We are late July and it is time to look at the gold accounts for the first half of 2011! Hinde Capital Fund Management conducted a study in June 2011 entitled “A Golden Renaissance, Precious Metal Dynamics ” which confirms the upward trends in physical gold (but not in “paper gold”).
Another analysis conducted by Goldsphere Edmond from the Rothschild Fund also confirmed this rise in demand in countries with a strong geopolitical risk despite stagnant mining production.
We were expecting a correction in the Gold Trend this summer and yet just the opposite has happened.
The Eurozone and American debt crises have helped this push upwards which has not been this significant since the beginning of the century.
Gold has risen an average of 19% per year since 2001. It is now facing an unprecedented demand.
Since the United States imposed the dollar as the world’s reserve currency and then subsequently flooded the market with it to increase consumption, the dollar has been heavily devalued. Their ability to stifle the price of gold has waned and globally investors have sought to ditch large reserves of weakening dollars for something safer. These investors initially thought the Euro may be the path to take but they got it wrong again and are now flooding into the only sure refuge which is physical gold. It is incredible how so many of these high flying know-it alls seemed oblivious to the obvious risks in the Dollar and then the Euro. Do they really research their options or just deal over expensive meals and golf holidays. Could they not see the blatant crisi of Sovereign debt affecting the major economies of the world? One has to ask what they have been doing for the last ten years and how apparently well-informed intellects make such poor judgments? (Must be the constant intoxication of self-appreciation, greed, drugs and alcohol)

A steadily increasing demand since 2003

Particular strength can be found in emerging nations where the demand for gold is rising to the detriment of the Green-back: 12% for India and 21% for China. Also, Mexico has filled its coffers of 93 tons of gold in the 1st quarter of 2011. Asia accounts for 62% of the demand, some of it cultural such as in India, but also other countries now active in the market are seeking to catch up for lost time (private investment now allowed in China) but also because “Governments wish to increasingly diversify their foreign exchange reserves and to disinvest from the US dollar or other currencies in trouble” (Option Finance Agency, France).

Other sectors such as jewellery are also in high demand (+ 55%) despite the rise in the price of gold (+ 3.1%). For this first half of 2011, the demand increased overall by 25%.
The paradox is that the demand for investment is still low, which proves that the course gold has nothing to do with any speculative flows. Indeed, it is also estimated that there is a mass of net flows out of “paper gold” (such as ETFs) equivalent to 55 tonnes. Overall, investments in gold are less and less by speculators, which is positive for the gold price trend. The attraction of a safe haven and sure value during these difficult and uncertain times is populating the gold investment market with serious investors, both private and institutional. This is hardly surprising when one calculates the increasing risks attached to most other forms of investments (which are largely based on owning bits of paper and have proved catastrophic to large funds in recent years).

Physical gold, a healthy investment

This study also shows that despite a growing demand, mining production did not increase accordingly and in fact was virtually stagnant. Recent fears have also surfaced that South African mines will be closed by strike action.

Another surprising finding is that gold sold by individuals to be recycled is steadily declining. This shows that the masses wish to hold on to something of value and also that they are fed up with being ripped off by those crooks who run incessant TV ads.
Even in Greece and despite the crisis, gold plays its role as a life insurance and safe haven since it is often kept in the home. Despite the attractive gold prices Greeks will not sell that they already have and they are still likely to buy more as a protection for their future survival.
Finally, another unexpected discovery, physical gold investment is disconnected from gold shares (the gold shares represent only 1% of world market capitalization). This disconnection is partly explained by the increase in the costs of production for mining companies and the difficulties encountered by countries which are politically unstable (Burkina Faso, Côte d’Ivoire).

“Khrysos (Gold) is the child of Zeus, neither moth nor rust devoureth it; but man is devoured by this supreme possession” (Pindar, c. 522-422 BC).

Gold companies should eventually be seen as worthwhile value but for the moment it is physical gold that is benefiting from investment because it is a real, tangible asset that you own and not just a promise.

On Goldcoin.org we have always preferred physical gold to “paper gold” for many reasons, but if one were to cite a single reason it is that the providers/suppliers of  ETFs (Exchange Traded Fund) can fail themselves as a Company which means you lose everything as you do not own a specific piece or pieces of gold, they do. On the other hand, if all ETF holders asked to recover in physical form their investment in gold, it would be impossible because they have sold more ETFs than they have Gold– sound familiar? It is the equivalent of Fractional Reserve Banking but applied to gold because these providers work and think like banks – and we know where that type of mentality led us to!!
Unbelievable Shallow Arrogance
Finally, as we approach the eve of the US debt deadline it is worth paying note to the despicable behaviour of so called elected democratic representatives who would be chastised in primary school for the same childish squabbling. Worse still is listening to them speak as they grandstand before the world’s media playing out their silly games. They sound like caricatures from the Simpsons with their phony accents and voices and yet we are to believe these are the best the “greatest nation in the free world “has to offer – I pity regular Americans who are governed by such an inconsiderate bunch of self-interested marionettes. Here at Goldcoin.org we have previously discussed the true nature of these politocrats in “Conspiracy, Collusion and Con-men – Why don’t they want you to buy Gold?”

As they push ever closer to the deadline it seems that they actually want the US to default and let’s face it so should we all – it’s about time the Fed and the Financial giants got their come-uppance by losing everything so we could start again and hopefully with something better- honest would be a start. Their brinkmanship may just backfire as the markets decide to take them down anyway even if they agree!
We have previously referred to this in “Financial Meltdown and Black Swans – Myth or Reality?” .
Should the Dollar collapse, which is an increasing possibility even when they introduce QE3, Americans and the rest of us should prepare for hard times not yet witnessed by most of the generations alive.

To give you an insight we suggest  reading “The chaos of a currency collapse” and multiply the effects by millions!

The stage is set for the Chinese Yuan to take the place as the World’s Reserve currency and the American politicians are doing their best to make sure it happens!!

The strengthening demand for physical gold investment is no accident as more and more regular folk know they need to protect themselves before the chaos and crisis ahead.
Don’t miss the opportunity, buy some gold now as insurance against losing everything when the Wall St bell falls silent!

