Monday, June 25, 2012

Regulators to Classify Gold as Zero-Risk Asset


For the first time, unencumbered gold bullion is to be classified as zero risk, in line with dollar cash, US Treasuries and other explicitly government-guaranteed assets. If implemented, this will be an important step in the re-monetisation of gold and, other factors equal, should be strongly supportive of the gold price, both outright and relative to that for government bonds, the primary beneficiaries of the most recent flight to safety.
Well, on 4th June the Federal Reserve, OCC (Office of the Comptroller of the Currency) and FDIC (Federal Deposit Insurance Corporation) collectively circulated a memo asking for comment on their proposed changes to the regulatory capital risk-weighting framework. Section 11, ‘Other Assets’, specifies that a “zero risk weight” is to be applied to “gold bullion held in the banking organization’s own vaults, or held in another depository institution’s vaults on an allocated basis…”.[2]
Indeed, as I wrote in The Canary in the Gold Mine, if gold is re-classified as a zero-risk-weighted asset, “the price is likely to soar to a new, all-time high.”

Editor's Note : If what John postulates is true, during a crisis, gold will be pushed up as institutions and investors seek for zero-risk safe haven asset.

Excerpt from Original Source

Thursday, June 21, 2012

Hong Kong Considering to De-peg from USD

For over 30 years, Hong King’s currency has been pegged to the US dollar with hope that the reserve currency would bring monetary stability. However, with the current uncertainty in the USD, Hong Kong policy makers are weighing their options whether to peg to another currency or let the HKD be traded independently.
In the subsequent three decades, China's economy has grown from strength to strength, overtaking Japan as the world's second biggest income generator in 2010.
At the same time, growth in the US economy has slowed and its currency seems to be showing signs of a long-term downward trend.

With more than half of Hong Kong's exports going to the mainland, and with financial engagement between the two sides deepening, Hong Kong's currency system is likely to become ever more linked to China's.

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Tuesday, June 19, 2012

2008 Financial Crisis - An Inside Job

Inside Job

Many of us still think that the Financial Crisis in 2008 was an accident. This video may change your perspective and perhaps even make you feel outraged.

Watch this Academy Award winning documentary directed and produced by Charles Ferguson. His work might just wakes us up from our ignorance. I personally believe that the 2008 crisis is not yet over. In fact, it was just the beginning and today we are moving towards the eye of the storm.

Watch full movie online

Tuesday, June 5, 2012

China Gold Import From Hong Kong Up by 62%


Hong Kong's gold shipments to mainland China in April jumped 62 percent to the second-highest level on record, while gold flow from China increased to an unprecedented level, official Hong Kong trade data showed on Monday.

Hong Kong shipped out 101,768 kg of gold to mainland China in April, and received 34,368 kg from China, which brings the net exports to 67,400 kg, a surge of 77 percent on the month, according to the data posted on the website of the government agency.
In the first four months of the year, Hong Kong sent a total of 237,287 kg of gold to China, and received 70,688 kg from the mainland. On an annualised basis, net gold exports to China could reach nearly 500 tonnes in 2012, compared with last year's 380 tonnes, according to Reuters calculations.

China has overtaken India as the world's top gold consumer in the past two quarters, with consumer gold demand in the first quarter of 2012 hitting a record high of 255.2 tonnes, said the World Gold Council.

Excerpt from Original Source