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In recent weeks France has defied US demands not to build Mistrals for Russia, has questioned dollar imperialism and the Petrodollar, and has blasted the US banking regulator's fines as "accelerating the decline of the dollar." So it is likely not a huge surprise that ahead of the G-20 meeting of world leaders later in the year, The FT reports, France has gathered support to challenge US regulators imposing heavy penalties on foreign banks. Berlin, London and Rome have backed Paris in its push to have its concerns about so-called US extraterritoriality discussed when leaders of the world’s top 20 economies meet hoping to bring "more proportionality" to bank fines. With allies like this…

 

As The FT reports, top regulators have been raising concerns about the impact of the long procession of fines on their efforts to strengthen banks’ finances.

France has gathered support to challenge US regulators imposing heavy penalties on foreign banks at a G20 meeting of world leaders later this year after the record $8.9bn fine levied on BNP Paribas last month.

 

Berlin, London and Rome have backed Paris in its push to have its concerns about so-called US extraterritoriality discussed when leaders of the world’s top 20 economies meet in Brisbane in Australia in November, according to French and other European officials.

 

…

 

“There should be co-ordination between regulators, as there should not be multiple jeopardy,” agreed one senior European official, who confirmed that there had been “informal discussions” about putting the issue of bank fines on the G20 agenda.

 

“It is an issue, but we have to be careful not to go into an area of saying ‘it is too much and we have got to lay off these guys’,” said the official, who added that the G20 could discuss how to bring more “proportionality” to bank fines.

 

French finance minister Michel Sapin sought support for France’s stance in recent meetings with Wolfgang Schäuble and Pier Carlo Padoan, his German and Italian counterparts, according to French officials. There was a “positive reception”, one said.

 

…

 

In Berlin, officials said Germany had agreed to back Paris, saying it supported a common EU approach to the US over extraterritorial jurisdiction. Berlin sees that a union-wide approach to Washington is more likely to bear fruit than case-by-case discussions.

As a gentle reminder, Brazil, Russia, India, China, and South Africa are all members of the G-20 and, we suspect, would not be too worried backing any such coordinated actions against US extraterritoriality.

However, we leave it to the French to express their anti-dollar-imperialism…

Single whammy:

• NOYER: BNP CASE WILL ENCOURAGE ‘DIVERSIFICATION’ FROM DOLLAR

Here is the full google translated segment:

Q. Doesn't the role of the dollar as an international currency create systemic risk?

 

Noyer: Beyond [the BNP] case, increased legal risks from the application of U.S. rules to all dollar transactions around the world will encourage a diversification from the dollar. BNP Paribas was the occasion for many observers to remember that there has been a number of sanctions and that there would certainly be others in the future. A movement to diversify the currencies used in international trade is inevitable. Trade between Europe and China does not need to use the dollar and may be read and fully paid in euros or renminbi. Walking towards a multipolar world is the natural monetary policy, since there are several major economic and monetary powerful ensembles. China has decided to develop the renminbi as a settlement currency. The Bank of France was behind the popular ECB-PBOC swap and we have just concluded a memorandum on the creation of a system of offshore renminbi clearing in Paris. We have very strong cooperation with the PBOC in this field. But these changes take time. We must not forget that it took decades after the United States became the world's largest economy for the dollar to replace the British pound as the first international currency. But the phenomenon of U.S. rules expanding to all USD-denominated transactions around the world can have an accelerating effect.

In other words, the head of the French central bank, and ECB member, Christian Noyer, just issued a direct threat to the world's reserve currency (for now), the US Dollar.

 

Double whammy:

• Total’s de Margerie Sees No Need for Dollars in Oil Purchases

Oil major Total's chief executive Christophe de Margerie was responding to questions about calls by French policymakers to find ways at EU level to bolster the use of the euro in international business following a record U.S. fine for BNP.

"There is no reason to pay for oil in dollars," he said. He said the fact that oil prices are quoted in dollars per barrel did not mean that payments actually had to be made in that currency.

So even a major beneficiary of the status quo appears to see the end in sight for the Petrodollar.

