Commodities

Copper traders tried as they might on Monday to boost the price of the December future through $3.00 per ounce as G20 finance ministers displayed heroic ambivalence to the value of the dollar. By telling investors that they had intention of rolling back fiscal and monetary stimulus measures, they basically warned that deficit spending could continue indefinitely and that the role of the dollar will continue to diminish as there is now no sign of a monetary tightening on the horizon.

Without any sign of rising interest rates, the dollar has even less appeal. Last week the U.S. Department of Labor signaled a 26-year high in the rate of unemployment and while that took a chunk out of the view that the Federal Reserve might raise interest rates, a prediction from the International Monetary Fund sounded the death knell. The IMF warned that the dollar had further to fall even after a 15% depreciation against its global partners since March.

A 15-month low for the value of the dollar index helped send the price of gold up to a new record high. The index measures the dollar’s value against a basket of trading partner’s currencies. Year-to-date the value of an ounce of gold has ramped up 25% while the dollar has fallen 7.7%, but has dropped twice that far since its highest point during March. December gold traded at $1,111.70 per ounce early in Monday’s session.

Analysts at Merrill Lynch pointed to defensive moves by central banks aimed at preserving the value of assets as they recently diversified into gold. Merrill predicted gold would trade at $1,500 per ounce. Last week the world caught wind of such a move by the Reserve Bank of India as it devoured an additional 200 tons of gold adding it to a 357.7 ton stash.

That purchase by India could be seen as raising the stakes in a giant game of chicken. The seller was the IMF, which had announced plans to sell off twice as much of that amount. By stepping into purchase half of it, not only did India reduce the global supply of a finite commodity, but it may also have pushed other buyers into a corner forcing them to buy off-market. Once other buyers merely thinking about adding gold to their hoard see their chances of bagging a slug of gold on the wane, all hell could let loose forcing prices spiraling ever-higher.

Secret Order member, Sean Brodrick laid out his thoughts on gold in last Friday’s webinar – his views are well worth the listen. Click the link below to view the recording.

https://weissevents.webex.com/weissevents/lsr.php?AT=pb&SP=EC&rID=1708827&rKey=9bbf0f8ed3495881

The Supreme Council of the Secret Order of Jurojin

Tyche Research

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