Исполнилось 25 лет со дня памятного краха британского фунта стерлингов. Все началось с того, что объединенная Германия отказывалась снижать процентную ставку. Бундесбанк обосновывал высокую процентную ставку — 9% годовых — тем, что ему нужно бороться с инфляцией, возникшей вследствие объединения ФРГ и ГДР. Ставки в Германии оказались существенно выше, чем в других странах ЕС и в США, поэтому спекулянты активно скупали дойчмарку, вследствие чего доллар США и другие основные мировые валюты резко девальвировались по отношению к ней.
New cryptocurrencies are emerging almost daily, and many interested parties are wondering whether central banks should issue their own versions. But what might central bank cryptocurrencies (CBCCs) look like and would they be useful? This feature provides a taxonomy of money that identifies two types of CBCC - retail and wholesale - and differentiates them from other forms of central bank money such as cash and reserves. - "Central bank cryptocurrencies", Bank of International Settlements, Sept. 17 2017 In addition to its traditional observations on the state of the global financial system (which today also included a warning that global debt may be underreproted by as much as $14 trillion due to rampant use of FX swaps), in its latest quarterly review, the Bank of International Settlements, takes on cryptocurrencies, and specifically whether central banks should be worried by their exponentially fast propagation, it not quite adoption. Echoing the paradox first voiced by Bundesbank chief Jens Weidmann in June, namely that "digital currencies will make the next crisis worse" by pointing out that digital currencies - whose flow can not be blocked by conventional means - make an instant bank run far more likely, and in creating the conditions for a run on bank deposits lenders would be short of liquidity and struggle to make loans. “My personal take on this is that central banks should strive to make existing payment systems more efficient and still faster than they already are – instant payment is the buzzword here,” the Bundesbank president said at the time, adding that "I am pretty confident that this will reduce most citizens’ interest in digital currencies.” Ironically, considering the recent all time highs in bitcoin, ethereum and other cryptos and record users on the US Coinbase exchange, would also suggest that citizens faith and confidence in the existing "payment systems", and thus central banks, is at all time lows. * * * Perhaps this is what prompted the BIS to tackle the sensitive topic of both cryptos and digital currencies, warning that the exponential growth in cryptocurrencies could pose a risk to the stability of the financial system. Among other observations, the BIS stated that central banks will need to figure out whether to issue a digital currency and what its attributes should be. Complicating matters, the BIS which has a habit of hedging every single statement and idea, also warned that institutions need to take into account of not only privacy issues and efficiency gains in payment systems, but also economic, financial and monetary policy repercussions. The BIS analysis takes place several months after the Dutch central bank announced plans to create its own blockchain-based currency if only for internal use only, and after the BOE's Mark Carney said cryptocurrencies could be part of a potential “revolution” in finance. As Bloomberg adds, U.S. officials are exploring the matter too, though in March Federal Reserve Governor Jerome Powell said there were “significant policy issues” that needed further study, including vulnerability to cyber-attack, privacy and counterfeiting. According to the BIS, one option for central banks might be a currency available to the public, with only the central bank able to issue units that would be directly convertible with cash and reserves. There might be a greater risk of bank runs, however, and commercial lenders might face a shortage of deposits In short, there is much confusion in elite financial and policy circles about the value and future role of cryptocurrencies. Which is probably why as part of its report, the BIS explains the key considerations central banks will need to keep in mind as they create central bank cryptocurrencies, or CBCCs, as a "new form of central bank money". Here is the brief summary: Our starting point for defining CBCC is a report on cryptocurrencies published in 2015 by the Committee on Payments and Market Infrastructures. This report sought to provide a definition of the new class of currencies represented by bitcoin and altcoins (alternatives to bitcoin) that had emerged using the same technology. The report identifies three key characteristics of cryptocurrencies: they are electronic; are not the liability of anyone; and feature peer-to-peer exchange. Cryptocurrencies utilise distributed ledger technology to allow remote peer-to-peer transfer of electronic value in the absence of trust between contracting parties. Usually, electronic representations of money, such as bank deposits, are exchanged via centralised infrastructures, where a trusted intermediary clears and settles transactions. Previously, peer-to-peer exchange was restricted to physical forms of money. Some - but not all - of these features are also common to other forms of money (Graph 2, left-hand panel). Cash is peer-to-peer, but it is not electronic, and it is a central bank liability. Commercial bank deposits are a liability of the bank that issues them. Nowadays, they are in electronic form and are exchanged in a centralised manner either across the books of a given bank or between different banks via the central bank. Most commodity monies, such as gold coins, may also be transferred in a peer-to-peer fashion but are neither the liability of anyone nor electronic. It may seem natural to define CBCCs by adapting the CPMI's definition to say that they are electronic central bank liabilities that can be used in peer-to-peer exchanges. But this ignores an important feature of other forms of central bank money, namely accessibility. Currently, one form of central bank money - cash - is of course accessible to everyone, while central bank settlement accounts are typically available only to a limited set of entities, mainly banks. In this spirit, Bjerg (2017) includes universally accessible (ie easy to obtain and use) in addition to electronic and central bank-issued in defining the new concept of central bank digital currency (Graph 2, right-hand panel). The BIS then goes further, and unveils what it dubs "a new taxonomy of money", whose properties are as follows: issuer (central bank or other); form (electronic or physical); accessibility (universal or limited); transfer mechanism (centralised or decentralised, ie peer-to-peer). The BIS then summarizes the various aspect of this new taxonomic definition in the following Venn diagram: the four-ellipse version, which it calls the money flower, shows how the two potential types of CBCC fit into the overall monetary landscape. The BIS explains: In principle, there are four different kinds of electronic central bank money: two kinds of CBCCs (the shaded area) and two kinds of central bank deposits. The most familiar forms of central bank deposits are those held by commercial banks - often referred to as settlement accounts or reserves. The other form is, at least in theory, deposits held by the general public. Tobin (1987) refers to this form as deposited currency accounts (DCAs). So far, central banks have generally chosen not to provide DCAs. While there is much more in the full report (link), the BIS uses the above taxonomy to classify different examples of money from the past, present and future according to where they would fit in the money flower. The money flower with selected examples Graph B fills out the money flower with examples of money from the past, present and possibly the future. Starting at the centre, we have Fedcoin, as an example of a retail CBCC. The concept, which was proposed by Koning (2014) and has not been endorsed by the Federal Reserve, is for the central bank to create its own cryptocurrency. The currency could be converted both ways at par with the US dollar and conversion would be managed by the Federal Reserve Banks. Instead of having a predetermined supply rule, as is the case with Bitcoin, the supply of Fedcoin would, much like cash, increase or decrease depending on the desire of consumers to hold it. Fedcoin would become a third component of the monetary base, alongside cash and reserves. Unlike Bitcoin, Fedcoin would not represent a competing, private "outside money" but would instead be an alternative form of sovereign currency (Garratt and Wallace (2016)). CADcoin is an example of a wholesale CBCC. It is the original name for digital assets representing central bank money used in the Bank of Canada's proof of concept for a DLT-based wholesale payment system. CADcoin has been used in simulations performed by the Bank of Canada in cooperation with Payments Canada, R3 (a fintech firm), and several Canadian banks but has not been put into practice. In Sweden, the demand for cash has dropped considerably over the past decade (Skingsley (2016)). Already, many stores do not accept cash and some bank branches no longer disburse or collect cash. In response, the Riksbank has embarked on a project to determine the viability of an eKrona for retail payments. No decision has yet been taken in terms of technology (Sveriges Riksbank (2017)). Hence, the eKrona is located on the border between deposited currency accounts and retail CBCCs. Dinero electrónico is a mobile payment service in Ecuador where the central bank provides the underlying accounts to the public. Citizens can open an account by downloading an app, registering their national identity number and answering security questions. People deposit or withdraw money by going to designated transaction centres. As such, it is a (rare) example of a deposited currency account scheme. As Ecuador uses the US dollar as its official currency, accounts are denominated in that currency. Bitcoin is an example of a non-central bank digital currency. It was invented by an unknown programmer who used the pseudonym Satoshi Nakamoto and was released as open-source software in 2009 along with a white paper describing the technical aspects of its design (see Box A for further details). PokéCoin is a currency used for in-game purchases in the Pokémon Go game and an example of a virtual currency. Utility Settlement Coin (USC) is an attempt by the private sector to provide a wholesale cryptocurrency. It is a concept proposed by a collection of large private banks and a fintech firm for a series of digital tokens representing money from multiple countries that can be exchanged on a distributed ledger platform (UBS (2016)). The value of each country's USC on the distributed ledger would be backed by an equivalent value of domestic currency held in a segregated (reserve) account at the central bank. The Bank of Amsterdam (the Amsterdamse Wisselbank) was established in 1609 by the City of Amsterdam to facilitate trade. It is often seen as a precursor to central banks. A problem at the time was that currency, ie coins, was being eroded, clipped or otherwise degraded. The bank took deposits of both foreign and local coinage at their real intrinsic value after charging a small coinage and management fee. These deposits were known as bank money. The Wisselbank introduced a book-entry system that enabled customers to settle payments with other account holders. The Dutch central bank was established in 1814 and the Bank of Amsterdam was closed in 1820 (Smith (1776), Quinn and Roberds (2014)). The 1934 series gold certificate was a $100,000 paper note issued by the US Treasury and used only for official transactions between Federal Reserve Banks. This was the highest US dollar-denominated note ever issued and did not circulate among the general public. It is an example of non-electronic, restricted-use, government-backed, peer-to-peer money. Examples of privately issued local currencies include the Bristol Pound and BerkShares, located in the right-hand petal. Stores in Bristol, United Kingdom, give a discount to people using Bristol Pounds, whereas BerkShares are purchased at 95 cents on the dollar and are accepted at retail stores in the Berkshires region of Massachusetts at face value. Precious metal coins are examples of commodity money. They can be used as an input in production or for consumption and also as a medium of exchange. This is in contrast to fiat money, which has no intrinsic use. Although commodity money is largely a thing of the past, it was the predominant medium of exchange for more than two millennia. E-gold account holders used commercial bank money to purchase a share of the holding company's stock of gold and used mobile phone text messages to transfer quantities of gold to other customers. Payments between e-gold customers were "on-us" transactions that simply involved updating customer accounts. E-gold ultimately failed. But before it shut down in 2009, it had accumulated over 5 million account holders. Many current private mobile payment platforms, such as Venmo (a digital wallet with social media features popular with US college students) and M-pesa™ (a popular mobile money platform in Kenya and other East African countries), employ a similar "on-us" model. Users transfer either bank deposits or cash to the operator, who gives them mobile credits. These credits can be transferred between platform participants using their mobile devices or redeemed from the operator for cash or deposits. The daily number of M-pesa transactions dwarfs those conducted using Bitcoin. However, in terms of value, worldwide Bitcoin transfers have recently overtaken those conducted on the M-pesa platform (Graph 1, right-hand panel). Source: BIS
LJUBLJANA/FRANKFURT (Reuters) - With the euro zone's economy finally growing, the time for the European Central Bank to reduce its monetary stimulus may be nearing, speeches by three ECB policymakers suggested on Thursday. After buying more than 2 trillion euros ($2.38 trillion)worth of bonds since 2015, the ECB is expected to announce next month it will slow the pace of its purchases, since economic growth is accelerating and inflation is stable, albeit sluggish. One of the most vocal critic of the bond buys, Bundesbank head Jens Weidmann, said the situation called for "easing up on the accelerator" of monetary stimulus as the threat of a sustained fall in prices was now gone.