And now The Triple Whammy

• *FRANCE SAYS INCREASING EURO USE IS ISSUE OF 'GLOBAL BALANCE'
• *SAPIN SAYS EURO AREA NEEDS TO LEAD DISCUSSION ON DOLLAR USE
• *FRANCE NOT FIGHTING 'DOLLAR IMPERIALISM,' SAPIN SAYS (wo shy mention it?)

French Finance Minister Michel Sapin says that now is the right time to bolster the use of the euro in transactions outside the U.S. Sapin speaks in an interview with Bloomberg News in Aix-en-Provence, France.

“We sell ourselves aircraft in dollars. Is that really necessary? I don’t think so,” Sapin says, adding "I think a rebalancing is possible and necessary, not just regarding the euro but also for the big currencies of the emerging countries, which account for more and more of global trade."

 

“We can avoid the exchange rate risk, and that’s always useful. We can diminish financing costs in pricing more in other currencies,” Sapin says.

 

“This is not a fight against dollar imperialism,” Sapin says.

 

“It’s up to Europe, to the euro zone in particular, to lead this argument,” Sapin says.

 

As The FT reports, Mr Sapin said he would raise the need for a weightier alternative to the dollar with fellow eurozone finance ministers when they meet in Brussels on Monday, although he declined to go into detail about what practical steps might emerge.

As we joked previously, nope – no anti-dollar-imperialism here at all…

*  *  *

As we showed recently…(and have ever since 2010)… nothing lasts forever

Meanwhile, somewhere Putin is still laughing.

via Zero Hedge http://ift.tt/1kg57JH Tyler Durden

With the world’s attention focused on the ongoing death and destruction in Gaza most have forgotten that just two months ago a vicious Al-Qaeda spinoff, after taking over the north of Iraq and a third of Syria’s territory including its oil production facilities, proclaimed the creation of an Islamic State caliphate a few hundred kilometers north of Baghdad. The reason why the ISIS story fell off the front pages is that while the jihadists were consolidating their power in the caliphate region, it was believed that they have no chance of advancing onto Baghdad and the energy-rich Iraq regions south of Baghdad (and thus have little impact on the price of Brent). And yet there was one major “weakest link” – recall that a month ago we reported that “Baghdad May Lose Its Drinking Water As ISIS Approaches Dam“, an outcome which would put Iraq’s capital, and its 8 million residents, at the mercy of ISIS.

According to Al Arabia it is this “weakest link” that is now in play after ISIS took over Iraq’s biggest dam unopposed by Kurdish fighters, who also lost three towns and an oilfield on Sunday to the Sunni militant group, witnesses said cited by Reuters.

Iraqi security officials said Wednesday that fighters for the
Islamic State in Iraq and Syria were advancing on the Haditha Dam, the
second-largest in Iraq.

VOA confirms:

Islamic State fighters seized control of Iraq’s biggest dam, an oilfield and two more towns on Sunday after inflicting their first major defeat on Kurdish forces since sweeping through the region in June

 

Local officials said militants with the extremist group Islamic State took control of the towns of Zumar and Sinjar near the city of Mosul on Sunday, waging fierce clashes with Kurdish forces.

 

The French news agency AFP quoted a United Nations spokesman saying 200,000 people have fled Sinjar and said there are grave concerns for their safety.

It gets worse: control of the dam could give ISIS, which has threatened to march on Baghdad, the ability to flood major cities. This in turn will merely serve to further facilitate the expansion of ISIS as it approaches Baghdad from the north…

Meanwhile, ISIS also seized two small towns in northern Iraq after driving out Kurdish security forces, officials and residents said, according to the Associated Press.

 

The fresh gains by the Sunni extremist militants have forced dozens of residents to flee from the religiously mixed towns of Zumar and Sinjar, near the militant-held city of Mosul, to the northern self-ruled Kurdish region.

 

Earlier on Sunday, ISIS militants have successfully captured an oil field close to the Iraqi town of Zumar after fighting with Kurdish forces who had control of the area.

 

ISIS, which had a lightning advance through northern Iraq in June, warned residents in nearby villages along the border with Syria to leave their homes, suggesting they were planning an assault, witnesses said. ISIS fighters killed 16 Kurdish troops in attacks in northern Iraq, while 30 pro-government forces died battling the jihadists on other frontlines, officials said Saturday.

 

Zumar is a small Kurdish-majority outpost northwest of Mosul, which used to be under federal government control but was taken over by the Peshmerga in June.

