about when gold would enter stage two. So perhaps I will again be early by forecasting that silver will enter stage two of its bull market this year. Regardless of the accuracy of my timing, one thing is clear. Because it is still in stage one, silver remains good value.
By Andy Sullivan
WASHINGTON (Reuters) - Congressional negotiators on Wednesday raced against a looming deadline to agree on billions of dollars in spending cuts and find a budget deal that keeps the federal government operating beyond Friday.
With time running short, Republican and Democratic negotiators struggled to find a compromise that would avert a federal government shutdown that could throw hundreds of thousands of employees out of work.
Senate Democratic leader Harry Reid said the budget talks were "constantly evolving" and accused Republicans of changing the terms of the debate ahead of the midnight Friday deadline.
"Every time we agree to meet in the middle they move where the middle is," Reid said as the Senate opened on Wednesday. "We stand here with fewer than 72 hours on the clock ... It's time to get the job done."
Negotiators had tentatively agreed on a figure of $33 billion earlier this week, but House of Representatives Speaker John Boehner, a Republican, is now pushing for a target of $40 billion.
The two sides also must resolve what programs would go under the knife to satisfy Republican demands for sharp spending cuts in the current fiscal year.
Separate negotiating sessions at the White House and the Capitol on Tuesday failed to produce an agreement between Boehner and Democrats, and they blamed each other for the impasse.
The White House said President Barack Obama could meet with lawmakers again on Wednesday. But aides for Boehner and Reid said there was no meeting with Obama scheduled yet.
The budget showdown is the biggest political test for both parties since Republicans swept to power in the House and made big Senate gains in last year's elections on promises to slash government spending and reduce the federal government.
Obama vowed to keep negotiators at work until they agree on a budget for the remainder of the fiscal year, which ends on September 30. Temporary funding expires at midnight on Friday.
"The only question is whether politics or ideology are going to get in the way of preventing a government shutdown," he told reporters after Tuesday's White House meeting failed to find common ground.
China has likely begun a campaign to convert its dollars to gold that could end up with the nation cornering the gold market, says Richard Lehmann, editor of the Forbes/Lehmann Income Security Investor newsletter. China is alarmed about potential weakness for the dollar, he says in an interview with Steve Forbes. So “I’m concerned that basically China is probably already on a program to diversify the dollar into gold. I don’t think they want any other fiat currencies or want to minimize that amount.”
If China buys enough gold, at some point it can simply dictate the price, Lehmann says. And it has the means to do so, given that Chinese currency reserves total almost $3 trillion, and the world’s gold supply is now worth about $5 trillion, he says.
So China could “in one stroke, basically take control of the gold market and tie the dollar to gold so that effectively, if every six months the dollar deteriorates 5 percent, they can just upgrade the stated price at which they wanted to buy gold and thereby upgrade and up-value their gold reserves, but also keep the dollar in check.”
With plenty of other investors buying gold too, many experts expect it to continue rising. Richard Russell, author of the Dow Theory newsletter, says in a commentary obtained by King World News that the precious metal may reach $6,000 an ounce.
Spot gold was at $1,407.40 an ounce near midday Thursday.
Silver promises to become the nextbig buzzword among investors in 2011 and beyond, according to one of the investment industry's most prescient and successful experts on precious metals.
Eric Sprott is the founder of the Toronto-based investment firm, Sprott Asset Management LP. His renowned hedge fund, Sprott Hedge Fund LP, is heavily weighted in precious metals and has generated an estimated 23% annualized return over the past decade. Other similarly oriented funds under his stewardship have also been stellar performers in recent years.
He's now so bullish on silver that he launched the $575 million Sprott Physical Silver Trust in November of last year as he believes that: "Silver will be the investment of the decade."
"I think that silver could easily get to $50 this year," he tells BNWnews.ca.
This all bodes especially well for publicly traded companies that are already mining silver, he says. Likewise for ones that are developing primary silver deposits or gold deposits with plenty of silver as a byproduct.
