Price of gold set to rise as price fixing under review

July 8th, 2014 No comments

Australia Gold Necklace3

The  price is mentioned every night on the news but now the bizarre, ancient method of setting it is up for review following a major rigging scandal.

LONDON’S century-old gold price fixing, tainted by a rigging scandal and attacked by critics as old-fashioned, goes under the spotlight this week in key talks aimed at modernising the process.

Analysts said that the market price of gold, which is driven by investment and jewellery demand, could climb as a result of an overhaul.

Buyers and sellers of the precious metal will meet in London on Monday to discuss the setting of the global benchmark, which affects the flow of billions of dollars worldwide every day. The World Gold Council (WGC) will host an eagerly-awaited forum with retail and central banks, exchanges, mining firms, refiners, traders and other industry groups, while Britain’s Financial Conduct Authority (FCA) watchdog will attend as an observer. The benchmark gold price is set by four banks at 10:30am London time (0930 GMT) and 3:00pm, via teleconference.

The banks — Britain’s Barclays and HSBC, Canada’s Scotiabank and Societe Generale of France — are all members of the Gold Fixing Company and agree the price twice daily. Germany’s Deutsche Bank pulled out of the panel earlier this year.

The process begins with the so-called spot price of gold, which is based on the current market rate of contracts for physical delivery of the metal.

The four banks must then declare whether they are interested in buying or selling at this level. The price can fluctuate depending on the balance of supply and demand, and settles on a so-called “fixing”.

The system lurched into crisis this year when Barclays was fined more than 26 million ($45 million, 33 million euros) by the FCA after an ex-trader at the troubled bank admitted attempting to manipulate the gold price.

Barclays is among several banks fined billions of dollars by regulators for foreign exchange rigging, prompting a broad review of how global financial benchmarks are set.

Critics argue the gold-price fixing process is also open to abuse.

“It lacks transparency, which means prices can be rigged to benefit banks, at the expense of producers, traders, investors, jewellers and other market participants,” said Mark O’Byrne, research director at broker GoldCore.

“Prices should be determined by market forces of supply and demand and not due to a bank’s determination.” The process is little changed since its creation on September 12, 1919, when the Gold Fixing Company’s five founders — including NM Rothschild & Sons — agreed one single daily price fix in British pounds.

O’Byrne added: “The gold fix is anachronistic in the modern technological age of electronic trading and a move to electronic trading seems inevitable. At the same time, this will not be a panacea as oversight and transparency remains important.” Caroline Bain, senior commodities economist at research consultancy Capital Economics, said transparency was needed to prevent price rigging.

Prices had rocketed to an all-time peak of $2052 per ounce in September 2011 on fears of a fresh global recession amid the raging eurozone debt crisis.

The market could return once more to such levels if the fixing system is overhauled, according to O’Byrne.

“We believe that a more transparent and reliable fixing could lead to higher gold prices as we suspect that prices are artificially low at this time and do not reflect the delicate supply demand balance in the physical gold market,” he told AFP. “Nor do they capture the degree of systemic and geopolitical risk in the world today.”

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GOLD Investment Seminar

July 7th, 2014 No comments


New to #Gold?

Last chance for early bird tickets!

Don’t miss out on the opportunity to hear from Jordan Eliseo, one of Australia’s leading economic analysts, speaking about Gold and why it’s becoming a preferred investment for many Australians.



Eddi McGuire Celebrates Million Dollar Hot Seat Anniversary with ABC

June 10th, 2014 No comments

Eddi McGuire


To celebrate Million Dollar Hot Seat’s 1000th episode airing tonight, Eddie McGuire immersed himself in some of Australia’s finest Gold bullion. Help secure your financial wealth with investment grade bullion by contacting us today. Picture: Mark Stewart Source: News Corp Australia



Are you in a Gold rush?

April 29th, 2014 No comments
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Think outside of the square.

February 24th, 2014 No comments


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If you have been waiting to buy your first physical #gold, now is a good time to start!

February 20th, 2014 No comments

Australian Bullion Company


Gold prices soar despite bearish bank reports – Levenstein

Gold prices surged last week smashing through several key resistance levels including the psychologically important $1300 an ounce level.

Gold prices continued to advance last Friday for an eighth session in a row, gaining almost 5% for the week, fuelled by a combination of increased physical demand, technical buying and economic jitters. And, on Monday, the price of spot gold hit $1329.70 per ounce, a 3-1/2 month high.

Market sentiment towards gold has been positive since the beginning of the year as weak U.S. economic data, and emerging market jitters have taken a toll on global equities, spurring demand for bullion – often seen at times of uncertainty as a safe haven.

Gold is up 10% this year after a 28% drop in 2013, while silver has gained more than 12%.

The price of the yellow metal has broken well above its 50 day moving average, has traded above the 100 day moving average and has also closed above the 200 day moving average as well as the key resistance of $1,300/oz. These positive signs suggest that the upside could continue.

The price of gold began last week on a firmer note and then after vacillating for most of the day on Tuesday, prices rallied after Federal Reserve Chair Janet Yellen pledged to continue to maintain the monetary policies set by her predecessor Ben Bernanke.

Despite calls for lower prices from practically every major bank, the price of the yellow metal is now up by around 10% from the beginning of the year. Gold has now broken above the $1300 for the first time since November last year. This is an important turning point for the yellow metal, and I urge you to consider adding to your portfolio.

If you have been waiting to buy your first physical gold, now is a good time to start, as I believe the bull market is making a comeback. If you already own gold, but have been waiting for the right time to add to your position, now is the time.

