The Next Gold Bull Market Starts Before October

By Jeff Clark

I’m going out on a limb: I think the next bull phase in the gold market gets underway before October.
Why? China.

But not due to runaway demand…
At an International Monetary Fund (IMF) forum last month, China’s central bank governor, Zhou Xiaochuan, made it clear he believes the renminbi is “ready for reserve status.” It would be a huge step for the Chinese currency, starting with the fact that it would be added to the basket of currencies IMF member countries can include in their official reserves. Billions would be invested in it.

What was the IMF’s reaction? “We welcome and share this objective,” said IMF Managing Director Christine Lagarde. “We are now working closely with the Chinese authorities in this regard,” added Director of Communications Gerry Rice.

They didn’t say they would accept it, but then again, they surely wouldn’t advertise it in advance.

What’s the connection to gold? If Chinese officials seek “reserve” status for the currency, they’ll want to announce their updated gold holdings beforehand.
Why? Two reasons:

• Currency strength. Demonstrating they hold ample gold reserves—certainly more than the official number of 1,054 tonnes—puts the currency on more solid footing. The IMF holds the world’s third-largest gold reserve, so this issue matters.

• Transparency. A gold reserve announcement would help quell worries about the country’s lack of data transparency, something that’s been an ongoing concern.

Regardless of China’s motivation to announce its gold reserves, the IMF might require it anyway, as it’s been over six years since the last update.

The review process for admitting a new currency is held only every five years. I seriously doubt Chinese officials want to wait until 2020. Meetings will be held soon, with the results announced in October.

What’s Behind (Chinese) Door Number Three?

A recent Bloomberg estimate put China’s gold reserves at 3,510 tonnes, more than triple the old amount. If accurate, it would place China second only to the US, which says it has 8,133.5 tonnes. Other analysts speculate China holds around 2,100 tonnes.

I think the actual number is higher than either estimate. My guess is at least 4,000 tonnes (Jim Rickards thinks it’s 4,500 tonnes). If I’m right, and if Chinese officials do announce a new reserve figure before October, it could light a fire under the gold price.

A large increase is key, because even mainstream investors know that China has been buying a lot of gold. To really jolt the market, the new number must be a surprise—which is exactly what I expect.
Why? Many analysts overlook that Hong Kong imports are no longer a reliable way to measure China gold demand. China agreed over a year ago to import gold through numerous channels, such as banks, refiners, and even jewelry dealers. For this reason alone, I think China’s gold holdings are higher than what they think.

Of course, I could be wrong about a pending announcement. Buying Chinese government bonds still comes with a lot of restrictions, for example, which could keep the renminbi from being accepted by the IMF and eliminate the pressing need for China to declare its gold reserves. Or maybe the US—with the highest share of votes in the IMF—tries to block it from happening.

But most of the rest of the world is already on board, as evidenced by the whopping 57 countries that signed on to become founding members of China’s Asian Infrastructure Investment Bank. Furthermore, nearly two-thirds of the world’s central banks currently invest in the renminbi. And over 10,000 financial institutions already transact in it.

On top of this, China recently agreed to adopt IMF standards for reporting balance of payment data. And they just launched their own facility to fix the yuan’s value to gold. You wouldn’t take these kinds of steps if you didn’t want your currency included in the IMF basket.
So, I think it’s likely China will announce an updated figure on its gold reserves, and that it will be higher than the mainstream expects. If it makes headline news, it could ignite the gold price and give instant birth to a new bull market.

If I’m right, we obviously want to be positioned before it happens.
And if I’m wrong? It doesn’t really matter, because all the core reasons for owning gold remain intact and poised to turn into catalysts.

Harry Dent Has Accepted My Bet!

This is just one reason I bet Harry Dent about where the gold price is headed. He recently proclaimed that gold will fall to $700 in less than two years—and I say hogwash. I bet him a gold Eagle that it won’t, and he accepted, so our bet is live.

We battle it out in a new special report, a 17-page debate where each of us argues our case. You can read our in-depth report free of charge—just enter your email address here, and we’ll send it to you right away.

Which is more likely, inflation or deflation? Is gold destined to fall if deflation wins? Why has gold held strong in spite of a soaring dollar, and how will it perform if we face another crisis? Is a currency crisis really ahead? And how will production costs impact the price?
Read the eight “proof points” each of us offers, along with the details of our wager and the date the winner will be announced. We both think the report will help each individual investor make up his or her own mind.

It’s the battle of the year, with two ounces of gold on the line. I invite you to follow along in our “boxing match” and see who takes home the gold. Enter your email address and see who wins!

History Shows A Gold Bull Market Is Fast Approaching

By Jeff Clark

Yearning for sunnier skies for your gold investments? How’s this sound…

• Gold in a decisive bull market, with the price steadily rising

• Silver soaring and outpacing gold’s gains

• Gold stocks rocking, erasing underwater positions and racking up the profits

That’s not pie in the sky wishful thinking—it accurately describes the next stage of the gold market, something that will soon visit your portfolio.

With the price of gold currently stuck in place, like a stain on the front of your best shirt, and the stocks only teasing us like Lucy holding the football for Charlie Brown, how can I be so sure?

