The Gold Market Discussion with Jim Clark, 3-8-15

The Gold Market Discussion with Jim Clark, 3-8-15

March 8, 2015

This week gold prices traded in narrow range around the $1165 to $1210 area, currently gold prices are $1168 per ounce silver at $15.88. Gold is now trading below most miners’ ability to bring gold to market. This represents a tremendous opportunity to acquire physical gold at seriously depressed prices.

These are some of this week’s important economic events.

  1. Austria’s Heta bank has 7.5 billion Euro short fall, insolvent.
  2. Dollar hits 12 year high
  3. Global Central Bank Rate Cuts Continue
  4. EU QE begins in March to the tune of 60 billion euros per month

Did Austria just experience their Lehman moment?

(Reuters) – Austria’s Financial Market Authority stepped in on Sunday (March 1st) to wind down “bad bank” Heta Asset Resolution and imposed a moratorium on debt repayments by the vehicle set up last year from the remnants of defunct lender Hypo Alpe Adria.The step, allowed by new legislation that gives banking supervisors more power to intervene, followed an outside audit of Heta’s balance sheet that exposed a capital hole of up to 7.6 billion euros ($8.51 billion) which the government was not prepared to fill, the FMA said.

This means no more bailouts for Austria’s 3rd largest bank. They have been cut off, and now because of legislation passed a just a month before creditors will be forced to “bail in”

“The finance ministry noted that creditors can be forced to contribute to the costs of winding down Heta – or “bailed in” – under new European legislation that Austria adopted this year so that taxpayers do not have to shoulder the entire burden.”

There you have it… “Bail ins” are what will happen moving forward. Bankrupt governments around the world will no longer be putting taxpayer money to bail out banks that have taken inordinate amounts risk.

Speaking of risk, the following chart has lots of investors concerned. Margin debt has now hit a new all-time high.  Market at high along with margin debt, and the dollar also at a 12 year high.

 

Dollar Index

With the dollar hitting a fresh 12 year high a US recession is likely on the way.

 

Global Rate Cuts Continue as EU starts QE

Central banks representing roughly 60% of the global economy are cutting rates, or using other tools to pump more cash into the system. This currency war is made worse by the ever increasing strength of the dollar.

European Central Bank (ECB) President Mario Draghi announced the launch of an open-ended, expanded monthly 60 billion euro ($70 billion) private and public bond-buying program on Thursday. More of the same from central banks as they continue to create money to buy “assets”, and with no end in sight take a look at how gold is trading to the EURO

 

It appears that gold is ready for another leg up relative to ever cheaper Euros. Lets look at Yen…

 

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”
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