Shaky Markets; More on German Gold and How it Relates to You; Working Until Age 80
Gold is marking time at just $6 above the $1,700 mark while stocks are up .2%, or 15 points, managing a small dead cat bounce after recent weakness. Today there’s big excitement around Facebook which is up over 20% on an earnings beat. This month has turned out to be all about the earnings. What can the Fed say this week to get the bulls recharged, frankly I do not know. The market is saying, ‘it’s the earnings, dummy.’ As outlined on Monday, overall earnings and revenue has been stale to downright lousy and the earnings and revenue outlook guidance warns of weaker times ahead. To confuse everyone, more housing indicators are coming in positive, though even with today’s numbers, have the total increase reported is based on the need to start the construction and not completions.
Other corporate developments: Karmazin exiting SiriusXM! Netflix earnings fall. Bad day at Zynga. http://lat.ms/QWQiax From the LATimes.
On the gold news front, breaking news has been been limited in scope which has meant that focus has continued to center on developments which might not of received the attention if the news flow had been heavier. German gold continues to receive some attention. This report via AP:
Unease about Germany’s unchecked gold reserves
By The Associated Press
via Boston Globe
Monday, October 22, 2012
“BERLIN — Germany’s central bank has failed to properly oversee the country’s massive gold reserves, which have been stored abroad since the Cold War in case of a Soviet invasion, independent auditors say.
The central bank must renegotiate its contracts to gain the right to inspect its gold bars, which are worth tens of billions of dollars and are stored in the United States, Britain, and France, the Federal Auditors Office said in a report to lawmakers obtained by The Associated Press on Monday.
The report says the gold bars “have never been physically checked by the Bundesbank itself or other independent auditors regarding their authenticity or weight.” Instead, the Bundesbank relies on a “written confirmations by the storage sites.”
Most of Germany’s gold reserves — some 3,400 tons worth an estimated $190 billion at current rates — have been kept in the vaults of the U.S. Federal Reserve, the Bank of France, and the Bank of England since the postwar days, when Berlin worried about a possible land war with the Soviet bloc.
The auditors maintain that the central bank must be able to at least inspect samples of its gold bars at regular intervals to verify their book value.
The report acknowledges that such inspections might be logistically complicated, but it stresses that “this cannot discharge [the bank] from the necessity to carry out an inventory.”
The central bank said in a reaction to the report that was also sent to lawmakers Monday that it sees no reason for a physical inspection of the bars. “There is no doubt about the integrity of the foreign storage sites in this regard,” it stated.
The debate on most of the gold reserves being held by foreign authorities has caused some inevitable conspiracy theories questioning their very existence, but several German politicians have also voiced unease.
Philipp Missfelder, a leading lawmaker from Chancellor Angela Merkel’s center-right party, has asked the Bundesbank for the right to view the gold bars in Paris and London, but the central bank has denied the request, citing the lack of visitor rooms in those facilities, German daily Bild reported.
Given the growing political unease about the issue and the pressure from auditors, the central bank decided last month to repatriate some 50 tons of gold in each of the three coming years from New York to its headquarters in Frankfurt for “thorough examinations” regarding weight and quality, the report revealed.
An initiative backed by some German economists, industry leaders, and a few lawmakers dubbed “bring home our gold” launched in May has attracted some 10,000 supporters online so far.
But Finance Minister Wolfgang Schaeuble and others maintain that there is no reason to worry.
“I currently have no doubt about the stock and the storage of the gold reserves,” said Priska Hinz, the opposition Greens top lawmaker on the budget committee. “I do not doubt the reliability of the foreign central banks,” she told the AP.
Several passages of the auditors’ report were blacked out in the copy shared with lawmakers, citing the Bundesbank’s concerns that they could compromise secrets involving the central banks storing the gold.
The report said that the gold pile in London has fallen “below 500 tons” due to recent sales and repatriations, but it did not specify how much gold was held in the U.S. and in France. German media have widely reported that some 1,500 tons — almost half of the total reserves — are stored in New York.”
Jim again: These international holdings are a mess. Tungsten gold anyone? Has any of this gold been re-leased many times over? Now is the time to purchase gold while the purchasing is good. We could very well see a disrupted gold market if it turns out that Central Bank holdings are loused up.
Apropos of nothing with respect the to the markets…
More people want to work til 80 – unfortunately from lack of savings…http://goo.gl/DwNN7 .
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Author Jim Kingsland
Market commentator with focus on Gold and Silver after long broadcast career at FNN, Bloomberg, and Fox. #RandomHouse published author on PMs. Jim has also been involved in projects for CAC and Coinplex.
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