Last month Belarus witnessed the effects of a collapsed currency when the Government cut the rouble’s value against the US dollar by almost half. Previously 3155 roubles would buy a dollar but in the blink of an eye they decided 4930 would be needed. This was not even the reality because perception of the collapsing currency meant the situation was even worse as people scrambled for foreign exchange on the black market where you needed at least 6000 roubles to buy a dollar.

So what sparked this crisis?

President Lukashenko had promised to raise public sector wages by a third during his election campaign, which he duly carried out. This was sustainable only because of the support Belarus received from Moscow in terms of loans. However, as fears grew about the country’s finances, support from Russia waned and even near neighbours from the EU didn’t fancy the risk thus sparking a sharp drop in confidence in the currency.
To exacerbate the problem there was a shortage of foreign exchange currencies, dollars or euros, in the country.

The consequences of a collapse

Wide spread panic broke out as the economy effectively became paralyzed and people suddenly realised their currency was of diminishing worth. Shops were quickly emptied of everything that could be bought. Everyday food was snapped up at “luxury” style prices as people thought of survival but also they also bought electric goods like toasters, microwaves, canned goods and virtually anything that was for sale as they rushed to convert their currency into “any tangible assets” that were not losing value as quickly as their roubles.
The empty shelves throughout the towns seemed eerily reminiscent of the Soviet controlled days.
Shoppers knew that anything they could purchase could be more useful as a form of barter than the diminishing currency in their purses and wallets.

The human cost was quickly evident from the stories of employees sent on unpaid leave as companies also struggled to cope and comprehend the impact. Andrei, a computer company employee explained how he queued for a week in Minsk trying to buy dollars but didn’t even get one. “In just one month, I have been made bankrupt, the entire country is bankrupt” he said, adding that “even during the Soviet collapse we never suffered such a nightmare”.

There are many more stories of hardship, families without food or the means to buy any, shops without stock for them to buy even if they had the means.

Dmitry who is a 48 year old factory worker explained how he closed his bank account to get out 5 Million roubles in cash so he “could buy something before my money turns to dust”.

Tensions are growing as many people blame the President for mismanaging the economy.
Staple food supplies are now hoarded but people feel anxious that unrest is starting that could spill over into conflict at any time.
Revolution is always more likely when the population are starving.

Which country is next?

This may all seem so far away from wherever you are reading this but the causes of currency collapse may be closer to your doorstep than you think.

How many countries are in deep debt and reliant on support loans and bailouts right now?
Greece, Ireland, Portugal, Spain, Italy, Japan, USA, Belarus and virtually all of Eastern Europe and the Euro zone (only they never put it in the headlines!)

What happens when the support cannot be maintained?
Currency Collapse.

It could be the US Dollar, the Euro, the Yen who knows?
But even if it isn’t your currency that collapses what will be the knock on effects in every developed country if one of these currencies collapses?
The same as in Belarus.

Globalisation has been the buzz word for expanding Capitalism but it also means that economies are now inextricably linked and inter-twined to such an extent that when one sneezes they all catch a cold!

Remember the level of Sovereign Debt is spiralling out of control in the US, Greece, Ireland, Portugal and others are close behind such as Spain and the UK. Austerity measures in all countries are hurting normal folk badly – they are losing their jobs, suffering pay freezes, inflation and pension erosion. Social unrest and industrial action looms large across Europe and this will itself impact the recovery and debt repayment. This has already started in Greece, Portugal, Ireland and large scale protests in the UK are gathering momentum with the Autumn likely to be the boiling point of anger.

The discontent and despair of regular folk is understandable as they are bearing the brunt of all the hardship and it just isn’t fair.
Politicians spout their practiced rhetoric about how to fix things but the reality is they just don’t care that much as they are not the ones affected. They have means to isolate them from the hardships and many of them are actually responsible for producing the mess. How can they care about regular people or preach what we need to give up when they don’t – ever met a poor politician? Enough said!

There is now even talk of a “sub-prime” type problem in China because of over-indulgence in property speculation, leaving huge swathes of developments empty or under-occupied and therefore leaking money and ready to default.

We need more than lip service!

Mainstream news outlets are all controlled by self-interest groups (private and Governments) and they never provide the whole story about global economic frailty as there would be worldwide panic if they told the truth. The situation right now is on a knife edge and the next Belarus is not far away. Politicians won’t admit it but then again they won’t suffer like the rest of us as they’re all rich enough and well connected to see out any storm. They care too much for their own popularity to be honest.
Posh boys and rich kids rule the world and their assets are well protected in advance.

Remember what happened when panic struck in Belarus, people bought any tangible asset they could because it would maintain value better than their currency.
This phenomenon is happening daily – your bank account is the best place to keep currency if you want it to devalue!

Currency is not a means of preserving wealth because it has no inherent value especially when confidence is lost – then it is just a piece of paper.

The only real money available is a tangible asset that maintains its value whatever happens to printed bits of paper currency – and that is gold!

A lesson on Money and currency

We need to understand the difference between money and currency as one is real and the other a promise. Money can be defined as a medium of exchange and a store of value and until fairly recent times was in fact coins made out of precious metal with an intrinsic value or for ease of use, notes backed by precious metal.
Money, when considered as the fruit of many years’ industry, as the reward of labor, sweat and toil, as the widow’s dowry and children’s portion, and as the means of procuring the necessaries and alleviating the afflictions of life, and making old age a scene of rest, has something in it sacred that is not to be sported with, or trusted to the airy bubble of paper currency. Thomas Paine (1737 – 1809)
Currency is still a medium of exchange but is not a store of value as it only derives its value by government degree or “fiat”. It’s value is based on the issuing the authority’s guarantee to pay the stated (face) amount on demand, and not on any intrinsic worth or extrinsic backing. All national currencies in circulation, issued and managed by the respective central banks, are fiat currencies.