 

In other attacks on Saturday, five would-be volunteer fighters were killed and 16 wounded in a suicide car bomb attack on a Shiite militia recruitment center in the town of Balad, north of Baghdad, police said.

… and from the south.

In equally intense overnight fighting on the main front south of Baghdad, at least 23 pro-government forces were killed by relentless mortar shelling of their positions in Jurf al-Sakhr.

 

ISIS militants began attacking the town late Friday, killing 11 soldiers and 12 members of the Asaib Ahl al-Haq militia, an officer and army medic said.

 

Another seven soldiers were wounded during a subsequent government operation against jihadist fighters in Jurf al-Sakhr, Al-Hamya and Latifiya, the sources said, claiming 37 IS fighters were killed.

 

Using the western city of Fallujah as a rear base, jihadists have repeatedly attacked Jurf al-Sakhr, where pro-government forces are keen to prevent a foray that would expose the nearby holy Shiite city of Karbala and further encircle Baghdad by cutting the main road to the south.

And if Baghdad does indeed fall, all those recent Crude shorts will be less than happy.

Finally, here is a visual summary of all the most recent clashes as ISIS approaches Baghdad, courtesy of the ISW:

via Zero Hedge http://ift.tt/1kwjYjD Tyler Durden

With the world’s attention focused on the ongoing death and destruction in Gaza most have forgotten that just two months ago a vicious Al-Qaeda spinoff, after taking over the north of Iraq and a third of Syria’s territory including its oil production facilities, proclaimed the creation of an Islamic State caliphate a few hundred kilometers north of Baghdad. The reason why the ISIS story fell off the front pages is that while the jihadists were consolidating their power in the caliphate region, it was believed that they have no chance of advancing onto Baghdad and the energy-rich Iraq regions south of Baghdad (and thus have little impact on the price of Brent). And yet there was one major “weakest link” – recall that a month ago we reported that “Baghdad May Lose Its Drinking Water As ISIS Approaches Dam“, an outcome which would put Iraq’s capital, and its 8 million residents, at the mercy of ISIS.

According to Al Arabia it is this “weakest link” that is now in play after ISIS took over Iraq’s biggest dam unopposed by Kurdish fighters, who also lost three towns and an oilfield on Sunday to the Sunni militant group, witnesses said cited by Reuters.

Iraqi security officials said Wednesday that fighters for the
Islamic State in Iraq and Syria were advancing on the Haditha Dam, the
second-largest in Iraq.

VOA confirms:

Islamic State fighters seized control of Iraq’s biggest dam, an oilfield and two more towns on Sunday after inflicting their first major defeat on Kurdish forces since sweeping through the region in June

 

Local officials said militants with the extremist group Islamic State took control of the towns of Zumar and Sinjar near the city of Mosul on Sunday, waging fierce clashes with Kurdish forces.

 

The French news agency AFP quoted a United Nations spokesman saying 200,000 people have fled Sinjar and said there are grave concerns for their safety.

It gets worse: control of the dam could give ISIS, which has threatened to march on Baghdad, the ability to flood major cities. This in turn will merely serve to further facilitate the expansion of ISIS as it approaches Baghdad from the north…

Meanwhile, ISIS also seized two small towns in northern Iraq after driving out Kurdish security forces, officials and residents said, according to the Associated Press.

 

The fresh gains by the Sunni extremist militants have forced dozens of residents to flee from the religiously mixed towns of Zumar and Sinjar, near the militant-held city of Mosul, to the northern self-ruled Kurdish region.

 

Earlier on Sunday, ISIS militants have successfully captured an oil field close to the Iraqi town of Zumar after fighting with Kurdish forces who had control of the area.

 

ISIS, which had a lightning advance through northern Iraq in June, warned residents in nearby villages along the border with Syria to leave their homes, suggesting they were planning an assault, witnesses said. ISIS fighters killed 16 Kurdish troops in attacks in northern Iraq, while 30 pro-government forces died battling the jihadists on other frontlines, officials said Saturday.

 

Zumar is a small Kurdish-majority outpost northwest of Mosul, which used to be under federal government control but was taken over by the Peshmerga in June.