World stocks hit new record highs on Tuesday amid a continuation of Monday's risk-on theme which unleashed a dramatic relief rally on easing North Korea tensions and signs that Hurricane Irma caused less damage than feared (which according to Keynesians should be GDP negative). The MSCI All-Country World Index gained 0.2%, hitting the highest on record with a fifth consecutive advance. European equities headed for the longest winning streak in five months while S&P 500 futures extended on Monday's record high, pointing to another all time high open. Meanwhile, the dollar struggled to build on a strong start to the week as concerns about lackluster inflation lingered before key U.S. data. Europe's Stoxx 600 Index gained for a fifth day, the longest run since April, up 0.6% hitting the highest level in 5 weeks, as the technology sector joined in the rally ahead of Apple iPhone unveiling later on Tuesday. Chip makers STMicroelectronics N.V. and Infineon Technologies AG were among big gainers, while the insurer index gained a further 0.3%, as insured property losses from Hurricane Irma’s are expected to be smaller than initially forecast. S&P index futures also rose as North Korea stayed silent - for now - in the face of another round of sanctions. As Bloomberg puts it well, "the appetite for riskier assets that took hold on Monday was sustained more by a lack of bad news than any positive catalysts." So far there have been no further provocative developments from North Korea after the UN Security Council approved a watered-down proposal to punish the nation for its latest missile and nuclear tests. Meanwhile, Hurricane Irma damage estimates were revised sharply lower (remember when the worse the hurricane, the better for GDP? Apparently for stocks, no matter what the hurricane outcome, it's all good). With a flat greenback, bonds across Europe followed Treasuries lower. “The absence of walking into any North Korea-related headlines, the general feeling that the worst-case scenario from Hurricane Irma was avoided and with the more significant economic data reserved for later in the week too, markets seem to have breathed a collective big sigh of relief,” strategists including Craig Nicol at Deutsche Bank AG wrote in a note to clients. In overnight geopolitical developments, Japan's Defense Minister Onodera said Japan cannot rule out possibility of further provocation by North Korea and will stay on alert. Shortly prior, the UN Security Council unanimously voted to increase sanctions against North Korea, albeit substantially watered down from the original version proposed by the US and excluding an oil embargo or asset freezes of the government. The US Ambassador to the UN Haley said the US is willing to act alone to stop North Korea’s nuclear programme and that half-measures have not worked. There were also comments from South Korea which later stated that North Korea is technically ready for a nuclear test. British consumer price inflation came in stronger than expected at 2.9 percent, offering more clues as to the Bank of England’s policy decision on Thursday, and sending the pound to the highest level against the USD, as cable rose as high as 1.328. The BOE has been struggling to keep inflation at 2 percent since sterling tumbled in response to Britain voting to leave the European Union in June 2016, pressuring on consumer spending and living standards (more below). Asia, too, was green across the board: Japan’s Topix index advanced 0.9 percent at the close in Tokyo. Australia’s S&P/ASX 200 Index added 0.6 percent. South Korea’s Kospi index rose 0.3 percent. The Hang Seng Index in Hong Kong and gauges in China fluctuated. The MSCI Asia Pacific Index climbed 0.4 percent. The Japanese yen fell 0.3 percent to 109.74 per dollar, the weakest in more than a week. The dollar failed to maintain momentum after Monday’s 0.6 percent gain, with market focus turning to whether U.S. consumer-price data due Thursday has the potential to improve the greenback’s allure. The Bloomberg Dollar Spot Index swung between gains and losses as investors unwound risk-off positions, while the pound rallied on the back of faster-than-estimated U.K. inflation. Sterling rose to $1.3282, its highest level in a year, as data showed annual core inflation in Britain accelerated to 2.7 percent in August, the most since 2011. Profit-taking in euro-pound longs also helped cable push above the August highs, according to currency traders in Europe and London. The strong U.K. data spurred an immediate repricing of Bank of England rate-increase odds. Based on MPC-dated overnight index swap rates, chances of a 25 basis point hike by the end of year have risen to 33 percent from 24 percent Monday. A tightening is fully priced in by end of summer next year. Risks are now skewed toward a hawkish shift in the BOE Monetary Policy Committee vote on Thursday, with more than two members now pushing for a rate increase, providing more support for the pound. Over in China, the onshore yuan slumps by the most in six months against a trade-weighted currency basket amid a weaker central bank fixing and a dollar surge overnight. The Bloomberg replica of the CFETS RMB Index slumped 0.44%, the biggest drop since March 16, to 94.9385, just two days after reaching this year’s high on Monday. On Tuesday, the PBOC weakened its daily reference rate by 0.43%, the most since Jan. 9 and the first cut in 12 days, to 6.5277 per dollar. The fixing was weaker than the 6.5245 average of estimates from 18 traders and analysts surveyed by Bloomberg, and followed on Friday's aggressive attempt by the PBOC to reignite volatility by invitine shorters into the currency after it cut reserve requirements from 20% to 0%. Brent traded near $53.50/bbl; Bloomberg reports that OPEC output fell in August. OPEC’s estimate of its oil production, compiled from four of six external data sets known as secondary sources, fell to 30.004m b/d excluding output from Libya and Nigeria, according to a person familiar with the matter; down from 30.113m b/d in July. At the same time, Saudi Arabia reportedly told OPEC it pumped 9.95m b/d of oil in August, down from 10.01m b/d in July. The data contrast with OPEC’s internal ests, which show Saudi Arabia pumped 10.022m b/d in August vs 10.049m b/d in July, according to information compiled from four of six secondary sources. “The OPEC monthly report is coming out later and that should set some kind of direction to the market,” says Tamas Varga, analyst at PVM Oil Associates. “Yesterday we saw the WTI-Brent arbitrage strengthening, it has been so weak that it’s inevitable that at some point people are going to find U.S. crude so cheap that it will reverse” Elsewhere, safe-haven assets such as U.S. Treasuries and gold gave back most of recent gains. The 10Y Treasury yield jumped to 2.1515% from 2.1250%, the highest in a week. Germany’s 10-year yield gained three basis points to 0.37 percent, the highest in a week. Britain’s 10-year yield rose three basis points to 1.076 percent, the highest in almost three weeks. Gold dropped to $1,326.31 per ounce, compared to Friday’s one-year peak of $1,357.4. Key events on today's calendar include the JOLTS job openings, NFIB small business optimism report, U.S. 10-year auction. Bulletin Headline Summary from RanSquawk: GBP rallies, as CPI & RPI beats put focus on the MPC In politics, UK Parliament passed the Brexit Bill and Norway’s ruling centre-right government won re-election Looking ahead, highlights include potential comments from ECB’s Constancio and a US 10yr Auction Market Snapshot S&P 500 futures up 0.1% to 2,490.75 STOXX Europe 600 up 0.5% to 381.49 MSCI Asia up 0.3% to 162.84 MSCI Asia ex Japan up 0.4% to 538.95 Nikkei up 1.2% to 19,776.62 Topix up 0.9% to 1,627.45 Hang Seng Index up 0.06% to 27,972.24 Shanghai Composite up 0.09% to 3,379.49 Sensex up 0.6% to 32,080.00 Australia S&P/ASX 200 up 0.6% to 5,746.44 Kospi up 0.3% to 2,365.47 German 10Y yield rose 2.6 bps to 0.362% Euro up 0.04% to $1.1958 Italian 10Y yield rose 0.9 bps to 1.677% Spanish 10Y yield rose 2.7 bps to 1.593% Brent Futures down 0.5% to $53.57/bbl Gold spot down 0.09% to $1,326.28 U.S. Dollar Index unchanged at 91.88 Top Overnight News President Donald Trump plans an aggressive travel schedule, taking him to as many as 13 states over the next seven weeks, to sell the idea of a tax overhaul as the administration tries to avoid repeating the communication failures of its attempt to repeal Obamacare Florida’s ports re-open after Irma, but feeding gas stations could take days and restoring power also is a challenge in getting gas to consumers Investors may pile into Treasuries and gilts at the expense of Japanese and Chinese debt if a proposal by the world’s biggest wealth fund is implemented Hedge funds are less interested in shorting China after being wrong in predicting a sharp devaluation, a credit crisis and an economic hard landing UN Votes New North Korea Sanctions Short of an Oil Embargo Toshiba Board Is Said to Aim for Chip Sale Decision Wednesday Equifax’s Seismic Breach Tests Trump Pledge to Dismantle Rules CBOE Plans to Introduce Options on S&P Select Sector Indexes U.K. Inflation Accelerates More Than Forecast to Reach 2.9% $150 Billion Misfire: How Forecasters Got Irma Damage So Wrong In Dismal Summer, ‘Despicable Me 3’ Producer Delivers $1 Billion SoFi CEO Cagney to Step Down by Year End; Co. Seeks Successor FPL Says Much of SW Florida Electric System Will Need Rebuild Delta Says 1,100 Flights Canceled at Atlanta on Irma Effects U.K. Will Offer Troops to Support EU Operations After Brexit Li Upbeat on China Economy as Lagarde Cites Push to Curb Risk Asian markets traded mostly higher on positive momentum from the reduced North Korean concerns, which also followed a strong performance on Wall St where the S&P 500 closed at a fresh record level. ASX 200 (+0.7%) and Nikkei 225 (+1.2%) gained as financials mirrored the outperformance in their counterparts stateside where lower estimates of hurricane damages and rising yields buoyed the sector, while JPY weakness remained the driver for Japanese exporter sentiment. Conversely, Shanghai Comp. (+0.1%) and Hang Seng (Unch.) were less exuberant after the PBoC refrained from liquidity operations again and after the Hong Kong benchmark index met resistance around the 28,000 level. Finally, 10yr JGBs were lower as 10yr yields rose by the most YTD alongside increases in global yields, with demand for bonds also dampened by the positive risk tone and after a 5yr auction where the b/c declined and tail in price widened from prior. PBoC refrained from open market operations