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Articles by Bullion Star

Hyperbitcoinization

8 days ago

According to the hyperbitcoinization hypothesis, the world will be overcome by bitcoin. How has the hypothesis fared so far?
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Chinese gold imports – Better data, lower inflows, unanswered questions

15 days ago

By Ronan Manly at https://www.bullionstar.com/blogs/ronan-manly/chinese-gold-imports-better-data-lower-inflows-unanswered-questions/
While gold imports into China fell noticeably between May and July 2019, the reasons for the lower gold inflows may be more complex than the official line.
In mid-August Reuters published a story titled “China curbs gold imports as trade war heats up” claiming that the Chinese authorities had been ”severely restricting gold imports since May” by reducing the monthly gold import quotas that are handed out to a group of Chinese and foreign banks by China’s central bank, the People’s bank of China (PBoC). The background to gold import quotas can be read here in BullionStar’s article “Chinese Cross-Border Trade Rules of Gold“.
Speaking on condition of anonymity

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More on the puzzle of negative interest rates – copy

21 days ago

Interest rates on many bonds have plunged into negative territory. But why on earth would anyone be willing to save $1000 only to get $999 in the future? Saving up for a rainy day has always gone hand in hand with a positive interest rate, not a negative one.
In my last post I showed how negative real return on saving could emerge. I invoked a certain type of a economy – a dystopic island where castaways like Robinson Crusoe live. The island’s few meagre opportunities to invest have dried up. Technological advancement has halted. To prepare for his retirement Robinson Crusoe stores coconuts, but the constant assault from rodents and insects meant that he’d end up with less resources than he started with.
Crusoe and other castaways his age can also prepare for old age by lending resources

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The not-so-crazy world of negative interest rates – JP Koning

August 6, 2019

A few years ago when I was working at a bank, I asked the bond trader who worked next to me what he thought about the newish phenomenon of negative interest rates. “Rate are only negative cause they’re messing around in our markets!” he whispered indignantly. By “they” he meant central bankers.
Was the bond trader right? Are negative interest rates an artificial phenomenon that central bank technocrats have foisted on the world? Or can interest rates naturally turn negative, of their own accord? (In this post I’ll be referring to real interest rates here, not nominal rates. If you have a bond that yields 0.5% per year, but inflation is 1%, then the real, or inflation-adjusted rate, is -0.5%).
This is an increasingly relevant question. As Deutsche Bank’s Torsten Slok recently illustrated,

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The History of the World is a History of Gold – BullionStar

August 1, 2019

The history of gold is nearly as long as the history of human civilisation. Gold has been inextricably linked to human civilisations since at least 6000 BC. There is absolutely no way of looking at the history of the world without encountering the history of gold.
Most importantly, gold has been used as money in countless civilisations for thousands of years, facilitating trade and economic growth and acting as a store of value for accumulated wealth. Indeed, gold has been the ultimate form of money for thousands of years precisely because it is a trusted form of money which retains its purchasing power over time.
Because it can be found in its naturally occurring state, gold was one of the first metals known to man, and early civilizations prized gold for its unique and precious

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Gold the Ultimate Asset as Fed Joins Race to the Bottom in Global Rates

July 31, 2019

The US Federal Reserve’s Federal Open Market Committee (FOMC) today announced a 0.25% cut in the influential US federal funds rate from a target range of 2.25% – 2.50% to a target range of  2.00% – 2.25%, a move which was closely watched and widely signaled, but which was the first such fed funds rate cut in over 10 years.
As an official interest rate which affects all other US interest rates including bank-to-bank overnight loans, the US Federal Reserve uses changes in its fed funds rate to manipulate US economic growth, but its impact is even more far-reaching, influencing as it does the relative strength of the US dollar versus other currencies, and the interest rate decisions of the world’s other major central banks.
Confirmation of the cut – officially called a policy action – came at

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Gold Smuggling to India & Japan is a Symptom of Governments’ War against Gold

July 10, 2019

By Torgny Persson the founder and CEO of BullionStar.
Smuggle gold to India and Japan has become a lucrative business for many dealers and middlemen across Asia. It is widely known that demand for physical gold by Asian populations is insatiable. From the estimated held by India’s population to the more than 25,000 tonnes of gold calculated to be held by China’s population, these two countries alone hold nearly one quarter of the world’s known above ground gold stocks.
However, beyond China and India, gold is central to almost all Asian societies and cultures. While sometimes forgotten, Japan became one of the world’s largest gold market in the 1970s and 1980s when it imported thousands of tonnes of gold to satisfy its investment boom in gold. Hong Kong’s gold market, one of Asia’s oldest,

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