My name is Shawn Ozbun, and our goal is to keep you up to date with what’s going on in the world of Gold and Silver by providing you with current news and precious metals pricing.
The Silvertowne Vault Cast is brought to you by www.Silvertowne.com
Welcome back to the SilverTowne Vault Cast and as always I am pleased to be here talking to you about the importance of owning precious metals. The election is over and regardless of who you voted for I think we can all be pleased that it is over, at least I am. One thing is for sure we are facing hard economic times and it’s never been more important in my opinion to be owning some precious metals like gold and silver so that we can help protect our wealth against the unavoidable coming inflation that will eventually be rampaging it’s way through our economy. Today we are going to talk about the Euro crisis and if gold as collateral could help solve the problem, we are going to talk about gold’s quick rebound back over the $1700 dollar mark and the coming tsunami of inflation that is headed our way.
Before we get into all those topics I want to remind you to subscribe to our YouTube channel or our iTunes channel and I would like to ask you to take the time to leave a comment and some feedback. You can also contact me by emailing me at vaultcast@silvertowne.com and leave me some feedback or suggestions that way. I don’t take phone calls simply because I am not a financial adviser and I cant give you any financial advise but I welcome your feedback and thoughts and I might be able to speak about your feedback on the vault cast and again that email address is vaultcast@silvertowne.com.
Now lets go ahead and get into todays precious metals pricing!
Gold - $1717.90 Up 1.04
Silver - $31.85 Up .03 cents
Platinum - 1538.00 Up $.50
Palladium - $602.98 down $1.58
Financial News:
Gold as Collateral: Could This Solve the Euro Crisis?
Debt-crippled euro zone countries could see the yields on their sovereign bonds fall dramatically if they used their gold reserves as collateral for that debt issuance, according to Sylvester Eijffinger, professor of financial economics at Tilburg University.
Funding costs have risen to unsustainable levels for several euro zone countries, forcing them to seek financial aid from their fellow euro partners.
If governments were to use gold as collateral, sovereign credit risk would be reduced and the European Central Bank would no longer have to buy up debt from struggling euro zone members, Eijffinger told CNBC.
The ECB's plan to buy unlimited amounts of short-dated government debt, known as Outright Monetary Transactions or OMT, has been heavily criticized. Although the scheme eased investors' nerves, many analysts argue it will be equivalent to the ECB printing money to finance governments.
Using gold as collateral would pose fewer risks to the ECB’s balance sheet than the ECB’s recently launched bond-buying program, Eijffinger said.
Of all euro zone countries struggling with high debts, Portugal and Italy would benefit most from the method because they hold large reserves of gold. Spain, Ireland and Greece would not gain as much.
Italy holds 2450 metric tons of gold, and Portugal has 383 metric tons of gold. This compares to Spain's 282 metric tons of gold, and Greece's 112 metric tons of gold, according to the World Gold Council.
Italy holds gold reserves of 24 percent of its two-year funding requirements, for Portugal this is 30 percent, according to the World Gold Council.
A recent EU study also recommended that the central banks of euro zone countries use gold as collateral for highly distressed bonds to allow the euro area to reduce financing costs, like it did in the past.
Restrictions
There are some restrictions to using gold as collateral however.
Central banks of euro zone countries along with the Swedish Central Bank and the Swiss Central Bank signed a contract in 2009 which stated they would not put more than 400 tons of gold on the market over the course of the five years that followed.
Since the euro zone was formed, all of the gold that euro zone member states hold has been pooled by the ECB. Member states’ central banks are not allowed to make decisions over these holdings without getting approval from the ECB.
“This may limit the options until 2014, but a country will only have to sell if [it defaulted on its debt] they do not live up to all the conditions that are being set ,” Eijffinger said. Read More...
Gold Reclaims $1700 as Dollar Falls
Spot gold gained 2 percent to $1,717.09 an ounce by 1:11 p.m. EST (1811 GMT). Some analysts also cited technical buying after gold rebounded from key support at its 100-day moving average in the last several sessions.
Gold rose 2 percent on Tuesday, as speculation of an election win for U.S. President Barack Obama and higher hopes for Federal Reserve stimulus fueled an abrupt midday rally.
Some analysts said a Republican team that champions fiscal responsibility and is skeptical of Fed stimulus would be unlikely to renominate Fed Chairman Ben Bernanke for a third term in 2014.
"Gold rallied in oversold conditions because early poll indications suggested Obama could win, and that bolstered hopes of Bernanke and Fed stimulus," COMEX gold options floor trader Jonathan Jossen said. Read More...
Why Bernanke can’t stop the Kress Cycle Tsunami
A question that many are asking right now is what impact the Fed’s latest monetary policy action will have on the projected deflationary scenario for 2013-14. Specifically, market participants are wondering if the Fed’s monetary policy action will prevent deflation from running its course.
The answer to the above question holds profound implications for investors in stocks, commodities and real estate. If the Fed is serious about its commitment to stopping deflation at any cost, it could potentially put the brakes on the deleveraging process and hold off a deflationary nightmare for a few more years. The emphasis here is on the word “potentially,” for it’s still very much in doubt that the Fed’s efforts will suffice for reasons we’ll discuss here.
The long-term deflationary cycle of 120 years is just two short years from bottoming, which means the proverbial finish line is in sight. The bad news is that two years can seem like an eternity when the deflation cycle is ravaging the global economy, as it’s expected to do in 2013-14. Even the slightest hesitation or deviation from the central bank’s aggressively loose monetary policy would allow the floodtide of deflation to overwhelm the financial market and economy.
Next year is a critical one for the economy as it marks the start of the final “hard down” phase of the 60-year/120-year economic cycle due to bottom in late 2014. If the Fed and the other major central banks (notably the ECB) take their foot off the monetary accelerator for even a minute it will allow deflation to overspread the global economy, potentially reversing the recovery of the last four years. Read More...
Thanks for listening to the Silvertowne vault cast. You can find our show on YouTube and I would love it if you would subscribe and as always our show can also be found in the iTunes store. You can email me at vaultcast@silvertowne.com to give some feedback and suggestions as well.
For the best source for acquiring gold and silver please contact Silvertowne at 1-877-477- coin, that’s 1-877-477-2646 or you can visit us at www.silvertowne.com. Silvertowne has been a trusted precious metals and numismatics dealer since 1949.
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[Disclaimer] Shawn Ozbun is not a licensed financial adviser, there is risk associated with all investment including gold and silver. You should seek advise from a licensed financial expert before making a purchase.
