US Dollar Crashed Below 80.00 - Will Gold Move Higher Now? GLD, MUX, TNR.v, GDX

  

  FOREX market is moving very fast today with US dollar move nothing less than to be called crashing down below 80.00. It stands at the 79.78 at the moment of writing with Euro at 1.3861 and Pound at 1.6544. Will Gold finally move higher now from potential Double Bottom formed this year? 10 Year Treasuries are pushing the all-important level of 3.0% now. All metals are moving higher today with Copper up 1.58%.

The Big Squeeze - Mystery Hand Scoops Up Copper MUX, TNR.v, GDX, CU

"Interesting time comes for the Copper plays. Commodities are so much hated asset class now, that the move could be very unexpected for many people, when rotation starts from overpriced equity markets into the real assets plays."

Jesse: Record COMEX Gold Claims Per Deliverable Ounce of Gold at 92 to 1 GLD, MUX, TNR.v, GDX

 Jesse reports that we have another All-Time-High leverage at COMEX with 92 Owners per one once of Gold.

Jesse: Record COMEX Gold Claims Per Deliverable Ounce at 79 to 1 GLD, MUX, TNR.v, GDX

  "Jesse reports that the Game Of Musial Chairs in the Western Fractional Gold Reserve System is getting into the new stage with the record level of leverage. Now report from Bloomberg can be put into another perspective." 

Bloomberg: London Gold Vaults Are Virtually Empty GLD, MUX, TNR.v, GDX

Bloomberg quite suddenly provides some really interesting information about the state of the gold market and ongoing manipulations around it these days. Could the reports about JPMorgan being Net Long Gold now be correct in the end?

The Future Of Money: Gold, CIA And Bitcoin

  All these discussions about the CIA and Bitcoin connections are still in the conspiracy theory category like LIBOR and FOREX manipulations before. After China has banned its financial institutions  from participation in Bitcoin the question about who is really behind the Bitcoin is getting more and more interesting.

  With Facebook we created for NSA all our profiles, with Bitcoin somebody is mapping our accounts, IDs and Networks. As the case with Silk Road shows Bitcoin transactions are public forever, can be mapped and build into evidence - so much for distribution and anonymity.

Bitcoin Crashes As China Bans Financial Companies From Bitcoin Transactions

"After Peter Schift, The Economist, Forbes and even Mr Bubble himself - Mr Greenspan - have called Bitcoin The Bubble it took the announcement from China to Crash it down from Double Top and parity level with Gold. It is important to note that China has been buying the record amount of Gold this year and has encouraged its citizens to accumulate it. Now China is explicitly warning its people about the dangers of Bitcoin speculative Bubble and effectively taking its out of official monetary system.

  Now position of FED and Congress on Bitcoin is getting more interesting: do we have the Mexican standoff between Gold backed China, FED backed US Dollar and ... NSA, sorry Satoshi Nakamoto backed Bitcoin?

  Gold should be waking up to the Bitcoin action after this Chinese move and its timing is very important as well: Gold is very close to retest this year low."

Can Bitcoin Be The Digital Con Scheme? - Quantitative Analysis of the Full Bitcoin Transaction Graph

"We do not know whether it is the shellbomb or just another scam around Bitcoin, but decided to share it and find comments from more technically sophisticated readers. All our analysis before was based on the Bubble signs which can be attributed to Bitcoin exorbitant rise and that it is unsustainable in the long term. 

  From this report we can take that Bitcoin Open Source is not that open after all and we can see the attempt to game the other Bitcoin participants with artificially inflated prices - pure OTC stock style Pump and Dump run by insiders. This report analyses transactions in 2012, but its findings are particularly interesting now in light of recent parabolic rise of Bitcoin. How do we know that similar type of coordinated transactions are not taking place now artificially inflating Bitcoin prices?

  Before you can make any of your conclusions we must accept that this report and its findings are real and correct and not just another scam around Bitcoin apart from its price. We welcome any comments from technically sophisticated readers."

Ultimate Bitcoin Showdown: Schiff vs. Voorhees

"Peter Schiff is digging up Bitcoin phenomenon with Voorhees and its claims for being "Gold 2.0" Markets are not very happy pricing Taper now and people suddenly remember that Equity prices can go down as well. Peter is raising the very important point of "Bitcoin limited supply" - even if Bitcoin number is limited by algorithm to 22 million total there are another 100 crypto-currences to chose from even now. Voorhees is arguing that Bitcoin has already the Network Effect, which brings its value, but he warns that Bitcoin is very risky investment proposition as well. As we have mentioned before, crypto-currency backed by Gold will be the next logical step in this development.