"If the price of silver continues to go up, silver stocks are going to perform even better," Sprott adds.
Meanwhile, Sprott says the big catalyst for surging silver prices in the coming years will be exponentially increasing investment demand, which is already beginning to overwhelm existing silver supplies. The mining industry only produces around 800 tonnes of silver per annum. This is a relatively inelastic supply, regardless of silver prices, he adds.
As household investors are becoming increasingly jittery about the debasement of the U.S. dollar and other major currencies, they are loading up in record numbers on silver bars, coins and silver-denominated exchange traded funds, Sprott says.
However, there's also a quantum shift in investment demand taking place among big players in the precious metals market, including India (which is aiming to increase its imports by about 77 million ounces per annum), and of course China.
"China's net imports of silver were 112 million ounces last year. In 2005, they were net exporters of 100 million ounces," he says.
"That's a 200 million ounce shift in an 800 million ounce annual market that seldom ever grows because production hardly ever goes up. So where's it all going to come from? We don't know."
In fact, silver promises to outshine gold over the coming years, Sprott says. "Silver is the poor man's gold. Gold has had a great run for the past 11 years. But I absolutely believe that silver will outperform gold this year. Currently, there's more investment dollars going into silver than into gold."
Such a game-changing scenario should recalibrate the gold to silver pricing ratio in silver's favor, thereby eventually restoring it to its traditional level of about 16 to 1, he says. "It's the easiest call of all time."
"Silver as a currency always traded in a ratio of around 16 to 1 compared to gold, when it was a currency in the U.S. and the U.K. The current ratio is 48 to 1. If we go back to a 16 to 1 ratio, the implied price for silver would be $85.62 (per ounce)." he adds.
"On that basis, if gold goes to $1,600, then that would value silver at $100. And we certainly think that gold is going to $1,600. In fact, I'm willing to bet that this ratio will overshoot on the downside. It might even get to 10 to one."
The only reason why silver is still trading at a 48 to 1 ratio to bullion's spot price is that its price is being "manipulated" by big banks, Sprott says. That's because they don't want precious metals to become a popular alternative currency to Fiat money (currencies that are not backed by hard assets).
"Then there's also a huge short position out there on silver," he adds.
But time is on silver's side, he says, as the sovereignty debt crisis deepens in Europe and a continued policy of qquantitative easing in the U.S. continues to undermine the value of the greenback.
I was gratified to see how well my recent article (Is China Behind The Big Silver Short Dec 25th, 2010) was received, when over 50 websites worldwide picked it up in the first 24 hours. But I am afraid that a fair bit of confusion was created by that article, which I want to clarify here.
First, I am not presenting this as fact. I am presenting this as a theory that explains the observable facts.
With no transparency in the banking industry, we will never get a chance to see the swap books of JP Morgan or HSBC to find out which of their clients are shorting silver, or how much of the money behind silver shorts comes from JPM's own proprietary trading desk, and this is how it SHOULD be. But the presumption IS that the CFTC is monitoring these books, and would perform their duty to investigate any clearly manipulative and excessively large short positions not being held by legitimate hedgers of mine production. Sadly, we cannot depend on the CFTC to put fair, realistic position limits in place, or even to enforce the unrealistic position limits already in place, which are far too high compared to annual silver production and compared to above ground silver inventories to actually succeed in limiting anything.
Since the CFTC is just another captured "regulatory agency" like the SEC and there will never be any transparency in the shady operations of the mega banks, let's look at the circumstantial evidence available to us and build a case against them, just as any criminal investigator would: using method, means, motive, and opportunity.
