Gold is trading higher this morning on safe haven demand as tensions in the EU escalate over Greek Prime Minister Tsipras unwavering stand against bowing to the EU or European Central Bank. Gold last reported a.m. is $1241.90 up $6.70 and silver is $17.11 up 37 cents.
Tsipras is refusing to honor debt repayment commitments and is defiantly opposed to any extension of Greece’s bailout package. European stock markets and the Euro are both down today as fears of a Greek exit materialize. Greek bank bonds are trading at 60 percent of face value and Greek bank stocks are down 65 or more percent from mid-summer.
Cyprus added fuel to the fire by offering Russia soil for a new military base. Cyprus remains opposed to additional sanctions against Russia along with most of the EU including Germany. The proposed base will be used to house Russian war planes and is located only 40 kilometers from Britain’s air force base at Akrotiri. Western bankers are determined to incite another world war though the European Union is standing in opposition.
Germany has to walk a fine line as it attempts to temporarily appease the U.S. while hoping to repatriate its gold. Germany’s gold reserves are the second largest in the world following the United States according to the World Gold Council. Bundesbank’s gold holdings have been held in the treasuries of central banks in New York, London and Paris. According to the German central bank 1447 tonnes are stored at the Fed bank in New York, 307 tonnes in Paris and 438 tonnes in London. This brings into clarity the tight rope Germany is walking because without its gold it has no real financial legs to stand on.
China’s gold consumption is astronomical as withdrawals from from the Shanghai Gold Exchange total 255 tonnes for the month of January. Global new mined gold supply equates to 258 tonnes a month. Mainstream media reports that Chinese gold demand is curbing are misleading. The bottom line is China holds second position for now, only to its partner nation India when it comes to gold purchases. The latest SGE figures show withdrawals at almost 54 tonnes last week.
Estimates by the GFMS at Reuters claiming weakened Chinese gold consumption are completely understated. Possibly one third of China’s gold imports are unaccounted for as they enter the country directly rather than through Hong Kong. China offers no records on these purchases making it impossible for GFMS to calculate total gold purchases. China is maneuvering itself into position along with other BRICS nations to displace the U.S. dollar. It’s really only a matter of time before the dollar is forced to compete with physical gold and not other worthless currencies.
Brazil, Russia, India, China and South Africa comprise the BRICS nations. These nations have combined foreign currency reserves of 4.4 trillion and account for 43 percent of the world’s population. While the U.S. economy is based solely on debt, these nations economic growth revolves around tangible assets like energy and gold. BRICS nations are quickly moving towards creating an alternative to fiat currencies and physical gold will ensure their success.
Rome couldn’t see the forest for the trees until it was too late. Being the U.S. doesn’t make us immune to these principals. Math in Greece is math everywhere else.
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