The problem is that fiat currency runs the risk of central bankers printing too much and causing large inflation or worse. The more that is printed the more the currency is debased just as the Fed is doing now with the dollar. This has been going on for decades with central banks indiscriminately creating money to cover expenditure and ever increasing debt. There are examples throughout history and in the 20th Century most of us are aware that in Germany in 1923 it would take a barrow load of Deutschmarks to buy a loaf of bread but an ounce of gold could buy a reasonable house and one dollar was worth 4 trillion marks.

This irresponsible printing of money has eaten away at the value of the world’s reserve currency the USD dollar and dollar based assets, to such an extent that they have lost 82% of value since 1971, the year the US cut links with the gold standard. The GBP has fared even worse that the USD losing around 85% of value since 1971. There are many illustrations of then and now and how owning gold with intrinsic value would have more purchasing pro rata than currency. E.g the latest model Cadillac Eldorado would have taken 180 ounces of gold at $42.02 to pay the showroom price of $7,546. This same 180 ounces is now worth over $200k and would buy two Cadillac convertibles with enough left over to fuel to first service. In the UK an average family car cost £1000 around 60 oz of gold and now the same would cost £17000 around 23 oz of gold. The 60 ounces would have bought the same family car for you a sports car for your wife and a hatchback for your son or daughter. Gold retains its purchasing power year after year.

Not long ago the gold standard imposed monetary discipline on countries as they had to hold enough gold to cover the money in circulation but this all changed with the Jamaica agreement in 1971 when the decision was taken by President Nixon on the 15th August 1971 to suspend the direct convertibility of dollars into gold, the keystone of the financial system created in July 1944 (the Bretton Woods Agreement). On the 1st October 1971 the general assembly of the IMF asked the board of trustees to study and propose a comprehensive reform. This would be adopted by member States during a meeting held in Kingston (Jamaica) on the 7th and 8th January 1976, and included a set of provisions which put an end to the reign of gold. The US money supply in 1971 was $776 billion and quickly became an upward curve which rose dramatically over the last decade where the US money supply doubled from below $7 trillion to $14.3 trillion indicating that spending is out of control.

The US National debt is now greater than this!

The US though still likes to play the rich kid on the block and bizarrely gives aid to those supporting its debt as a report in the Daily Mail of London illustrates:
The U.S. is providing hundreds of millions of dollars of foreign aid to some of the world’s richest countries – while at the same time borrowing billions back, according to report seen by Congress.

The Congressional Research Service released the report last month which shows that in 2010 the U.S. handed out a total of $1.4bn to 16 foreign countries that held at least $10bn in Treasury securities.

Four countries in the world’s top 10 richest received foreign aid last year with China receiving $27.2m, India $126.6m, Brazil $25m, and Russia $71.5m. Mexico also received $316.7m and Egypt $255.7m.

And yet despite the massive outgoings in foreign aid, the receiving countries hold trillions of dollars in U.S. Treasury bonds.

China is the largest holder with $1.1trillion as of March, according to the Treasury Department.

Brazil held $193.5bn, Russia $127.8bn, India $39.8bn, Mexico $28.1bn and Egypt had $15.3bn.
Maybe it’s just additional interest on the debt to keep them sweet!

Greece figures predominantly in the spotlight and unrest is growing – will the Government have to mortgage the Acropolis and Parthenon or even sell them off to pay their debts?
Clearly they can never work their way out of this debt because they would have to increase GDP by 12% a year for 30 years in order to grow their way out of debt.
The Sovereign Debt crisis is well and truly out of control and the only solution will be to default on the debts and devalue currencies.

As discussed in the example of Belarus, chaos ensues when currencies collapse and regular folk suffer badly as they don’t see it coming or refuse to believe it could happen to them.

Be warned: A currency collapse is coming near you.
Be prepared: don’t put faith in bits of paper which have no inherent value.
Protect yourself: Invest in tangible assets that hold real value at all times, especially during a crisis.
Remember: Real money has inherent value, it is worth something because of what it is not because of what is written on it.
Now you know why people buy gold to protect themselves from crisis – it always holds value and is the only real money.

In summary:
• Currency is not money and its value can be changed by monetary policy makers
• Currency can be created and printed at will with no substance to support it
• Currency depreciation in value is accelerating with subsequent loss of purchasing power
• National debt is increasing to disastrous levels with threat of sovereign debt default
• Confidence in the USD is waning and its use as a reserve currency is under threat
• Countries and investors are shedding their dollar assets
• Central Banks are diversifying into gold and out of dollar assets
• Smart investors are diversifying their portfolios with a proportion of gold
• The value of gold has been consistent in retaining its purchasing power
• Gold is insurance for your wealth
• Gold is the only real money

I rest my case!

Here at Goldcoin.org we have always been suspicious of the Politocrats, Bankers and Global fortunes that endlessly manipulate markets and misinform the masses through the mainstream media.

Let’s face it they all have one thing in common and one goal – looking after themselves by milking the masses to increase their own personal wealth.

Governments around the world tell their voters that they are “doing it for the country”, “thinking of the future, the families, the under-privileged etc. etc.”

They lie. The only interest a politician has is keeping the power, its privilege and saying whatever it takes to stay there.

In reality nothing ever changes even when the ruling party does because they’re all in it together. They talk of democracy yet if you are not born into privilege, educated with privilege and financed by the wealthiest (who you must subsequently appease with policies that suit them) you have no chance of ever approaching the dizzy heights of Government where you can begin to change things for the common good.

Even Obama, the charismatic President of Hope, had to bow to the rich lobby with backroom deals to ensure he got into the race for the top. Where does the money come from to organise the campaign needed? Unless you’re a multi-billionaire you have to play along. So where is the democracy? It’s always the same interests that pay the candidates bills therefore buying the White House and controlling policy.

Look at the British model – Cameron, Clegg, Osbourne etc. – all posh boys with a lifetimes supply of money, public school and Oxbridge education. Same before with Blair, Brown, Darling and the dark lord himself Mandlesson (the biggest hypocrite on the planet). What do any of these have in common with their voters apart from the same type of passport. How can they have the audacity to preach what is right for the country and “sharing the pain” of austerity when it will never affect their own privileged lives.

