Additional Quantitative Easing Certain to Stifle Fiat Valuation

A recent speech by Mario Draghi, head of the European Central Bank, seems to indicate that additional monetary easing is on the horizon for the European Union. Draghi’s comments included the phrase “do whatever it takes,” in reference to alleviating the European debt crisis, leading many to believe that sovereign currency printing presses may again be called to action.

Europe’s refusal to monetize the debt load of Spain and Greece is expected to force these nations to activate fiscal cuts, but more action may be needed. Adding to the flurry of financial central planning, the US has now moved their third Quantitative Easing time table forward by one month.

These actions on the part of Central Banks only delay the inevitable. The Fed could put Americans in a position of facing a veritable “ground zero” of monetary easing. The implications of ramping up currency printing are financial Armageddon. By keeping the specter of infinite Quantitative Easing on the table, the US may never close the door to debased GDP targeting.

Largest Precious Metals Exchange Could Experience Future Struggles

MCX, otherwise known as the Multi-Commodity Exchange of India was approved by India’s regulatory body in late 2003. The exchange deals in energy-related products, agricultural products and precious metals. Since its approval by the Securities and Exchange Board of India, the exchange has realized the majority of its trading value from only two precious metals. The exchange’s dependence on silver and gold has risen from around 50 percent in 2007 to near 65 percent by 2011.

The success of MCX has been shown by its domination of India’s silver and gold markets at shares of 98.5 and 97.1 percent, respectively. Its overall market share has risen to 86 percent in 2011/2012. MCX has become the largest global silver and gold trading exchange.

Unfortunately, the very market that spurred the success of MCX could create issues for the sky-rocketing exchange in the coming years. A surge in international open interest, hedging, excessive volatility and rapidly changing customs and taxation requirements could challenge the steady revenue and sustained volumes that MCX has, thus far enjoyed.

Canadian Precious Metals Processing Plant Robbed in Ecuador

Gunmen entered a precious metals processing plant in Ecuador’s El Oro Province on the fourth Monday in July 2012. It is estimated that the robbers made off with approximately four-thousand ounces of silver and thirteen-hundred ounces of gold, in the early morning heist. The stolen metal was in the form of bars, and was pilfered from the processing plant at the Zaruma Gold Project.

Although there were no serious injuries during the robbery, the stolen property is worth several million dollars at today’s precious metals prices. Police were on the scene as support was lent to employees involved in the incident. According to Robert Washer, CEO of the Canadian mining company, insurance claims have been filed in an attempt to recover the company’s losses. Dynasty’s production and liquidity could potentially be affected if the stolen bars are not recovered, or sufficient insurance compensation is not received in an appropriate time frame.

Dynasty Metals currently mines gold and silver at three different Ecuadorian projects. Security upgrades are being contemplated.

Ichimoku Analysis Shows Likely Precious Metals Uptrend

Ichimoku, meaning “one look” is a method of charting and analyzing market data that allows easy identification of resistance and support for various financial categories. The Ichimoku Hyo chart was created by Goichi Hosoda of Japan. The chart displays a market equilibrium analysis called Ichimoku Kinko Hyo, which is becoming increasingly popular in the west, due to its long-term accuracy.

Long-term price trending and momentum in the short-term are defined by the Ichimoku chart, in order to identify price objectives. The chart is developed by using prices at the midpoint and close of each trading day. This data creates a “pattern of signals” to generate a plot. The resulting chart uses twenty-six days into the past and future markets, and generates an analysis with current data.

Gold bullion and, consequently, little brother silver bullion are currently attempting to break through their monthly support levels on the Ichimoku chart. The movement shown by this highly accurate method seems to bode well for a precious metals uptrend in the near future.

World Nations Move Towards Precious-Metals-Backed Currencies

Many global currencies are still associated with the United States dollar, relying on it to dictate their value. Substantial dollar devaluation is causing currencies pegged to the dollar to be undervalued, as well. The Chinese Yuan is one of these currencies, but China appears to be moving towards accumulating hard assets in the form of precious metals. This movement is evidenced by the Chinese government’s push for private ownership of silver and gold, in addition to its increase in production and import of precious metals.

Many believe that China cannot develop without the help of Western civilization, but China is not the only nation to begin movement away from the dollar. Other Asian countries, as well as African and South American economies have also shown signs of jumping ship. Should the trend continue, the US could find it increasingly difficult to continue its deficit lifestyle.

As China discretely amasses precious metals, while prices are low, the US continues to tout the dollar’s rise in global currency markets.