Yen Falls 2.1% To 0.148 Million/Oz – BOJ, ECB, FED and BOE Continue to Debase
Today’s AM fix was USD 1,545.25, EUR 1,207.42 and GBP 1,025,65 per ounce.
Wednesday’s AM fix was USD 1,568.50, EUR 1,222.81 and GBP 1,038.40 per ounce.
Gold fell $17.30 or 1.1% yesterday while silver fell 28 cents or 1.03% on the COMEX yesterday.
Cross Currencies Table – Bloomberg
While gold is lower in dollars and in most currencies today, it is sharply higher in Japanese yen after the BOJ announced the continuation of ultra-loose monetary policies and even more radical measures in a clear signal that currency wars are set to deepen.
Gold will be supported by continuing ultra-loose monetary policies and currency debasement by the ECB and BOE who are expected to announce interest rates remaining at historic lows of 0.75% and 0.5% respectively.
The Bank of Japan satisfied stock markets with a host of new monetary easing that sent the yen tumbling and helped stocks recover from losses. The fact that it is risks an outbreak of significant inflation and possibly a currency crisis is being ignored by market participants for now.
The central bank said it would introduce "quantitative and qualitative monetary easing" with steps including hiking purchases of Japanese government bonds to an annual pace of "about 50 trillion yen" ($530 billion), buying bonds of all maturities rather than the previous three-year-from-maturity limit.
Incredibly, the BOJ is increasing purchases of exchange-traded funds (ETFs) and real-estate investment trusts (REITs) – a sign of monetary imprudence if ever there was one.
Gold’s weakness has shaken even some of the most fervent gold bull’s faith in gold.
Many retail investors have been spooked by the price weakness and this is clearly seen in liquidation in many gold ETFs. Holdings of the SPDR ETF fell to 38.9 million ounces Tuesday — down from 39.1 million on Monday. They were at 43.4 million ounces on January 2.
While we have seen a record sales of government gold certificates in recent weeks, there has been little increase in sales of physical coins and bars and vaulted bullion.
There is also the unfortunate phenomenon of many middle class people having to sell their gold holding as it is liquid and they are under financial pressure and need the cash in order to pay down debt or just to use in day to day spending.
Weak and more speculative hands are being cleared out of the market which is healthy. That is not to say that further weakness is not possible however sentiment is as bearish as we have seen it in 10 years which is bullish from a contrarian perspective.
Despite a flurry of account openings and increased buy side activity in the immediate aftermath of Cypriot savings confiscation, as of yet there has not been any sustained increase in public buying.
Unfortunately, the public has and will continue to buy strength and sell weakness – the opposite of course of what they should do. Accumulating and diversifying into gold remains prudent and is an even more attractive proposition at these lower price levels.
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Britain’s debt mountain reaches £1.39 TRILLION – The Daily Mail
Bank of Japan adds to easing; yen falls sharply – MarketWatch
Helicopter QE Will Never Be Reversed – The Telegraph
Gold Bugs Had the Best Monetary Rule – Bloomberg
What A Real Hard Currency Mine Looks Like – Zero Hedge