Gold is trading at a 4 month high today after the surprise move by the Swiss National Bank last week. The Swiss have driven gold prices above platinum by the most in almost two years. The SNB decided to let the currency trade freely against the Euro and markets are still rattled.
The Swiss franc’s appeal as a safe asset was damaged after last weeks decision bringing gold to the forefront as a storehouse. When misery hits the “paper markets” investors always run to gold with the knowledge that it will remain as insurance against fiat markets.
Gold last reported a.m. today is $1275 down $2.30 and silver is $17.70 down 7 cents.
Russia and China continue purchasing massive amounts of gold preparing for a possible gold backed currency as the U.S. dollar spirals downward. It has been rumored through the media that Russia was selling much of its gold but the reality is they have continued purchasing even more. Russian gold reserves rose in December to $46 billion nearing the highest level since April 2013.
On the other hand Russia is reducing its exposure to U.S. Treasury debt. For the 20th month in a row Russia’s holdings of U.S. Treasury debt have fallen. Russia has openly stated their distrust of the dollar and they will eventually remove it from trading. The U.S. dollar is still king of “fiat currencies” but the reality is all of them are sinking. It’s only a matter of time before the dollar loses reserve currency status.
Through January 19, gold sales in China are already outpacing gold production. According to HSBC Securities gold demand will rebound by as much as 15 percent in 2015 as Asian demand for bullion increases. An economic slowdown in China and import restrictions in India hindered gold purchases in 2014. Continued demand in Asia will place a strain on the available supply of bullion and should help stabilize gold and silver prices. Of course the bullion bankers will work to keep gold prices down attempting to strengthen the U.S. dollar.
London Bullion Market top forecaster Ross Norman believes gold will see an average price of $1321 and $18.56 for silver in 2015. He sees gold having turned the corner and investor flows returning strongly. He admits we may see runaway prices but they are unlikely without significant events such as the Swiss National Bank decision last week.
It’s important to remember that the London Bullion Market has been caught red-handed rigging precious metals prices as evidenced in last years law suits against member banks.
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