We have all heard the expression first coined in John Bunyan‘s book, Pilgrim’s Progress, in 1678, “A bird in the hand is worth two in the bush.” China is starting to take that old adage to heart. Not only will China become the largest Christian Nation by 2030, but China’s Shanghai Gold Exchange (SGE) is positioning itself into becoming the world’s primary physical gold market place, beating out of course, the London exchange and aiming at the west’s futures markets. How are they going to do this? Well, it’s not how, but now. The Chinese central bank just granted SGE to launch a global physical trading platform in the city’s pilot Free Trade Zone (FTZ) a bold move posturing for complete dominance over New York and London in fixing the gold price. Do you remember back in September 2011, when China set a new standard for the purity of gold by one factor, five nines, 99.999 fine pure 24k gold? Much of the world scratched their head as to why would they do that, wouldn’t they have to contend with much more of a loss factor when in the refining process? Evidently, China has figured out a way around any extra loss factor when refining to 99.999% pure gold. The benefits of adding this extra factor must be to allow them to secure their currency on a gold standard much more quickly than when using a less pure standard of four nines, which is currently used universally the world over. Essentially, less weight is needed when the gold is more pure to reach the same value monetarily. Pretty simple especially if the only audits taken are internally. So basically, China intends to out trade the west in control of the price of gold while backing their own currency, the renminbi, not just on the current gold standard but the new standard they have created and are enacting. All the while during this transformation China and Russia will disrupt markets across the globe while they back out of the US dollar and US treasuries only to support developing areas of Africa and West Asia with the gold backed renminbi. China’s main goals are obvious: increase the pricing power of physical gold while seeking to internationalize the renminbi and diminish the world’s obedience to the US dollar, especially when meeting energy or oil demands. Meanwhile in Russia, Putin states that Russia and China need to secure their gold and currency reserves thus achieving the obvious goals stated above, more rapidly than we first anticipated. All we have to do is look at history to see the future, take last month’s highlights for examples: Russia’s central bank bought 28 metric tonnes of gold in April and are setting up a joint currency with Belarus and Kazakhstan, while dumping record amounts of US treasuries. Over the table, China and Russia agree to a $400 Billion energy deal amongst 40 other business contracts. Openly China calls for the de-Americanization of the world and what may include an introduction of a new international reserve currency to replace the dominant U.S. dollar. No doubt the international community wants to permanently stay out of the political turmoil and spillover of the United States preventing any future ripples into the world markets. However, it is a little premature of China and Russia to try and slow gold growth in the short term, with gold currently below 1300, but it seems only convenient for the central banks’ appetites to gobble up. Could a long term world currency evolve behind a precious metal backed renminbi? Possibly but only if Americans can encourage Washington enough to play a more constructive role in addressing global affairs, and increasing confidence in the government of the United States. Other countries are bolstering cooperation to promote peace, security, and stability in Asia and Africa by investing in infrastructure and some of those 21 countries include China, Russia, and even, Iran. Beyond any doubt is the unprecedented amounts of physical gold China is importing, the aggressive posture taken economically towards the American dollar’s future and buying their gold back with declining American dollars. Peaking world interest is the amount of interest in the new global trading platform offered by SGE, which will most likely become the largest global physical gold trading platform on planet earth. China and the world wove their dependence on the U.S. dollar slowly over the half century, now they wish to bring forth a strategy of insulation against any volatility in the U.S. dollar. What better way to do this than buy large amounts of gold, refine the gold a factor further, place it back in the market in the form of their paper money, shield the actual remaining gold reserve figures from world auditors while promoting confidence that the gold remains intact and safe. So, even if instances where countries like Germany call in 50% of their gold reserves only too…well, not be given their gold. Wait, China’s stealing a page from our current gold market playbook as seen in the gold manipulation game that continues to play out in the western courts and while more countries call-in or audit their gold reserves, i.e. Austria. Only the eastern world is in position to be able to glean the benefits of any judge or referee’s decision in the current western style gold game. Yes, the gold game is changing while the calls from the last few years are getting sorted out, the newest player, the Shanghai Gold Exchange, is building a rockstar roster of a portfolio to slam dunk the price of physical gold to a real bottom this season in future hopes of over inflating the price in upcoming seasons to prop up their vested interest. SGE is set to acquire a majority portion of the physical gold trade away from the long established franchises and once completely established will become the definite gold game changer in the world. Brace yourself America we are poised to get knocked off our perch for sitting on the sidelines too long. Obey natural history, get secured in physical gold now, while the powers that be are doing the same. Thanks for reading. As always comments or questions are welcomed. God Bless.