again today.PBoC set CNY mid-point at 6.5277 vs Prev. 6.4997, biggest fixing drop since January. Chinese Premier Li says China's economy will continue maintain trend seen in H1, adds China will not boost exports through CNY depreciation. Top Asian News Hong Kong Finance Chief Warns Again of Property Risk as Fed Acts Star Stock Geely Soars Most in Month on Market Sentiment Boost China’s Banks Are Leading Globalization Charge, McKinsey Says Hedge Funds Used to Love Shorting China. Now, Not So Much European equity markets also traded in the green across the board with Stoxx 600 sectors following the theme, as financials lead the way. UK home builders have struggled however, and underperform, likely weighed on after a report in the Times suggested that the chronic housing shortage is being made worse by the reluctance of banks to lend to small housebuilders, the Federation of Master Builders has claimed. Bunds underperform, leading the middle of the curve, as investors unwind safe haven flows. The Bund now trades around 162.40, with the next support to look-out for being 162.22. Gilts do trade slightly better than Bunds, however, the Gilt bears did catch up following the beats in UK CPI and RPI data. Gilts now trade through September lows, with the BoE possibly looking at a hawkish tilt on Thursday. Top European News Norway PM Wins Second Term as Insurgency Against Oil Fizzles Swedbank Plans Two-Tiered FICC Research Offering After MiFID II Italian Quarterly Unemployment Rate Falls to Lowest Since 2012 U.K. Builders Fall; BofAML Sees Multiple Risks, Full Valuations In currencies, morning FX volatility has largely been based on data: the UK beat across the board, with EUR/GBP now hitting one-month lows, as the inflation figures could lead the BoE to be more forceful in realigning market forecasts with their own when it comes to rate hike expectations. The stronger data, supported by some form of Brexit direction clarity, has helped sterling find a bid through the European morning. Elsewhere, only a slight miss from Sweden helped some SEK bulls, with many pricing in a bad report, following Norway’s misses yesterday and inflation also remaining above the Riksbank's target. EUR/SEK fell from 9.5820, to print lows around 9.5440. Political news also caused some early volatility; as the latest Newshub poll showed a lead for the National Party vs. Labour in New Zealand, the details of the poll have the Greens now under the 5% threshold required to enter Parliament without the security of an electoral seat win. The lack of power from the Greens will lead to Labour not being able to form a coalition, leaving the national party with a 61 seat majority. In commodities, WTI and Brent saw some bearish pressure, as bulls failed to test yesterday’s high. Fundamentally, US refineries are restarting following the shutdowns caused by Hurricane Harvey, however, with restarts historically dangerous, operators did keep the shutdowns to a minimum. Precious metals continue to highlight metal markets, as the risk tone has picked up this week, the fail to fill Monday’s gap could be an indication of a strong bearish trend in Gold, which trades back within August’s range. OPEC figures show that the cartel's August output has fallen to 30mln bpd, according to sources. On today's calendar, there is the NFIB small business confidence reading and July JOLTS job openings. Away from the data, China Premier Li Keqiang will host an economic roundtable in Beijing that will include heads of IMF, the World Bank and WTO. US Event Calendar 6am: NFIB Small Business Optimism, 105.30, est. 104.8, prior 105.2 10am: JOLTS Job Openings, est. 6,000, prior 6,163 DB's Jim Reid concludes the overnight wrap Yesterday felt a bit like a no-news-is-good-news-day for markets. Indeed, the absence of walking into any North Korea related headlines was part of the story, while the general feeling that the worst-case scenario from Hurricane Irma was avoided also played a big role. With the more significant economic data reserved for later in the week too, markets seem to have breathed a collective big sigh of relief with the S&P 500 (+1.08%) rallying to another all-time high after rising by the most in a single session since April. The Dow (+1.19%) and Nasdaq (+1.13%) are just off their respective record levels, while prior to this in Europe the Stoxx 600 had closed +1.04% for its best day since mid-August. Meanwhile, after flirting with a 1% handle last week, 10y Treasury yields jumped +8.0bps yesterday to close at 2.131% and finish what was the weakest session since late July. The stronger than expected China inflation data probably impacted at the margin too but as we said yesterday it feels like the bigger test for rates will come this Thursday with the August CPI report. Meanwhile bond markets in Europe finished anywhere from +1bp to +6bps higher in yield, with interestingly Italy outperforming although it wasn’t obvious what was driving that. Elsewhere, in further evidence of a classic risk-on session two of the bigger underperforming currencies were the Swiss Franc (-1.27%) and Yen (-1.42%), while Gold also tumbled -1.41%. WTI Oil rose +1.24% as OPEC members voiced support for a possible extension of production cuts. Just after the close of the US session last night, the UN Security Council voted unanimously for a watered down version of sanctions on North Korea, which does not include an oil embargo. The resolution passed seeks to cut imports of refined petroleum products to 2 million barrels per annum and ban textile exports, but does not include the more stringent oil embargo, likely reflecting the lack of support from China and Russia. We are yet to have heard a response from North Korea post the decision. One would have to imagine that the outcome helps nearterm sentiment insofar as not antagonizing China, but the reality is that it still doesn’t come closer to solving much. This morning in Asia, markets have largely followed the lead from the US and are trading broadly higher as we go to print, with the Nikkei (+1.01%), ASX 200 (+0.87%), Kospi (+0.12%) and Shanghai Comp (+0.07%) firmer. The Hang Seng is currently flat. US equity futures are also little changed while bond markets in Asia are weaker. Staying in Asia, yesterday our China Chief Economist Zhiwei Zhang published a report previewing the 19th National Congress meeting from October 18th. Zhiwei notes that this week-long event kicks off a six-month process that continues with the Central Economic Working Conference (CEWC) in December and the National People’s Congress (NPC) in March next year. He notes that the event is more about politics than setting economic policies, as the representatives will elect a group of leaders. Based on the age rule, five of seven incumbent members of the Politburo should retire as they are older than 67. Other important things to look out for include the CEWC setting GDP growth targets, while finally, the NPC will see a reshuffle of cabinet ministers and government posts. Overall, Zhiwei expects no substantial change in policy over the next six months, although the central government may slow fiscal spending a bit and the focus will turn to whether China may push for more deleveraging and structural reforms. Moving on. Following on from China’s better than expected inflation report the early focus in Europe yesterday was on the mixed August CPI reports out of Norway and Denmark. Norway disappointed with underlying CPI falling a fair bit more than expected (-0.9% mom vs. -0.4% expected) however Denmark then bettered expectations after coming in at -0.3% mom versus expectations for a bigger -0.5% decline. As a reminder, today we’ve got a bunch more inflation reports including Sweden first thing this morning, followed by the UK and then Portugal. Staying in Europe, there was a steady slate of comments from ECB board members yesterday. The early comments came from Benoit Coeure. Initially the headlines appeared fairly negative, warning that persistent gains in the euro may weigh on inflation, however the details of his comments revealed Coeure highlighting that the pass-through impact of the currency appreciation has declined as a result of a stronger economy and therefore any future impact is more limited on inflation. Later on, the ECB’s Ardo Hansson highlighted that “inflation rates have been gradually increasing” while fellow board member Sabine Lautenschlaeger said that “conditions are in place for inflation to pick up and move steadily towards our goal”. Elsewhere at the ECB, it was interesting to note the El Mundo report yesterday suggesting that the German government wants Bundesbank President Jens Weidmann to replace ECB President Mario Draghi when he steps down in October 2019. The article also suggested that a representative from Southern Europe as Vice-President would be nominated to keep the balance (Spain’s Economy Minister being highlighted). Weidmann has held relatively extreme and vocal views on ECB policy so it’s hard to know if this would improve his case across the wider Eurozone. Anyhow, this is still reasonably far off for now with a decision not due to be made until June 2019. Moving onto the latest on Brexit. Following a vote early this morning, PM May’s repeal bill secured enough votes (326-290) in the House of Commons to pass the first hurdle which would allow the UK government to copy EU law onto the domestic statute book. However, the real challenge will be how many amendments are made over the next eight days as Parliament debate the bill further. One such debate includes allowing ministers to make changes to existing laws, but bypass the normal scrutiny by parliament. Before we take a look at today’s calendar, in terms of the remaining data yesterday, in Italy July industrial production was above market at +0.1% mom (vs. -0.4% expected). This, coupled with solid gains in the preceding two months, has led to annual growth of +4.4% yoy (vs. +3.7% expected). In France, the business industry sentiment index was slightly lower than expectations at 104 (vs. 106 expected), but remains consistent with annual GDP growth of c.2% yoy. There was no data released in the US yesterday. Looking at the day ahead, in the UK, we have August CPI (+0.5% mom expected), PPI (+0.1% mom expected) and RPI (+0.5% mom expected). Across Europe, France’s 2Q total payrolls and Italy’s 2Q unemployment rate are also due. Over in the US, there is the NFIB small business confidence reading and July JOLTS job openings. Away from the data, China Premier Li Keqiang will host an economic roundtable in Beijing that will include heads of IMF, the World Bank and WTO.
