Over the last 20 years, the IMF estimates that global debt has increased from $74 trillion to $238 trillion while the global economy has grown at about half that rate, from $36.5 trillion to $79.6 trillion. This process is creating financial claims on the real economy that far exceed the increase in production of goods and services. - Equities
At some point, this ratio of debt creation to GDP growth will reach exponential proportions, and is a significant factor in governments and central banks all beginning to conduct serious talks on bringing about a reset to the financial and monetary system.
The Bank recognises that a new economy, a new world and new demographics demand a new financial system.
While we prepare for great change, we will be guided by one constant: our mission to promote the good of the people we all serve.
This infrastructure must be overhauled now that the economy is on the cusp of the fourth industrial revolution and our demographic challenges are intensifying.
And rebalancing of the global order is proving as dramatic as it was in Montagu Norman’s time. Such profound changes demand a new finance.
We now have a balance sheet fit for a new world order with greater reliance on markets in a wider range of reserve currencies. – Silver Doctors
However how each individual nation to preparing for this is an interesting dichotomy unto itself. In the East for example, nations like China, Russia, the Brics, and Turkey are accumulating gold at a record pace, while also constructing financial platforms such as CIPS and the AIIB to absorb the functions of both SWIFT and the IMF should these institutions collapse during a black swan event or through mutual decision.
Unfortunately in both the U.S. and in Europe, their answer appears to be the doubling down on their debt creation until the system simply implodes upon itself as it nearly did 10 years ago.
Both the world and individuals nations have gone through financial and currency resets numerous times over the course of history, and primarily when a particular empire no longer has the capability of dominating the world's financial system. But unlike previous times such as with Spain, Rome, France, or Britain, the current system is not run on a gold or silver standard, which means that the reset will be much harsher to the common person since it will require a halving or worse of their current standard of living.
After several weeks of downward movements in the gold and silver markets, July 3 saw what potentially could be a bottom for the precious metals.
With the dollar giving up some gains from yesterday when it climbed back over 95 on the index, a combination of this and two other events may be creating a catalyst for gold and silver prices to regain momentum, especially after they rebounded to $1250 and $16 respectively this morning.
Gold futures on Comex staged a solid comeback from the lowest levels seen since July last year, and now looks to regain the $ 1250 mark heading into the US factory orders data.
The yellow metal’s rebound today, is mainly driven by the US dollar slide across its main competitors, as markets resort to repositioning ahead of the US Independence Day holiday and July 6 tariffs deadline.
The greenback’s decline can be also attributed to the flattening of the Treasury yield curve, the spread between the 10-year and 2-year Treasury yields, which is at the flattest since 2017.
– FX Street
In addition to the dollar's pullback today, news that JP Morgan has been buying back millions of ounces of short gold contracts from the Comex may also have something to do with today's $15 move in the gold price.
The COMEX gold market structure, by virtue of recent aggressive managed money selling, is easily capable of a sudden rally of $100 or more. After all, the price of gold is now $50 below its key moving averages and the commercials would have little trouble rigging prices higher to the moving averages and an equivalent amount above. This is, after all, the main, if not sole driver of price and what the rinse and repeat cycle is all about. But what makes it special this time is JPMorgan’s pronounced buyback of short positions.
By buying back at least 50,000 gold short contracts, the equivalent of 5 million oz, JPMorgan has just sidestepped the loss of $500 million should gold rally a quick $100 an ounce, as seems almost inevitable given the overall market structure. – Silver Doctors
Finally, it also appears that the demand from Asia that has been lacking over the past few months has reversed at the Shanghai Gold Exchange as buying over the past 10 days has increased quite a bit.
Asian buying of gold has picked up lately as the price has fallen, and this may slow any further price declines in the precious metal, says Mitsubishi. “With gold prices down at six-month lows, Chinese buyers have been very assertive of late,” the firm says. Turnover on the Shanghai Gold Exchange’s gold contract has been 11.5% higher in the last 10 days, compared to the same period in 2017, the firm says. “The average local price of gold has been 21% lower in this period than a year ago, leading to a good deal of opportunistic buying from the local jewelry and bar fabrication business, despite the retail market in general being quite quiet,” Mitsubishi continues. “Chinese and wider Asian buying demand ought to continue to cushion further price drops in gold.” - Kitco
The summer months are traditionally the biggest downtime for gold as both volume and investors stay out of this market in favor of other assets. But with the ongoing trade wars between the U.S. and China creating volatility in the currency markets, a return of the gold bull market may be occurring sooner than usual here in July.
In a very interesting piece of analysis published recently by Dr. Jim Rickards, it is appearing more and more that the start of the recent bull market for gold in early 2016 is coinciding with central banks starting to peg their currencies to the price of that precious metal. And in addition, these banks are using the SDR as the benchmark for this... meaning that not only are they expecting the SDR to soon replace the dollar as the sole global reserve currency, but that it will also now hold gold as one of its components in its basket of currencies.
Here’s what DHB discovered. Before China joined the SDR, both the dollar price of gold and the SDR price of gold were volatile. After China joined the SDR, the dollar price of gold continued to be volatile, but the SDR price of gold exhibited much less volatility, especially after the first few months.
Most importantly, the trend line of SDR/GLD is a near-perfect horizontal line.
In short, world money has now been pegged to gold at a rate of SDR900 = 1 ounce of gold. It’s a new gold standard using the IMF’s world money.
There’s the GMR right in front of your eyes.
It takes a while to sink in. Why did SDR/GLD go from normal volatility to no volatility overnight? The straight-line behavior of SDR/GLD after the Chinese yuan joined the SDR is impossible without some kind of intervention or manipulation. The odds of this happening randomly are infinitesimal.
The SDR/GLD horizontal trend line after Oct. 1, 2016, is an example of what statisticians call autoregression. This only appears if there’s a recursive function (a “feedback loop”) or manipulation or if it’s presented as a fraud. This is how Harry Markopolos spotted the Bernie Madoff fraud; Madoff’s returns were too steady and consistent to be real given the volatile nature of capital markets. - Goldcore
Gold bottomed out in December of 2015 and began a new move upward at the same time the SDR appeared to peg itself to the gold price in 2016. However Rickards is not the only one to comment on the work of DH Bauer as GATA has also put in their own addendum to Jim's analysis.
Rickards writes: "In short, world money has now been pegged to gold at a rate of SDR 900 to 1 ounce of gold. It's a new gold standard using the IMF's world money. There's the global monetary reset right in front of your eyes."
The charts contained in Rickards' letter are not reproduced in GoldCore's reprinting but they show the gold price measured in SDRs presenting a nearly horizontal line for the last year and a half.
Of course if the gold price and SDR valuation are now locked together, this doesn't just mean that central banks are rigging the gold market. It means that every major central bank in the world is aware of and complicit in the rigging, likely preparing for another international currency revaluation, this time one in which gold is to be a major component, a revaluation that will change the value of all capital, labor, goods, and currency in the world. - Goldseek
What both of these agencies do agree upon however, is that betting on the dollar, yuan, or SDR is not the best haven of protection. Instead Rickard's succinctly ends his letter by telling us exactly what will be the foundation of any currency reset or valuation that comes to pass..."My advice under these circumstances is simple. Dump dollars, yuan and SDRs (if you have any) and get gold. That’s where the whole world is heading."