Call it the monetary theater of the absurd. After all, here is what a determined currency manipulator did between September 2002 and July 2008.
To wit, it pumped about $200 billion of new dollar liabilities into the world financial system, thereby expanding the Fed’s balance sheet by 26%. Clearly, global traders and US trading partners didn’t welcome that flood of freshly minted fiat currency because during the same period, the traded-weighted dollar exchange rate plunged by 25%. Full Story
Have you heard the news? US Treasury bonds are sky rocketing as it turns out there is no inflation amid a global central bank NIRP-a-thon and race to the currency bottom. Going the other way, our 30yr Treasury yield Continuum is burrowing southward.
But today the din is coming from the opposite pole. Everywhere you look on the financial websites it’s now about tanking yields, decelerating growth, trade war damage and deflation. Here is the 30 year bond yield (TYX), which is front and center in this hysteria (click the charts below for the clearest view). That is one impulsive looking drop. Full Story
"What I see, despite all the excitement of gold and silver bugs, is the setting of a bull trap much like what happened to silver at the hands of [White House Chief of Staff] Bill Daley when silver was allowed to run up to nearly $50 and then was smashed down to take all the wind out of the sails of the silver bulls, and silver has remained firmly under the control of the market riggers since, trapped in a narrow trading range between $14 and $17 for years now.
"Once they get as many longs in the bull trap as they can, they will smash silver again as they always do. As long as prices are set on the New York Commodities Exchange, there is no hope... Full Story
Over a weekend in April six years ago, without any corresponding news, the gold price was smashed out of the blue for nearly $200. For months before the smash analysts often said that China had put a floor under the gold price, buying whatever it could to hedge its U.S. dollar exposure without pushing gold's price up too much.
That analysis made sense, since, with its estimated $3 trillion in foreign-exchange reserves, mostly in U.S. dollar instruments, China was in a position to control any market on the planet.
But over that weekend in April six years ago the supposed Chinese floor under gold disappeared... Full Story
The world is in the midst of one of the strangest asset bubbles of all time. Instead of being fueled by the hope of bigger and bigger gains, it is being driven by a resignation to incurring lower and lower… and ultimately negative, yields on capital.
This summer, the global inventory of bonds yielding less than zero reached a record $13 trillion.
Negative yielding instruments are concentrated mainly in Europe and Japan, where they have spread from sovereign to corporate issuances. Now even some “junk”-rated bonds are teetering around 0%. Full Story
Given the considerable risks right now, is it any wonder that gold has performed so well this year? As I write this, the yellow metal is trading above $1,475, up 12.6 percent from the start of January.
Gold demand in the first half of 2019 was its best in three years, climbing to 2,181.7 tonnes, largely due to increased appetite for gold-backed ETFs as well as record buying by central banks. Bank purchases of bullion rose an incredible 47 percent year-over-year in the second quarter, pushing the total amount for the January-to-June period to its highest since central banks became net buyers of gold in 2010. Poland was the top buyer—ahead of Russia, even—with reserves growing 77 percent to 100 tonnes. Full Story
We sometimes forget that the economy is FAR more important than the stock market. It may not be so to traders, but it is for investors — those being the (now rare) people who actually buy stocks in order to own a good company. It is to the average person who works for a living. It is to Main Street business owners. We spend so much time thinking about, “Oh, my gosh, where are stocks going” that we almost act as if we care less where the economy is going.
Clearly stock traders care less about the where the economy is going because they revel in news that the economy is declining. All that matters to these pencil heads is that a falling economy will guarantee more Fed meds. (Not too much decline, though, or that might actually manage to bring down their beloved market from its godlike status and zenith among the stars.) Full Story
…ushers in the restoration of price discovery in the precious metals market. The price of gold is at or near an all-time in most currencies except the dollar. This summer, however, it would appear that the dollar-based valuation of gold is starting to break the “shackles” of official intervention and is beginning reflect the underlying fundamentals. Gold priced in dollars is up over 14% since mid-November 2018 and over 44% since it bottomed at $1050 in December 2015. But those RORs for gold are inconvenient truths you won’t hear in the mainstream financial media. Full Story
A friend who has not been paying close attention to the gold market for a while asked your secretary/treasurer this afternoon for a summary of his outlook. With the monetary metals on fire tonight as they have not been for a long, long time, maybe the reply is worth sharing:
1) The gold market has felt very different for months -- felt much stronger.
2) The usual central bank-instigated smashdowns, which used to depress the price for weeks or months, now are failing to keep the price down for more than a day or two.
During WWII the Germans were in need of money to buy foreign materials to conduct the war. It is estimated they stole almost 500 metric tons (around 16 million troy oz equal to $23 billion USD @ $1,450 / oz) from various governments. Most was taken from Belgium, the Netherlands, Austria and Czechoslovakia. The French gold (about 2,500 metric tons or 80 million troy oz) was saved from the Germans in a rather interesting story that I will save for later. Full Story
By: Chris Waltzek Ph.D., GoldSeek Radio - 5 August, 2019
- Our guest notes the Fed's decision to slash rates this week and the implications for PMs aficionados. - The domestic total debt outstanding concerns our guest, especially the Fed's balance sheet, still $3 trillion higher than before the Great Recession. - Today, the $800 billion seemed enormous, now it's more than 4 times higher, a perpetual debt that can never be repaid according to our guest. - Economic policymakers will keep the house-of-cards intact as the entire global currency system is interconnected. - The inevitable fiat death spiral leaves merely a few safe havens, such as the PMs, fairly valued real estate and cryptocurrencies. Full Story
By: Mike Gleason and Frank Holmes - 5 August, 2019
Well, after months of presidential complaining, tweeting, and pressuring, Donald Trump finally got a rate cut from the Fed.
A lower interest rate was supposed to stimulate the stock market and make the dollar cheaper versus the currencies of exporting countries -- thereby making U.S. products more competitive according to Trumponomics. Instead, stocks fell and the U.S. Dollar Index broke out to a two-year high following the Federal Reserve’s policy move on Wednesday.
By: John Mauldin, Thoughts from the Frontline - 5 August, 2019
You Think the Fed Is One and Done? Awash in Debt Investment Grade Zombies Selling Under Pressure Falling Apart Quickly Navigating the Waters Ahead New York, Maine, New York, and Montana Full Story
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