Why is the price of gold not soaring?

Here’s why it should be.

Yesterday the Bank of Japan, (BOJ), announced unprecedented steps, (for them), aimed explicitly at the creation of inflation, with a stated target of 2 per cent in two years. The new boys at the BOJ helm, (who were carefully hand-picked to ensure they would do this), used their first meeting to push through a raft of measures which more than sated even the market’s craving for action. This was heady stuff for central bankers, (especially Japanese ones, who for years have been notorious for under-delivery); they will aim to double the money supply to Yen 270 trn, (roughly USD 3 trn), in two years, almost doubling the amount of monthly bond purchases and lengthening the maximum permissible maturity to include 40-year bonds, increased the pace at which they will buy Exchange Traded Funds and Real Estate Investment Trusts, and even decided to ditch, (temporarily at first), its so-called ‘banknote’ rule, under which its total bond purchases were hitherto limited to the amount of Yen in circulation.

Not surprisingly these measures caused the yen to dive on the foreign exchange markets and Japanese 10-year government bond yields fell below 0.5 per cent. Only in Japan would investors be happy to buy these bonds, with that yield, 0.5 per cent per annum, when the government and the central bank is intent upon creating inflation of at least 2 per cent per annum-only in Japan because over 90 per cent of Japanese bond issuance is snapped up by domestic investors-individuals, pension funds, life insurance companies, government entities.

Will this continue happily forever? That depends on the degree of "success" which the BOJ’s policies enjoy. Japan Inc. had certainly better hope so, with interest rate payments already accounting for more than a quarter of government spending-even with interest rates at 0.5 per cent and lower for shorter maturities!

This is where gold should come into the picture - how can the world’s third largest economy embark on such an explicit inflationary policy without investors rushing to secure an inflation hedge by acquiring the age-old comfort of gold? One explanation is simply inertia; the market has endured nearly two decades of deflation in Japan and will take time to get worried about inflation there, secondly it will take time for Japanese liquidity to find its way into the global economy, but most importantly, the Cypriot and the North Korean crises loom large in investors’ minds and the only challenger to gold as a safe-haven is the US Dollar-hence an unstable equilibrium has formed with regard to the price of gold expressed in US Dollars.

If you believe that the Cypriot crisis will ultimately fade from memory and, pray God, North Korea is playing its old game of sabre-rattling to extort more aid, then someday soon gold will have its day and now is it great time to buy.

Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

Photo: Getty
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No, the battle in Momentum isn't about young against old

Jon Lansman and his allies' narrative doesn't add up, argues Rida Vaquas.

If you examined the recent coverage around Momentum, you’d be forgiven for thinking that it was headed towards an acrimonious split, judging by the vitriol, paranoia and lurid accusations that have appeared online in the last couple days. You’d also be forgiven for thinking that this divide was between a Trotskyist old guard who can’t countenance new ways of working, and hip youngsters who are filled with idealism and better at memes. You might then be incredibly bemused as to how the Trotskyists Momentum was keen to deny existed over the summer have suddenly come to the brink of launching a ‘takeover bid’.

However these accounts, whatever intentions or frustrations that they are driven by, largely misrepresent the dispute within Momentum and what transpired at the now infamous National Committee meeting last Saturday.

In the first instance, ‘young people’ are by no means universally on the side of e-democracy as embodied by the MxV online platform, nor did all young people at the National Committee vote for Jon Lansman’s proposal which would make this platform the essential method of deciding Momentum policy.

Being on National Committee as the representative from Red Labour, I spoke in favour of a conference with delegates from local groups, believing this is the best way to ensure local groups are at the forefront of what we do as an organisation.

I was nineteen years old then. Unfortunately speaking and voting in favour of a delegates based conference has morphed me into a Trotskyist sectarian from the 1970s, aging me by over thirty years.

Moreover I was by no means the only young person in favour of this, Josie Runswick (LGBT+ representative) and the Scottish delegates Martyn Cook and Lauren Gilmour are all under thirty and all voted for a delegates based national conference. I say this to highlight that the caricature of an intergenerational war between the old and the new is precisely that: a caricature bearing little relation to a much more nuanced reality.

Furthermore, I believe that many people who voted for a delegates-based conference would be rather astounded to find themselves described as Trotskyists. I do not deny that there are Trotskyists on National Committee, nor do I deny that Trotskyists supported a delegates-based conference – that is an open position of theirs. What I do object is a characterisation of the 32 delegates who voted for a delegates-based conference as Trotskyists, or at best, gullible fools who’ve been taken in.  Many regional delegates were mandated by the people to whom they are accountable to support a national conference based on this democratic model, following broad and free political discussion within their regions. As thrilling as it might be to fantasise about a sinister plot driven by the shadow emperors of the hard Left against all that it is sensible and moderate in Momentum, the truth is rather more mundane. Jon Lansman and his supporters failed to convince people in local groups of the merits of his e-democracy proposal, and as a result lost the vote.

I do not think that Momentum is doomed to fail on account of the particular details of our internal structures, providing that there is democracy, accountability and grassroots participation embedded into it. I do not think Momentum is doomed to fail the moment Jon Lansman, however much respect I have for him, loses a vote. I do not even think Momentum is doomed to fail if Trotskyists are involved, or even win sometimes, if they make their case openly and convince others of their ideas in the structures available.

The existential threat that Momentum faces is none of these things, it is the propagation of a toxic and polarised political culture based on cliques and personal loyalties as opposed to genuine political discussion on how we can transform labour movement and transform society. It is a political culture in which those opposed to you in the organisation are treated as alien invaders hell-bent on destroying it, even when we’ve worked together to build it up, and we worked together before the Corbyn moment even happened. It is a political culture where members drag others through the mud, using the rhetoric of the Right that’s been used to attack all of us, on social and national media and lend their tacit support to witch hunts that saw thousands of Labour members and supporters barred from voting in the summer. It is ultimately a political culture in which our trust in each other and capacity to work together on is irreparably eroded.

We have a tremendous task facing us: to fight for a socialist alternative in a global context where far right populism is rapidly accruing victories; to fight for the Labour Party to win governmental power; to fight for a world in which working class people have the power to collectively change their lives and change the societies we live in. In short: there is an urgent need to get our act together. This will not be accomplished by sniping about ‘saboteurs’ but by debating the kind of politics we want clearly and openly, and then coming together to campaign from a grassroots level upwards.

Rida Vaquas is Red Labour Representative on Momentum National Committee.