Have you ever met a poor politician?

Have you ever met a politician apart from Nelson Mandela who has experience of real life, who has known hardship and suffering?

The political class all over the world are the same – self-centred, greedy, hypocritical, power-hungry and serve themselves before thinking about their peoples or country.

Yet when they spout their prepared rhetoric they expect us to believe what they tell us, they even convince themselves that they know what they’re doing. They’re ready to take the credit at the hint of a success yet they remain completely unaccountable for all the failures and the misery they create. No such thing as performance related objectives and pay for them. How many failed politician end up as a well paid consultant, after dinner speaker or in the House of Lords like Prescott (Socialist in only the drivel from his mouth and very much Capitalist in his lifestyle, cars and bank account)!

The Rothchilds, Rockerfellers, Murdochs and other similarly rich and shady “families” control everything from Governments, Fiscal policy and of course the markets.

One particular example is the manipulation of the Gold markets. This has long been explored and proven by our friends at GATA and it is worth reading some of their factual proof at  http://www.gata.org/.

The Federal Reserve don’t want you to own Gold because they need you to borrow their printed bits of paper to make even more money for themselves. If they were a serious organisation would they have allowed a $14 Trillion + debt to run out of control? Would they be paying it off with bits of paper they keep printing (and therefore creating a devalued dollar by flooding the currency pool)?

In France, private investors hold more gold than the Bank of France and their affinity with the yellow precious metal goes back through history. The private investment in gold is continuing to increase as they arm themselves against this crisis. Eurozone sovereign debt issues are of great concern and people are taking no chances. The Greeks and Irish will default on their bailout packages and move to restructure. Portugal will follow.

The Euro will face a complete collapse or severe devaluation.

This is not a prediction but an eventuality. These three countries have no hope and no means to be able to cope with their debts and the austerity measures crippling their economies means growth is impossible. They face decades of misery, low standards of living and with inflation biting on daily necessities will soon be faced with civil unrest on an unprecedented scale.

However, a recent article by a prominent government adviser  in France shows the unscrupulous lengths they will go to. His name is Philippe Chalmin who is a Professor of Economics and sits on the Governments advisory committee. He gave a ridiculous outburst decrying and demeaning the value of Gold and called it “completely stupid”.

This from a country that survived WWII because of hidden gold.

This from a government puppet trying to put investors off the scent!

Similarly an article posted on the Marketwatch website by a Wall Street journalist, David Weidner, completely trivialises Gold. He should know better and his views are akin to a rabbit caught in the headlights!  You can see the detail via our friends at GATA here.

There is a stark contrast in the East where the Chinese are stocking up on gold. The Government, the Central Bank and private investors are actively being encouraged to buy. This shows intent to replace the weakening Dollar  by the Yuan as the world’s reserve currency and to back it in gold. The irony is that the biggest attack on the US Dollar is from The US Federal Reserve  by excessively printing bits of paper to buy off the US defecit.

The Establishment is petrified that people will ditch currency because Gold is a better protection against crisis and inflation – FACT.

The Establishment is petrified that people will stop investing in paper promises, stocks, shares, ETFs because they are all linked to debt and are vulnerable to collapse in a crisis – FACT.

The Establishment is petrified that they are losing control of the masses because we are not as stupid as they would wish and the real information flows freely and quickly via the net – FACT.

The Establishment is petrified that mere mortals like us are buying gold which leaves less for them and impinges on there “privileges” – FACT.

This is why don’t they want you to buy gold.

Greed, jealousy, protectionism, elitism.

Conspiracy and collusion by Con-men who seek to control everything.

So hit back and spit in their face

Buy what you want not what they tell you.

Beware of the mainstream media which is edited by those seeking to control.

Buying gold have never been so accessible and that scares them.

Buying gold protects your wealth against inflation and the effects of a crisis.

Central Banks, Governments and the Biggest fortunes in the world are all investing in huge quantities of Gold right now – do they know something you don’t?

Not now!

Here’s a Goldcoin.org summary of events moving and shaking the markets supplied by our regular Gold Guru Bill.

In Wednesday nights website update initial resistance was listed at 1457-1465 and the high so far today is 1462.50  — support was listed at 1441-1447 and the low so far is 1450.50

London Gold Fix $1458.25 -$3.25

In yesterday’s update gold prices dropped right at the 9AM est timeframe and supported on the 1444 price support area.  Since that time, the gold market has rebounded into early Wednesday morning US trade but has yet to overcome the resistance area’s that it will need to in order to forge higher.

So far this morning, gold is tracking with equities, as the fear of slowing was at least part of the reason behind the aggressive selling in markets on Tuesday. The markets opened

The trade bounced higher on improved US retail sales release this morning, as investment demand for gold is likely to remain somewhat dependant on the prospect of inflation, which in turn can be dependant on the pace of the economy.  Business Inventories were up .5%
The key will be whether the stock market and gold will be able to hold those early gains as the day wears on.

The pressure for USA to work the budget deficit has President Obama addressing the nation this afternoon after the metals market close. Tax hikes and healthcare cuts are the speculation going into the speech –and as news trickles out  there is speculation of 100-150 billion dollar cuts in military spending proposed and entitlement spending.  Expectations are to suggest curbing domestic spending …. all the usual “talk” that one would expect.  This expectation might act to quell the upside on gold today going into the speech.

While the gold market saw evidence of rising gold production at Fresnillo in the first quarter, that news was offset by expectations of lower annual 2011 gold production from Kingsgate.

The gold market might also be garnering some lift from a survey released overnight that suggested many think central banks will be net buyers of gold in the near future. With the US Beige book, US retail sales up .04% , a Treasury auction and a Presidential speech/testimony today the gold market looks to have an active trade today.

The Dollar is near unchanged levels against most of the major currencies during overnight trading and is just sitting at the on the index.