Buy Gold for Long Term as "Fiat Money Is Doomed" - Buy gold for long term as fiat money is doomed warns Frisby- Gold’s "winning streak" will continue in long term- September is traditionally a good month for gold, as we head into the Indian wedding season- "It’s just a matter of time before gold comes good again..." by Dominic Frisby, Money Week Today folks, by popular demand, we’re talking gold.It’s had a nice summer run.What now? Gold has been buoyed by the North Korea scare Let’s start with an update. Back in July I suggested a flip trade: buy then in anticipation of a rally, sell in the autumn. But I also ventured that a proper, multi-year bull market in gold, such as the one we saw in the 2000s, was a way off. The price then was $1,230 an ounce. As I write, we’re a couple of dollars shy of $1,340. We’ve had a $110 rally. Aren’t I a genius? So what do we do now? Buy more? Sell? Hold? Let’s have a lively debate. The first observation I’d make is that a good $30 to $40 of today’s price is war premium. A certain North Korean has been firing missiles and exploding bombs. The world has, quite understandably, got nervous. And a certain American has been positing (with some justification) various potential responses on Twitter. Is this North Korean affair going to die down and fade away, or is it going to escalate? Regular readers of this column will be aware that I know the answer to most things, but I confess that here I fall short. This is something of which only a select group of informed North Korean insiders will have concrete knowledge. But how this affair pans out will determine gold’s direction in the short term. If it escalates, gold goes up. If it doesn’t, then that $30 or $40 of war premium will be given back. I’d wager that this is just noise, albeit rather scary noise, and that it will pass. But this is no more than a guess, and not even an informed one. Aside from North Korea, over the last 45 years, September has proved a good month for gold, rising by an average of about 2.5%. The given reason for this is that gold buying increases as we head into the Indian wedding season, which runs from October to December. Indians are the biggest buyers of physical metals. About a third of global physical gold demand comes from India, half of which is spent on jewellery for their ten million weddings each year. However, over the past five years, the reverse has been the case. September has been a bad month for gold with falls averaging around 1.5% for the period. That might be simply because we have been in a bear market. It might be because Indian gold-buying has been upset by various changes in legislation and new taxes, and is down some 10%-15% from the heady heights of 2010 and 2011. Gold has the potential to roar higher – but it could easily stall, too I was intrigued by this chart (chart above) from Jordan Roy-Byrne over at the Daily Gold. In the top pane you see the gold price since last 2009. In the bottom one you see the net speculative position of Comex traders. Currently, the net speculative position has hit 248,000 contracts, which amounts to an open interest of 46%. You can see by the red arrows Jordan has drawn that the 55% marked the 2011 top, the 2012 top and the 2016 top. If the net speculative position rises to that level from here I would venture that that is a level from which to be selling quite aggressively. In the longer term, there are constructive things to see in the chart. The 2017 low was higher than the 2015-16 low. Each of the 2017 lows has been higher than the last. However, for me to come out and declare myself a full-blown bull, I’d like to see us break above the 2016 highs around $1,370. For us to make a higher high, in other words. That high is not far off – only $30. But until that point, I’m going to take the cautious-and-hope-I’m-wrong stance and say we are still trading in a range, and no new multi-year bull market has yet begun. From a Comex point of view there is room to go higher – gold is hot, but not yet bubbly. From a seasonal point of view there is also room to go higher. The same applies from a trend point of view – and certainly from a Korean point of view. An ongoing stand-off out east could cause another $30 surge from here. Speculative interest could grow. And this whole thing could run out of steam in a few weeks’ time close at the 2016 highs. That would make my buy-in-July-sell-in-the-autumn call look like genius. Then again, we might be near $1,450 before speculative interest gets to the scary 55% mark. And that would make for a nice higher high, within a new price-definable bull market. Finally, on the downside for gold (and the upside for the rest of us), this whole Korean thing could blow over, and with it, this summer’s renewed interest in gold. I’m hedging my bets as you can guess. My inner trader says take some money off the table now, and leave a bit to ride out the next few weeks. What happens in Korea defines where we go next. My inner investor, however, says own gold. Fiat money is doomed. It’s just a matter of time before gold comes good again. But don’t expect to be a millionaire by tomorrow. From Money Week News and Commentary Gold retreats from 1-year high as dollar gains ground (Reuters.com) Asia Stocks Rise, Dollar Rebounds as Irma Weakens (Bloomberg.com) Weakening but still potent Irma aims full force at Florida’s Gulf Coast (Reuters.com) Hurricane Irma Makes Florida Landfall as $200 Billion Threat (Bloomberg.com) Venezuela's Maduro says will shun U.S. dollar in favor of yuan, other currencies (Reuters.com) Source: Bloomberg Gold Trading Volumes Hit Record High As Dollar Crashes (ZeroHedge.com) Here Is The Real Reason Why Draghi Won't Provide Any Details Today - Blain (ZeroHedge.com) Eight Silver Bullion Banks Against The World (SilverSeek.com) Trust issues? China targets a $3 trillion shadow banking industry (Reuters.com) Gold’s winning streak will continue in long term - Frisby (MoneyWeek.com) Gold Prices (LBMA AM) 11 Sep: USD 1,338.75, GBP 1,015.31 & EUR 1,114.24 per ounce08 Sep: USD 1,350.90, GBP 1,026.82 & EUR 1,120.71 per ounce07 Sep: USD 1,340.45, GBP 1,026.52 & EUR 1,119.54 per ounce06 Sep: USD 1,340.15, GBP 1,028.03 & EUR 1,122.11 per ounce05 Sep: USD 1,331.15, GBP 1,029.51 & EUR 1,120.43 per ounce04 Sep: USD 1,334.60, GBP 1,030.98 & EUR 1,120.53 per ounce01 Sep: USD 1,318.40, GBP 1,020.18 & EUR 1,107.98 per ounce Silver Prices (LBMA) 11 Sep: USD 17.85, GBP 13.51 & EUR 14.86 per ounce08 Sep: USD 18.21, GBP 13.80 & EUR 15.09 per ounce07 Sep: USD 17.79, GBP 13.59 & EUR 14.85 per ounce06 Sep: USD 17.77, GBP 13.62 & EUR 14.90 per ounce05 Sep: USD 17.88, GBP 13.80 & EUR 15.03 per ounce04 Sep: USD 17.80, GBP 13.75 & EUR 14.95 per ounce01 Sep: USD 17.50, GBP 13.53 & EUR 14.69 per ounce Recent Market Updates - Conor McGregor – Worth His Weight In Gold?- Gold Has 2% Weekly Gain,18% Higher YTD – Trump’s Debt Ceiling Deal Hurts Dollar- ‘Things Have Been Going Up For Too Long’ – Goldman CEO- Physical Gold In Vault Is “True Hedge of Last Resort” – Goldman Sachs- Bitcoin Falls 20% as Mobius and Chinese Regulators Warn- Gold Surges To $1338 as U.S. Warns of ‘Massive’ Military Response- Precious Metals Outperform Markets In August – Gold +4%, Silver +5%- 4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders- Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards- Gold Surges 2.6% After Jackson Hole and N. Korean Missile- Diversify Into Gold On U.S. “Political Instability” Advise Blackrock- Trump Presidency Is Over – Bannon Is Right- The Truth About Bundesbank Repatriation of Gold From U.S. Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
Conor McGregor - Worth His Weight In Gold? - Conor McGregor, MMA champion has gold statue made of him- If McGregor was cast in investment grade gold bullion he would be worth ...- If Mayweather were cast in gold he would be worth $2.7m- Ali once fought equivalent of MMA fighter and nearly lost use of his legs- Gold continues to be seen as the ultimate prize in sport- Gold a great prize but true value is as a safe haven At the moment there are some heated debates going on about statues that some believe should no longer stand. Many of the figures previously cast in bronze, gold or stone are no longer seen as heroes. Time has changed some people's perspective on what were once seen as heroic endeavours and achievements. Today we have different measures of success and while statues of now divisive historical figures are being pulled down, statues of modern millennial heroes are being raised. Last week a statue was created of the 'Notorious', world champion Mixed Martial Arts (MMA) fighter, Dublin-born Conor McGregor. In one of the most hyped fights of all time last week, McGregor was defeated by the 50-times unbeaten boxing champion Floyd Mayweather in Las Vegas. McGregor’s achievement of stepping out of his comfort zone and his actual sport and taking on the legend that is Floyd Mayweather was applauded by most and it is something that has not gone unnoticed by Irishman Eamon Heneghan. Last week Heneghan unveiled a life-size gold statue of Conor McGregor, ‘I'm such a big fan and find him so inspirational.’ the amateur sculptor told the Irish Independent. Heneghan is currently out of work. He saw that McGregor has a keen interest and penchant for gold and gold statues and decided that he would make one for him. His hopes are that the MMA champion will notice it. We hope he does as statues are getting bad rep at the moment and this one was only made out of admiration for someone who has made history. The gold-sprayed chicken wire and papier-mâché statue has been called a mixture of things but it was definitely one headline that declared the statue ‘belongs in the pantheon of horrible sports sculptures’ that grabbed my attention. Whatever you think of the statue you have to admire the effort that went into it. We thought we would look at some other headline-grabbing sports statues and look at what may have happened if they had been cast in gold. Ugly statues A lot of sports stars have been confronted with statues that perhaps aren't the most...flattering. One of the most famous is Ronaldo. The bust was cast out of bronze, but we suspect if Ronaldo had ben cast in gold he might feel a little happier about it. Is Ronaldo worth his weight in gold? Ronaldo was bought by Real Madrid for €94 million in 2009. At the time his weight in gold was worth €1.76m, today he is worth over €2.8m in gold. This is nothing to do with Ronaldo's performance, instead the simple climb in price of gold. How does that compare to the other competitor for world's best footballer, Lionel Messi. The Barcelona Forward €250m. Weighing in at 72kg, Messi's weight in gold today is worth €2.25m. Wimbledon champs Photo credit: AP In 2011, Andy Murray was 'honoured' with a Terracotta Army statue in Shanghai. The Chinese are obviously known for their love of gold. Had they decided to make Andy's 84kg frame into a gold statue in 2011 then it would have fallen slightly from £2.856m to £2.688m. Murray's statue in Shanghai was in good company. Just the year before Roger Federer had been gifted with a statue in a similar style. In contrast to Murray's 2011 statue, Federer's 2010 statue has climbed in value from £2.295m to £2.72m. It shows what difference a year can make. All about the gold What’s most interesting about the coverage