Rising 5% in March 2014, the U.S. Labor Department reports this current spike in the cost of certain goods for consumers. Most retail businesses have struggled, as of late, to raise prices because so many Americans are still out of work and paychecks haven’t gone up much. Stocks have been taking punches lately as big banks like J.P. Morgan, the nation’s largest bank, report quarterly earnings down 20%, while other banks, i.e. Wells Fargo, have surged up 14% with fewer bad loans decisions. Investment banking and mortgages are still the sectors of fiscal concern domestically. Internationally, the concerns over any G7 involvement in Ukrainian affairs have even pushed gold bearish speculators to the point of not having a bear position in place. Presently, the market is a tough call for next week, please refer to the Kitco weekly survey predictions in the image provided. Many analysts offer the opinions about the trend on gold next week, but few are willing to put anything on the table in the form of a guarantee. Stock losers pulling out of gold to cover losses will soften gold’s potential to climb amid the world’s turbulence, i.e. Russia, G7, Ukraine, flight 370, Turkey, Syria, North Korea, Venezuela, and the current inflation strain on the U.S. middle class. Considering all of these factors and a world which historically adheres to, “murphy’s law”, the long-term outlook for gold appears increasingly expensive. Now, just may be the time to buy gold or silver before the purchasing power of the dollar declines.
Increasing, increasingly, and more ever increasable can the gap widen between the haves and the have nots. Domestically and internationally the taste of capitalism, especially in China, is very persuasive in fostering peoples desire to obtain more while retaining their current lifestyle. However, contractions in the marketplace are bound to affect people’s buying decisions and consequently alter a nation or states’ gross income (GDP), which then could spill out onto the world stage. One point of concern for the world at large is Japan’s national Consumer Price Index (CPI) which rose at it’s fastest pace in 22 years this April, surging 2.7% from the previous year! This type of inflation looks poised to continue traveling skywards while the buying power of the first world consumer is diminishing. Additionally, a five percent increase in just one month, March, on such goods as food, clothing, and jewellery, is happening right here and now in the United States! Additionally, The New York Times reported this week, the American middle class is no longer the world’s most affluent. We are at a crossroads as a nation and as a world culture, due to the widening monetary gap placing too many undesirable consequences in the way of consumers’ everyday spending decisions. Although, we may be limited in what we can do to change the overall predicament facing each global buyer. We here at Fort Myers Gold Exchange feel that any type of price increase puts an extra strain on the average consumer looking to purchase our fine goods at discounted wholesale prices. We stand resolute that FMGE will not increase our prices on the general consumer anytime in the foreseeable future! Allowing more buying power to reside with our customers will not only help move more goods, but will also sustain one’s wealth amidst the current inflammatory economic pressures, not only by holding a precious limitable commodity, like silver or gold, but also enjoying the commodity as you wear it.
Please do check us out, because we will always continue to offer wholesale deals to our savvy shoppers, both online and in-store, but also to our numerous nationwide jewelry retailers who stop by to stock up with us and to cash-in their scrap gold for the highest cash price. We may not have the Google glass on sale for $1500 this month, but we sure do have a wide selection of new and previously enjoyed jewelry, antiques, coins, and from just about anything to everything of value. Stop in and see us, as we continually have newly acquired unique items on hand to peruse and purchase.
Buyers, come see and pick precious items even before they get placed online!
Sellers, we are always willing to help you discover, for free, the worth of your items and continually look forward to offering each customer an unbeatable cash offer for your precious items!
Thank you all for your continued patronage and support!
-The F.M.G.E. Family
“May God bless and keep you always,
May your wishes all come true,
May you always do for others
And let others do for you.
May you build a ladder to the stars
And climb on every rung,
May you stay forever young,” -Robert Zimmerman a.k.a. Bob Dylan
The Federal Reserve’s massive bond-buying program has supported gold and silver bullion by keeping interest rates low and dwindling inflation fears by flooding the market with cheap US dollars. However, gold is headed for its first annual decline in 12 years due to investors, supported by a recovering global economy, who pulled money from gold and channeled it into riskier assets such as equities. The U.S. budget deal avoiding a government shutdown in January which speedily passed through the House of Representatives overnight lifted the dollar to a five-year high against the yen. As always a stronger dollar is a negative for gold as it makes the metal more expensive to holders of other currencies.
Barring some strange crisis event, it seems highly likely the Fed will initiate a reduction in the stimulus starting in 2014. The December 17-18th meeting is scheduled and many believe the implementation of the reduction in quantitative easing will not be a smooth one in 2014. Many analysts see short sale trading of gold to continue up until the time the Fed starts the expected reduction of its aggressive bond buying program. An analysis of the data from QE1 of 2014 will have to be taken into consideration to determine the trajectory and pace of this tricky reduction expected to start in March. Five years ago when the Fed embarked on this ultra-loose monetary policy many analysts at the time said inflation would ramp up uncontrollably. So far this hasn’t happened with the U.S. consumer price index only rising 1% for the last twelve months well below the Fed’s expectation of 2.5%. Thereby, low inflation means investors don’t need gold to hedge against rising prices. Lest we not forget, the Federal Reserve prints money to purchase Treasuries and mortgage backed securities but it’s obvious from chart #1 that this spending has gone parabolic.