Because that’s exactly what happened after every other bear market. For example…

• 1976. Bear market ends, and gold begins a 701% run in less than four years.

• 1985. Bear cycle ends, bull cycle begins. Gold gains 71.8% over the next three years.

• 2001. Monster gold bull cycle delivers a 630% advance over the following 10 years.

As I pointed out last month, markets cycle. The current range-bound price for precious metals won’t last forever, for the simple reason that they never have, especially in the resource market.

If you set your sights on the big picture, you’ll see that in spite of today’s negative emotions, gold’s future prospects will render them a distant memory.

Consider some of the likely changes on the horizon and how they will transform the gold market from flat and listless to exciting and profitable…

• Stock market reversal. The performance of the broader equity markets is probably the biggest reason gold hasn’t attracted the mainstream. But stock markets cycle, too, and a correction is due, perhaps overdue—the S&P is up six straight years and nine consecutive quarters. Margin debt is higher now than it was preceding the 2008 crisis, and corporate profits saw the biggest drop in four years last quarter. Gold will be the benefactor in the reversal, especially since it’s already corrected.

• Recession. The probability of a future recession is 100%. The only question is when and how big. GDP last quarter was barely positive. Any unexpected surprises to the downside for the economy will be especially positive for gold.

• Currency war backfire. This “race to the bottom” being pursued by global central bankers won’t work long term. At best, countries steal growth from their trading partners. At worst, it can disintegrate into inflation, recession, retaliation, and even war. Currency wars have happened before—twice in the last century alone—and they’ve always ended badly. One guess what asset performs well in a crisis.

• Higher interest rates. We’re skeptical that the Fed will actually raise rates, but eventually the market will force rates higher regardless of the Fed. This, in turn, will hurt the real estate market. Meanwhile, those analysts that blindly assume rising rates are negative for gold forget that real rates (nominal interest rate minus inflation) are positive for gold—an almost certain outcome because of…

• Inflation. The emergence of inflation feels far off, but already there are signs it’s picking up. Wages have started to move higher, what is normally the starting point for inflation. Ground beef prices are now at record highs and have more than doubled since 2010—increases like this can’t go unaccounted for indefinitely. Remember, we don’t have to wait for high inflation for gold to move; it’s the onset of inflation, or an unexpected jump in inflation, that will spur gold.

• US dollar reversal. If you’ve grown tired of the dollar’s “strength,” don’t leave the theatre early. Its rise is certainly not sustainable long term, and in time will be forgotten. Nothing stays standard deviations above the norm forever. And eventually the dollar will collapse, because the trajectory of our debt isn’t mathematically sustainable.

• Bond market turmoil. As my colleague Dan Steinhart pointed out in The Casey Report, there are currently $3.6 trillion in negative-yield government bonds outstanding today, mostly in Europe and Japan, giving investors zero chance of making money or even breaking even. The sad outcome here is that inflation will massacre the average bond holder.

My point is that any reasonable big picture view of the political, financial, and economic trends show that virtually all of those changes will be very positive for gold—and aren’t that far off.

It will be a new day for the gold market, one full of rising prices and profitable investment statements.

But despite all this evidence, there are those in our industry still calling for gold to fall.

Among the loudest is my colleague Harry Dent.

He says gold will drop to $700/oz.

Of course, I think he is dead wrong.

And I bet Harry bullion from my private stores that gold will never drop to that level.

He took the bet. And to help you decide who will win (hint: it's me), Harry and I each put all the research we’ve assembled to form our predictions into a special 18-page report titled Gold: Dead or Alive?

For anyone who owns an ounce of gold or single share of mining stock, this is a must-read. And it’s completely free. Click here to get your copy.

The Message from Last Week’s Headlines: Don’t Dare Sell Your Gold!

By Jeff Clark

Have you noticed the trend in mainstream headlines over the past week?

The gold price may be stagnant, but forces behind the scenes signal that something big is gelling.

What conclusion would you draw from this rundown of recent headlines?

China Creates Gold Investment Fund for Central Banks. China announced a new international gold fund. Over 60 member countries have already invested. The fund expects to raise 100 billion yuan ($16 billion). It will develop gold mining projects in the new Silk Road economic region.

China Could Send Gold Up At Least $200. Saxo Bank’s Steen Jakobsen says China’s multibillion-dollar Silk Road Initiative will prompt Beijing to pull money out of Europe and the United States for infrastructure investments elsewhere. This could send commodities higher and push Europe into recession. As a result, his 2015 price for gold is $1,425 to $1,450, more than $200 higher than its current level.

Red Kite Launches New Base and Precious Metals Fund. The fund has already deployed almost $1 billion in equity, loans, and royalty streams into at least 17 junior mining firms. It hired a physical metals trader to handle all the supply. The fund will likely fund underserved juniors that have struggled to get funding.

Texas Senate Passes Bill to Establish Bullion Depository for Gold and Silver Transactions. A bill to make gold and silver legal tender in Texas passed in the state senate by an overwhelming 29–2 vote. The bill essentially creates a way to transact in precious metals. It will allow citizens to deposit precious metals in the state depository and then use the electronic system to make payments to any other business or person who also holds an account.