surrounding this new statue is that it wouldn’t have happened if Heneghan hadn’t decided to paint it in gold. If he’d not painted it at all or just gone for a plain colour then no-one would be interested. We have a fascination with gold that means it makes headlines. Most people have an interest in gold. We reward people in gold. Last week the belt McG and Mayweather were fighting for was made of 1.5kg gold (plus 3,360 diamonds 600 sapphires and 160 emeralds). The desire to reward and be rewarded in gold has been around since time immemorial. It is not a recent phenomenon of rising gold prices or flashy Instagram photos. We know deep down inside that to be rewarded in gold is to be rewarded with something that will last long past the victories and should even secure your financial future. Watch gold in the long-term The last few examples of how gold can change in over time are merely short-term ones. To bring it back to Mayweather we can take each of his fighting weights from his 50 fights and see how the equivalent weight in gold has climbed since. The graph below shows the percentage gain in the gold price since Mayweather's first fight in 1996 and in 2017. Since his 1996 fight against Roberto Apodaca the price of gold has climbed by over 226%. Gold hasn't demonstrated as big gains if you bought in recent years but the lesson here is that gold takes its time. A bit like property or indeed fine wine. Conclusion: Gold's the champion but it takes its time and doesn't show off The most famous boxer of all time is of course Muhammad Ali. What's interesting about Ali in light of the Mayweather vs McGregor fight is that the legendary boxer once took on a similar challenge. In 1976 Ali fought Antonio Inoki, a Japanese professional wrestler. The fight was fought under special rules and is seen as a precursor to the MMA sport which McGregor is famous for today. The result was a draw but Ali was arguably left worse off. He was left with two blood clots in his legs. These hindered him for the rest of his career with amputation even being discussed at one point. The fight is considered one of the most embarrassing of Ali's career. Ali was so convinced that he could show that he was 'The Greatest' that he stepped out of his comfort zone and into unfamiliar territory. As a result he nearly ruined his entire sporting future and his health. An analogy can be drawn with Ali's challenge with what we see today in the financial world and governments controlling the monetary system. They feel they are infallible. They are taking on riskier and riskier matches, with rules that are unfamiliar and the consequences known. What has survived the test of time and all of the risk taking and speculative punts whether in sports or finance? Gold has. Gold cannot be beaten to a pulp whether figuratively or literally. It has stood strong through financial crisis and crashes throughout history and will continue to protect people in the coming uncertain years. Conor McGregor has done very well financially in recent years and is believed to have made €100 million from the Mayweather fight alone. We sincerely hope that in order to protect his financial well being, he diversifies into physical gold bullion. News and Commentary Gold climbs to 1-year high as U.S. dollar sees fresh weakness (MarketWatch.com) Gold rises to one-year high amid sluggish dollar (Reuters.com) Dollar Tumbles as Yen, Euro Rally on Irma, ECB (Bloomberg.com) ECB keeps door open to even more stimulus (Reuters.com) Hurricane Harvey lifts U.S. jobless claims to more than two-year high (Reuters.com) Source: Bloomberg Yen Losing its Haven Sheen to Gold on North Korea (Bloomberg.com) Gold to reach $1400 on dollar weakness and North Korea (CNBC.com) Flight to quality may see further gains for gold bullion (CNBC.com) Gold prices boom as fears grow over North Korea nuclear crisis (Independent.co.uk) Own Gold for Long Term as Fiat Money is Doomed - Frisby (MoneyWeek.com) Gold Prices (LBMA AM) 08 Sep: USD 1,350.90, GBP 1,026.82 & EUR 1,120.71 per ounce07 Sep: USD 1,340.45, GBP 1,026.52 & EUR 1,119.54 per ounce06 Sep: USD 1,340.15, GBP 1,028.03 & EUR 1,122.11 per ounce05 Sep: USD 1,331.15, GBP 1,029.51 & EUR 1,120.43 per ounce04 Sep: USD 1,334.60, GBP 1,030.98 & EUR 1,120.53 per ounce01 Sep: USD 1,318.40, GBP 1,020.18 & EUR 1,107.98 per ounce31 Aug: USD 1,305.80, GBP 1,013.17 & EUR 1,098.31 per ounce Silver Prices (LBMA) 08 Sep: USD 18.21, GBP 13.80 & EUR 15.09 per ounce07 Sep: USD 17.79, GBP 13.59 & EUR 14.85 per ounce06 Sep: USD 17.77, GBP 13.62 & EUR 14.90 per ounce05 Sep: USD 17.88, GBP 13.80 & EUR 15.03 per ounce04 Sep: USD 17.80, GBP 13.75 & EUR 14.95 per ounce01 Sep: USD 17.50, GBP 13.53 & EUR 14.69 per ounce31 Aug: USD 17.34, GBP 13.47 & EUR 14.62 per ounce Recent Market Updates - ‘Things Have Been Going Up For Too Long’ – Goldman CEO- Physical Gold In Vault Is “True Hedge of Last Resort” – Goldman Sachs- Bitcoin Falls 20% as Mobius and Chinese Regulators Warn- Gold Surges To $1338 as U.S. Warns of ‘Massive’ Military Response- Precious Metals Outperform Markets In August – Gold +4%, Silver +5%- 4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders- Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards- Gold Surges 2.6% After Jackson Hole and N. Korean Missile- Diversify Into Gold On U.S. “Political Instability” Advise Blackrock- Trump Presidency Is Over – Bannon Is Right- The Truth About Bundesbank Repatriation of Gold From U.S.- Cyberwar Risk – Was U.S. Navy Victim Of Hacking?- Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300 Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
"If you want a friend in this market... get a dog," exclaims former fund manager Richard Breslow as he reflects on the farcical 'market' that traders contend with everyday. Via Bloomberg, If what is going on in the world wasn’t so serious, it would be entirely appropriate to describe any market moves that happen today as the silly season. This is going to be pure price action, where greed is already off for the weekend and fear is the order of the day. The only game that’s being played is called Find The Stops. And be aware that the market will only selectively pay attention to noise or comments based on the positioning of the weakest hands. The only news that will matter is unlikely to happen during this trading session and the storm tracker radar plots are highly unlikely to tell us something new. Remember those simple days when New York Fed President Dudley would speak-- and people listened? On a normal day we’d be warned to remember that he’s going to give us his latest thoughts. Last night, all I heard was “yeah, yeah, heard it all before.” If he gave the same speech next week it would be parsed to death. But traders just aren’t in a position nor the mood to fade these current moves. On the other hand, a Reuters story citing unnamed sources that suggests ECB Governing Council members mostly agree that their next step is likely to be reduced bond purchases sent the European sovereign bond market into a tizzy. We actually have a special file where we keep stories like this. No matter that Bundesbank President Weidmann, no less, reminded us that “inflation pick-up will only be sluggish and that uncertainty about the future path of inflation is quite large.” Mandates be damned. To make matters even more extreme, for the balance of the day, there’s only Canadian employment numbers to distract us. And to be candid, after this week’s Bank of Canada news (they unexpectedly but appropriately hiked rates), the only people who will be even mildly interested are those who have a personal stake in whether 1.20 to the U.S. dollar will hold. One thing that’s for sure is, this level of anxiety is compounded by the inability and unwillingness of investors to maintain hedges. The only thing standing between this being full-blown panic versus the frenetic gyrations we’re seeing is the central bank put. But that’s on them. They broke it and now own it. We’re just the infantilized yield hunters along for the ride. Finally Breslow has some advice ahead of this weekend's "unhandicappable" event risk in Florida and North Kore: It grates on everything I believe, but this would be a good day to avoid putting yourself at the mercy of the algorithms. They don’t understand that while you can set a fire, arranging for a hurricane is another order of difficulty
Gold Has 2% Weekly Gain,18% Higher YTD - Trump's Debt Ceiling Deal Hurts Dollar - Gold hits $1,355/oz as USD at 32-month low -concerns about Trump, US economy- Silver and platinum 2.3% and 1.2% higher in week; palladium 3% lower- Euro Stoxx flat for week - S&P 500, Nikkei down 0.65% and 2.2%- Geo-political concerns including North Korea, falling USD push gold 2.1% in week- Gold prices reach $1,355 this morning following Mexico earthquake- Safe haven demand sees gold over one year high, highest since August 2016- Silver touches $18.24 - highest level since April 2017- Goldman, BoAML and Deutsche Bank all warn re markets this week Editor: Mark O'Byrne This morning the earthquake in Mexico likely contributed to gold eking out further gains to $1,355/oz, its highest since August 2016. The gold price is now up 2.1% for the week. Sadly some of the short-term performance in both gold and silver is because of devastating events around the globe. From hurricanes and earthquakes to potential nuclear wars. However, as explained earlier this week, while gold is reacting to geopolitical events in the short term, the real driver of gold will be the impact of these events which is government money printing and debasement of the currency. Only this week, Trump extended the debt ceiling - with the devastation of the floods in Texas and Hurricane Irma the latest reason to increase the US national debt. Is the Euro too strong? Yesterday the ECB decided to leave interest rates unchanged. On the back of the decision, the euro rose to $1.20 pushing the US dollar to a 32-month low. Draghi did not express concern over the currency’s strength. Some indication was given as to the when the ECB would taper asset purchases - October is expected. Relative to gold and silver in the last week, the euro has underperformed. No increase in the US rates or the dollar Meanwhile in the US weak economic data and events in Texas and Florida have likely pushed any chance of further rate hikes back. Data yesterday showed weekly jobless claims rose this week to their highest since 2015. Hurricane Harvey likely contributed to this and it is likely the start of a trend and will likely get worse. Odds of the increase happening this year have slipped from 40% to 29%. For many a rate hike would be bad news for gold and silver prices. However so far this year this has not proven to be as damaging as some bears expected. Indeed, as we have shown with data and charts many times, rising interest rates generally corresponds with rising gold prices - as seen in the 1970s and from 2003 to 2006. Trump’s deal-making and money printing This week President Trump struck a short-term deal with the Democrats in order to avoid a showdown over the US debt ceiling. Many had been worried that the issue would be dragged out by both parties. Republicans were reportedly furious at Trump’s decision. As a result gold fell back somewhat after a stellar start to the week. Many market participants had expected the debt