call us nowvisit us on FacebookFollow up on TwitterVisit us on LinkedIn

Buy Gold Ireland - Gold Bank

Please update your Flash Player to view content.
buy gold bars
buy gold bars in sizes from 1 kilo down to 20 gram sizes from refiners such as Umicore, Argor Hereaus etc.
buy_now
quicklinks_2
buy gold coins such as krugerrands, sovereigns and Aussie Kangaroos ranging in size from 1 oz to 1/10th oz 
buy_now
buy silver coins
buy 1oz silver bullion coins such as Philarmonics and US Eagles and silver bars in 1 kilo, 500g and 100g sizes
buy_now
quicklinks_4
Want to sell your gold or silver bullion? We buy bullion coins and bars at highly competitive rates with immediate payment..
buy_now

Gold Prices

Gold Prices

Silver Prices

Silver Prices
24hrs | 7 days | 1 month | 1 year | 5 years

Buy Gold Ireland

ECB starts money printing March 2015

ECB launches QE March 2015

Mario Draghi launched the European answer to the Federal Reserves money printing of the last few years when he announced in January that the ECB would be pumping 60 billion a month of newly printed Euros into the Eurozone in an effort to head off deflation and cheapen the euro currency at the expense of the dollar and the yen.

It seems that central banks around the world are currently playing a game of musical chairs where everyone gets a chance to cheapen their currency against the others for a period and then another bank gets a turn. Now the Federal reserve has stopped money printing for the time being it’s the Euro and the Yen which are being treated like confetti. Already the Euro is trading at decade long lows against the dollar and gold has taken advantage to move upward against the Euro.

Last year gold rose approx. 11% in euro terms with a high for the year of approx. €984. This year gold has already broken above €1150 thanks to a strong run up in January and then pulled back to the €1055 area once the Greek debt situation was put on the long finger. At present (March 05) gold is moving back up and presently sits at €1094. The outlook for gold in 2015 is rather more supportive of higher gold prices than it has been in the last 2 years due to renewed money printing.

The new year started with a bang with the Swiss Central Bank deciding(being forced) to decouple the Swiss Franc from the Euro when it became obvious that Draghi will print as much Euro paper as necessary to generate inflation. The markets were perhaps surprised when Draghi finally stopping talking and started acting on money printing. The US has spent the last several years printing and as a consequence the American economy looks more robust than any other developed economy at the moment. But this American comparative strength is deceptive, by printing dollars the Fed cheapened US currency against that of its trading partners, particularly the EU, thus making US goods and services cheaper for non US consumers and US consumers alike and propping up the US growth rates at the direct expense of the EU and Japan as well as other less developed regions.

Now that this trick is working in reverse expect to see direct consequences in the US with more and more disappointing figures for exports, house sales, income growth etc. As the American economy continues to weaken under this strain it will be interesting to see how the Fed manages expectations around interest rate increases. A rate increase would need to be based on the US economy strengthening further from 2014 not slowing down, as we are suggesting will happen. If interest rates were to increase the effects on an already weakening housing market could be dramatic. We feel the Fed will not deliver on higher interest rates this year and would suggest that investors keep in mind that current dollar strength is based around the rate hike scenario projected for this year.

The Greek bailout situation looks set to run and run as the Greek economy is simply unable to serve the debt levels it already has. The Greek economy is significantly less productive than northern European economies and simply cannot produce enough activity and taxes to service debt in excess of 315 billion euros. The obvious solution is a greek exit from the Euro so enough drachmas can be printed to pay off this debt in devalued currency and let Greece move on. Instead it’s being anchored to a currency which it cannot control and it stays under a debt burden it cannot service. This saga will roll and roll until eventually Greece exits the Euro and/or defaults on its debt. Many suggest the issue here is that Greece must be kept in line paying its debt and not default so as not to threaten the Euro. We would suggest that the issue is much bigger. If a developed western economy can default on its sovereign debt that would invite the markets to cast a sceptical eye over the debt levels of all sovereigns. Imagine the consequences if the markets started to treat heavily indebted countries like Spain, Italy and the US as default risks? Interest rates would climb and this could make current US debt levels unaffordable to a US administration that is actually insolvent but has the saving grace of being able to print dollars, unlike the Greeks. There are a number of ways the sovereign debt issue can play out, but all of them involve higher gold prices.

