Billionaire Hugo Salinas Price – Central Banks Smashed Gold

Today multi-billionaire Hugo Salinas Price told King World News that central banks were definitely behind the smash in the gold price yesterday. He also said people should ignore it and continue buying gold and silver. But first, here is what Hugo Salinas Price had to say when asked about the plunge in gold yesterday: “I definitely think the central banks were behind it. I look at the graph of the gold price yesterday and when it collapses down $100 in about an hour, that is not natural market action. I think people are getting used to this. This is standard procedure and it doesn’t worry me at all.”

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via My Blog.

Why Are the Chinese Buying Record Quantities of Gold? – Forbes

This month, the Hong Kong Census and Statistics Department reported that China imported 102,779 kilograms of gold from Hong Kong in November, an increase from October’s 86,299 kilograms. Beijing does not release gold trade figures, so for this and other reasons the Hong Kong numbers are considered the best indication of China’s gold imports.

Analysts believe China bought as much as 490 tons of gold in 2011, double the estimated 245 tons in 2010. “The thing that’s caught people’s minds is the massive increase in Chinese buying,” remarked Ross Norman of Sharps Pixley, a London gold brokerage, this month.

So who in China is buying all this gold?

The People’s Bank of China, the central bank, has been hinting that it is purchasing. “No asset is safe now,” said the PBOC’s Zhang Jianhua at the end of last month. “The only choice to hedge risks is to hold hard currency—gold.” He also said it was smart strategy to buy on market dips. Analysts naturally jumped on his comment as proof that China, the world’s fifth-largest holder of the metal, is in the market for more.

There are a few problems with this conclusion. First, the Chinese government rarely benefits others—and hurts itself—by telegraphing its short-term investment strategies.

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via Why Are the Chinese Buying Record Quantities of Gold? – Forbes.

Fed pledges low rates till kingdom come! What it means …

Last week, I discussed how the European Central Bank has lost its marbles, launching its own version of quantitative easing. I dubbed it “QE-E.”

I also said that QE accomplishes almost nothing for the “real” economy, even if it juices asset markets. And sure enough, we got more proof of that this week (details to follow!).

Well, this week it was the Federal Reserve’s turn at the podium and what happened? Policymakers didn’t launch an official QE3 program. But they did promise to keep short-term interest rates low through late 2014 … up from a previous pledge of 2013.

Not only that, the Fed also said it would continue with its “Operation Twist” policy of selling shorter-term Treasuries and buying longer-term ones. The goal? Hold down long-term interest rates.

Noted bond fund manager Bill Gross of Pimco dubbed it “QE2.5.” All I could do was shake my head!

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via Fed pledges low rates till kingdom come! What it means … — Money and Markets.

Volcker confirms central bank need to suppress gold to stabilize exchange rates at ‘critical point’

Volcker confirms central bank need to suppress gold to stabilize exchange rates at 'critical point'.

Fed to Maintain Rates Near Zero Through Late 2014

WASHINGTON — The Federal Reserve, declaring that the economy would need help for years to come, said Wednesday it would extend by 18 months the period that it plans to hold down interest rates in an effort to spur growth.

The Fed said that it now planned to keep short-term interest rates near zero until late 2014, continuing the transformation of a policy that began as shock therapy in the winter of 2008 into a six-year campaign to increase spending by rewarding borrowers and punishing savers.

The economy expanded “moderately” in recent weeks, the Fed said in a statement released after a two-day meeting of its policy-making committee, but jobs were still scarce, the housing sector remained deeply depressed and Europe’s flirtation with crisis could undermine the nascent domestic recovery.

The Fed forecast growth of up to 2.7 percent this year, up to 3.2 percent next year and up to 4 percent in 2014, but at the end of that period, the central bank projected that the recovery would still be incomplete. Workers would still be looking for jobs, and businesses would still be looking for customers.

“What did we learn today? Things are bad, and they’re not improving at the rate that they want them to improve,” said Kevin Logan, chief United States economist at HSBC. “That’s what they concluded — ‘We’ve eased policy a lot, but we haven’t eased it enough.’ ”

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via Fed to Maintain Rates Near Zero Through Late 2014 – NYTimes.com.

Central banks huge gold buyers in 2011

Gold had a solid day yesterday, closing the Comex pit session above important resistance at $1,650 per ounce. Silver for March delivery also finished above $30 per ounce. At the currency markets the US dollar weakened slightly, with the Dollar Index losing 0.36% to close at 81.18. This helped solidify recent gains in crude oil prices, with WTI crude now back above $101 a barrel.

With negotiations still on-going between the Greek government and its private creditors and the situation in Hungary looking increasingly fraught, the World Bank has warned that developing nations should prepare for a slump in economic activity comparable to the 2008/09 downturn. Though the Bank’s chief economist Justin Lin stated that Europe’s sovereign debt crisis was “contained”, he stated that “the risk of a global freezing-up of the markets and as well as a global crisis similar to what happened in September 2008 are real.” The ratings agency Fitch has now stated that it expects a default from Greece in March.

Meanwhile, the precious metals consultancy group GFMS reported yesterday that net central bank purchases of gold reached 430 tonnes last year – a more than five-fold increase on the previous year and the highest level since 1964. As reported by Dow Jones Newswires, in 2010, net demand from these institutions stood at just 77 tonnes. GFMS expects central bank buying to remain at an elevated level, with demand of around 190 tonnes in the first half of 2012 – a slight reduction on the 205 tonnes bought in the first half of last year.

GFMS notes “notably higher enthusiasm” from emerging market central banks for gold. Mexico was the largest official purchaser last year – buying 100 tonnes of the yellow stuff. Other notable official buyers include Turkey, Russia, South Korea, and Thailand. China is also acquiring gold at a rapid pace (around 350 tonnes a year), but its acquisitions are from mines in China rather than from open market purchases.

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via Central banks huge gold buyers in 2011.