  Gold is holding up today so far after the recent sell off even with rising US Dollar today - which is interesting."

Gold: PBOC to ‘Basically’ End Normal Yuan Intervention, Zhou Says GLD, MUX, TNR.v, GDX

  

  Now we have a better insight into the recent record level Gold buying by China. Head of PBOC talks about currency flexibility and acceleration of yuan convertibility. All announced reforms target to jump start the new phase of Chinese economic growth with Internal Consumption becoming the main driver. In this situation stronger Yuan means stronger purchasing power in China, less US Treasuries buying (which is happening already) and higher commodity prices in US Dollar terms.

RJ Wilcox: China’s Central Bank Gold Reserves are Growing Rapidly GLD, MUX, TNR.v, GDX

"We are monitoring the situation with Gold demand from China as it is the main driver for the Gold market now. So far this demand has backed Gold to withstand the numerous attacks in the paper market to allow Janet Yellen to implement even more aggressive easing polices at the FED. 

  Rising Gold price indicates FIAT currency debasement, pushes real interests up, which economy and fiscal budget can not sustain at the moment. These official Gold holdings numbers are already out of date and the question is how much Gold China really already holds now and you can add to it the state level encouragement for citizens to accumulate Gold in China."

US Dollar And Gold This Week - Janet Yellen: "There Are No Bubbles And More To Be Done." GLD, MUX, TNR.v, GDX, SLV

"Another very important input is coming from China this week after the conclusion ofThe Third Plenum. Details are still scarce, but what is coming out is nothing less than groundbreaking. China will relax its one child policy, abolish labor camps and will allow more private capital participation alongside with the state. Our take is that China is very serious now to build its internal market and will concentrate on the long term plan of the stimulating the transition to the Internal Growth oriented model.Walmart results are showing that FED QE wealth transfer policies can not make U.S. food stamps nation to prosper in any meaningful way and nobody can rely on it any more. What it means? Higher Yuan in the end and higher commodities prices in the dollar terms. That is why China is so active in securing the best available hard assets all over the world including Gold, Copper and Lithium."

Bloomberg:

PBOC to ‘Basically’ End Normal Yuan Intervention, Zhou Says

The People’s Bank of China will “basically” end normal intervention in the currency market, Governor Zhou Xiaochuan said, without giving a timeframe.

The yuan’s trading band will be widened in an “orderly way” as China seeks to enhance the currency’s two-way flexibility, Zhou wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting. The nation will phase out investment caps for both domestic and foreign investors, he added. A ceiling on deposit rates offered by local banks will be gradually removed as well, PBOC Deputy Governor Yi Gang wrote in the book.

Enlarge image

People’s Bank of China Governor Zhou Xiaochuan wrote, “We will increase the role of market exchange rates, and the central bank will basically exit from normal foreign-exchange market intervention.” Photographer: Tomohiro Ohsumi/Bloomberg

“We will increase the role of market exchange rates, and the central bank will basically exit from normal foreign-exchange market intervention,” Zhou wrote. The central bank will “establish a managed floating exchange-rate system based upon market supply and demand,” he added.

Acceleration of yuan convertibility and liberalization of interest rates were among the key reform proposals decided on at the Third Plenum and published by the official Xinhua News Agency on Nov. 15. The party said it plans to achieve these targets by 2020.

“Even if Zhou hadn’t made these comments, yuan reforms were already heading toward liberalization, and it’s just a matter of time,” said Bruce Yam, a currency strategist at Sun Hung Kai Forex in Hong Kong. “These public comments suggest the speed’s picking up.”

‘Favorable Time’

China should seize “any favorable time window in yuan capital-account convertibility” to accelerate reform, Zhou wrote in the book. The PBOC’s Yi said in April the currency’s trading band will be expanded “in the near future.”

Twelve-month non-deliverable forwards in the yuan rose after Zhou’s comments were reported, gaining the most in a month to 6.1440 per dollar as of 6:07 p.m. in Hong Kong, according to data compiled by Bloomberg. The onshore currency closed little changed at 6.0927 in Shanghai. One-month implied volatility in the onshore yuan, a measure of expected moves in the exchange rate used to price options, jumped 13 basis points, or 0.13 percentage point, to 1.67 percent.