Last week's article never intended to state that China had a NET SHORT POSITION IN SILVER. The title of the article was in question form, and the body of the article explained my theory that the Chinese have both long and offsetting short positions in silver, WHICH MAY RESULT IN COMBINED NET POSITION OF ZERO. I stated that the Chinese were using these opposing positions, in which China may hold the same exact same number of long COMEX future contracts and short COMEX future contracts resulting in no net long or short position, AS A MECHANISM WHO'S PURPOSE IS TO ACCUMULATE SILVER METAL AND DISPOSE OF EXCESS US DOLLAR RESERVES, which are constantly accumulating in the Chinese Central Bank month after month as a result of the persistent trade deficit. The brilliance of this mechanism is that it could allow the Chinese to secretly drain physical silver metal inventory away from the COMEX without spiking the market price of silver, which would hurt their producers and exporters. They merely need to hold their long contracts to maturity and take delivery of the physical silver, while selling their short contracts before maturity for cash, and using the proceeds to buy more short contracts with maturities further into the future (roll their shorts forward for longer dated shorts). The money they lose on the shorts (paper) as the silver price gradually climbs can just be considered additional acquisition cost on the longs (silver bars).
We Americans have been accumulating Chinese produced goods for many years now, about four times the amount of American goods being consumed by the Chinese. We settle the difference in US dollars, a good deal for the US: we trade freshly printed paper for scarce resources and labor. The Chinese already pay for all the American goods they require by exchanging a greater quantity of their own goods, so they are constantly accumulating US dollar reserves in the Chinese Central Bank, and want to find a way to use or invest these dollars so they don't sit idle. As these dollars continue to build up in China, the Chinese have accumulated nearly a trillion dollars worth of US Treasury bonds, and another trillion dollars worth of US Agency bonds (bonds of Fannie Mae, Freddie Mac and Ginnie Mae). All these bonds pay a below market rate of interest because they are implicitly or explicitly guaranteed by the US government, but it still amounts to more than allowing the reserve dollars to remain idle in the Chinese Central bank.
But now the Chinese realize that:
The principal returned on their maturing bonds is worth less and less every time because of the incessant quantitative easing (money printing) by the federal reserve, which is a form of gradual default
Fannie Mae, Freddie Mac, and even the US Treasury may default outright on their bonds at some point in time
Hard assets and commodities represent a safer store of value than fiat currency
One measure that the Chinese have taken is to reduce their purchases of US Treasury Bonds, even though the trade deficit with the US continues at high levels. In January 2008, China was the single largest buyer of US Treasury Bonds, with purchases totaling $153 billion. In September 2008, the Chinese became the largest holder of US Treasury bonds, surpassing the Japanese for the first time.
By June 2009, China became a net seller of US Treasury bonds, and their purchases have continually moved to the shorter maturities. According the US Treasury Website, Chinese holdings of US Treasury bonds have declined by about 4% year over year from October 2009 to October 2010, even though they have been steadily accumulating treasuries since July 2010.
According to a recent Bloomberg article, China imported 209 metric tons of gold during the first ten months of 2010, compared to 49 tons imported in all of 2009. Even though they are the world's biggest gold producer, they exported zero tons in 2009. Only India consumes more. Although India's gold consumption is mainly in the form of jewelry, this is deceptive. The Indians may wear it around their necks and wrists, but they use it as more of a savings account, especially in rural India. The savings of Chinese citizens amount to about 40% of their personal income, so what more perfect vehicle than gold bullion to protect their savings from inflation and government instability?
In April 2009, China's Central Bank announced that they had covertly accumulated 454 tons of gold since 2003, raising the official figure on Chinese gold reserves from 600 tons to 1054 tons in one day, after remaining unchanged for six years.
Since the Chinese are wisely accumulating gold, why not silver?We have no public announcement by the Chinese Central Bank to go by, or any official figures of their silver holdings (if any), so we need to see if we can base a theory on the available facts.
The Chinese have a long established cultural affinity for silver. Silver began to be used as a currency in Guangdong, China in 1423 when it became legal tender for payment of taxes. Provincial taxes had to be remitted to the capital in silver after 1465. In 1914, the National Currency Ordinance established the Silver Dollar as the national currency of the Republic of China. In 1949 the incoming Communist regime took China off the silver standard, but there are still many Chinese alive today who can remember a time when silver was used as money in China. In 2004, China legalized private ownership of gold and silver bullion for its private citizens, and in 2008 they began actively encouraging their people to invest their retirement savings in gold and silver. The Chinese word for "bank" uses the same symbol as silver.
