Fire! Money Running For The Exits

Dominique de Kevelioc de Bailleul / Beacon Equity

The Swiss 2-year sovereign just reached a -0.47 rate, and with JP Morgan doing such a good job suppressing paper bullion prices, gold has gone into a stealth ‘backwardation’, according to Goldmoney’s James Turk.

Quietly, the Swiss 2-year sovereign just broke through recent lows Friday, plunging to -0.435 percent. Instead of getting a toaster with your deposit, investors have to give the Swiss government a toaster along with their money—each month, for two years?!

In other words, big money knows a catastrophic event is near and a response by central banks won’t be far behind.

Gold‘s range-bound pricing while Swiss sovereign rates drop like a stone suggest an explosion in the gold price is also near. In fact, because of the LIBOR manipulation scheme, gold may be already be in ‘backwardation’, but the market hasn’t picked up on the fire in the theater.

James Turk stated his rational for suggesting gold has reached backwardation to Eric King of King World News (KWN).

“Interest rates are a reflection of risk. Normally, the lower the interest rate, the lower the risk of holding that particular type of money,” Turk explained. “Historically, gold’s interest rate has always been the lowest. . .

“So interest rates for currencies are always higher than gold’s interest rate. But because of this LIBOR scandal, and the fact that we are seeing interest rates being manipulated by central banks, for the past year we have had dollar interest rates lower than gold interest rates and that’s a huge anomaly.”

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