Daily Market Update

Interview: “Are We Going To See Massive Confiscation Of Wealth By Banks!?”

Today’s AM fix was USD 1,246.00, EUR 915.84 and GBP 744.73 per ounce.
Yesterday’s AM fix was USD 1,244.25, EUR 914.42 and GBP 742.26 per ounce.   

Gold climbed $3.20 or 0.26% yesterday to $1,246.30/oz. Silver rose $0.03 or 0.48% to $18.84/oz.

Gold rose for the first day in six yesterday but remains near a four month low in London. Overnight, Singapore gold traded sideways very close to the $1,245/oz level again and remained tied to this price in trading in London. Futures trading volume at this time of day was 55% below the average for the past 100 days, according to data compiled by Bloomberg.

Gold’s price weakness in recent days is leading to some activity. Directionless trade in recent weeks had led to lackluster trading but gold’s price weakness in recent days has led to more activity and both an increase in selling and buying.

Sellers are nervous that technical damage has been done and momentum is down. They are concerned that this could lead to further price falls.

Buyers are more focused on the long term and view the price falls as a buying opportunity. Buyers are almost solely focused on the fundamentals and are tuning out the negative short term technical picture.  

Gold in U.S. Dollars – 2014 YTD – (Thomson Reuters)

Continuing revelations regarding gold manipulation by banks continues to be ignored, for now.

The Financial Times reports today that when the UK’s financial regulator(FSA)  slapped a £26 million fine on Barclays for lax controls related to the gold fix, it offered more ammunition to critics of the near-century-old benchmark. But it also gave precious metal traders in the City of London plenty to think about.

“While the Financial Conduct Authority says the case appears to be a one-off — the work of a single trader — some market professionals have a different view. They claim that the practice of nudging a tradeable benchmark to protect a "digital" derivatives contract — as a Barclays employee did — was routine in the industry,” according to the FT.

Gold bullion is due a bounce as it appears oversold. Gold’s 14-day relative-strength index was at 28.1 today and since May 29, it has been below the level of 30. This suggests a potential impending rebound to technical analysts.

The dollar reached an almost two-month high versus 10 major currencies before the U.S. government releases a jobs report on Friday. Friday’s jobs report is forecast to show employers added 215,000 jobs in the U.S., just above this year’s average. A worse than expected number is quite possible given the state of the struggling U.S. consumer and retailers. This would lead to a safe haven bid for gold.

Silver for immediate delivery added 0.3% to $18.86/oz in London. Silver reached $18.63 on May 30, the lowest since June 28, 2013. Palladium fell 0.6% to $833/oz. Palladium reached $845.24 on May 28, the highest since August 2011 due to concerns about Russian supply. Platinum lost 0.6% to $1,422.51/oz, after falling to $1,421.75, the lowest since May 12.

Interview: “Are We Going To See Massive Confiscation Of Wealth By Banks!?”

GoldCore’s Head Of Research, Mark O’Byrne was interviewed on Rick Wile’s Trunews radio programme on Monday night. Topics discussed in the 30 minute interview were

– China and Russia’s gold hoarding
– Ireland and Europe’s perspective on the dollar
– Denial and complacency amongst the public
– Deflation and inflation risk
– Do not trust government ‘headline inflation’
– Ecuador’s pawning their gold to Goldman Sachs
– The importance of owning physical gold internationally
– The likelihood of deposit bail-ins in G20 countries
– Cyprus bail-in did not hurt Russians – rather Cypriot working and middle classes
– You have to be prepared. Better to be a year early than a day late
– And how this all factors into the coming restructuring of the global financial system

Transcript of First 4 minutes:
Rick Wiles: A lot of news out today about a major change coming in the global financial system and at the center of it is gold.

Mark O’Byrne: Absolutely I’ve switched off the last few days and made the weekend sacrosanct with family. The stories you alluded to are hugely important. There are more pieces in the jigsaw puzzle which is increasingly suggesting that we are approaching what we suspected for sometime, that there would be problems in the international monetary system and problems with the dollar. 

It all comes back to gold ultimately. Gold has been at the cornerstone of our monetary system for centuries and its only in recent years that it has been demonetized. It looks like we heading back to some form of quasi gold standard and all the signs are pointing in that direction now.

Rick Wiles: What are you hearing in Ireland about the fate of the U.S. dollar?

Mark O’Byrne:  A lot of people are lulled into a false sense of security, there is a lot of complacency. Most of the media is basically suggesting that everything will be fine … trust in the politicians … trust in the ECB … trust in our great leaders …

And there is only a minority of people who see beyond that and instinctively they know some things are wrong. Some people have an understanding of events from a historical perspective and they realize intuitively things are not as kosher as is being suggested.

In terms of the dollar, we are very dependent on the U.S. – we have huge multinationals based here, including huge tech firms and many immigrants based in the U.S. and our economy is very dependent on exports to the U.S. and on the U.S. economy.

