Month: April 2013

By www.CentralBankNews.info     The Reserve Bank of Fiji maintained its accommodative monetary policy stance and held its Overnight Policy Rate (OPR) steady at 0.5 percent, saying domestic demand and the labour market was continuing to improve and there are signs of rising investment activity.
    But the Reserve Bank, which last cut its rate by 100 basis points in November 2011 to support economic growth, said the performance of various sectors was still mixed with a notable decline in gold production due to lower quality ore being extracted and greater focus on capital work.
    The number of visitor arrivals to Fiji also fell by 7.9 percent in January from the same month last year, led by lower visitors from Australia, New Zealand, China and Europe.
     Consumer spending was trending upwards and growth in new consumption lending more than doubled to $132.5 million in the first three months of this year compared with first quarter 2012.
    Consumer prices rose by an annual 3.3 percent in March due to higher food prices, while foreign reserves were around $1,458.8 million as of April 26, sufficient to cover 4.2 months of imports of goods and non-factor services, the central bank said in its Economic Review.

    www.CentralBankNews.info
   

By Aaron Gentzler

We are on the cusp of a profound change in our system of money…
the biggest change since President Nixon severed the link between the
dollar and gold.

I call it the “end of money.” Because it will profoundly change our attitudes toward how we save and store capital.

The fiat money system Nixon ushered in has been around for four
decades. Now central banks are taking it to its logical conclusion.
They are “trashing cash” by flooding the system with new dollars,
pounds, euro, yen and renminbi.

This debasing of currencies is supposed to trigger a “recovery.” But
all it’s triggering is the junking of paper money and frothy stock
markets. Central banks don’t see this. And they continue to promise to
print money until they see higher inflation rates.

They should be careful what they wish for. They risk not only
trigger inflation, but also a widespread flight out of paper money and
into “unconventional money” alternatives.

Why should you care? Because how you choose to store capital is of
vital importance. As fund manger Edelweiss Holdings puts it:

Saving involves sacrifice. Sacrifice requires fortitude.
Fortitude should be rewarded over time by an accumulation of capital…
There is unlikely to be a second chance to re-accumulate a lifetime’s
savings. When it’s gone, it’s gone. That capital is precious to the
saver.

This is an important point… and one that most wealth builders fail to take account of. How you save is as important as what
you save. Lose your capital due to the collapse of a currency… or
other form of “money”… and your savings will go with it.

As the fiat money system unravels… and as the “end of money”
approaches… gold and silver will offer protection. In stark contrast
to the avalanche of new paper money issuance, these metals are in
finite supply. This means central banks can’t inflate their value away
by creating more of them.

I recommend you start with silver coins. Buying what’s called “junk silver” is an easy, quick, direct way to begin.

Don’t let the name fool you. “Junk silver” simply describes a circulated coin that may show some wear.

Junk silver gives you exposure to silver price increases. It’s also a
strong contrarian buy right now because gold and silver prices are
deeply unloved… and have taken a beating in recent months.

Junk silver gives you a tangible, portable store of wealth AND the benefit of long-term silver price appreciation.

You want to focus on coins of 90% silver content. The famous John F.
Kennedy-faced half-dollar that was minted between 1965 and 1970, for
example, contains 40% silver by weight. That’s not bad. And it is a
large coin. But for maximum portability, you can do better.

George Washington-faced quarters from 1934-1964 are 90% silver by
weight. Somewhat tougher to find are Franklin Roosevelt-faced dimes
minted between 1946 and 1964. These are also 90% silver by weight.

To get started, you can find rolls or even bags of junk silver on
websites such as eBay or Etsy. Or you can set up an account with metals
dealers providentmetals.com or apmex.com.

It’s important to shop around and compare who has the lowest markups and cheapest shipping. Use a site such as kitco.com
to compare the silver content (by weight) of the coins you’re buying
to the current spot price for silver so you know what markup you’re
paying.

And don’t forget about local dealers. A simple Google search will
put you in contact with reputable and established dealers near you.

In fact, starting small and local is a great way to begin a collection of physical gold and silver.

Junk silver is just the first step to protecting yourself from the
“end of money.” In future updates, I’ll be recommending some other
unconventional ways to store wealth and protect your capital.

Best regards,

Aaron.