So the primary MOTIVE of the Chinese Central Bank in accumulating silver is to wisely transfer dollar reserves to tangible assets, as they have already admitted they are doing with gold, to protect themselves against the out of control money printing by the Fed.
Another MOTIVE is to start an asset backed currency at some time in the future.As the US dollar is continually overprinted by the Fed, its days as the world's reserve currency are numbered. The Chinese are just biding their time, trying to cash in as much of their US debt holdings (while they still maintain SOME purchasing power), before the day when the Yuan ultimately becomes the world's reserve currency by default. The first steps have already been put into place, such as the currency swaps and bilateral trade agreements with Brazil, Australia, Indonesia, Turkey and Russia. These countries all have natural resources that China needs, and are markets for exports of Chinese finished products. When the dollar, pound and euro implode from overprinting, the world will need a new reserve currency, and will not trust another one consisting of nothing but unbacked fiat paper. By accumulating a huge cache of gold and silver, the traditional, historical monetary metals, the Chinese will be ready to back the Yuan when the world's oil exporters will be demanding payment in hard assets. The level of gold/silver redeemability chosen for the Yuan will determine the value of all other world currencies from that day forward, by their free market exchange rate with the Yuan.
A third MOTIVE for the Chinese to be accumulating silver now is the increasing necessity of silver as a raw material for high tech goods produced in China.There is no substitute for silver in many applications, and the demand is the most inelastic of any commodity. China would like to dominate future production of solar panels, switches, flat panel TV's, computers, cell phones, GPS units, batteries of all kinds, especially hybrid car batteries, silver bearings, silver solder, and the list goes on. A ready stockpile of silver will protect the productive capacity Chinese industry in the face of expected future silver shortages.
I now consider it much more likely that the Chinese Central Bank has it's short COMEX silver position with HSBC bank, the largest international bank in China and known to have a huge silver short position, (which is unlikely to be a legitimate producer hedge), and probably have their corresponding long COMEX silver position with JP Morgan, although this might also be with HSBC. I am just speculating that keeping the positions at two different banks, under two different names, would help to camouflage their strategy of accumulating precious metals and dumping US dollars. With all the global banking secrecy, there is never any shortage of opportunity to unload a bunch of US dollars. But their window of opportunity is closing because of the historically low inventory levels of silver at the COMEX.
This opportunity appears to be coming to an end with looming delivery defaults at the COMEX. In September 2010, there were 3002 silver contracts standing for delivery at the COMEX on first notice day, August 30, 2010. Of those, 84% of the holders (2519 contracts totaling 12.595 million oz) actually took physical delivery, In the next delivery month, December 2010, there were were 17,208 contracts standing for delivery on first notice day, November 26, 2010. Using the same 84% ratio of contracts that actually took delivery in September (presumably 16%, probably more, were talked into settling in cash, likely at a hefty premium to the contract's value based on spot), that leaves 72.3 million ounces of silver actually delivered to long contract holders by the COMEX in December 2010, more than six times as many silver bars as delivered three months earlier in September. As of January 6, 2011 the COMEX released inventory figures of only 44.9 million remaining ounces of silver registered for delivery.
There is an internet rumor going around that billionaire hedge funds (on the advice of former JP Morgan traders and in competition with the Chinese) settled their December long contracts at expiration for large cash premiums by posting the necessary cash and demanding (threatening) to take physical delivery on their long contracts. This would help explain the 9% gain in the price of silver during November, on top of a 14% gain in September and a 9% gain in October, never once having fallen below the 20 day, 50 day, or 200 day Moving Average during those three months.