US property market shows signs of weakness April 2014

Faltering US housing market April 2014

Six years after the collapse of 2008 there is a real sense of optimism among analysts that the US economy is finally shrugging off the effects of that collapse with real estate and stock market gains being the Fed’s chosen workhorses to drive the US economy forward. But some conflicting data seem to suggest that instead of accelerating the US economy is still simply flatlining with after more than half a decade of unprecendented monetary stimulus.

A big worry for the Federal Reserve (and any balanced individual who wants to see what the data is really indicating about the US economy) is the latest housing data. There are now real indications that the US housing market is going down again just when the US economy is supposedly picking up steam. Purchases of new houses fell 14.5% from February and mortgage applications have dropped off by 19% from 12 months previously. This is a real wake up call for the Federal Reserve as this indicates weakening demand at the very time the economic growth is supposed to accelerate. And these numbers have emerged in what is usually the busiest season for real estate. It’s worth noting also that new home sales fell by a similar volume in the months prior to the 2008 crash.

So what’s going on with real estate? Both housing and stocks have had a couple of good years based on the Federal Reserve’s money printing leading to targeted inflation in both of these asset classes. Perhaps the outlook is more clouded now that the Fed is attempting to taper, but they are still printing to the tune of 55 billion dollars a month (which by anything other than the standard of the last few years is Alice in Wonderland material!). Despite this wave of money housing is softening? Part of the answer seems to sit with investor activity – big real estate investors like Blackstone have been key to driving up house prices in the last two years as their access to the newly printed money was much greater than that of owner occupiers. But these investor groups have been pulling back sharply as prices have risen and many seem to feel current prices are no longer so attractive. Mortgage interest rates are rising and this is causing a reduction in investor activity across the real estate space.

Based on this it could be argued that investor activity alone has been disguising the weak state of the housing market. Now we are emerging into an environment where we will rely on owner occupiers to sustain and drive up prices and that is going to give a much clearer picture of economic strength in the US – and the early signs are not promising. Affordability is way down, and owner occupiers are even more sensitive than investors to rising mortgage rates and also face a tight credit market. Add a weakening housing market to a stock market which will struggle in the face of Fed tightening and you have the recipe for real difficulties in the 12 months ahead. As it has in the last 6 years the US economy is again likely to disappoint the economic pundits who expect a pickup in growth. The US economy historically has a recession every 4 to 6 years and its starting to look like we’re bang on target for another one in the same time frame – before we’ve even escaped the effects of the last downturn. What will the Federal Reserve do this time?

2014 to be a better year for gold prices

In US dollar terms gold fell 28% in 2013 and in Euro terms gold topped out in September 2012 at just over €1380 before falling back to the €900 area by December 2013. Silver did even worse and while it has been as high as €34 euro in 2011 by the end of 2013 it was breaking below the €15 level. All of this has happened while the Federal Reserve was fully engaged in QE3 and pumping billions a month in government debt and mortgage backed securities.

In contrast to the poor performance of gold and silver in 2013 the stock markets had a great year and the US property market showed real signs of life. Both of these markets relied almost entirely on the Federal Reserve’s money printing to make headway however, as Bernanke felt that driving momentum in property and stocks was key to US economic recovery. Ironically precious metals got hammered as the Fed’s QE program drove investors to follow momentum in equities and real estate. Furthermore, analysts pointed out that a taper was coming at the end of 2013 and this compounded poor sentiment in the metals markets.

But since the start of 2014 when the Fed has actually started the tapering process equity markets have stalled and metals prices have moved up quite strongly. The economic data over the December January timeframe has been generally below expectations and this has been explained away as a result of poor weather conditions. However, we believe that the US economy is set once again to underperform dramatically over 2014 as the Fed tries to reduce QE and that the current weakness is not just a temporary blip. Since we believe that money printing was the prime driver in equity prices last year we also predict that equity markets will go nowhere this year as the Fed tries to bring its balance sheet under some control through the taper process.