ceiling issue to be a far greater issue than it turned out to be. Of course, it still is a big issue as Trump and the Democrats have merely pushed the can down the road, but for now this is something they (and markets) will likely not worry about too much. There are concerns over the discontent and discord in the White House which has still not passed any meaningful legislation since Trump’s inauguration. This is providing greater support for gold which appears to be gaining strength due to issues in Washington. Is it about geopolitical risks? Short-term hikes in the gold and silver price are thanks to expected increases in safe haven demand considering events such as North Korea, potential genocide in Myanmar, Venezuelan economic crisis and of course, extreme weather events and now a massive earthquake. However these are not necessarily the long-term drivers of the gold and silver price. As we explained earlier this week. It is most likely down to concerns over governments and their monetary policies. Trump and his government are of course creating geopolitical risks, however it is the fact that his policis are (and will continue) to result in currency debasement that will provide longer-term support for gold. Goldman Sachs’ analysts suggested this week that gold’s rise to one-year highs is thanks to perceived pro-growth promise from Trump which are currently floundering but will result in more money creation. His to-do (and expense) list has also grown as a result of hurricanes in the country. Conclusion We should rightly pay attention to events happening around the world. They are devastating the lives of so many people. However, when it comes to our portfolios we should not look to the pattern of a hurricane or the sabre-rattling of a dictator to justify our decisions to hold certain assets. Instead we need to switch off the 23-hour rolling news and ask ourselves what this means for the long-term. All of it whether war, recovery from an environmental disaster or peacekeeping operations in Myanmar means spending. Money does not grow on trees and no Western government has any money left ... just debt and lots of it. Currency debasement continues on a massive scale globally. This in time will have devastating consequences for our economies and our digital and paper savings and investments. Investors should prepare their portfolios in the same way one would for an environmental disaster or war - with good, solid insurance. News and Commentary Gold climbs to 1-year high as U.S. dollar sees fresh weakness (MarketWatch.com) Gold rises to one-year high amid sluggish dollar (Reuters.com) Dollar Tumbles as Yen, Euro Rally on Irma, ECB (Bloomberg.com) ECB keeps door open to even more stimulus (Reuters.com) Hurricane Harvey lifts U.S. jobless claims to more than two-year high (Reuters.com) Source: Bloomberg Yen Losing its Haven Sheen to Gold on North Korea (Bloomberg.com) Gold to reach $1400 on dollar weakness and North Korea (CNBC.com) Flight to quality may see further gains for gold bullion (CNBC.com) Gold prices boom as fears grow over North Korea nuclear crisis (Independent.co.uk) Own Gold for Long Term as Fiat Money is Doomed - Frisby (MoneyWeek.com) Gold Prices (LBMA AM) 08 Sep: USD 1,350.90, GBP 1,026.82 & EUR 1,120.71 per ounce07 Sep: USD 1,340.45, GBP 1,026.52 & EUR 1,119.54 per ounce06 Sep: USD 1,340.15, GBP 1,028.03 & EUR 1,122.11 per ounce05 Sep: USD 1,331.15, GBP 1,029.51 & EUR 1,120.43 per ounce04 Sep: USD 1,334.60, GBP 1,030.98 & EUR 1,120.53 per ounce01 Sep: USD 1,318.40, GBP 1,020.18 & EUR 1,107.98 per ounce31 Aug: USD 1,305.80, GBP 1,013.17 & EUR 1,098.31 per ounce Silver Prices (LBMA) 08 Sep: USD 18.21, GBP 13.80 & EUR 15.09 per ounce07 Sep: USD 17.79, GBP 13.59 & EUR 14.85 per ounce06 Sep: USD 17.77, GBP 13.62 & EUR 14.90 per ounce05 Sep: USD 17.88, GBP 13.80 & EUR 15.03 per ounce04 Sep: USD 17.80, GBP 13.75 & EUR 14.95 per ounce01 Sep: USD 17.50, GBP 13.53 & EUR 14.69 per ounce31 Aug: USD 17.34, GBP 13.47 & EUR 14.62 per ounce Recent Market Updates - ‘Things Have Been Going Up For Too Long’ – Goldman CEO- Physical Gold In Vault Is “True Hedge of Last Resort” – Goldman Sachs- Bitcoin Falls 20% as Mobius and Chinese Regulators Warn- Gold Surges To $1338 as U.S. Warns of ‘Massive’ Military Response- Precious Metals Outperform Markets In August – Gold +4%, Silver +5%- 4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders- Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards- Gold Surges 2.6% After Jackson Hole and N. Korean Missile- Diversify Into Gold On U.S. “Political Instability” Advise Blackrock- Trump Presidency Is Over – Bannon Is Right- The Truth About Bundesbank Repatriation of Gold From U.S.- Cyberwar Risk – Was U.S. Navy Victim Of Hacking?- Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300 Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
“Things have been going up for too long...” - Goldman Sachs’ CEO - Lloyd Blankfein, Goldman CEO "unnerved by market" (see video)- Bitcoin bubble is no outlier says Bank of America Merrill Lynch- Bubbles are everywhere including London property- $14 trillion of monetary stimulus has pushed investors to take more risks- We are now in a new era of bigger booms and bigger busts - BAML- “Seeing signs of bubbles in more and more parts of the capital market" - Deutsche Banks' John Cryan- Global debt bubble and China very vulnerable too - warns Steve Keen- Bubbles, bubbles everywhere ... lots of potential pins ... got gold? Editor: Mark O'Byrne Video - Goldman CEO Unnerved By Market. Image: Getty Images via CNBC The B word is something which is almost whispered in financial circles. To acknowledge there might be a bubble somewhere is like admitting the proverbial elephant is in the room. But, like many taboo words, it seems the mainstream are coming around to the idea that it is ok to mention the word ‘bubble’ and express their concerns about the possibility of at least one existing. This week Goldman Sachs’ Lloyd Blankfein, Deutsche Banks’ CEO John Cryan and strategists at Bank of America Merrill Lynch have separately expressed concerns that there are signs of bubbles in the markets - from the obvious bitcoin bubble to the less obvious bubble in London and other property markets and bubbles in many stock and bond markets. The most obvious one is bitcoin. Bitcoin is up 380% this year whilst the combined market cap of cryptocurrencies is up by 800%. However these are by no means anomalies according to analysts at BAML. Cryan and Blankfein agree, thanks to central bank money printing and low interest rates, they too are expressing their concerns over the state of markets. "When yields on corporate bonds are lower than dividends on stocks? That unnerves me ... "Lloyd Blankfein There's no bubble here Professor Robert Shiller has been calling a bubble in bitcoin for a couple of years, for him it is the latest sign of 'Irrational Exuberance'. “The best example right now [of irrational exuberance] is Bitcoin. And I think that has to do with the motivating quality of the Bitcoin story. And I’ve seen it in my students at Yale. You start talking about Bitcoin and they’re excited! And I think, what’s so exciting? You have to think like humanities people. What is this Bitcoin story?” The bitcoin community was not best pleased when the man who is credited with being able to spot speculative manias decided to single out the cryptocurrency as the latest one. In response CoinTelegraph wrote an article entitled 'Bitcoin So High Above the Bubbles They Can't Be Seen'. The author claims that bitcoin is failing to follow the pattern of other bubbles. In fact, a closer inspection of the growth, and the eventual burst of the associated bubbles shows that Bitcoin is so far off the charts that it looks like an absolute outlier. The bitcoin crowd are doing exactly what so many tend to do when a market is massively outperforming - they build a narrative from it and begin to fuel the belief that the price can only go up. A BBC Capital article on the bitcoin phenomenon quotes a small bitcoin investor as saying '“I don’t know how far it’s going to grow,” he explains, “but if something is growing at hundreds of per cent, that’s a pretty valuable return.” Note 'I don't know how far it's going to grow...' The investor is convinced this can only go one way. For now we can perhaps assure ourselves that unlike in some other markets few investors will have gone all in or driven themselves into debt (as per the housing market). A happy, bubbly narrative Bubbles are created when investor enthusiasm and optimism are at excessive levels. In a 2010 interview with the Financial Crisis Inquiry Commission (FCIC) Warren Buffett explained that this happens because investors originally invest based on a sound premise, which is then the only focus for the investment strategy and they end up blinkered. Simply put investors begin to invest based on a sound premise, for example house prices are going to go up because money is losing its value and there is a more demand than supply. Investors are convinced that as house prices are climbing they must buy now. This goes on and on based on the original premise. Investors ignore other developments such as house price climbs are now outstripping inflation. We are seeing a similar thing in bitcoin. The housing example is no more pertinent right now than in Australia which is basically a $1.7 trillion house of cards. According to LF Economics, Australian housing speculators are able to use unrealized gains in properties as a 'cash substitute' for down payments on other investment properties. 'Profitability is therefore predicated on ever-rising house prices...“[Many] international wholesale lenders ... may find out the hard way that they have invested into nothing more than a $1.7 trillion ‘piss in a fancy bottle scam’,” Homebuyers forget the original premise and and become blinkered by the price action - which is that house prices are going up and up. Because it has been relatively easy and cheap to borrow money to finance purchases on these properties homebuyers suddenly see themselves as investors and decide to buy more than one house, because ‘it’s only going to go up’. This is where we are with so many asset classes right now, including bitcoin, property, vintage cars and equities. Debt and bubble junkies But what gets the narrative going in the first place? In the last ten years it has been the generosity of central banks in their infinite money printing and low interest rate policies. “Post the financial crisis, the largesse of central banks appears to be inducing quicker and steeper price gains in assets compared to the case historically,” analysts at BAML wrote “Speculative behavior in assets is cropping up more frequently and in more places than just credit markets.” Earlier in the summer Citi's Hans Lorenzen said the effect of the central banks' 'largesse' was that "the wealth effect is stretching farther and farther afield." BAML's analysts are also seeing this spread of the bubble effect across a number of markets, not just in credit markets where there is an unprecedented buying spree. 