Month: June 2021

Seeking Alpha/Anna Sokolidou/5-31-2021

“But the interesting point is that gold must be physical and held in the institution’s own vaults. It should not be in paper form or owned and leased by someone else. Most gold investments are leased or borrowed or held in paper form. So, it looks like major changes are about to come. Since gold will have such a risk-free status, many banks will be encouraged to buy more for bookkeeping purposes. This will also highly encourage every central bank to raise its physical reserves of this shiny yellow metal.”

USAGOLD note: More detail on Basel 3, i.e., the importance of the banking system treating gold as a currency rather than a commodity. Sokolidou is right in pointing out that Basel 3 encourages physical ownership over the paper representations – a circumstance likely to put additional pressure on already stressed physical supplies.

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Bloomberg/John Authers/5-27-2021

“Two months ago, the dollar was rallying, and touched its 200-day moving average, suggesting that it was ready to break higher. Technical analysis matters a lot in the foreign exchange markets, and that moment helped traders decide that they weren’t prepared to take it higher. Now the dollar is at another possible parting of the ways. If the currency drops further from here, it sets a new seven-year low, and strengthens the belief that it is now in a secular downturn.”

USAGOLD note: The reasons behind the downturn are well-documented at this juncture and unlikely to reverse anytime soon. The question remains, though, if other nation-states will be more aggressive in the debasement of their currencies than the United States.

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