Here is a link to a financial message board where an apparent market insider posted Wednesday that the participants were so happy with their easy COMEX silver profits in December, that they plan to make much larger purchases of COMEX silver long contracts in the last few weeks of February, 2011, and stand for delivery in March, the next delivery month for COMEX silver. I will be looking at the March COMEX silver delivery figures with great interest, and will not be at all surprised to see major gains in the February and March price of silver. The post also warns of a planned takedown of gold (and indirectly, silver) during the month of January in order to cover some of their silver shorts (scare investors into selling their silver) in time to minimize the banksters' pain in March. This is portrayed as a desperate, last resort tactic since there are enough existing gold inventories available for the banksters to work with, but no silver and buying silver on the open market would only spike the price.
China is panicking.
Rampant inflation is driving Chinese consumers to buy gold on a massive scale...
In fact China is already set to buy almost half of all the gold that'll be mined this year.
You read that right: The Chinese may buy nearly 50% of total world gold production in 2011.
This incredible demand will no doubt put significant strain on global supplies.
Today I want to talk about how this soaring demand may be the catalyst that pushes gold prices over the $1,500 level in as little as a few weeks.
Over 1.3 billion inflation-nervous Chinese eye gold
In January 2010, China recorded an inflation rate of 1.5%. But just 12 months later, the rate of Chinese inflation has climbed to 4.9%.
Rising inflation has sent food and property prices in China skyrocketing.
The price of food in China, for instance, has increased 10.3% on an annual basis; grain saw an increase of 15.1% and fruit is up 34.8% since January of last year.
China's rising inflation stems from the $585 billion economic stimulus package its leaders pushed through in the depths of the financial crisis two years ago.
In dollar terms, China's stimulus was much smaller than the $800 billion package the U.S. created. But it was much larger as a percentage of the nation's GDP...
And now, all of that money sloshing around the Chinese economy has driven inflation rates to nearly 5%.
The Chinese government has already made some big moves to keep domestic inflation from spiraling out of control:
* raising interest rates multiple times;
* toughening price-fixing rules;
* tightening lending requirements and raising the minimum down payment people need to buy a home.
So far, none of these measures have managed to curb inflation. Fears of uncontrollable inflation — even hyperinflation — are quickly circulating throughout the Chinese economy.
This has prompted a rapidly growing number of China’s 1.3 billion citizens to start devouring gold as wealth protection.
Panic in the East
According to the gold-specializing Swiss Bank UBS, Chinese gold demand exceeded 7.05 million ounces in the first two months of 2011 alone.
This incredible demand is equal to roughly 47% of all the gold produced during the same two months!
The Chinese are buying nearly half of all the gold that is being produced worldwide.
Extrapolated over the full year, Chinese consumers could be in line to buy over 42.3 million ounces of gold just this year.
Let me put that into perspective for you. That's more gold than is being officially stored as reserves by China's Central Bank...
The Financial Times recently quoted a senior executive at the Industrial and Commercial Bank of China ICBC, who spoke of the “voracious” appetite for gold in China...
China's largest bank by market capitalization started a physically-backed gold savings accounts in December with the World Gold Council. Account openings have already surpassed 1 million, with more than 12 tonnes of gold already stored on behalf of investors.
Zhou Ming, deputy head of ICBC's precious metals department, said the nation's largest bank sold nearly 250,000 ounces of physical gold in January — the equivalent of 50% of all the bullion ICBC sold last year.
Zhou also said there was heavy demand for silver, with ICBC selling about 13 tonnes of physical silver in January alone, compared with 33 tonnes in the whole of 2010.
The demand for gold in China is exploding before our eyes. It seems that demand by individuals is reaching almost frightening levels.
And none of this includes what the country's Central Bank may be squirreling away...
We know that China has been buying on gold price dips. Various officials have confirmed this in the past, although we have no idea of the volumes involved.
The People’s Bank of China is almost certainly continuing to diversify their massive $3 trillion currency reserve into gold and precious metals in order to protect themselves from their large exposure to the weakening U.S. dollar.
We also know that China has been accumulating gold surreptitiously through buying up domestic production.
This suggests that increasing gold production was part of a long-term strategic plan to become a global leader in gold investments among governments.
