David Cameron warned last night that the global economy risked another crash and said in an article that 'red warning lights' were 'flashing on the dashboard of the global economy' and the eurozone was 'teetering on the brink' of another recession.
The warning came at the same time that the world’s largest economy, Japan, fell into another recession. Japan shrank by an annualised 1.6% in the third quarter. This followed a huge 7.3% contraction in the previous quarter caused by a rise in the national sales tax and ran counter to economists forecasts for a 2.1 percent rebound.
Mr Cameron's warning follows a claim by Bank of England governor Mark Carney that a 'spectre' of economic stagnation was haunting Europe. Christine Lagarde, managing director of the International Monetary Fund, has also expressed fears that a diet of high debt, low growth and unemployment may yet become 'the new normal in Europe'.
Writing in the Guardian at the close of the G20 summit in Brisbane, Cameron says there is now “a dangerous backdrop of instability and uncertainty” that presents a real risk to the UK recovery, adding that the eurozone slowdown is already having an impact on British exports and manufacturing.
Mr Cameron said global instability such as the continued eurozone crisis and the ebola outbreak threatened the UK's recovery.
The G20 summit in Brisbane seems to have been a highly entertaining affair. Albeit for all the wrong reasons.
The 20 richest countries in the world pledged to magic up 2.1% of economic growth over the next five years. How this is suddenly possible after six years of failure is unclear but it makes for good PR. Climate change was also high on the agenda.
But it was the brow-beating of Vladimir Putin by the leaders of the increasingly repressive free world that got most of the media attention. Canada's Harper reluctantly shook Putin's hand while demanding Russia pull out of Ukraine or face the might of Canada.
Australia's assistant secretary of defense was sent to greet him. Merkel said the EU is considering further sanctions even as protests by farmers across Europe are erupting due to the loss of the Russian export market.
Obama assured the G20 that the US, who have waged a series of bloody and costly wars since 2002 would lead the charge against Russia's aggression against Ukraine, "which is a threat to the world, as we saw with the appalling shoot-down of MH17" - the Malaysian Airlines flight which was shot down over Ukraine in July.
Australia's Abbott had threatened to "shirt front" - that is to physically confront - Putin over the atrocity which claimed 28 Australian lives.
Perhaps he was restrained from doing so due to the lack of evidence of Russian involvement in the attack on the plane which had been diverted from it's regular flight path and directed over rebel held territory by Ukrainian air traffic control.
While the Western media try to present Vladimir Putin as being a pariah in the "global community,” it is important to remember that Putin was treated as the guest of honour at the APEC conference in Beijing. The official photograph of that event made it clear that the US are now regarded as less important in the conduct of East-Asian affairs.
This week it was Putin's turn to be humiliated as the official photo placed him out at the very edge of the picture. No such disrespect was shown to China's Xi Jinping who appeared in the centre, indicating Australia's reliance on China. The close relations between Russia and China indicate that Putin is not as isolated as the media would make it seem.
Tensions between Russia and the West are escalating. The West are threatening even more sanctions unless Russia stop aiding pro-Russian rebels in Ukraine. Putin insists that Russia is not involved in Ukraine and so there is no resolution in sight.
The damage being inflicted on Russia's economy by sanctions have caused Russian figures to openly discuss dethroning the petrodollar. Sergey Glasyev, economic advisor to Putin, recently said that while "all freely convertible currencies are today under American control," the dishonest monetary policies of the US is leading towards the "end of the American financial empire."
"It will give us a chance to be among the first to suggest a new configuration for the world financial system in which the role of national currencies would be significantly higher," he said.
When that time comes what Russia will propose will almost certainly involve gold-backed currencies. In Q3 Russia bought more gold than the combined buying of all other central banks. Russia imported 55 tonnes of gold in that period.
Russia have increased their gold stocks three-fold since 2004. This is happening against a backdrop of central banks being net buyers since 2009.
Currency wars look set to rapidly escalate as Russia look to dethrone the dollar in response to onerous sanctions being placed on it by the west. Russia's official gold holdings have surpassed those of China with a dramatic upsurge in imports since sanctions began.
It is certain that currencies will come under increasing pressure over the next few months. The countries who have consistently improved their standards of living over the past two decades are also the countries who are consistently accumulating gold. The countries who have seen a steady decline over the same period appear to have little or no gold reserves.
It would be wise to act as ones own central bank and add some gold to one's portfolio.
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MARKET UPDATE
Today’s AM fix was USD 1,187.00, EUR 950.36 and GBP 759.49 per ounce.
Friday’s AM fix was USD 1,154.00, EUR 926.31 and GBP 736.20 per ounce.
Gold climbed $28.90 or 2.49% to $1,190.70/oz Friday. Silver surged $0.69 or 4.42% to $16.30/oz.
Gold and silver both finished up for the week at 1.31% and 3.56% respectively after prices spiked higher after the Asian and European markets were closed late in trade Friday.
Gold in U.S. Dollars - 5 Days (Thomson Reuters)
Gold hovered at two week highs on Monday, after a short covering rally and gold buying Friday.
Spot gold was at $1,187.20 an ounce by 0724 GMT, after earlier rising to a two-week high of $1,193.95. Friday’s jump over 2% allowed the metal to break out of a key technical level of $1,180.
Bearish bets on gold futures and options by hedge funds are near a record, according to CFTC data. Trading today on the Shanghai Gold Exchange’s benchmark bullion spot contract was the highest since April 2013.
Despite hugely negative sentiment towards gold, it is worth bearing in mind that gold is down just 1.3% this year.
Asian demand and particularly Chinese and Indian demand continues to be very robust.
India's October gold imports surged 280% year on year to $4.18 billion, the trade ministry said today
Ongoing softness in global gold prices is prompting more buying in the United Arab Emirates and in the Middle East. As jewellery buyers and store of wealth gold coin and bar buyers snap up gold in its various forms. There are estimates from the local jewellery trade showing that retail offtake for the full year in the UAE could be up by 15-20% in volume terms (in kilograms) on 2013, according to Gulf News.
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