'Asset bubbles seem to be becoming more “bubbly” as time goes by...' Unlike our bitcoin friends, BAML sees a key issue with the current trajectory of the crypto's price: For instance, the increase in Japanese equities was pronounced between mid-1982 and the end of 1989, with share prices rising around 440% over the period. But Bitcoin, for instance, has risen roughly 2000% since just mid-2015. And other, recent, in-vogue indices seem to be surging higher as well. Not to mention the Nasdaq index has soared over 18 % this year while the S&P 500 and Dow Jones indexes are each around 10% higher - building on the already large gains seen in recent years. Throughout the year U.S. bond yields at the 10-year and 30-year maturities have also fallen. As Deutsche Bank's John Cryan pointed out much of this inflation in the market place is thanks to the prolonger period of low-interest rates and cheap monetary policy. He called for the ECB to put an end to their current monetary policy and it is now causing “ever greater upheaval.” “We are now seeing signs of bubbles in more and more parts of the capital market where we wouldn’t have expected them...I welcome the recent announcement by the Federal Reserve and now also from the ECB that they intend to gradually bring their loose monetary policy to an end.” Is no one else worried about this? Cryan pointed out that today volatility is markedly cheap given what is going on in both financial markets and the wider geopolitical space. "The interesting thing about the markets today is that obviously they pay some regard to these hotspots but they don't seem to be paying too much regard because we see very high asset prices in almost all asset categories..." In Professor Steve Keen’s book Can We Avoid Another Financial Crisis?, he argues that many countries have become debt junkies. “They face the junkie’s dilemma, a choice between going ‘cold turkey’ now, or continuing to shoot up on credit and experience a bigger bust later.” Is it all about to go ‘pop’? BAML strategist Barnaby Martin thinks not. Currently the market has a benign view on rates and this will most likely only be altered by an ‘inflationary shock’ which will see the major flows into the credit cycle fall back. Or the ECB swiftly stops with its current QE programme. The latter may come sooner than we think, today the ECB is expected to give some indication on its plans regarding bond purchases, but in reality it probably won’t make much difference. As Martin writes, this party isn’t coming to an end just yet: "the end of the credit party will likely require a big inflationary “shock” in Europe, and one strong enough to reset market expectations over the pace of rate hikes. Safe to say that this seems a long way off to us." As a result, helped by falling political uncertainty (note European policy uncertainty is now lower than US policy uncertainty – the first time since mid-2012) and the renewed rise in negative yielding assets (note record number of European countries now with negative yielding debt), we see credit spreads heading tighter into year-end. China swoops in from the left-field How might all this end? Who knows. The last time interest-rates were this low for as long was during the 1930s and that ended with the Second World War. It might be through trying to avoid World War III that the financial collapse is finally triggered. Currently Trump is relying heavily on China to cool things down with Kim Jong-Un of maniacal despot fame. In Keen’s latest book China is one of the countries he believes is a debt junkie. The country’s credit-driven expansion has accounted for more than half of global growth since 2008. Why? Because it dealt with the collapse of the Western credit bubble in 2008 by fuelling a bubble of its own. Today Chinese banks have $35tn of assets on their balance sheets – a fourfold increase since 2008. In the last decade private debt as a proportion of the country’s annual economic output (GDP) has increased from 120% to 210%. Its financial system could almost be a mirror to those seen in the US and UK in the run up to the financial crisis. It has a large shadow banking system and special investment vehicles that take assets off balance sheets. How does this relate to Trump, North Korea and the next financial crisis? Trump needs China on side when dealing with Kim Jong-Un. However, last week Beijing said that in the event of war between the two nuclear powers it would sit on the sidelines. Trump now has to decide how to handle China as the country clearly has its limits in how much it will help. The most obvious option would be to impose economic sanctions for example, slapping tariffs on steel imports. It could also put China in a negative light in terms of its dealings in markets such as going back to Trump’s old rhetoric branding the country as a currency manipulator or accusing it of facilitating illegal piracy businesses. Should sanctions be imposed then a trade war would inevitably erupt. This eruption would firmly put a pin in China’s bubble and ripples would be sent out across the world. Bubbles, bubbles everywhere ... lots of potential pins ... got gold? News and Commentary Gold holds steady amid softer dollar (Reuters.com) Stocks Rise, Treasuries Fall on Debt-Ceiling Deal (Bloomberg.com) Trump cuts deal with Democrats in Congress to avert immediate budget and debt crisis (LATimes.com) Fed’s Beige Book finds worry about health of U.S. auto industry (MarketWatch.com) Fischer to Step Down in Mid-October as Fed Vacancies Mount (Bloomberg.com) Source: Bloomberg “Sum of All Fears” Restores Investors’ Faith in Gold (Bloomberg.com) How Investors Are Preparing for the Worst on North Korea (Bloomberg.com) We’re Going into Another Long-Term Gold, Silver Bull Market - Neumeyer (SmallCapPower.com) Gold Break Above $1,375/oz Should See Rise To "Initial Target of $1,705/oz" - BMO (GoldSeek.com) ‘Things Have Been Going Up for Too Long’ - Goldman CEO (CNBC.com) Gold Prices (LBMA AM) 07 Sep: USD 1,340.45, GBP 1,026.52 & EUR 1,119.54 per ounce06 Sep: USD 1,340.15, GBP 1,028.03 & EUR 1,122.11 per ounce05 Sep: USD 1,331.15, GBP 1,029.51 & EUR 1,120.43 per ounce04 Sep: USD 1,334.60, GBP 1,030.98 & EUR 1,120.53 per ounce01 Sep: USD 1,318.40, GBP 1,020.18 & EUR 1,107.98 per ounce31 Aug: USD 1,305.80, GBP 1,013.17 & EUR 1,098.31 per ounce30 Aug: USD 1,310.60, GBP 1,014.93 & EUR 1,096.71 per ounce Silver Prices (LBMA) 07 Sep: USD 17.79, GBP 13.59 & EUR 14.85 per ounce06 Sep: USD 17.77, GBP 13.62 & EUR 14.90 per ounce05 Sep: USD 17.88, GBP 13.80 & EUR 15.03 per ounce04 Sep: USD 17.80, GBP 13.75 & EUR 14.95 per ounce01 Sep: USD 17.50, GBP 13.53 & EUR 14.69 per ounce31 Aug: USD 17.34, GBP 13.47 & EUR 14.62 per ounce30 Aug: USD 17.44, GBP 13.49 & EUR 14.60 per ounce Recent Market Updates - Physical Gold In Vault Is “True Hedge of Last Resort” – Goldman Sachs- Bitcoin Falls 20% as Mobius and Chinese Regulators Warn- Gold Surges To $1338 as U.S. Warns of ‘Massive’ Military Response- Precious Metals Outperform Markets In August – Gold +4%, Silver +5%- 4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders- Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards- Gold Surges 2.6% After Jackson Hole and N. Korean Missile- Diversify Into Gold On U.S. “Political Instability” Advise Blackrock- Trump Presidency Is Over – Bannon Is Right- The Truth About Bundesbank Repatriation of Gold From U.S.- Cyberwar Risk – Was U.S. Navy Victim Of Hacking?- Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300- Mnuchin: I Assume Fort Knox Gold Is Still There Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
~ Fibozachi "Learn the rules like a pro, so you can break them like an artist" - Pablo Picasso | the ECB Awaiting any hint of guidance from Super Mario as to WTF the ECB’s ever-‘upcoming’ exit strategy may be .... .... before hitting a wall in Berlin (or tearing down that wall to erect an even yuuger one) ... ... by the Bund-buy-button bludgeoning Bundesbank bumping up before the brink, of Barclay’s Bundes' Bund band .. .. the Euro and US Dollar each sit on opposite sides of an FX see-saw. Technically, literally and figuratively. What does that mean? "What it [literally] means is that the ECB has to be very cautious with its exit and if they don't taper within less than six months (of ending the programme) something might have to give." - Pictet Wealth Management senior economist Frederik Ducrozet, quoted by Reuters (5.9.17) What it technically means is that despite new recent swing highs - and possible climaxing pricespasm higher, produced by the finale throes of the PSPP' sadomasochistically priapistic program - the EURUSD' technical profile is becoming increasingly sanguine - where sanguine is, somehow, a slightly less smarmy way of saying hopium-infused headfake - as the ever-overdue-for-a-correction-2017 EURUSD rally may be about to run out of steam around round number 120. Technically speaking: the Euro' 1.03395 EUR swing low set in January 2017 is a major swing low. We have to go back 15 years - to 2002 - to find the EURUSD at a lower price level. As the Euro Futures weekly chart directly below shows (EC, continuous contract) ... ... the RSI, MACD, and Stochastics are in Overbought Territory .. .. and may soon reverse slope downwards and/ or cross-over their own averages (dashed white lines, within sub-panels of pic directly below). If the 2017 EURUSD rally finally comes to an end this week ... - on the heels of Super Mario Draghi Maths providing an actual semblance of "guidance" - ... it would mark a 34-week Fibonacci low-to-high cycle. After filling the tiny gap from February 2015, price has hit levels that served as major support in the past ~ 'support' is when price meets from above, 'resistance' is when price approaches from below. Much like "how to draw a trendline" or "stay woke", the ineptly incorrect application of ever-so-technical terms is irking. To recap: 'support' when price approaches from above, 'resistance' from below. And in this case, what was support will likely prove to be resistance. If Euro Futures turn down in the next few coming weeks, the first downside target is the 1.14 – 1.15 area ... which, served as resistance in marking major EURUSD swing highs over the past few years. ~ Fibozachi