Gold Smuggling in India at All-Time High. Customs agencies seized over 3,500 kilograms of gold (112,527 ounces) in 2014–15, the largest stash ever confiscated in Indian history. The report says gold smuggling has grown by 900% in just two years. It also estimates that seizures could be less than 10% of actual smuggling.

Russia Boosts Gold Holdings as a Defense Against “Political Risks.” Dmitry Tulin, monetary policy manager at the Russian central bank, said it is increasing its gold holdings because “it is a 100% guarantee from legal and political risks.” Part of the motivation is certainly that their overseas assets could be frozen if sanctions over the Ukraine crisis tighten.

Austria Repatriates 110 Tonnes of Gold from UK. Austria is repatriating 110 tonnes (3.53 million ounces) of gold from the Bank of England. It eventually wants to have 50% of its holdings stored at home. The country has reportedly been transferring its official gold reserves from unallocated to allocated accounts in recent years, and also reduced its leased gold by 60%.

D.E. Shaw Buys $231 million of GLD. D.E. Shaw & Company bought $231.07 million worth of SPDR Gold Trust last quarter. This is a new position for the company.

Canadian Fund Makes $700 Million Bet on GLD. Canadian asset manager CI Investments purchased a whopping 6,117,900 shares of GLD last quarter, worth $703.6 million. GLD is now the single largest holding of the fund—bigger even than its position in Apple.

More Funds Increase Their Shares in GLD… A Swiss investment bank increased its position in GLD by 490%, to over 4 million shares. Lazard Asset Management doubled its holding to over two million shares. Morgan Stanley increased its holding by 8.3%, and Blackrock Group added 167% more to its position.

Traders Buy Gold and Silver at Fastest Pace in Over a Decade. Large speculators haven’t bought silver this aggressively since September 1997. Net speculative longs in gold also added over 45,000 contracts, the most since July 2005.

HSBC Warns Titanic Global Economy May “Collapse.” The chief economist of the world’s third-largest bank, HSBC’s Stephen King, has compared the global economy to the Titanic. “We may not know what will cause the next downswing, but at this stage we can categorically state that in the event we hit an iceberg, there aren’t enough lifeboats to go round. The world economy is like an ocean liner without lifeboats.”

Global debt has soared by 40% since the Great Recession. It’s now $200 trillion, almost three times the size of the global economy. “It would be a truly titanic struggle for policymakers to right the economy,” King said. He doesn’t specifically mention gold, but…

IMF Says China’s Currency Is “No Longer Undervalued.” The International Monetary Fund declared that China’s currency is “no longer undervalued.” The statement is a major vote of confidence for Beijing and the renminbi. Recall that China wants its currency to be included in the IMF Reserve basket.

I predicted China would update its gold holdings to increase the likelihood of getting that acceptance. And that they could surprise the market by announcing a higher amount than the mainstream expects.

It’s one reason I bet Harry Dent that gold won’t fall to his predicted $700 level. I’m so confident I put up my own gold. He did, too.

Check out our 17-page report, where we each argue our case. You can read it free of charge—just enter your email address here, and you can access it immediately.

The report includes eight “proof points,” along with the details of our wager and the date the winner will be announced.

Which headline will you read in early 2017—Jeff Clark Wins Two Ounces of Gold, or Harry Dent Bests Gold Bull Jeff Clark? I invite you to read our debate and decide for yourself. Enter your email address, and see who wins!

Most Dangerous Time Since The History Of Economics

Financial expert Michael Pento on gold and silver update, Greek debt crisis and also thinks the biggest danger in the world is overconfidence in central banks. Pento explains, “The biggest bubble out there is an increase in faith that central bankers can save the world. This is why Chinese shares can drop 7 ½% overnight and the Dow can be up 90 points. What do I hear on radio and TV is who cares if Greece leaves the Eurozone because didn’t Mario Draghi say he would do ‘whatever it takes’? Who cares it Chinese shares collapse, because the Peoples Bank of China will just print money. Who cares if inflation in the United States becomes intractable? Didn’t they say Fed Head Janet Yellen and company would just buy all the sovereign debt there is to keep interest rates low? Who cares? 

The free market always wins, and it will always trump government. That’s why I am so petrified about investing right now. I think we are in the most dangerous time frame we have ever been since the history of economics. I think what is going to replace this misguided spurious faith in central bankers is going to be a renewed interest in hard money-precious metals. We are going to throw out the central bankers, and we are going to universally think it is absolute madness to think we can put our faith in a small unelected, unaccountable group of people. 

We are going to put our faith back into gold and silver as money. That’s what I am looking forward to. It will be great news to Americ and the economy in the long run.”

- Source

Bank Holidays and Capital Controls Are Coming

"The term bank holiday is a politician's euphemism. When one happens, you won't be celebrating... you'll be very worried." "Bank holidays and capital controls are all about maximizing the amount of money available for the government to confiscate." "Calling the experience a holiday...is like calling a mugging a surprise party."

- Nick Giambruno of Doug Casey's International Man