Keystone Financial Australia Market Updates Keystone Financial October 2016 Finance Market Upd | Page 2

On the other side of the world we have the Shanghai Gold Exchange. Members wanting to trade
there MUST have the fizz (physical gold) in their accounts to trade. It’s gold backed and eventually I
believe the price of gold will be set in this market as opposed to the US Exchange.
To put this dichotomy into perspective you need to know this: Annual Global gold production is about
2,400 tonnes (and declining BTW). That’s worldwide. In the course of the last week 1,000 tonnes of
paper gold were sold onto the market. That’s 40% of global production and I can assure you it wasn’t
companies ‘hedging’ forward sales. It was the bullion banks and BIS trying to push the price down
while China was on holiday. This move will back fire as smart money will take the opportunity to buy
fizz.
Something interesting right now is the USD strength against most currencies. It is the world reserve
currency which gives it special status but the reality is that it’s the least ugly in the global currency
beauty contest and will also go to zero. Since 1915 the USD has lost 97% of it’s purchasing power
demonstrating once again that paper is not a way to preserve your wealth.
Here’s what I’m watching:
-US Pres election – we are 29 days from finding out who will be President. I have been paying a bit
more attention to this and frankly, as an American I must apologize for the stupidity of my country. I
honestly cannot believe that the two candidates are the Best we could do. Whoever wins will not
change anything IMO.
-Gold/Silver – I’m really proud of those that contacted me looking to ‘buy the dip’. You are
understanding what it takes to be a successful investor and that is to do the opposite of what the
herd is doing. To re-iterate, we are in a bull market in the metals and in bull markets you can take
inevitable sell offs as an opportunity to add to positions.
We need to see Gold get back above USD $1300 an ounce and hold. I don’t know if there will be
any further downside but USD $1250 an ounce seems to be a pretty good area of support.
-Aus Reserve Bank – you may not have noticed but Glenn Stevens term ended and a new chief,
Philip Lowe took over last month. He is a true academic having spent his entire working life working
for the RBA. However, he did a 2 year stint at the BIS (Bank for International Settlements) from
2000-2002. This pretty much means he is hooked into and is part of the cadre of global Central Bank
elites.
-Australian Housing – I know property is a religion in Aus but I think the market is reaching
exhaustion. Prices in capital cities are so ridiculous that