The Chinese central bank limits the yuan spot rate’s daily moves to 1 percent on either side of a fixing it sets every day. The trading band was widened in April 2012, after being expanded from 0.3 percent in May 2007. The yuan in Shanghai has traded 0.7 percent stronger than the fixing on average this quarter, down from 0.8 percent in the first nine months of the year, according to data compiled by Bloomberg.

Investment Quotas

China’s central bank governor said in November 2012 that convertibility will be the next step in the overhaul of the exchange-rate system. “We are going to realize it, we are moving in this direction, we need to go further, we will have some deregulation,” Zhou said at a conference in Beijing then.

Quotas under the Qualified Domestic Institutional Investor and Qualified Foreign Institutional Investor programs will be expanded and then scrapped, Zhou said in the plenum book comments. The PBOC will start a trial program, called QDII2, that will allow individuals to invest overseas, Yi said. The monetary authority has identified the QDII2 program as a major goal for this year, according to a statement on its website in January.

“We expect the changes to be gradual,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. “This would likely put upward pressure on portfolio asset prices onshore.’

Borrowing Rates

China started publishing a new prime loan rate based on quotes from banks in October and signaled it may eventually replace the current PBOC benchmark. In July, the central bank scrapped a floor on lending rates.

The nation will ‘‘stick to the general direction of establishing and improving an interest-rate formation mechanism decided by market supply and demand,’’ Zhou said in the book. The PBOC will also promote interbank issuance, and trading of certificates of deposits will start soon, he added.

‘‘It’s a big step to take,’’ Patrick Bennett, Hong Kong-based strategist at Canadian Imperial Bank of Commerce, said by phone today. ‘‘My caution right now is these are statements rather than a timetable that we know will happen.’’

To contact Bloomberg News staff for this story: Fion Li in Hong Kong at fli59@bloomberg.net; Xin Zhou in Beijing at xzhou68@bloomberg.net"

  

  We would like to share with you today very interesting observations from the currency markets by Toby Connor. Recent volatility in the currency market was exceptional, particularly, when you consider that equity market was moving almost always in one direction - Up. Equity market volatility is at the record low and it looks like the real action now is in the US Dollar camp. Gold will follow this development fuelled by physical shortage as well.

  This concept of "Megaphone Top" in US Dollar is very interesting and we have seen its brutal Bearish resolution in 2008 in equity markets before.

Rick Rule On Gold & Resources: "The Stage Is Set For An Absolutely Dramatic Recovery" TNR.v, MUX

"To make this dramatic and pleasant for Survivors picture come true we need just one thing - Pros with the money coming into the market, without them it will always be only the wishful thinking. We can see them coming now."

Kitco:

Currency Markets: The Next Crisis Has Begun

Today the dollar broke through 80.40. This is a major development as it signals that the current daily cycle topped in only 2 days, thus confirming that the intermediate cycle has also topped.

I've been warning for months and months that this was coming. Anyone with a modicum of common sense knew that printing trillions of dollars was going to eventually have consequences. There is no escaping the inevitable; if you aggressively debase your currency eventually you are going to have a currency crisis. The first one has now begun.

Over the next 3-4 months the dollar is going to test the lower trend line of the megaphone topping pattern and ultimately break through. When it does we are going to witness a spectacular collapse in the dollar, probably testing the 2011 bottom by the next intermediate cycle low due in November.

This is going to cause all kinds of problems. We are already seeing the bond market breaking free of Fed manipulation. This will only get worse as bonds recognize the severity of the crisis ahead. Ironically the Fed is going to print harder and faster to try and tame the bond market. It will have the reverse effect. It will just accelerate the dollar collapse which, in turn, will intensify the selling in bonds.

This has already pricked the echo bubble in housing. In the chart below we see the same megaphone topping pattern in play as in the dollar index.

Smart money has known for months this was coming. I strongly suspect the manipulation in gold over the last 8 months was done to transfer physical metal from weak hands into strong hands in preparation for this event. Now it's time for gold to do its job of protecting wealth during a currency crisis. I told subscribers last night that we will see a war over the next several days and weeks as gold breaks free of the manipulation and gets busy discounting the coming currency crisis.

The intervention is going to try hard to keep gold prices down, but ultimately gold is going to win and break free of the artificially low prices. Ultimately gold is going to protect wealth during an inflationary period of time, just as it always does. And ultimately all the manipulation will succeed in doing is to cause price to rise much further and faster than would have occurred if gold had been allowed to trade freely.

Batten down the hatches - the next Fed created catastrophe has already begun.

By Toby Connor
GoldScents
www.goldscents.blogspot.com"