 

In other attacks on Saturday, five would-be volunteer fighters were killed and 16 wounded in a suicide car bomb attack on a Shiite militia recruitment center in the town of Balad, north of Baghdad, police said.

… and from the south.

In equally intense overnight fighting on the main front south of Baghdad, at least 23 pro-government forces were killed by relentless mortar shelling of their positions in Jurf al-Sakhr.

 

ISIS militants began attacking the town late Friday, killing 11 soldiers and 12 members of the Asaib Ahl al-Haq militia, an officer and army medic said.

 

Another seven soldiers were wounded during a subsequent government operation against jihadist fighters in Jurf al-Sakhr, Al-Hamya and Latifiya, the sources said, claiming 37 IS fighters were killed.

 

Using the western city of Fallujah as a rear base, jihadists have repeatedly attacked Jurf al-Sakhr, where pro-government forces are keen to prevent a foray that would expose the nearby holy Shiite city of Karbala and further encircle Baghdad by cutting the main road to the south.

And if Baghdad does indeed fall, all those recent Crude shorts will be less than happy.

Finally, here is a visual summary of all the most recent clashes as ISIS approaches Baghdad, courtesy of the ISW:

via Zero Hedge http://ift.tt/1kwjYjD Tyler Durden

Four central banks meet in the week ahead, and non-manufacturing purchasing managers surveys will be reported. While they are worth assessing, they are unlikely to be the key to the movement in the capital market in the week ahead.  

 

Some may argue it is always the case, but in the days ahead, market psychology mediated by market positioning may be particularly important.  

 

The low volatility bemoaned by some banks, hedge funds, speculators and their sympathizers in the media is actually a boon for many asset managers and corporations.  Many investors recognized that the low volatility was not agnostic to market direction.  The low volatility was a function of a steady-to-higher equity and bond (lower bond yields) markets.  

 

It was also a function of narrow ranges of movement among the major currencies. Consider, for example, that according to Bloomberg data, the dollar-euro pair, the most actively traded currency pair in the more than $5 trillion a day market, was confined to less than a fifth of a cent in two days on the second half of July. 

 

Unambiguous signs that after recovering from the contractionary fluke in Q1, the US economic momentum has carried into Q3.  Economic conditions consistent with the Fed’s mandates are being approached.  Various price measures have firm, and although the labor market may not be healthy (“significant under-utilization” is still evident, according to the FOMC statement), it is on the mend.

 

This saw the US 10-year bond yields recovered from around 2.45% to 2.60%, the highs since the start of the month.  The equity markets turned down, and the magnitude of the losses inflicted technical damage.  The dollar appears to be breaking out against both the euro and yen.  This was in many ways what investors had generally expected this year.   The implied volatility in the capital markets rose.   Volume appears to have picked up as well.   Turnover on the NYSE moved above its 100-day moving average on July 31 and August 1.  

 

However, investors have been repeatedly frustrated by the lack of follow-through that characterizes range trading in the currencies and are fearful of another setback.  Similarly, US Treasuries rallied, sending yields back below 2.50%.  Although the S&P 500 finished last week at its lowest level in nearly two months, it managed to finish off the intra-session lows and back near the middle of the day’s range.  

 

The key question is has anything really changed.  The pullback in US yields supports a negative answer.   The US 2-year yield reaches its highest level in three years in the middle of last week before falling back below the 50-day moving average.  In the backup, the 10-year yield did not even make it back to the high in early July before returning toward the recent lows below 2.50%.  

 

The FOMC statement made it clear that while the downside risk to inflation had lessened, the slack in the labor market favored continued accommodation, and the low Fed funds rate was anticipated to continue for a considerable period.   There was one dissent over that forward guidance, but no one, even those that have publicly argued the Fed was slipping behind the curve, called for a rate hike.    The course that Bernanke put the Fed on remains intact.  

 

Another way of asking the question is whether the markets are in new trends or poised to consolidate.  Our reading of the technicals favors the latter scenario. The US economy and inflation are not consistent with 10-year yields below 2.5%.  As yields fall below there, buying dries up and shorts are enticed.  This is caps the rallies.  The prospects for the ECB’s TLTRO next month and the possibility that Japan provides more stimulus may cushion any significant dollar pullback. 

