Gold was resilient again today and even managed to drag its little cousin Silver over the 40 dollar mark.
Mr. Chavez of Venezuela has said he will nationalise his country's gold mining industry for the benefit of those in power there apparently. I doubt that this move will entice much in the way of additional Foreign Direct Investments. And he is also asking for the return of his country's bullion deposits from the Banks.
"Venezuela has about 211 tons of its 365 tons of gold reserves held abroad at institutions including the Bank of England, JPMorgan Chase & Co., Barclays Plc, Standard Chartered Plc and the Bank of Nova Scotia, according to a government document." Bloomberg NewsA much more modern approach would be to create an ETF that purports to represent his gold bullion holdings, in fractional reserve multiples of its true quantity, and simply take the money of investors without performing any work.
I doubt that Venezuela has enough bullion on deposit that its withdrawal from the mitts of the Anglo-americans would trigger a Herstatt effect, otherwise known as the infamous dominoes of settlement risk. But you never know.
I suspect strongly that this is a move by the BRIC's to 'persuade' the Anglo-Americans out of their stonewalling on the reconstitution of the SDR, and the replacement of the dollar-centric international payments regime with something more to their liking. And as a major oil exporter to the US, Venezuala may be in a position to help them make that point, if they can survive the retribution which will certainly follow.
The rhetoric is getting thicker, and it appears that Wells Fargo has warned that gold is a bubble and could correct quite hard. Thus they take the other side of that august Caesar of the markets, JP Morgan, which has also recently looked into its crystal ball and said that gold will rise to $2500 by year end.
So which of these book-talking bandits would you like to believe?
It must be options expiration on the Comex metals market next week, and yes, so it is. So first a run up with a follow on bear raid with more margin increases might be expected.
Or the rest of the world's central banks could continue to stand for delivery, and hang the Western banks with the rope which they had sold to them.
If it comes to a default, and there has indeed been some coverup of fraudulent selling by the banks, or even the leasing of national gold surreptitiously to the bullion banks and then irrecoverably into the markets, look for scapegoats, preferably suspicious and foreign, to conveniently appear as if on cue. There will never be an admission of guilt, but dissembling and distraction.
Time for another rogue trader? I doubt they can afford to throw one of the TBTF under the bus, but perhaps a smaller fry, a sacrifice to the market gods.
On the domestic front, Matt Taibbi asks, Is the SEC Covering Up Wall Street Crimes? The shredding machine, compounded with a sudden memory loss, organizational non-involvement, and managerial ennui, is the US version of The Official Secrets Act.
And in the meantime, the common people will probably suffer, regardless of outcome, the hapless victims of serial policy failures and malfeasance in the partnership of corporations and the government.