Do not wait any longer. Add physical gold to your investment portfolios.

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Rick Rule to gold investors: You suffered the pain, so why not hang around for the gain?

February 20th, 2014 No comments


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Peter Schiff: Gold Update, The Dollar Will Collapse First, Janet Yellen Wants More Inflation & More

February 17th, 2014 No comments

Peter Schiff, the CEO of Euro Pacific Precious Metals, says, “The messes get progressively bigger because the bubbles get progressively bigger. We have the biggest bubble ever blown right now because we have a simultaneous bubble in the stock market and the real estate market and the bond market. . . . The air is coming out of all of them. The Fed knows this bubble is too big to pop. That’s why the Fed is going to come back with an even bigger round of QE (money printing) than the last round. We’re going to be hit with a tsunami of inflation. . . . I think we’re going to be stuck with a lot of the money, which means it will bid up consumer prices right here in America. New Fed Chief Janet Yellen said she wants more inflation. Well, she’s going to get it.”

Schiff thinks the U. S. Dollar will be in trouble first and not Treasury Bonds. Why? Schiff says, “The dollar will go poof first. Remember, the Federal Reserve can buy up all those bonds to stop the prices from collapsing, but in order to do so, it has to print dollars. But, eventually, the dollar collapses because the world figures out the game. The Fed can print all the dollars they want, but they can’t force people to accept them. That is going to be the problem.” (There is much more in the video interview.)

Join Greg Hunter as he goes One-on-One with money manager Peter Schiff.

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Unemployment rate worst in 10 years

February 17th, 2014 No comments



The jobless rate has shot up to 6 per cent, its highest level in more than a decade, as 3700 jobs were removed from the economy, official figures show.

There were 7100 full-time positions lost and 3400 part-time jobs added, the Bureau of Statistics data for January showed.

The participation rate, the percentage of people either in work or looking for work, remained stable at 64.5 per cent. December’s participation rate was revised down to 64.5 per cent from 64.6 per cent.

“There’s no spinning it, Australia’s labour market is weak,” Moody’s Analytics associate economist Katrina Ell said.

“Businesses are not confident in future economic conditions so are trimming jobs and working their existing staff harder.”

Analysts had expected the unemployment rate to edge up to 5.9 per cent, with 15,000 jobs added to the economy.

The further losses in full-time jobs for both men and women suggested broader weakness in the labour market beyond the mining and resources-related sectors, ANZ’s head of Australian economics Justin Fabo said.

The unemployment rate, which edged up last year, is expected to rise further above 6 per cent in 2014 as the economy adjusts to lower investment from mining companies.

“I guess what we’ve got to remember is jobs growth is a lagging indicator of economic activity,” St George’s chief economist Besa Deda said.

The Reserve Bank has repeatedly noted in its statements that it has been expecting the jobless rate to push higher as the mining boom peaks and the economy turns to other sectors to drive growth.

In its Statement of Monetary Policy released on Friday, it said that “with growth of economic activity expected to remain below trend for a few more quarters at least, it is likely that employment growth will be only moderate over the coming year and the unemployment rate will continue to edge higher”.

The latest labour market numbers came as a monthly survey by Westpac and the Melbourne Institute found consumer confidence slipped for the third straight month in February, as Australians fretted over the weak jobs outlook.

Unemployment rate worst in 10 years

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Sell off for Gold based on faulty logic

January 15th, 2014 No comments



Sell off for Gold based on faulty logic

Throughout 2013, and especially over the last few weeks of the year, investment markets have watched gold sell off. The reason for this fall in gold, logic has it, is that with the US economy growing more strongly and the Fed cutting back on its Quantitative Easing (QE) program the need to own gold is fading.

Money printing leads to inflation

The QE program is money printing, and this is inflationary. So what if the Fed has cut $10 billion from its QE program each month – that still leaves $75 billion being printed each and every single month. That’s a whole lot of inflation being stored up for the future.

It’s not only in America, either. Governments around the world are targeting higher inflation as a way to reduce their relative debt levels and swing their economies back to growth. In Japan this policy has been termed ‘Abenomics’ after the President who introduced it: and it’s working – Japan has rapidly rising inflation after years of deflation.

Everywhere you look, central banks are printing money in attempts to increase the money supply and grow the economy. This supply of currency is pushing asset prices to an all-time high. And when inflation is rising and interest rates are low, the one place you can’t put your money is in cash.

Targeting inflation will be good for gold

The Fed wants inflation to rise. That’s why, in conjunction with it lifting its foot off the QE pedal, it said it will introduce other monetary easing policies. It won’t be raising interest rates until inflation has reached 2.5%, for example. That’s not predicted to happen until 2016. So expect the Fed to be inflation accommodative for at least another 12 to 18 months.

I cannot remember a time when inflation was not good for gold.

Let’s not forget supply and demand

When the gold price falls, gold mining companies back away from production. Their current focus is on the most profitable mines and they have begun to cut back on expansion. Over the next few years that will mean the amount of gold available reduces significantly, at exactly the time the world’s central banks have begun stockpiling.

In fact 2012 and 2013 saw the largest purchases of gold by central banks on record. China looks to be exchanging paper assets for gold and silver.

Take advantage of short term weakness

This gold sell off holds no water when you examine gold logic. Enormous sums of money are being printed, central banks are hoarding gold, policy makers are targeting inflation, and gold supply is set to drop. Faulty logic has led to a weakness in gold. Short term price weakness always presents opportunity. When the fundamentals haven’t changed then it’s time to begin taking a leaf out of China’s book and start buying gold again.

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