 

Although in our narrative, we place much emphasis on yields, we suspect the stock market is the weak link among the capital markets.   A strong view held by many we speak with is a skepticism of the stock market’s advance and have been anticipating a pullback.  However, they have been frustrated because it had not taken place.  They may prove too eager to buy this pullback, hence the likelihood of initial consolidation.  However, given the technical damage and market sentiment, the risk is to the downside of equities.

 

There are four major central banks that meet in the week ahead, Australia, UK, euro area and Japan.  They are unlikely to be instrumental in the shaping the price action.  The BOE is the easiest to dismiss as when it doesn’t do anything; it does not talk about it.  The inflation report on August 13 and the MPC minutes on August 20 may be more important.  There is some speculation that the first dissent in favor of a rate hike could take place this month.  We are less sanguine. 

 

The BOJ may not be as confident that the retail sales tax will not spark prolonged economic weakness, but it is unlikely to tip its hand.  Governor Kuroda has warned that inflation will ease before picking up against in the second half of the fiscal year.  

 

The Reserve Bank of Australia is unlikely to change the cash rate.  There is some risk that Governor Stevens seizes the opportunity to talk down the currency.  The central bank meeting is followed a couple days later by the Monetary Policy Statement, and this could be an opportunity to discuss how the strong Australian dollar is hindering the economic adjustment process.  Most worrisome recently is signs that the housing market is unlikely to offset the weakness in the mining sector.  

 

The ECB is still monitoring the impact of its June rate cuts and is awaiting the implementation of its TLTRO facility.  Even though the preliminary July CPI ticked down, there is some risk that Draghi sounds somewhat more optimistic or confident.   The recent credit report and bank survey are promising, with both the lending conditions have eased, and demand has improved.  German retail sales and French consumption surprised on the upside.  

 

This week’s June industrial production report is likely to show some recovery after May’s weakness.  Italy’s GDP, which contracted in by 0.1% in Q1 may have grown by the same magnitude in Q2.  This would produce a flat H1, but importantly no downside momentum.  This is the same general signal likely from the service sector PMI.  The decline in the euro is also a welcome development for the ECB.  

 

After a data-packed week, the US calendar in the week ahead generally lacks the market moving potential.  The data will add incrementally to what the market already largely already knows.  The non-manufacturing ISM may be more useful before the national jobs report, but even then often does not elicit a market response. 

 

Unit labor costs and productivity are derivatives of GDP.  The stronger than expected growth likely translates into slower growth of unit labor costs and higher productivity.  Consumer credit will be reported, but the thing that stands out most is the lack of much growth in revolving credit.  The increase in US consumption is being fueled by the income associated with the 1.6 mln net new jobs created this year, not credit cards.  

 

China, the world’s second largest economy reported July services PMI over the weekend. It slipped to 54.2 from 55.0 in June.  This is a six-month low and appears to be weighed down by the real estate market that continues to soften.  Nevertheless, most data has indicated that the effect of some targeted stimulus measures are putting a floor under the economy and helping to offset the drag from the property market.  

 

It is an important week for the monthly cycle of China’s economy reports, but taken together is unlikely to shed much fresh light on its economic challenges.  Export growth is expected to improve.  Consumer and produce prices were likely little changed from June. Aggregate social financing has been running above its average, but is expected to begin moderating.  In June aggregate funding was CNY1.97 trillion, compared with the three-month average of CNY1.64 trillion and CNY1.47 trillion over the past 12-months.  

 

On Saturday, Mexico’s lower house of Congress approved the final bills that will facilitate the implementation of the historic energy reform, culminated a three-day special session. The bills now go to the Senate, where they are expected to improve.  In fact, the anticipation of the energy reforms has underpinned global investors interest in Mexican debt and peso.  

 

The stronger US economic data, including Q2 GDP and healthy auto sales, failed to translate into a stronger peso.  To the contrary, the peso was the weakest currency last week, losing 2% against the greenback.  The dollar pushed through MXN13.26 before the weekend to reach its best level in nearly 4 1/2 months.  We anticipate some consolidation, which in this context means the peso is likely to recover somewhat.  