The World Gold Council even reported:
Some market participants believe that China may also be continuing to buy local mine production, which it has done regularly in the past. There is certainly no shortage of experts, both domestic and from overseas, advising China to do so.
The World Gold Council estimates China’s gold demand could double in 10 years as more investors embrace precious metals.
But even in the short term, the expected demand for gold in China over the coming month will be enough to put significant strain on global supplies.
I expect this heavy demand to help push precious metal prices to record highs in 2011.
Prices of $1,500 an ounce for gold and $40 an ounce for silver remain viable short-term targets.
Any price dip should be seen as a buying opportunity.
Greg McCoach is an analyst at Wealth Daily
Texas (Kitco News) -- Rep. Ron Paul, R-Texas, has one question for the U.S. Mint: why is there a coin shortage?
He is aiming to get to the bottom of this during a scheduled April 7 hearing of his U.S. House Subcommittee on Domestic Monetary Policy to examine the bullion programs at the U.S. Mint.
“We are going to try and find out what the Mint has done so they can give us a better answer as to why there is a shortage. Why can’t they keep the supply of coins up?” said the congressman in an exclusive interview with Kitco News.
Demand for precious metals in the futures markets and in physical gold bullion coins increases as the dollar weakens, which often leads to coin shortages.
Part of the problem lies in manufacturing the blanks, said Paul. The blank planchets are not made at the Mint, which hasn't had the production capacity for this stage of the minting process since the budget cuts of 1981.
“Looks like we don’t even get (all) blank coins made in the U.S. – there is a contract with a foreign company, which makes no sense at all,” said the congressman.
Today there are three refineries that supply planchets to the Mint: VennerBeck Stern Leach in Rhode Island, Sunshine Minting in Idaho and Goldmark in Perth, Australia.
Paul said that a U.S. company may appear at the scheduled hearing with a solution.
“They can help relieve the shortage by providing these blank planchets for the Mint,” he said, not revealing the company.
“I think there is a huge demand and it is being provided by a bureaucracy, and the bureaucracy isn’t responding very well -- but I can’t believe there is any excuse for this,” he said.
The Mint is planning a major overhaul of the metals composition of coins and how they manufacture them. The Coin Modernization, Oversight and Continuity Act of 2010 gives the Mint greater flexibility in meeting the demand for bullion coins as well as meeting the demand for gold and silver numismatic items.
Give Them a Choice: Paul
Paul is a strong advocate of currency backed by precious metals
Paul wants competition in currencies, and to do so, he said the tax on coins needs to be done away with. “Money shouldn’t be taxed with sales taxes or capital gains taxes, that would be my goal,” he said.
In March, Paul introduced H.R. 1098, the Free Competition in Currency Act of 2011, which would repeal legal tender laws in order to prohibit taxation on gold, silver, platinum, palladium and rhodium bullion. The bill has been referred to the House Committees on Financial Services, Ways and Means, and Judiciary.
A staunch critic of the Federal Reserve, Paul said that instead of arguing his case for the Fed to close down tomorrow, he’s arguing the fact it should not hold a monopoly. “They have a monopoly on a type of money that isn’t even constitutional,” he said.
“We would use no force, nobody has to use gold and silver coins,” said Paul. Rather, he said the Fed does use force. “They are a cartel and they make us use Federal Reserve notes,” he said.
The market provides a competition; however, he said there is always the threat of being taxed or the gold and silver being taken away as in the 1930s.
Paul explained that ideally, we should allow the market to pick the currency. “If you deal with international finance, people can use different currencies. Within the U.S., I believe you literally could, especially in this age of computers, that you could calculate two different currencies without difficulty.”
Return to Gold Standard
A common assumption is that Paul is calling for a return to a gold standard. He clarified, saying he is not so inflexible.
“I wouldn’t be overly rigid and say, ‘you must have a gold standard, you must go back to what we had.’ Our gold standard was imperfect, even though it worked better than the paper standard,” he said.
Lawmakers in several states, including Tennessee, Virginia, New Hampshire and South Carolina, have introduced bills to look into minting their own currencies in the event of a complete breakdown of the U.S. Federal Reserve. In Georgia, a bill to make the state only use gold and silver is in committee.