The Spanish Prime Minister stated that China has reaffirmed their support for purchasing Spanish sovereign debt. Euro zone Industrial Production during February was up 0.4%, lower than projections. UK Unemployment during February was 7.8%, lower than forecasts. French CPI during March was up 2.2% year-on-year, higher than expectations. The second leg of the Treasury’s monthly refunding, the 10-Year Note auction, will have data announced at 1:00 PM EST

Going to the charts:

Yesterday low at 1444 was a retest of the breakout price we had been watching last week.  We can see on the chart that today’s price has moved back above that red trend line and price is hanging around that line as it tries to make it support.   So we could see a lot of price activity mostly in the 1453-1463 area today.

Support is the 1444-1450 area and resistance is the 1463-1468 zone.

In summary — markets may pullback from their early morning start and drift sideways as we approach the presidents speech on deficit reduction. As long as price is above the red trend line — its trying to forge support from yesterday’s pullback.   The lower PURPLE line is key to this price breakout and price needs to retain closes above the 1425-1430 area to keep the price  breakout move alive.

by Bill Downey

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Here at Goldcoin.org we regulalrly feature expert Analysis from Bill Downey of Goldtrends.net to keep readers up to date with possible moves in the market.

Bill’s comments are drawn from a wide variety of sources and provide an up to date overview of the evolution of the gold price.

Here what Bill is saying:

In Sunday nights website update — resistance for today was listed at 1483-1490 and the high so far is 1476.50 — support was listed at 1458-1463 and the low so far is 1464.50

London Gold Fix $1469.50 -$1.00

Late Sunday night in the US and early in the Asian Monday trade saw commodities on the rise. However, news of a possible Peace deal in Libya and another 7.1 earthquake in Japan seemed to prompt a pause in oil price upside and in other commodity markets.

News of ongoing inflows into gold derivatives at the end of last week is lending to gold support so its generally a sideways choppy action we are undergoing this morning. The reversal in oil prices seemed to shift the attitude in a number of commodity markets this morning to a more sideways movement. With the big rise last Friday in commodities, it looks to be profit taking at the moment and not a start of a downtrend.

The Bretton Woods meeting hosted by George Soro’s over the weekend has calls for the US dollar replacement — but that was to be expected. The G20 meets in Washington DC on the 15th of the month and it would be interesting to hear the conversations that will take place there. With that meeting coming up at the end of the week — it is possible that gold may stay have some restraint later in the week, but the overall short term trend is still up.

The US Dollar is slightly bouncing this morning back to the 75 level but remains at key levels on the long term charts.

The Commitments of Traders Futures and Options report as of April 5th for Gold showed Non-Commercial traders were net long 230,758 contracts, an increase of 16,775 contracts. The Commercial traders were net short 287,091 contracts, an increase of 23,006 contracts. The Non-reportable traders were net long 56,332 contracts, an increase of 6,229 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 287,090 contracts. This represents an increase of 23,004 contracts in the net long position held by these traders.

A 7.1 magnitude earthquake hit near the Tokyo area today, causing water pumping at the Fukushima plant to be shut down for 50 minutes. Major banks in the UK were told to raise their capital levels and separate their retail operations from investment banking activities. Chinese Exports during March were up 35.8% year-on-year, while Chinese Imports during March were up 27.3% year-on-year, both of which were above market expectations.

Going to the gold chart — the breakout from a five month trading range last week is in play and while there is consolidation today from last Friday’s upmove — it does not look like a downtrend is beginning at the moment.

A new red line on the chart shows the short term FIRST support for this weeks action near the 1455 area on a closing basis. Additional support would be the 1444-1450 area on intra day pullbacks. THus the two key areas are the red trend line —and the lower purple line on the up channel. As long as price is above those price areas — the trend remains up. Resistance is the upper purple line near the 1490 – 1492 area.

In summary, todays consolidation in the 1460 area is normal after a nice upmove from last Friday and the bulls still have the short term advantage. First support will be the Red trend line — and resistance for the remainder of today looks to be in the 1473-1478 area. A pullback in the 1445-1455 area this week might provide an area for finding initial support. The bulls still have the advantage at the moment and the action does not at this point indicate that the trend has turned down — but rather is consolidating in the 1460 zone.

by Bill Downey

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People often ask if it is the right time to buy gold?

Quite simply it is always the right time to buy gold if you are looking to protect and preserve your wealth.

Sure the price can vary but the real value in owning physical gold is that it is your outright property which cannot be wiped out during a crisis or financial collapse. So think of a stocks and shares investment (or any other “paper” investment) the day after a crash – now think of physical, tangible gold assets that you own the day after a crash. The difference is obvious – one is worthless and may even lead to debt, the other has inherent value that will still be sought and can therefore be traded or sold.

Buying gold nowadays is simple and accessible to everyone.

You do not need to physically possess gold at home to fully participate, indeed quite the contrary – keep it safe, keep it in a vault and keep it accessible to sell whenever you choose.

For further information click here.

In last nights website update resistance was listed at 1437.50-1446 and the high so far is 1439. Support was listed at 1419-1425 and the low so far is 1430.

London Gold Fix $1434.50 +$2.00

There is a lot of cross current news this morning moving gold.

Gold prices were showing some positive action initially overnight despite minor strength in the Dollar versus the Euro and a few others. The gold market got marginal support from suggestions from the US Fed Chairman Monday night who labeled inflationary pressures as transitory, as that seemed to suggest that the Fed chief was a little less confident that inflation would indeed remain in check. In other words, the trade seemed to take the Fed comments overnight as a sign that inflation pressures were being acknowledged but were not fully entrenched yet. However, the Fed Chairman also suggested that recent price gains were probably temporary and that left the gold market somewhat confused. Indeed — he looked nervous during the discussion.

The gold market garnered some support from news of a credit downgrade of Portugal overnight, especially since the ratings suggested that the status of that debt remained under review.

Gold traded in the 1434 to 1439 area up until the London open. However, outside market action have limited gold prices early in the trade today, as some commodity markets like corn corn and soybeans started out on a softer footing–at least initially.