 

Lastly, geopolitical events continue to have potential to roil markets.  The Portugal bank woe and the Argentina default are seen as isolated events.  As tragic as then events in the Middle East, it too is seen as contained. Israel appears to have signaled its four-week old offensive may be winding down.   In terms of immediate market impact, the Ukraine/Russia situation, which has not yet stabilized, appears to be the greatest risk.  

via Zero Hedge http://ift.tt/UKKQQz Marc To Market

A day after Malaysian Airlines MH-17 was shot down on July 17 over east Ukraine (still to be determined by who thanks to epic amounts of fact-free propaganda) the new cold war between Russia and the US nearly heated up quite substantially, after a U.S. Air Force spy plane closely evaded an encounter with the Russian military on July 18 in what may potentially have escalated into a live fire tragedy that could have unleashed something far worse.

According to CNN, the U.S. plane had been flying in international airspace, conducting an electronic eavesdropping mission on the Russian military, when the Russians took the unusual action of beginning to track it with land-based radar.  The Russians then sent at least one fighter jet into the sky to intercept the aircraft, the U.S. official said Saturday.

And while the US version of events is that the plane was flying in neutral territory, we are confident the Russian narrative will put the spyplane squarely into Russian airspace, explaining not only the radar track and the scrambling of the interceptor, but the rapid evasive action by the US airplane.

Russian and U.S. aircraft often encounter each other, both in Northern Europe as well as the area between the Russian Far East and Alaska. But the official said the land radar activity by the Russians in this instance was unusual. The spy plane crew felt so concerned about the radar tracking that it wanted to get out of the area as quickly as possible. As a result of taking the quickest route away from Russian airspace the crew entered Swedish airspace. The U.S. official acknowledged that was done without Swedish military approval. The RC-135 Rivet Joint fled into nearby Swedish airspace without that country’s permission, a U.S. military official told CNN. The airplane may have gone through other countries’ airspace as well, though it’s not clear if it had permission to do so.

As a result of this incident, the United States is discussing the matter with Sweden and letting officials know there may be further occurrences where American jets have to divert so quickly they may not be able to wait for permission.

“We acknowledge a U.S. aircraft veered into Swedish airspace and will take active steps to ensure we have properly communicated with Swedish authorities in advance to prevent similar issues before they arise,” the U.S. State Department said.

The incident was first reported by the Swedish news agency Svenska Dagbladet. Russian officials did not provide any immediate reaction about the encounter.

As a reminder, this is not the first recent close encounter between US and Russian air forces: recall that on April 23 a Russian Su-27 Flanker fighter buzzed within 100 feet of the nose of a U.S. Air Force RC-135U reconnaissance plane over the Sea of Okhotsk between Russia and Japan, a Defense Department official said.

Needless to say, Russia is sending the US a clear message: your spy planes are not only no longer welcome here, but will be shot down if the incursions continue.

Which begs the logical follow up: what would happen if the US were to catch a Russian spyplane flying off the coast of California on a weekly basis?

via Zero Hedge http://ift.tt/1lqbtl0 Tyler Durden

Today’s AM fix was USD 1,284.50, EUR 959.16 and GBP 762.99  per ounce.
Yesterday’s AM fix was USD 1,295.00, EUR   966.92 and GBP 767.36  per ounce.

Gold fell $14.60 or 1.13% yesterday to $1,282.10/oz and silver slipped $0.25 or 1.21% to $20.37/oz.

 

 

 

 

 

 

 

 

 

Seasonal Gold – Gold’s Strongest Months Are August, September, November

Palladium was the only one of the major precious metals to rise in July, climbing 3.2% for its sixth month of gains. Platinum was down 1.8%, silver down 3% and gold down 3.4%.

Silver for immediate delivery was little-changed in London at $20.40 an ounce.  Platinum fell marginally and was at $1,463/oz. Palladium was marginally lower at $871/oz and remains near the 13 year nominal high of $889.75/oz.

 

 

 

 

 

 

 

 

Gold In U.S. Dollars – 10 Years

Gold is marginally higher in London this morning and overnight in Singapore, goldremained in a tight range between $1,280/oz and $1,285/oz. With Asian trade limited to a narrow band of just $5.00, volumes traded in late trade on Globex were low at just 9,000 lots (GCZ4).

Futures trading volume in London declined and was 31% below the average of the last 100 days. Traders are waiting for the non farm payrolls data later today.