By The Sizemore Letter

Listen to Charles discuss the GDP numbers and what they mean for the Fed’s quantitative easing with Peggy Tuck and Dave Dyer on Straight Talk Money radio.  Dave offers some unorthodox–and possible illegal!–ways for the Fed to put the brakes on QE Infinity without roiling the markets.

SUBSCRIBE to Sizemore Insights via e-mail today.

By Bill Bonner

Gold seems to be coming back fast. It rose $38 per ounce yesterday.

Of course, the Fed’s monetary meddling doesn’t work. And it will most likely cause a financial disaster.

But the biggest scandal of today’s central bank policy is that it is essentially the grandest larceny of all time.

The normal ways in which wealth is distributed may not be perfect,
but they are the best nature can do. People earn it. They save it. They
steal it. Or they get richer by investing.

Or they just get lucky…

Normally, in other words, wealth ends up being distributed in an unplanned and uncontrolled way. People do their best. The chips fall where they may.

But along come the central banks. They’re creating a new type of
wealth. It is not wage income. It is not the product of capital
investments. It is not the result of technology or productivity
increases or hard work or self-discipline… or any of the other things
that lead to wealth and prosperity.

Instead, it is created by the central bank “out of thin air.”

Not Your Grandfather’s Wealth

This new wealth is not like the regular kind. These chips don’t fall where they may; they get pushed around first.

The Fed creates new money (not more wealth… just new money). This
new money goes into the banking system, pretending to have the same
value as the money that people worked for. And people with good
connections to the banks take advantage of the cheap credit this new
money creates to aid financial speculation.

That’s what we’ve been watching in the financial markets for the last four years.

From Chris Martenson at PeakProsperity.com:

The central plank of Bernanke’s magic
recovery plan has been to get everybody back borrowing, spending and
“investing” in stocks, bonds and other financial assets. But not equally
so, as he has been instrumental in distorting the landscape toward
risky assets and away from safe harbors.

That’s why a two-year loan to the US
government will net you only 0.22%, a rate that is far below even the
official rate of inflation. In other words, loan the US government $10
million and you will receive just $22,000 per year for your efforts and
lose wealth in the process because inflation reduced the value of your
$10 million by $130,000 per year. After the two years are up, you are up
$44,000 but out $260,000, for a net loss of $216,000.

That wealth, or purchasing power, did
not just vanish: It was taken by the process of inflation and
transferred to someone else. But to whom did it go?

Where do the chips come to rest?

While the Fed punishes honest savers, stocks and bonds rise every
time a hint of more money printing is announced. And the yacht sales
continue to rise, too, as long as the Fed promises more.

A Recovery for the Rich

The result? From Pew Research:

During the first two years of the
nation’s economic recovery, the mean net worth of households in the
upper 7% of the wealth distribution rose by an estimated 28%, while the
mean net worth of households in the lower 93% dropped by 4%, according
to a Pew Research Center analysis of newly released Census Bureau data.

From 2009-2011, the mean wealth of the 8
million households in the more affluent group rose to an estimated
$3,173,895 from an estimated $2,476,244, while the mean wealth of the
111 million households in the less affluent group fell to an estimated
$133,817 from an estimated $139,896.

These wide variances were driven by the
fact that the stock and bond market rallied during the 2009-2011 period
while the housing market remained flat.

Affluent households typically have
their assets concentrated in stocks and other financial holdings, while
less affluent households typically have their wealth more heavily
concentrated in the value of their home.

From the end of the recession in 2009
through 2011 (the last year for which Census Bureau wealth data are
available), the 8 million households in the US with a net worth above
$836,033 saw their aggregate wealth rise by an estimated $5.6 trillion,
while the 111 million households with a net worth at or below that level
saw their aggregate wealth decline by an estimated $0.6 trillion.

There may be a “recovery” going on. But it is a recovery for the rich, not for the middle class.

Regards,

Bill

To learn more about Bill visit his Google+ page or Bill Bonner’s Diary

By www.CentralBankNews.info Here’s today’s Central Bank News link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news.

By The Sizemore Letter

The language of Wall Street is infused with pithy maxims.  “Don’t frown; average down.”  “The trend is your friend.”  And perhaps most relevant to us at this time of year, “Sell in May; go away.”

The last one is perhaps the most dangerous because, at least for the past several years, it has held true.  Since 2010, we’ve had strong first quarters followed volatile, choppy springs and summers.

