Wednesday, June 26, 2013

Comex gold inventories fall 32% in five months in bullish shake down

The day when gold is priced by the supply and demand of the physical metal rather than paper future prices in the Comex trading pit is coming closer, and with it a return of much higher gold prices.
A short history on gold in the past 100 years. We've had many changes in the way gold is represented in the financial markets, and surely some major changes are coming to the gold market in the years ahead. Will we come full circle and return to some kind of "gold standard" again? Possibly, but either way it's obvious to me that gold is a very important reserve asset for central banks because currencies come and go, but gold is forever.    BK 

  • 1920's Stock Market Boom.
  • 1929 Stock Market Crash.
  • Depression begins.
  • Pre-1933 we had a gold standard, gold fixed at about $22/oz.
  • Post-1933 a gold adjustment of about 50%, gold fixed at $35/oz.
  • 1933 Gold confiscation in the USA and a change to the gold standard.
  • 1934 President Franklin D. Roosevelt introduces the Glass-Steagall Act to end the depression.
  • 1940 WWII.
  • 1945 Bretton Woods Agreement, US dollar convertible to gold.
  • Early 1960's London Gold Pool was created to fix the price of gold.
  • 1965 French President Charles De Gaulle sells $300 million of his USD reserves for gold and threatens the viability of Bretton Woods.
  • 1971 President Richard Nixon closes the gold window on the USD and institutes floating currencies. Bretton Woods Agreement is cancelled.
  • 1970's Inflation runs rampant in the USA.
  • 1980 Gold hits all-time-high of $850/oz.
  • 1980 FED Chairman Paul Volker decides to raise interest rates and gold corrects down for the next twenty years.
  • 1999 President Bill Clinton repeals the Glass-Steagall Act and massive speculation in derivatives begins.
  • 1999 Bank of England Chairman Gordon Brown sells UK's gold at $282/oz.
  • 2001 9-11, the World Trade Centre is attacked and wars in the Middle-East begin.
  • 2007 The housing boom collapses.
  • 2008 Gold breaks its 1980 high of $850/oz.
  • 2008 Stock market and gold market crash and stimulus, bail-outs and QE begins.
  • 2011 Gold hits new all-time-high of $1,925/oz.
  • 2013 Gold corrects over 30% and "Bail-in's" are introduced and client's deposit money in banks is no longer segregated and clients are ruled to be "unsecured creditors" to the bank.