The jobs number is expected to be good after the positive surprise that was the GDP number. The GDP number has rightly been questioned as the growth in inventories contributed 1.66% and likely greatly exaggerated the strength of the U.S. economy in the 2nd quarter.

Markets are jittery and global stock markets are seeing losses with all U.S. indices down yesterday and Asian and European indices down today. Economic and trade war with Russia, conflict in the Middle East and the risk of contagion in Portugal and from Argentina’s default are weighing.

Institutional money is being allocated to gold again as seen in the ETF numbers.Gold ETFs saw their largest monthly inflow in July since December 2012, according to Reuters data, having added 7.4 tonnes to their holdings. Gold ETP holdings hit a four-year low in mid June at 1,491 tonnes, but have since seen some inflows.

Premiums for gold bars in India remain near recent lows due to weak domestic demand. The premium on Wednesday fell to $5-$6 per troy ounce compared with $10 per troy ounce during the last week.

Gold prices have been in lockdown in a range bound month. The spread between July’s high and low was just $57.54. This is the narrowest in seven years – the June 2007 range was $54.70. This was right before the global financial crisis.

In 2007, gold began to move up aggressively in September (see chart above). On September 1, it was trading at $672/oz. By early March 2008, it was over $1,000/oz – for a gain of nearly 50% of just 7 months.

Were gold to replicate the gains seen in that period in the coming months, gold would trade over $1,900 and close to new record nominal highs by the 2nd quarter of 2015. The real record high, adjusted for inflation, is of course $2,400/oz. We continue to believe it will be reached before 2020.

Global Conflict and Currency Wars a Threat to Economies and People 
The New Cold War risks devolving into actual conflict between Russia and Western powers. We are in the early stages of trade, economic and currency wars. Competitive currency devaluations were a precursor to World War II and actual conflict is a real risk now. Complacency is rife among financial advisers, brokers and bankers and the public is being lulled into a false sense of security … again.

It remains prudent to hope for the best but be prepared for less benign scenarios.

Gold’s Strongest Months Are August, September, November And January
The summer months frequently see seasonal weakness as has been the case in recent years and since gold became a traded market in 1971. Gold and silver often see periods of weakness in the summer doldrum months of May, June and July.

 

 

 

 

 

 

Gold Seasonal – Monthly Performance and Average (10 Years)

Gold’s traditional period of strength is from early August into the autumn and early winter. Thus, early August is generally a good time to buy after the seasonal dip.

Today, we commence August trading and August along with September and November, are some of the best months to own gold. This is seen in the charts showing gold’s monthly performance over different time frames – 1975 to 2011, 2000 to 2011 and the Bloomberg Gold Seasonality table above from 2003 to 2013.

 

 

 

 

 

 

 

 

 

 

Late summer, autumn and early New Year are the seasonally strong periods for the gold market due to robust physical demand internationally. This is the case especially in Asia for weddings and festivals and into year end and for Chinese New Year when voracious China stocks up on gold.

Gold’s weakest months since 1975 have been June and July  (see tables). Buying gold in early August has been a good trade for most of the last 34 years and especially in the last nine years, averaging a gain of nearly 13% in just six months after the summer low.

 

 

 

 

 

 

 

 

 

 

 

 

Thackray’s 2011 Investor’s Guide notes that the optimal period to own gold bullion is from July 12 to October 9. In the previous 25 years, gold bullion has outperformed the S&P 500 Index by 4.7%.

Conclusion
Gold’s ‘summer doldrums’ period is coming to a close. Traditionally seasonal factors often result in weakness in the precious metal markets, particularly in June and July creating an attractive buying opportunity.

The data is compelling but it is important to realise that the seasonal data is just another indicator. Gold’s recent weakness could continue in the coming months. Therefore, short term speculation should be avoided in favour of long term investment diversification.

Investors should, as ever, avoid attempting to time the market and consider cost averaging their purchases. This way they protect themselves from market falls and also from buying again at much higher prices.

Absolutely nothing has changed regarding the fundamentals driving the gold market. We are confident that gold, and particularly silver, are still in long term secular bull markets likely for a 15 to 20 year duration.

Owning physical coins and or bars in your possession and owning physical gold and silver in allocated and most importantly in segregated accounts will continue to protect and grow wealth in the coming years.

via Zero Hedge http://ift.tt/1lqbqp8 GoldCore