Global Risk Requires Every Investor to Own Gold – Martenson

Release Date: 
Friday, December 11, 2015

Gold and Silver Prices
Gold prices rose on Friday on short covering and bargain hunting. However, the markets ultimately ended the week slightly lower as investors continue to bake in the effects of a December interest rate hike.

“Gold prices are posting a decent rally in late-morning dealings Friday. Some short covering in the futures markets, heading into the weekend, and bargain hunting in the cash market are featured following early selling pressure that was tied to the slumping crude oil market. The up-move in gold prices could also be some position evening ahead of next week's much-anticipated FOMC meeting that concludes Wednesday afternoon.” (“Gold Rallies on Short Covering and Bargain Hunting,” KitcoNews, 12/11/15.)

Gold ended the week down $11.10, closing at $1,075.20. Silver prices closed at $13.99, down $0.56.

Global Risk Requires Every Investor to Own Gold – Martenson
Economic researcher and market analyst Chris Martenson, PhD, explained the threats to the global economy require every investor to include gold bullion in their portfolio.

“Gold is one of the few investments that every investor should have in their portfolio. We are now at the dangerous end-game period of a very bold but very reckless & disappointing experiment with the world's fiat (unbacked) currencies. If this experiment fails -- and we observe it's in the process of failing -- gold will provide one of the best forms of wealth insurance. But like all insurance products, it only works if you buy it before you need to rely on it…

“[W]e are witness to an incredibly aberrant moment in financial history -- one where the price of gold is extremely undervalued relative to its true value. And similarly, many paper assets are overvalued well-above their intrinsic worth. The dichotomy of this moment in time is likely not to be repeated in our lifetimes; and those who understand the fundamentals accurately have the opportunity to position themselves now to benefit greatly (or at least, to not be impoverished) as this extreme imbalance corrects, as it must.

The reasons to hold gold (and silver) -- I mean physical bullion here -- are pretty straightforward. Let’s begin with the primary ones:

  1. To protect against monetary recklessness
  2. As insurance against the possibility of a major calamity in the banking/financial system
  3. For the embedded 'option value' that will pay out handsomely if gold is re-monetized…

“For all the reasons above, it's only prudent to consider gold an essential element of a sound investment portfolio… Make sure you're taking steps today to ensure that the purchasing power of your wealth is protected, if not enhanced, when the trends identified above arrive in full force.” (“The Screaming Fundamentals For Owning Gold,” PeakProsperity, 12/8/15.)

Gold to Rise to $1200, Silver to $17 in 2016- Commerzbank
Commerzbank, an international commercial bank which finances more than 30% of Germany’s foreign trade, forecasts gold prices to rise to $1200 and silver to increase to $17 by the end of 2016.

“Commerzbank looks for gold to strengthen in 2016, as it starts to find support once the U.S. Federal Reserve gets its first interest-rate hike out of the way…

“’We expect to see prices perform better in the new year once the Fed has implemented its first rate hike in mid-December, thereby dispensing with one key factor that has been weighing on prices this year …  Supported by robust demand from Asia, gold should climb to $1,200 per troy ounce by the end of 2016. Silver should likewise make gains in gold’s slipstream, especially since rising physical demand will meet with falling supply…’

“’The silver price should also increase on the back of the recovery we expect the gold price to enjoy,’ Commerzbank said. ‘As with gold, we are likely to see the bulk of the price rise in the second half of the year. By mid-2016, we envisage a silver price of $15 per troy ounce and by the end of 2016 silver should be trading at $17 per troy ounce.’”  (“Gold To Rally To $1,200/Oz In 2016 On Gradual Fed Rate Hikes – Commerzbank,” 12/8/15.)

China Plans to Internationalize Its Currency With Gold – Jansen
Koos Jansen, gold analyst and blogger for Singapore’s preeminent bullion dealer, discussed a Beijing seminar where China’s President of the China Gold Association disclosed his country’s plan to “internationalize” the Chinese currency, the renminbi, using massive gold reserves.

“A seminar about gold supporting the internationalization of the renminbi and China’s financial strength was held in Beijing on 18 September 2015. One of the keynote speakers was Song Xin, President of the China Gold Association (CGA), Chairman of the Board of China International Resources Corporation, President of China National Gold Group Corporation and Party Secretary, who believes China’s economic power must be serviced by appropriate gold reserves to support the renminbi. An article written by Song published on Sina Finance in 2014 stated:

‘For China the strategic mission of gold lies in the support of renminbi internationalization. Gold … forms the base for a currency moving up in the international arena.

If the renminbi wants to achieve international status, it must have popular acceptance and a stable value. To this end… it is very important to have enough gold as the foundation and raising the ‘gold content’ of the renminbi. Therefore, to China, the meaning and mission of gold is to support the renminbi to become an internationally accepted currency and make China an economic powerhouse.

That’s why, in order for gold to fulfill its destined mission, we must raise our old holdings a great deal, and do so with a solid plan…’

“Since my last extensive blog post (20 May 2015) on PBOC gold purchases I’ve been able to collect more clues related to the amount of gold China’s central bank has harvested in exchange for its lopsided US dollar holdings. Last week I spoke to an insider with connections at Western bullion banks. This gentleman confirmed proxies of the PBOC purchase gold directly in the London OTC gold market that is shipped to Beijing. Implying much of the 1,750 tonnes that have mysteriously vanished from the London Bullion Market … between 2011 and early 2015 went to China. This supports the analysis the PBOC is buying at a pace of 500 tonnes a year in the international OTC market (not through the SGE) and owns approximately 4,000 tonnes by now.” (“Renminbi Internationalization And China’s Gold Strategy,”, 12/4/15.)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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