VIDEO: See Charles discuss “Sell in May” with InvestorPlace’s Jeff Reeves. 

But it is important to not be fooled by randomness here or, more accurately, be swayed by the recency bias.  I’ll never forget a simple study that money manager Ken Fisher published years ago in The Only Three Questions That Count.  Using data back to 1926, Fisher calculated the average return of the S&P 500 by month.

What did he find?  Well, as it would turn out, May happened to be one of the least profitable months, with an average return of 0.30%, though February, at 0.26%, was lower.  The only negative month was September.  Interestingly enough, October—which was the month of the 1987 Crash and the 1929 Crash—had an average return of 0.62%.

Yet the summer months of June, July and August were three of the most profitable months of the year, with returns of 1.37%, 1.87%, and 1.25%, respectively. July was actually the most profitable of all months; even December and January, the two months believed by many investors to be the best, were lower at 1.78% and 1.69%, respectively.

My point by now should be clear: “Sell in May, go away” is a losing strategy if you are basing it on seasonality alone.  In any given year, there could be legitimate reasons for selling in any particular month, but selling because it is a particular month is sloppy analysis that will lead to sub-par results.

So, what about this year?  After the great start we had, I’m not expecting much from the next quarter.  And in fact, given that the market has traded sideways since mid-March, you could argue that we are currently in a mild correction.

But any weakness here should be used as an opportunity to put new funds to work.  There is never an “ideal” time to invest, but I like to see valuations that are modest and sentiment that is lukewarm at best.  Today, both of these conditions are in place.

I’ve recommended income investments such as dividend paying stocks and master limited partnerships as the best way to generate returns in a sideways market.  If you haven’t loaded up your portfolio with them yet, do so on any weakness.  For “one-stop shops” I continue to like the Vanguard Dividend Appreciation ETF (NYSE:$VIG) for dividend-paying stocks and the JP Morgan Alerian MLP ETN (NYSE:$AMJ) for MLPs.  I own both personally and in client accounts.

SUBSCRIBE to Sizemore Insights via e-mail today. This article first appeared on TraderPlanet.

By www.CentralBankNews.info     Mexico’s central bank held its benchmark target for its overnight rate steady at 4.0 percent, saying the recent rise in inflation was temporary and there are no widespread pressures so inflation should resume its downward trend in June and then gradually move toward’s the bank’s 3.0 percent target.
    The Bank of Mexico, which last month cut its rate for the first time since July 2009 but stressed it was not embarking on a new cycle of easing, said inflation was expected to remain high in April and May and then settle around 3-4 percent during the second half of the year before declining to around 3 percent in 2014.
    A rise in Mexico’s inflation rate to 4.72 percent  in the first half of April from 4.25 percent in March and 3.55 percent in February strengthened expectations that the bank would not cut rates further.
    Mexico’s core inflation rate is expected to remain close, and even below, the bank’s 3.0 percent target for most of 2013 and 2014, the central bank said, adding that it would keep a close eye on prices to ensure that there are no second-round effects of the rise in inflation.

By Bill Bonner

We don’t like the looks of it…

Advisors are too bullish. Investors are too complacent. The financial authorities are too confident.

All up and down Wall Street… in central banks and in Washington…
the stuff that goeth before the fall is thick, sticky and stinky.

The economy is recovering, they say. The Fed has the situation in hand, they add. Don’t worry… we know what we’re doing, they assure us.

Barron’s magazine says the Dow is going to 16,000, illustrated with a picture of a bull on a pogo stick.

View Larger Image

Prime Minister Abe says he’ll revive the Japanese economy by printing
yen to buy Japanese bonds. And speculators take each hint from the Fed
as though it were a whisper from God Himself.

And all around them, the real economy struggles to stay even. Here’s
David Rosenberg of Gluskin Sheff with 12 signs that the economy is
weaker than we think:

• Household employment (-206,000 in March, the steepest decline in well over a year).
• Real retail sales (-0.3% in March, down for the second time in three months).
• Manufacturing production (-0.1% and also down in two of the past three months).
• Core capex orders (-3.2% in February and, again, down in two of the past three months).
• Single-family housing starts (-4.8% in March and negative for two of the past three months, as well).
• New home sales (-4.6% in February).
• Philly Fed for April down to 1.3 from 2 .
• NY Fed Empire manufacturing index down to 3.05 from 9.24.
• NAHB Housing Market I ndex down to a six-month low of 42 in April from 44.
• Conference Board C onsumer C onfidence I ndex down to 59.7 in March from 68.
• University of Michigan consumer sentiment down to 72.3 for April from 78.6, the lowest in over a year.
• Conference Board leading indicators down 0.1% in March, first decline in seven months.