I think there is a lot of wishful thinking. There is a complete failure to look at the fundamentals of the U.S. economy especially the $17 trillion national debt and $100 to $200 trillion in unfunded liabilities.

There are very few people or companies that are asking questions about this and we have done and say that these are real, real risks and you need to take actions to protect yourselves and your families, it’s probably similar to America, the minority of people are aware and the vast majority do not understand the risks.

The whole propaganda recently is the Keynesian propaganda that we need to print money and if we keep printing money and we kick the can down the road, everything will be fine. But anybody knows anything about economic or monetary history knows that this is not a recipe for a sound economy in the medium and long term and ultimately it leads to some form of monetary disaster.

Rick Wiles: So Ireland has so much riding on the U.S. dollar and the U.S. economy and most of the people including your leaders and the news media simply are putting the blinders on their eyes saying we don’t want to look at what’s going on with the U.S. dollar.

Mark O’Byrne: Yes. It’s a form of denial and people are putting their heads in the sand. 

It’s a similar to our property market here, I don’t know if you know but we also had a huge property bubble here . A few of us back in early 2000 were warning about the property bubble and we were just completely shut out of the media and dismissed as doom and gloom merchants and the usual pejorative things where people are being called names at instead of looking at the substantive points people are making.

It is safer to look at the research, let’s look at the evidence, instead of engaging in childish name calling. People were sidelined and dismissed – subsequently, the property bubble burst and prices fell between 50% in Dublin and up to 60-80% in the country outside of Dublin. There has been a bit of recovery in the past 2 years and a bit of recovery but I think we are entering a mini bubble again in Dublin. Its just complacency on every level. Ireland is a tiny economy of 4 million people and what happens in …

GoldCore Founder and Director of Research Mark O’Byrne

Transcript of Last 4 minutes:

Rick Wiles: Mark I feel that there’s another way of financial trouble coming in the next year and what I’m seeing is a number of nations getting into place the mechanism to do with the so called bank bail-ins – what we first saw in Cyprus when the ECB just reached in and stole billions of dollars from the people, just took it out of their bank account and now countries all over the world have been implementing regulations that will enable their central banks to do bank bail-ins.

Do you think that we are going to see this in the next year or so or are we going to see massive confiscation of wealth by banks?

Mark O’Byrne: The short answer is yes we will. The timing is of course is uncertain but I believe we will see it, even potentially in the coming months. I have expected them in recent months, but the authorities have managed to kick the can down the road, further than we thought.

Bail-ins will happen. We did a huge amount of research on bail-ins. When it happened in Cyprus, many of our clients got on the phone asking us questions regarding bail-ins, including from our U.S. clients.

We put our hands up and said we honestly don’t know. We don’t think so as we are not aware of any legislation in place.  But we do not know and we will go and do some research and come back to you.  So we did a huge amount of research on it. We hired outside consultants and we also brought in an academic one of the most trusted financial academics in Ireland and he reviewed it and wrote the foreword to our piece.

Basically we came to the conclusion that absolutely this is a real risk … 

You have to be prepared. Better to be a year early than a day late.

The good rule of thumb is the old Wall Street adage – you out 10% of your wealth in physical gold coins and bars and you hope it does not go through the roof as if it does, then it means that the economy and the rest of your investments are not doing well.

It is a classic hedge and a form of financial insurance and it is vitally important that everybody own at least 5% or 10% of their wealth in gold or maybe even a little bit more given the circumstances that we have spoken about today.

Rick Wiles: Alright and your company GoldCore in addition to offering the sale of gold krugerrands, American eagles, maple leafs, gold sovereigns and so forth you also have storage facilities around the world – Australia, Singapore other places, so our listeners could if they’re interested in storing some gold in different vaults around the world, they could work through you?

Mark O’Byrne: Yes, absolutely that is what we specialize in. For U.S. citizens, we advise you should take delivery and have some gold in your possession and we deliver and some gold in storage in the U.S.. In addition, given the world that we live in, it’s nice to have some offshore in a location that you can get on a plane or a boat to –  if need be. Its worst case scenario stuff and we hope it does not come to pass. It’s great financial insurance to have. Zurich and Singapore are two of the favourites among gold investors and two of the safest places.  There is great faith both in Zurich and Switzerland given its history and its respect for private property rights and similarly in Singapore which is fast becoming a new global precious metals storage hub.

We basically believe if you own gold you need to own it in the safest way possible and that is why we work with the safest counterparties in both Zurich and Singapore and we work with a lot of U.S. clients in that regard.

Rick Wiles:  Alright, my guest today was Mr. Mark O’Byrne from GoldCore in Ireland and the website is www.goldcore.com Mark thank you appreciate you being on Trunews today.

Mark O’Byrne: Absolute pleasure Rick, thank you for having me on.

The full interview can be listened to from the 36th minute here

Mark O'Byrne
Executive Director


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