The gold market was also undermined by news of further Chinese tightening action overnight. The Chinese moved 25 basis points on lending and deposit rates and that event probably increased overhead resistance in the US gold market this morning near the 1440 area. Still — the last few rate increases from China had almost no effect — pretty much about what we’ve seen so far today. Over the last four hours — gold has tried to break below the 1430 area. Each hour has

The gold market will also be watching the GOP budget proposal release later this morning, as aggressive deficit reduction efforts could also be seen as a limiting development for gold prices. Paul Ryan has rolled out the plan and the big number is 6.2 TRILLION DEFICT REDUCTION OVER 10 YEARS —– The proposal was just released — so it will take a few days to see how the market absorbs this and how the debate unfolds.

Meanwhile the US BUDGET DEFICIT CEILING runs out FRIDAY — and the politicians are going back and forth in threats to not extend the ceiling on the Republican side.

While equity markets in Asia were mixed during overnight trading, stock indices in Europe are generally lower this morning. The Dollar was slightly higher against most of the major currencies during overnight trading, although posting a substantial loss versus the Pound.

A credit ratings downgrade of the sovereign debt of Portugal by one level this morning. Euro zone Retail Sales during February were down 0.1%, lower than expected. Major US economic numbers released this morning include a survey of US non-Manufacturing industries grew less than expected, but it wasn’t a barn burner.

GOING TO THE GOLD CHART — today we show the daily chart and the short term cycles we follow on the website. Orange circles are when the stronger trends usually peak — and the blue circles are when the weaker trend usually ends. While not all points work — take February for example — there is enough to at least keep an eye on developments. The trend is still up —- watch 1439-1444 as a key area.

On the downside — there has been a test every hour since 7AM EST of the 1430 area but so far it is holding— and that puts SUPPORT for the remainder of the day at 1425-1430. As long as price is above that area — its still up.

In summary —- the trend remains up —-We think that 1439-1444 is the PIVOT PRICE AREA TO WATCH — and closes above 1444 would increase the potential for the upside. PRICE ALWAYS RULES — but these short term trends need to be watched going into Wednesday. AS LONG AS PRICE HOLDS 1425-1430 support today — continue to favor higher.

by Bill Downey

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We have previously reported at Goldcoin.org in Chinese queue at malls to beat Bernanke’s inflation with gold that the a Chinese Gold rush is underway from investors who are looking to beat inflation and devaluing currencies by buying and hoarding gold bullion and gold coins.

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 has increased 10.3% on an annual basis. The price of grain rose 15.1% and fruit prices were up 34.8% since January of last year.

Chinese inflation has been fuelled by an economic stimulus during the financial crisis two years ago of $585 which has resulted in excesses of liquidity in the economy.

The Chinese Government has tried to curb the inflation with measures such as raising interest rates several times and tightening lending requirements but so far this hasn’t worked. Even worse is the fear sweeping through the Chinese economy that inflation could go out of control and even lead to hyperinflation.

This has already prompted Chinese citizens to buy gold and their appetite for the yellow metal is insatiable.

This trend is not only set to increase but possibly explode into action following recent reports that the People’s Bank of China (PBOC) is actively recommending that over 1 Billion Chinese citizens buy gold as a way of preserving and protecting their wealth against inflation, economic crisis and the falling values of major currencies .

This recommendation was given in the Financial Markets Review from the PBOC and its publication coincided with the decline of several major currencies against the value of gold notably, the Swiss Franc fell 2.5%, The Japanese Yen 2%, The Pound Sterling 2% and of course the US Dollar  which fell 1%.

Chinese buy almost half the Gold produced in the world

According to the gold-specialising Swiss Bank UBS the Chinese demand for gold in the first 2 months of 2011 exceeded  7.05 Million ounces.

This unbelievable demand is the equivalent of 47% of all gold produced in the world during the same period. So the Chinese are buying almost half of the world’s gold production.

If this continues then the Chinese are set to buy in excess of 42.3 Million Ounces of Gold this year!

To put this quantity into context it is more gold than China’s Central Bank officially stores in its reserves.

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 started a physically-backed gold savings account 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.

Added to this is the continuing diversification out of Forex by the People’s Bank of China into gold and other precious metals. They have around $3 Trillion which they would like to change because the weakening dollar is eroding its real value. How much gold will they need for $3 Trillion?

We know that China has been accumulating gold surreptitiously by buying up its own 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.

According to Tom Bulford  “China has spent the last decade buying every ounce of gold it can lay its hands on.

In fact, the Chinese have increased their deposits by 1,054 tonnes since 2001.

That’s 76% more than it was buying just a decade ago!

And it’s not just the Government we’re talking about here.

Ever since private gold ownership was legalised in China…and the Shanghai Gold Exchange opened – regular Chinese citizens have also started buying up gold in a BIG way”.

Quite simply, the Chinese seem to want to buy ANYTHING gold…

…gold coins…gold bullion…even foreign gold miners.

In fact, according to Want China Times…

“Chinese state-owned gold miner China National Gold Group announced… that it will step up overseas mergers and acquisitions in an effort to increase its gold stockpiles by 100 tonnes this year.”

Chinese production figures

China Produced $35 Billion in Gold in 2010

According to China’s Ministry of Industry and Information Technology, gross output from domestic production increased 67% to 230 billion yuan ($35 billion) in 2010.

Of this, China’s gold industry earned 5 billion yuan ($3.8 billion) in profit — 78% more than in the previous year.

China’s gold mines produced 9.9 million ounces of gold in 2010 — an increase of 7% over 2009.

Meanwhile, total domestic gold output grew 9% to 12.0 million ounces. (source WGC)

India is also encouraging Gold acquisition

Traditionally there has always been a strong demand for gold in India  with its specific seasonal demands for weddings and a cultural attachment to jewellery. However, they are also strengthening demand in Asia which is fast becoming the most important Continent for gold investment.  Gold is selling extremely well to the ordinary citizens looking for wealth protection and preservation. There are over 460 Post Offices that sell gold direct to the people. India also has public companies that offer credit to anyone wishing to purchase gold – in other words you can get a loan to buy gold!

This incredible demand throughout Asia is sure to impact the price of gold which may not have been factored in to the so-called expert calculations/ predictions/guesses.

