Cross Currency and Precious Metal Table – (Bloomberg)

Gold fell $3.20 or 0.19% on Friday closing at $1,668.60/oz. Silver edged down to $31.31 in early New York trade, but it then climbed higher and finished unchanged on the day. 

Spot gold was up 0.05% for the week while silver was off 1.13%.

Gold Spot $/oz, 03JAN2010-11FEB2013 – (Bloomberg)

Gold is slightly weaker in dollar and euro terms today but higher in pounds and yen.

Volumes are light in thin trade as most of Asia is closed for the week long Lunar New Year holiday.

Palladium and platinum remain just shy of their strongest levels in almost a year and a half.

Europe’s finance ministers are meeting to discuss aid to Greece and Cyprus. They aim to tidy the sea of debt before the Italian elections on February 24-25 and a political scandal in Spain – both of which could quickly destroy the market calm.

Pro-independence parties in Scotland and Catalonia are preparing for referendums next year that they hope could see their regions as independent free countries.  A few analysts feel the freedom of seceding may incite others in Europe to follow suit.

Venezuelan President, Hugo Chávez announced a surprise devaluation of the bolivar by 36% over the carnival weekend.

Some analysts say that although the exchange rate adjustment was necessary to correct growing distortions in the economy, it did not go far enough as they feel the currency is still overvalued.

The moved shows the importance of gold as a diversification to protect against currency devaluations.

U.S. economic highlights this week follow: The Treasury Budget on Tuesday, Retail Sales, Export and Import Prices, and Business Inventories on Wednesday, Initial Jobless Claims on Thursday, and Empire Manufacturing, Net Long-Term TIC Flows, Industrial Production, Capacity Utilization and Michigan Sentiment on Friday.

Silver Spot $/oz, 13FEB2010-11FEB2013 – (Bloomberg)

Ron Paul spoke with Bloomberg television (see video in Commentary) and said that we are in a currency war and we have been for decades. He noted that governments have always competed against each other’s currencies even under Bretton Woods. It has always been a form or protectionism and will make people want to export more.

Dr. Paul said don’t blame countries like China and Japan just look at the debt the U.S. is buying. There will always be currency wars. The Bank of Japan claims it has to defend itself against deflation and decades of slow growth.

Ron Paul noted that the Bank of Japan’s yen devaluations will eventually lead to further price inflations that are to come. Investors and citizens will eventually reject the yen and switch to other currencies like dollars or Swiss francs.  Then eventually people will move to hard assets altogether as they are losing confidence in paper assets.

Dr. Paul was asked, “Do you think protectionism will lead to a crash in the international monetary system? He replied, “Nothing good can come of it. Even short run trade benefits leads to a weaker economy and higher prices. It doesn't solve the problem they won't face the truth. That is that all governments spend too much money, there is too much debt and they get away with it by taxing people”.

“It seems that all we have is more debt, more printing money, and more government interventions. Governments won’t even talk cutting things. They only want to make slight decreases of proposed increases in their budgets!”

On the next U.S. Treasury Secretary, Jack Lew, Paul says, “We don't need an intervener.  He should have a strong dollar policy by defining it, and not by propping up the market. Don't devalue a currency. It is then that you hurt savers and cost of living goes up. This only damages the middle class and the poor no matter what welfare programmes you have because they lose purchasing power.”

Dr. Paul says that he feels the Obama administration is trying to devalue the dollar, they are very different then sound people and different then the Austrian economists. They feel debt is ok.

The interviewer noted that the gold standard has not immunized us from financial crisis.

Dr. Paul retorts, “If you look at it over several years it does maintain money. There were flaws with the gold standard, during wars, there were problems in the past and we understand so much more today and we could do better.”

“If you think we need a wiser Federal Reserve, central economic planning for the manipulation of credit, or a better Treasury Secretary, I reject that. “

After all, Ron Paul says for over 6000 years of history gold is always money and paper money fails.

IMF Russia Gold in Million Fine Troy Oz, Monthly – (Bloomberg)

Russia buys gold to protect against “cataclysm with the dollar, euro, pound or any other reserve currency”

Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.

“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.

Gold, coveted by Russian rulers including Tsar Nicholas II and the Bolshevik leader whose forces assassinated him, Vladimir Lenin, has soared almost 400% in the period of Putin’s purchases. Central banks around the world have printed money to escape the global financial crisis, sapping investor appetite for dollars and euros and setting off a scramble for safety.

In 1998, the year Russia defaulted on $40 billion of domestic debt, it took as many as 28 barrels of crude to buy an ounce of gold, data compiled by Bloomberg show. That ratio tumbled to 11.5 by the time Putin first came to power a year later and in 2005, after it touched 6.5 -- less than half what it is now -- the president told the central bank to buy.

 
NEWS
Gold ticks up in holiday-thinned trade - Reuters

Silver Climbs as Gold Little Changed Before Euro Finance Meeting - Bloomberg

Gold edges higher as dollar weakens – Market Watch

Putin Turns Black Gold Into Bullion as Russia Out-Buys World - Bloomberg

Venezuelan devaluation sparks panic – The Financial Times

COMMENTARY
Video - Ron Paul: Are We in a Currency War? - Bloomberg

Venezuela Launches First Nuke In Currency Wars, Devalues Currency By 46% - Zero Hedge

No One Knows How Much Gold China's Central Bank Is Buying – Seeking Alpha

How Much Gold Does China Really Have? – Money Morning

Economist Predicts Higher Gold Prices In 2013 - Lower Thereafter – CME Group

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-- Posted Monday, 11 February 2013 | Digg This Article