Utah has received the most media attention on this subject as the House and Senate have passed HB317, which would recognize gold and silver coins as legal tender and exempt them from certain state tax liability.
“Governments over the many, many centuries have always demanded monopoly control over money. Even when gold and silver were principally used in the economies, they still wanted monopolies,” Paul said.
Hence, he is not confident that any Utah law would be allowed to stand. “Well, they are going to fight it tooth and nail. They are not going to go along with this even though we have the law and Constitution on our side and it should appeal to all Americans to have competition.”
Regarding U.S. interest rate hikes, Paul said they are going to be gradual and steady but they are indeed coming. “The next big shoe to fall will be interest rates going up on municipal bonds -- that means a lot of these bonds will start defaulting,” he said.
Paul has not ruled out a run at the presidency but has not confirmed it either. When asked what would stop him from running, he said: “minimal support.”
“So if there is a receptive audience out there, that is going to influence my decision,” he said. “I have to have a good sense that the message I have will be received well. Last go-around I kept talking about the dangers of the financial and housing bubble. This go-around, I’ve been concentrating on the dangers ahead for the dollar.”
香港文匯報訊（記者 馬子豪）通脹持續升溫下，處於升值軌的人民幣，成了港人熱門投資工具，2月份本港人民幣存款更突破了4,000億元大關。但由今日(4月1日)起，本港的 人民幣存款利率或將面臨下調。人行予本港唯一人民幣清算行—中銀香港之人民幣資金結算利率，以及由中銀香港給予其他港銀之利率，由今日起將調低逾0.2 厘，減幅約27%。銀行界人士認為，在人行減息下銀行難免要將成本轉嫁予客戶，故人民幣存款利率很有下調的可能。
工銀亞洲董事兼副總經理黃遠輝表示，人行是次減息後，將令銀行人民幣定存息率由目前普遍0.7厘， 下調至0.5厘，活期存款則料減0.1厘；又指銀行未必再積極以高息作人民幣存款推廣。黃遠輝強調，存人民幣最主要是看重其升值潛力，而非利率，故料減息 不會影響投資人民幣的大趨勢；但他坦言本港人民幣存款增速會略為放慢，另會吸引更多本港存戶到內地開戶，賺取更多利息。
金管局昨日公布，2月份人民幣存款按月再增10%，達到4,077億元人民幣；對比去年7月才不過 逾1,000億元，半年間已猛增3,000億元人民幣。礇豐銀行亞太區行政總裁王冬勝認為，調低息率將成趨勢，但相信下調幅度有限，影響本港人民幣業務發 展及存款增長的速度應不會受阻。
金管局發言人就調低息率解釋指，現時中銀香港存放於人行的存款，性質與內銀在準備金要求以外存放於 人行的資金相似，故人行所調整至的0.72厘，實為與內地超額準備金的利率看齊；而內地最近一次調整有關利率是於08年10月，由0.99厘調整至現時的 0.72厘，而是次則將本地清算行一同納入此範圍內。
與此同時，中銀香港宣布，在現行的清算制度以外，再於下周五(8日)成立另一條存放人民幣的渠道， 即為人民幣託管帳戶；由8日起，港銀除可將其人民幣餘額存放於中銀香港內，可將人民幣資金經由中銀香港，轉存中銀於深圳人行所開立的賬戶內，而給予港銀的 架存款利率同為0.629厘。
新措施的最大改善之處，將可解決目前大量人民幣存放於中銀香港，因而出現了授信限額的問題。去年 中銀香港因應坐擁大量人民幣存款，令其資產總額大幅上升37%，中銀香港副董事長兼總裁和廣北上周在業務會直言，此令銀行的資金應用有很大風險；令人民幣 存款更直接拖低了該行的淨息差。如今人民幣可分流至內地人行賬戶，可降低中銀香港與港銀的交易對手風險，紓緩其所面對的授信限額問題。