Gold Price set to go skyward with Asian demand and World events

Similarly there are other significant factors that cannot have previously been factored in to annual gold price predictions such as;

• The continuing European Sovereign debt crisis with Portugal the latest Eurozone country in difficulty,
• The on-going Japanese catastrophe following the Earthquake, Tsunami and nuclear crisis,
• The popular uprisings in North Africa and around the Middle East with Syria and Yemen on the brink and the conflict in Libya worsening by the day. This has drawn military (and therefore financial)  resources from France, the UK and the US which have their own deficit problems and now has involved NATO countries.

It is becoming increasingly difficult to see how all of this can be paid for or accommodated in a World Economy already faltering.

It is no wonder that the Chinese are hedging against another crisis and with their ever increasing hoards of gold they are aiming to back the Yuan with gold and ultimately replace the Dollar as the world’s reserve currency.

We are heading for a spot of $1500 within weeks – and then…..$3000+

In view of the colossal demands for gold already discussed, the possible collapse of the dollar and the unknown outcomes of other world events a crisis bigger than 2008 looms large and we cannot predict which event will trigger it but be sure that it will happen. When it does make sure you have copied the Chinese and secured your wealth in the only safe haven for the crisis ahead. Buy Gold and buy now before the price takes off exponentially surpassing $2000 and even £3000 an ounce before the end of the year. The worthless dollar, hyperinflation, extraordinary demand and debt crisis dictate the course of gold to re-establish itself as the only real measure of currency and wealth. When the dust settles and re-evaluations have been made just pray you have gold as it will be worth upwards of $3000 an ounce.

In last nights update resistance was listed at 1422-1428 and the high so far today is 1430. Support was listed at 1406-1413 and the low so far today is 1414.30

London Gold Fix $1419.00 +$5.00 LME

The gold market dipped last night to daily support at 1414 on forecasts from Gold Fields Mineral Services predictions of increased gold production in 2010 but the gold trade hasn’t been overly focused on the supply side of the equation. In fact, the gold trade generally thinks that investment and demand are easily poised to outdistance increases in supply. Gold Fields Mineral Services pegged world gold production in 2010 to have increased by 3%, with China contributing a gain of 6% and Australia contributing a somewhat shocking expansion of 16%.

While today’s gold upmove began shortly before he payroll reports, there is still a bit of caution of upcoming Fed dialogue, which this week has clearly tended toward a hawkish bias. For now, it sounds more like talk than action. Some traders are suggesting that the knock on impact of the Japanese disaster has already tempered prices and will in turn slow upcoming numbers throughout the world and that Fed tightening expectations are premature. With 3 US Fed members scheduled to speak during the trade again today and with unemployment reports due tomorrow, it is possible that metal prices will remain in the 1420-1430 area for the remainder of the day.

Monthly Japanese auto production readings showed a decline of 5.5% last night. Overnight the wires from North Africa suggested that the Libyan forces regained ground against the rebels.

Going to today’s chart — today’s push to 1430 has at least put us back above the 1420’s and currently trading near the 1425 area. End of month and beginning of month usually favors the upside in the metals so the upside is still favored into next week. The next big event will probably be the unemployment data on Friday. The potential for gold to remain in the 1420-1430 area until then has potential. Resistance for the remainder of today is the 1430-1435 area. support is 1419-1422. The next key area’s to wach would be a close above 1436 and 1444 as this would be suggestive that the upside still has the advantage. Trends are favored higher into next week.

by Bill Downey

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In last nights website update resistance was listed at 1432-1438 and the high was 1431.50 — initial support levels at 1417-1425 were broken — and 2nd tier support was listed at 1403-1409 and the low so far is the 1410.50

Last nights website update discussed a break below the 1420 area would be suggestive that this weeks pullback would still be in play and that next support would be the 1398-1412 area.

Gold and other commodity prices were undermined by softer than expected Chinese economic data, increased jobless claims in USA and renewed concerns of Euro debt because of news of a Spanish debt downgrade. News that PIMCO was turning bearish toward US government securities has also provided the potential for higher interest rates.

News that South African gold output in January rose by more than 15% over last year may have added to today’s downdraft from a short term perspective.

Developments in the Middle East should continue to provide some measure of support for gold prices, especially with the day of protest directly ahead in Saudi Arabia and the situation in Libya in a continued state of flux.

While equity markets in Asia and Europe were lower during overnight trading and the US stock market down hard in early trading, there’s a lot of bearishness this morning.

Looking a today’s chart — we can see that once the lower channel line gave way —- a lot of stops were set off and are getting cleared out. We’ve discussed this potential since Tuesday evening on the website.

Support for the remainder of the day is the 1398-1409 area and resistance is the 1418-1425 zone. PRICE IS AT THE LOWS from the first week of March near 1410 and should bounce around that area plus or minus a few dollars. If that area gives way then a test of the dotted trend line at 1398-1405 will be in play.

In summary — the lower than expected weakness in China and USA woke up complacent equity bulls. With commodities overbought in most area’s — it has brought on a lot of weakness.

On the chart, the lower red channel line was finally broken — and now we have to see whether gold holds a few dollars above or below last weeks lows near 1410. If prices can’t hold there — then a test of 1398-1403 will be the next test area. With the Saudi demonstrations on Friday — there should be some support going into the close near these levels but the sell off is very hard in equities — and may keep pressure on all fronts.

Prices need to get back above the 1420-1425 area in gold to neutralize this pullback.

by Bill Downey

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Malls Witnessing Gold Rush as Shoppers Fear Inflation

Jewelers at shopping malls across the capital are witnessing a gold rush as residents spooked by inflation fears look to protect their money.
Statistics from Beijing Caibai, the city’s largest jewelry store, show sales of gold and other jewelry have totaled about 4 billion yuan so far this year, a 70 percent increase year-on-year.

Wang Chunli, general manager, told METRO that hundreds of customers are lining up outside every day to buy gold accessories, such as necklaces and rings. To cope with demand, the store has even introduced a string-weave service, she said, adding: “We’ve also arranged experienced staff to be on duty and increased the number of security guards.”