If the stock market stalls out this year then we also expect to see some weakness in property prices in the US as a consequence of the attempted taper. General weakness in the US economy will be more difficult to explain away as spring approaches (doubtless many manufactured explanations will be made however!) and this lack of momentum on the general economy, stocks and property is likely to swing the pendulum of momentum back in favour of the metals. Unless a ‘black swan’ emerges gold and silver are likely to make consistent progress back to higher levels and erase much of the losses from last year. However if a ‘black swan’ event was to occur (e.g meltdown in derivatives markets…) gold and silver could both move rapidly past their previous highs in this cycle.

10 key points about gold

1.- It costs 7.8c to create a C note(100 USD bill), 2 grams of gold(spot price roughly $80) costs roughly $75 to mine.

2.- US national debt is increasing by between 1/2 and 1 trillion USD annually.

3.- Annual gold production for the past few years has averaged 2500 tonnes. 1 metric ton is 32150 troy ounces, equalling 80,375000 troy ounces or 99 billion USD, a relatively trivial amount in comparison with the debt numbers in point 2 above!

4.- 1 trillion USD(1000 billion) is over 10 ten times annual gold production.

5.- China is the number one gold producing country at roughly 320,000kg of gold annually, South Africa was consistently number 1 until recently, it currently sits at number 4.

6.- South Africa, once the powerhouse of global gold output is fading fast, the major mines in RSA are depleting so fast that they are 2 miles underground in dangerous conditions, analysts say that once the mining stops in these mines it will not be cost efficient to re-open many of them. Estimates say RSA gold mines are 75% mined.

7.- The Krugerrand, the worlds number 1 gold coin come under such a squeeze this year(with the price drop in 2013 causing a huge surge in demand)that the rand refinery upped premiums and a billion dollar purchase of scrap gold was made in USA by an un-named RSA corporation. South Africa has never before imported gold on this scale.

8.- More than 1/3 of annual gold production is via scrap and recycling, this source is coming under significant pressure as it is diminishing significantly, scrap tonnage is down year on year for the the last few years, although the price drop has influenced this, the general consensus amoung scrap dealers is that the supply is just not there.

9.- Gold is subject to the law of diminshing returns similar to oil(i.e it becomes more expensive to mine the same oz in a location over time),however gold mining is more labour intensive than oil drilling, it is also harder to estimate quantity on location and often yields disappoint more so than with oil.

10.-If there is one country that understands the value of gold it is China, they have risen to number 1 gold producer worldwide, while dramatically increasing annual purchases and inflows via Hong Kong in particular. Whilst China's holding are still less than the USA, there is an increasing realisation that the US does not have/own all the gold it reputes to. China on the other hand significantly down plays its holdings, its production and its inflows. He who holds the gold holds the power!

Fed fails to taper - implications for gold and silver

Last week the Federal Reserve announced to a surprised financial community that there would be no reduction in money printing this month. The markets had priced in a 5 to 10 billion reduction in the Fed’s 85 billion USD a month of QE which has been channelled into mortgage backed securities and US treasuries to support the US housing and government debt markets and thus keep interest rates at abnormally low levels. Since there has been such a strong drum roll of media commentary about the apparently improving prospects for the US economy and Bernanke has been talking about reducing QE for the last few months there was a consensus on wall street that the the Federal Reserve would act to taper in September.

This didn’t happen as Bernanke acknowledged that economic data was not firm enough to suggest the US economy could move forward without its sugar high of 85 billion every month. Bernanke is dead right in his assessment. Without the 85 billion, interest rates would accelerate their move higher – a trend which began as soon as the taper talk began to emanate from the Fed. This would quickly cause cracks and a new more spectacular collapse in the housing sector as mortgages become completely unaffordable for new buyers and house owners with large mortgages are forced to default on their loans. Given the already bad data on loan defaults for homeowners it’s clear that housing is one of the most vulnerable sectors when interest rates start to rise. And rise they will – nothing goes on forever and the lowest rates in history will not continue indefinitely.

Read more...

Page 1 of 5

  • «
  •  Start 
  •  Prev 
  •  1 
  •  2 
  •  3 
  •  4 
  •  5 
  •  Next 
  •  End 
  • »
You are here: