Central banks

There's one certain winner of next week's presidential election, according to HSBC Holdings Plc: investors in gold.

We can’t help but see also the beginning of a flight away from the currencies. And, besides, those countries (China, Middle-East countries) are indeed big buyers of gold, whether through their people or their central banks.

The mistake that most people make is to measure gold in US dollars. Gold in pounds for example is only 8% from the September 2011 peak.

The selling of gold we saw last week was another desperate attack by the BIS and some central banks, together with the bullion banks, to manipulate the gold market lower.

Odds of the rate going up in December are said to be about 65 percent on the futures market, but only 8 percent when the Fed meets in November, just before the US election.

Today, we might be standing at another historical peak in the global economy. There are certainly many similarities like deficits, debts and decadence. Just like the Roman Emperors, current leaders have illusions of grandeur of a magnitude that the world has never seen before.

The possibility of a hike in long-term rates is becoming a recurrent issue of concern in the markets. Will the Fed raise its rates? Are investors anticipating a normalisation in the yield curve? More important is the question of all the liquidity created by the central banks since 2008.

The SDR is just a step in the long strategy of China to eliminate the dollar’s “exorbitant privilege” and that gold will play a major role at the negotiating table

The world economy is now at its most dangerous point in history. In virtually every major country or region, there are problems of a magnitude which individually could trigger a collapse of the financial system.

The financial and banking crisis can hit Germany as well – it could even become the epicentre of the crisis, given the size of Deutsche Bank.