Markets Make Opinions

Facts, figures, statistics…

Do you believe them, dear reader? We don’t. We’re just giving the dreamers a little taste of their own medicine.

“Markets make the opinions,” say the old timers. When prices are up,
people share the opinion that they are going up. When prices go down,
opinions change with falling prices.

And when prices rise, the opinion mongers look for reasons to explain
why they have become so bullish. They find indexes, statistics, numbers
– all the “facts” confirm their opinion. When prices fall, their
opinions grow dark and they need to find new facts that they can use to
justify a counter view.

Get a feeling. Form an opinion. Find a fact and pretend that you are a
rational, reasonable investor. That’s the name of the game.

But are we any different?

Not at all. We’re just crankier. More cynical. And less impressed by authority in all its forms. Besides, we’ve been living in Argentina.

If a Nobel Prize-winning economist tells us that the economy is improving, what do we really know? We know he can talk!

If the president tells us that he and his friends are making the world a better place, what do we do? We laugh!

If a leading financial magazine tells us that the “Big Money” firmly believes the Dow is headed higher, what do we do?

We seriously consider selling!

From bearish fund manager John Hussman: “Rule o’ Thumb: When the
cover of a major financial magazine features a cartoon of a bull leaping
through the air on a pogo stick, it’s probably about time to cash in
the chips.”

Regards,

Bill

London Gold Market Report
from Ben Traynor
BullionVault
Friday 26 April 2013, 07:45 EST

GOLD drifted lower towards $1460 an ounce Friday morning in London, having climbed to its highest level since last week’s price drop at $1485 during Asian trading.

“The next resistance level is $1487,” says a note from technical analysts at Scotia Mocatta published late Thursday.

“Should we trade through that, we believe it will open up a full retracement to the $1522 lows…support is at $1322.”

Silver meantime rose as high as $24.86 an ounce in Friday’s Asian trading before falling back, while stocks and commodities fell and US Treasuries gained ahead of the release of provisional first quarter US GDP figures.

Heading into the weekend, gold in Dollars was up around 4% on the week by Friday lunchtime in London, set for its biggest weekly gain since early September 2012. Silver meantime was up 2.9%.

Over in Asia, “there’s panic buying [of physical gold products],” says Ronald Leung, chief dealer at Hong Kong’s Lee Cheong Gold Dealers.

“Everybody is buying gold…the physical market is still tight. The thing is that there are no immediate stocks.”

Wholesale dealers have this week reported premiums over the spot gold price of around $3 an ounce in Hong Kong and Singapore, and as high as $10 in Mumbai.

“You must be prepared to pay up,” one Singapore dealer told newswire Reuters this morning.

“I would think premiums will remain high in the short-term because of a shortage in immediate stocks. You have to wait for three days if you want to get gold now.”

According to a senior bullion bank executive speaking to BullionVault Thursday, Swiss capacity for producing kilo bars – the preferred form of gold bullion amongst private investors in Asia – is currently booked out until the end of May.

The US Mint meantime has sold 306,500 ounces of American Eagle gold coins so far this month, almost three times the volume sold in March.

“Although impressive in its scale,” says the latest commodities note from investment bank Natixis, “this retail demand will need to be sustained for a prolonged period if it is to offset not just the absence of [institutional investment] demand, but also potentially new investor sales in the coming weeks.”

As of Thursday, the world’s biggest gold exchange traded fund SPDR Gold Trust (ticker: GLD) has seen outflows of 42.7 tonnes from a week earlier, taking total holdings to just under 1090.3 tonnes, their lowest level since September 2009.

“Heavy disinvestment from ETF investors is being offset by strong physical demand in key markets such as India and China,” says a note from Australian bank Macquarie, “but neither of these is likely to continue indefinitely, and which runs its course first could determine whether the price moves $100 an ounce higher or lower.”