After seeing the enthusiasm for gold investment, insiders predict prices will continue to rise this year.
Zhou Xiangrui, deputy general manager of Guo Hua, an established gold and jewelry store, even suggested that the surging demand could set a new record, saying: “The price is estimated to increase by 10 percent this year.”

The price has already reached 338 yuan a gram at Caibai and 375 yuan a gram at Beijing branches of Chow Tai Fook and Chow Tai Seng, according to data from cngold.org, a popular gold investment website.

Concern over the volatile conditions in the Middle East and the debt crises in Europe could also impact gold prices, said Ji Zhiguo, an analyst the Beijing Gold Trade Center.
“This year we might see some investors purchasing more than 10 kilograms of gold bars again,”
he said. “A booming gold market coupled with a stable price increase could prompt more individuals to rush in and invest.”

Gold sales in large shopping malls citywide increased by at least 40 percent year-on-year during the first two months of 2011, Legal Mirror reported.

According to China Central Television, about 40 investors are rushing to purchase gold bars every day at the Wang Feng shopping mall in the Xinjiekou area, with most snapping up several kilograms at a time.

Wang Qiming, 34, who lives in Haidian district, said he has purchased both gold bars in malls and paper gold online.
“The capital has limits on house and car purchases, and it might be hard to preserve the value of my assets if I save cash in a bank account. So I’ve started to focus on gold investment,” he said, explaining that he plans to spend 300,000 yuan on 100 grams of gold bars.

“Stock markets change very fast and are not stable,” said Wang. “Gold investment seems much safer.”
A report released by the World Gold Council at the end of 2010 said China is the strongest market for gold investment and gold accessory purchase.

By Xu Fan
China Daily, Beijing

and courtesy of Chris Powell and GATA

Driven by persistent inflation in China and the worry about the appreciation of money, the demand for gold in the Asian continent remains high and in the first month of 2011 this reached a record. In this context, the “new rich” and those in the higher income segments both in China and India are throwing themselves into gold as a sure way of diversifying their investments.

Only last January, the Commercial Bank of China, one of the main financial institutions in the country, sold a total of 7 tonnes of gold ingots, which is the equivalent of around half of all the sale operations recorded by the bank in 2010. However, the attraction for gold is not limited to the buying of ingots: the growing demand for non-physical investments involving gold, through term deposits, could exceed 5,000 million Yuans by the end of the year.

One of the keys to this growing demand for gold in China is connected with high prices, which increased by 4.9% in January, compared to the same month of the previous year. Even though analysts are projecting a higher figure, around 5.3%, worries over inflationary pressures in the Asian giant could trigger an increase in interest rates by the Central Bank.

Faced with this scenario, a recent report by the World Gold Council (WGC) indicates that it is expected that the demand for gold from China will increase during 2011, as will demand from India for jewellery. According to the WGC, the growing interest in gold is shown in the recovery being enjoyed by the jewellery sector which registered an annual global demand which was some 17% higher than that shown in 2009.

Official figures released recently by the World Gold Council confirmed that demand for gold continues to rise. In 2010 the annual demand for gold rose by 9% equating to 3,812.2 Tonnes which is worth around $150 Billion. This is a ten year high and a strong indicator that the current price is not only sustainable but likely to increase further.
This increasing demand can be attributed to several factors.
First, there is an even higher demand for Jewellery.

Secondly, demand strengthened in key Asian markets, notably in China and India.
The Indian market is based on strong cultural references such as the Wedding Season and 2010 saw a revitalisation of the sector as awareness grows regarding the protection of wealth in gold.

The Chinese demand is backed by a strengthening retail investment by private affluent investors who are looking to gold bars and gold coins as a safe refuge for their newly acquired wealth.
The Chinese market saw the greatest increase in investment demand growth. The annual demand showed a 70% increase year on year and was equivalent to 179.9 tonnes.

After 21 years Central Banks are Net Purchasers

Thirdly and even more significant is the fact that after 21 years of being net sellers of gold the Central Banks became net purchasers of gold. This can be seen as a consolidation of their position in troubled times because they feel exposed to Forex fluctuations due to currency dilution and devaluation. It is also proof that they see gold as a safe haven to protect their reserves of wealth when they are aware of instability and potential crisis ahead. The instability in the Middle East, the soaring oil price and the risks of increasing inflation in developed economies is causing anxiety.
Central Banks are all too aware of the possible Eurozone collapse as Sovereign debt issues, austerity measures and bailouts fail to shake off the looming depression that awaits.

What will happen if Greece, Ireland or any other of the Eurozone Members are unable to abide by their debt resolution measures? Chances are there will be more than one if not all of them. Politicians wrangle with the shackles of increasing debt which they are trying to defer to another generation on a daily basis but fact is they can’t run away fast enough and they WILL get caught out. What then?

Paper Gold or Physical Gold?

It is hardly surprising that real demand is focused on physical gold and this can be illustrated by a drop of 45% for the year in demand for ETFs (or paper gold). Investors know that protecting their wealth ahead of a crisis can only be achieved by owning physical tangible assets.

When a crisis hits hard no-one can guarantee the value or indeed honouring of paper transactions as the financial institutions offering such products are themselves vulnerable to the systemic debt that pollutes all economies and that influences everyday life across the globe. Nobody predicted that an institution such as Lehman Brothers would fail or that RBS and Lloyds Banks would be brought to their knees. Similarly no-one can tell you today who will be the next casualty when economies falter. It could be your bank, your pension provider, your employer.

Act now or do nothing?

If you really like a bet then do nothing and take a chance on life not changing for you.

If you prefer to protect what you have and want to be sure that you are left with something for your future survival then get in to gold now. It is the inflation proof investment that is like fire insurance for your personal wealth. Exactly like fire insurance, do you think you should buy it before or after the event?

There are more and more options for physical gold investment and it has become accessible to everyone.
The most difficult step to take is to start, the rest is logical and reassuring.

Remember that investing in bars is good but investing in gold coins is even better. Click here for a guide to gold coin investment and don’t wait to start.