Many are speculating as to what 2014 will hold for the precious metals commodities market. Whether you believe that rapid inflation is still poised to come as a result of the massive monetary injections over the past five years or that a precarious deflationary cycle is more likely to come due to the innate design of Obamacare, both camps have great points as they eagerly await a tumultuous 2014. Interestingly most agree on some of the factors we are likely to see played out in 2014. For instance, asset managers, particularly western ones have large income flows coming out of ETFs and stocks are hitting all-time highs nearly on a daily basis, so these investors are not wanting to participate in gold at this time. Asian market changes, in particular, India’s government imposing import tax duties of 15% have especially made gold purchases slump for the largest gold buyer on the planet. The so easily forgotten monetary profits made from gold in the past are now being funneled into the soaring markets, with the Dow up 22.3%, the S&P 500 up 26.8%, and the Nasdaq up 34.7% for the year. Additionally, most agree that precious metals, although taking a beating in 2013, are ready for a long consolidation and correction within a slightly bullish market for all of 2014 and into 2015. For the medium to long-term investors looking to get into gold on a low may just have their opportunity in this coming year as the centralized banks seem to have satisfied their appetite for buying up the precious metal, see Chart #2. Let’s all remember the mid-70s when gold fell by 50% only to shortly thereafter head 850% higher and remember it was the centralized banks which sold their gold throughout the 80s up until 2008. In 2008, the centralized banks began buying and storing the precious metal to guard against potential inflation pressures from the initial QE rollout and the subsequent low interest rates by global central banks. As interest rates increase and as inflation fears subside the centralized banks may again like in the 80s become the lenders and sellers instead of purchasers of gold. Gold and precious metal outlook is improving day by day with expected downsides in the near-term, but the longer-term picture of gold seems poised for higher prices in 2014, because in a world where the centralized banks print fiat currency at record rates the true price of gold can and will no longer be held back from discovery.
Hello World! Welcome to Ft Myers Gold Exchange new blog on our newly designed website. We’re really excited to be able to bring you into the FMGE world with this blog. We’ve blogged about gold and silver trends in the past with modest accuracy, however, our last blog we pinned the tail on the donkey by showing that pressure was building for precious metals, i.e. Gold and Silver, to make a bullish run in this current fragile financial marketplace. As I am writing this sentence gold is up to $1347.30 an ounce and silver is up to $22.72 an ounce on Kitco. Gold is back on the one way street heading for the historic price of $2000/oz., it is just a matter of time because there is no place else for gold prices to go, but up.
India is now trading in more diamonds than before because they passed a law not allowing their citizens to trade in gold. The diamond market especially melee, small diamonds, are poised to move in price more now than ever. Historically, diamonds have always been a great investment to keep or move some of your wealth, because it is the only controlled commodity in the history of the world. Now with India and other countries soon to follow their lead, diamond trading and prices are going to fluctuate more than the industry has allowed up to this point. ABN AMRO Bank N.V. in Amsterdam and the De Beers vault in the Antwerp Diamond Bank control the amount of rough diamonds placed in the hands of their cutters around the globe each year. Limiting the amount of gem diamonds placed in circulation each year they can manage the price of this jewelry commodity. The Russian Popigai asteroid crater in Siberia is now thought to have over a trillion carats of raw diamonds! Thankfully, these impact diamonds are considered only for industrial uses and not as jewelry gemstones due to their fragmentation upon impact. Still out there in space are whole asteroids and planets even within our Milky Way that are thought to be totally comprised of diamond. A diamond planet in our own solar system is a striking thought but consider the impact on the market if one of these carbon bodies were to be rope tied and harvested, brought to earth and placed on an “open” market. Needless to say I’m not in favor of anyone at this point in time investing a large portion of their portfolio into the valuable rock for the points stated above. Unless they can get into the rock right or the right rock for the occasion. Come See Us!
The 85 billion per month bond buying program known as the Federal stimulus or better known as, Quantitative Easing, QE, appears that it may finally begin tapering down as many expect following a report from the G-20 summit in St. Petersburg, Russia. However, all this looms over whether we will proceed with intervention in Syria’s civil war, which could again hold off the Federal Reserve from making the decision to begin tapering down quantitative easing, thus keeping gold prices down for the short term.