On the currency markets, the Euro drifted lower against the Dollar but remained above $1.30. The Euro gold price meantime looked set for a 4.7% weekly gain at €1126 an ounce. By comparison, gold in Sterling was up only 2.8% on the week at £947 an ounce after the Pound rallied yesterday following news that the UK avoided recession in Q1.

In Switzerland meantime, the chairman of the country’s central bank today criticized proposals that would prevent his institution from selling any of its gold reserves, arguing it could hinder monetary policy.

Consumer price deflation accelerated in Japan last month, with the consumer price index down -0.9% year-on-year compared to -0.8% for February, official data published Friday show.

Bank of Japan governor Haruhiko Kuroda told a press conference that “there were no calls…for further monetary easing” at today’s central bank policy meeting, where policymakers decided to leave interest rates at 0.1%.

“For the time being,” said Kuroda, “the BOJ will be buying 50 trillion Yen of government bonds annually to expand the monetary base by 60 trillion to 70 trillion Yen each year.”

Two BOJ board members dissented from the central bank’s projection that inflation will reach 2% over the next three years, Kuroda revealed.

Ben Traynor

BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben can be found on Google+

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By www.CentralBankNews.info     The Bank of Japan (BOJ) expects inflation to rise to an average 0.7 percent in the current 2013 fiscal year and then accelerate to 3.4 percent in the next fiscal year, which begins April 1, 2014, easily exceeding the central bank’s new 2.0 percent price stability target.
    For the following year, fiscal 2015, inflation is forecast to ease slightly to 2.6 percent, according to the BOJ’s latest economic outlook. In the 2012 fiscal year, that ended March 31, consumer prices excluding fresh food, dropped 0.2 percent.
    “Comparing the current projection for the period through fiscal 2014 with that in the January 2013 interim assessment, the projected rates of change in the CPI are higher,” the BOJ said.
    In January the median forecast of a majority of the BOJ’s board members was for inflation to rise to 0.4 percent in the current fiscal year and then to 2.9 percent in fiscal 2014.
    The BOJ’s launch of a new, more aggressive phase of monetary easing last month has lead to fall in the value of the yen and thus improved the international competitiveness of Japanese exporters.
    Japan’s Gross Domestic Product is now forecast to expand by 2.9 percent in the current 2013 fiscal year, up from 1.0 percent in fiscal 2012, as consumers front-load spending ahead of planned tax hikes.

    Growth is then forecast to ease to 1.4 percent in fiscal 2014 before rebounding the following fiscal year and expand by 1.6 percent.
    The forecast is based on the assumption of stable global financial markets, a moderate rise in the growth of overseas economies and higher exports due to the yen’s depreciation.

   “Comparing the current projection for the period through fiscal 2014 with that in January 2013 interim assessment, the growth rates are expected to be higher than the ones presented in January, mainly due to the introduction of quantitative and qualitative monetary easing, and improvement in financial market conditions, and an increase in public investment,” the BOJ said.

    The inflation and growth forecasts take into account planned tax increases in April 2014 and fiscal 2015.
    Excluding the effect of the consumption tax hikes, inflation is forecast to hit 1.4 percent in fiscal 2014, up from January’s forecast of 0.9 percent, and then rise to 1.9 percent in fiscal 2015.

     The economic outlook repeated last month’s statement from the BOJ that Japan’s economy had stopped weakening and was showing signs of picking up.
    “Looking ahead, it is expected to return to a moderate recovery path around mid-2013, mainly against the background that domestic demand remains resilient due to the effects of monetary easing as well as economic measures, and that growth rates of overseas economies gradually pick up,” the BOJ said in its latest forecast.
    Two scheduled consumption tax hikes in 2014 and 2015 will hit demand but the BOJ expects growth in fiscal 2013 to continue to grow at a pace above its potential, “as a trend, as a virtuous cycle among production, income and spending is maintained,” the BOJ said, adding the country’s potential growth rate is estimated at an average of around 0.5 percent during the forecast period, with the rate growing gradually toward the end of fiscal 2015.
    The BOJ said upside and downside risks to its forecast for economic activity were seen as balanced, although there is high uncertainty regarding growth in overseas economies.
   The risk to the its inflation forecast is also judged to be balanced, “although considerable uncertainty surrounds developments in medium- to long-term inflation expectations,” the BOJ said, acknowledging that it faces an major challenge in shifting the expectations of consumers and businesses after almost 15 years of deflation.

    www.CentralBankNews.info