- Physical gold is "the true currency of the last resort" - Goldman Sachs- "Gold is a good hedge against geopolitical risks when the event leads to a debasement of the dollar" - Trump and Washington risk bigger driver of gold than risks such as North Korea- Recent events such as N. Korea only explain fraction of 2017 gold price rally- Do not buy gold futures or ETFs rather "physical gold in a vault" [is] the "true hedge" Editor: Mark O'Byrne What's increasing the demand for gold? Is it Kim Jon-Un's calls for nuclear war? Trump's tough tweets on government and trade and unleashing "fire and fury" on North Korea? The threat of World War III? Possibly not, according to Jeff Currie of Goldman Sachs. This is more to do with the market mechanics underlying such events. Currie released a note arguing that gold's strong performance of late is less to do with the current perceived risk in the geopolitical sphere and instead from the currency debasement that arises from central banks printing money. In light of this, investors should be buying up gold. Goldman's Currie refers to gold as the 'geopolitical hedge of the last resort'. This is the case 'if the geopolitical event is extreme enough that it leads to some sort of currency debasement' and especially so ' if the gold price move is much sharper than the move in real rates or the dollar.' Read on to see in exactly what form Currie believes you should be investing in gold. It has become too easy to pin gains on geopolitics As we have repeatedly pointed out, the gold price jumps following events such as North Korea testing missiles or Hurricane Harvey or a declaration from Trump. However these jumps are not frequently sustainable. What is going on in the U.S. and global markets and economy which really provides long-term support for the every-strengthening gold price. Currie writes: “It is tempting to blame the rally in gold prices on recent events in North Korea. While these events have helped to create a bid in gold, they only explain [roughly] $15 of the more than $100 [per ounce] rally since mid-July.” It is too easy to pin gold's rise on geopolitical events. Instead, argues Currie, these events are only really impacting gold if they lead to 'actual currency debasement.' Instead, the recent rally has been down to the decline in the U.S. dollar and lower real interest rates. Gold is the currency of the last resort All about that (de)base This dynamic is captured by a negative correlation between gold prices and real interest rates. As the central bank prints more currency, the price of the currency as measured by the real interest rate declines. The lower real interest rate, in turn, reduces the opportunity cost of holding a real asset like gold, leading the market to bid up gold prices. So at the core, gold is a hedge against debasement, which is why we have termed it the “currency of last resort.” Bigger things to worry about than Korea Interestingly gold's move this year has had far more to do with President Trump than it has to do with North Korea. Currie argues that Kim Jong-Un might only be responsible for 15% of the yellow metals' move. 85% of the price rise can be accounted for by the fact that the Trump risk premium is reflected in both real interest rates and a weaker US dollar. This does not mean that gold will no longer be classed as a hedge against geopolitical risk (as well as currency debasement). But, in the current climate gold is reacting more to Trump risk and the ongoing devaluation of monetary assets. We find that gold can effectively hedge against geopolitical risk if the geopolitical event is extreme enough that it leads to some sort of currency debasement, and especially if the gold price move is much sharper than the move in real rates or the dollar. For these events, gold essentially serves as a call option and can therefore be thought of as a “geopolitical hedge of last resort.” For example, gold served as an effective hedge after the events of September 11, 2001 when the US Federal Reserve substantially increased dollar liquidity, debasing the US dollar. Gold also proved an effective hedge during the Gulf Wars as governments printed money. Learn from Lehman In conclusion, gold is still very much as we have argued - a hedge against geopolitical risk and currency debasement. Investors must consider gold-market liquidity when using gold to protect themselves. Goldman Sachs argue that liquidity in the gold market is crucial when deciding to hedge via physical gold in a vault versus COMEX gold futures. Investors should not assume that during a geopolitical event liquidity will not be a problem: Using a gold futures contract as the basis of the hedge makes the implicit assumption that market liquidity will not be a problem in the realization of a geopolitical event. Goldman Sachs strongly advise that investors buy physical gold as opposed to ETFs or Comex Futures. Their logic for this? The liquidity event that was the collapse of Lehman Brothers. The importance of liquidity was tested during the collapse of Lehman Brothers in September 2008. Gold prices declined sharply as both traded volumes and open interest on the exchange plunged. After this liquidity event, investors became more conscious of the physical vs. futures market distinction and began to demand more physical gold or physically-backed ETFs as a hedge against black-swan events. Therefore owning physical gold bullion coins and bars in the safest vaults in the world will again be the primary way to protect yourself and your wealth in the event of a geopolitical crisis and liquidity crunch. "The lesson learned was that if gold liquidity dries up along with the broader market’s, so does your hedge—unless it is physical gold in a vault, the true “hedge of last resort." Gold and Silver Bullion - News and Commentary Gold up for fifth straight day as geopolitical concerns persist (Reuters) Asian Stocks Fall as North Korea Worries Persist (Bloomberg) Gold Outshines Bitcoin After N. Korea Bomb Test & China ICO Ban (Barrons) U.S. stocks pummeled by policy uncertainty, North Korea tensions (Marketwatch ) Fed governor urges central bank to pretend there's no inflation (Reuters) Source: BofA Via Zerohedge.com Gold is a currency debasement hedge of last resort - Goldman (Yahoo Finance) Goldman Issues Two Different Price Targets On Gold In The Same Day (Zerohedge) Commentary: I’m not buying gold until this happens (CNBC) Paris Hilton, the China crypto crackdown… and the worst way to buy bitcoin (Stansberry C.H.) BofA: Even The Bubbles Are Becoming More "Bubbly" Thanks To Central Banks (Zerohedge ) Gold Prices (LBMA AM) 06 Sep: USD 1,340.15, GBP 1,028.03 & EUR 1,122.11 per ounce05 Sep: USD 1,331.15, GBP 1,029.51 & EUR 1,120.43 per ounce04 Sep: USD 1,334.60, GBP 1,030.98 & EUR 1,120.53 per ounce01 Sep: USD 1,318.40, GBP 1,020.18 & EUR 1,107.98 per ounce31 Aug: USD 1,305.80, GBP 1,013.17 & EUR 1,098.31 per ounce30 Aug: USD 1,310.60, GBP 1,014.93 & EUR 1,096.71 per ounce29 Aug: USD 1,323.40, GBP 1,020.34 & EUR 1,097.36 per ounce Silver Prices (LBMA) 06 Sep: USD 17.77, GBP 13.62 & EUR 14.90 per ounce05 Sep: USD 17.88, GBP 13.80 & EUR 15.03 per ounce04 Sep: USD 17.80, GBP 13.75 & EUR 14.95 per ounce01 Sep: USD 17.50, GBP 13.53 & EUR 14.69 per ounce31 Aug: USD 17.34, GBP 13.47 & EUR 14.62 per ounce30 Aug: USD 17.44, GBP 13.49 & EUR 14.60 per ounce29 Aug: USD 17.60, GBP 13.59 & EUR 14.62 per ounce Recent Market Updates - Bitcoin Falls 20% as Mobius and Chinese Regulators Warn- Gold Surges To $1338 as U.S. Warns of ‘Massive’ Military Response- 4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders- Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards- Gold Surges 2.6% After Jackson Hole and N. Korean Missile- Diversify Into Gold On U.S. “Political Instability” Advise Blackrock- Trump Presidency Is Over – Bannon Is Right- The Truth About Bundesbank Repatriation of Gold From U.S.- Cyberwar Risk – Was U.S. Navy Victim Of Hacking?- Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300- Mnuchin: I Assume Fort Knox Gold Is Still There- Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words- Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - Bitcoin falls 20% as Mobius and Chinese regulators warn- “Cryptocurrencies are beginning to get out of control” - warns respected investor Mark Mobius- Mobius believes governments will begin to clamp down on cryptocurrencies sparking rush to gold- Yesterday China's PBOC ruled Initial Coin Offerings (ICOs) are illegal and all related activity to halt- China is home to majority of bitcoin miners- Paris Hilton latest celebrity to support an ICO- Gold's return of 16% YTD look 'dull' or 'stable'?- Bitcoin fell 23%, now down 16% from $5,000 high Editor: Mark O'Byrne Bitcoin in USD 1 Year (Coindesk) An ICO - “unregulated issuances of cryptocoins where investors can raise money in bitcoin or other [cryptocurrencies]”Financial Times Just as you thought you were getting your head around bitcoin and all the other hundreds of cryptocurrencies out there, the financial headlines are screaming at you about something called initial coin offerings or ICOs. Now you don’t really know what’s going on. The latest news in the crypto world is that the People’s Bank of China (PBOC) announced yesterday that ICOs (Initial Coin Offering) are illegal and that all related fundraising activity should cease immediately. But what is an ICO? An ICO is like an IPO but kind of in reverse. It is a tool that trades future cryptocoins in exchange for cryptocurrencies of immediate, liquid value. You exchange bitcoin or ethereum with the underlying company in exchange for a new token, say ‘ISawYouComing Coin’ A more formal explanation is offered by Travis Scher: An ICO is a crowdsale of cryptographically secured blockchain tokens to fund the development and operation of one of three types of blockchain projects: A platform-layer blockchain (such as ethereum or Lisk) An organization that operates on a blockchain (known as a decentralized autonomous organization ('DAO'), or a centrally organized distributed entity ('CODE') A decentralized application ('dapp') that runs on a platform-layer blockchain. Tokens that fund these are sometimes known as appcoins. So far in 2017 $1.366 billion has been raised in ICOs. In global market terms they are still relatively small. But when you consider that US startups raised just $11 billion through IPOs in the second-quarter of this year then you can appreciate the rapid growth in the space. The largest ICO so far this year has been by Tezos to fund its new blockchain tech which is still alpha testing. They raised $232 million worth of bitcoin (BTC) and ether (ETH) coins. To be clear, to partake in an ICO does not automatically grant you ownership or shareholder rights to the underlying company, as would happen in an IPO. Instead you are exchanging money for a token that may or may not succeed in the future. Given how many thousands of cryptos are currently competing with one another this is a real punt. Investors have to make sure they spend a huge amount of time researching the underlying blockchain, the market, the team etc. You should only go for an ICO if you have a very significant appetite for risk, no concerns about losing your capital and love a good flutter. Sound little too new and Wild West? You’re not the only one who thinks so and there is plenty of evidence to back up your concerns. There is no regulation ensuring that those offering the ICO do so in a responsible manner as per other fundraising activities. A quick search of ICO fraud and you will be confronted with many articles (all from 2017) reporting on various ICO scams. Plus Paris Hilton has just jumped in on one…not to cast aspersions but, but, but…it is ... So what’s the deal? A $2bn+ fundraising market and no regulation? In a brilliant report by Smith+Crown it is explained how the usual rules of fundraising can be avoided by ICOs: Most ICOs today are marketed as ‘software presale tokens’ akin to giving early access to an online game to early supporters. In order to try to avoid legal requirements that come with any form of a security sale, many ICOs today use language such as ‘crowdsale’ or ‘donation’ instead of ICOs. Don’t forget the bitcoin and cryptocurrency industry is also relatively unregulated. By allowing it to grow organically and without various regulatory restrictions we have seen major shakeouts in the industry and it has forced its members to pull up their socks and seek out regulation. However ICOs are now at a point where they are no doubt attracting unsophisticated investors. I have met many people who are worried they have missed out ‘on the bitcoin thing’ and believe that by getting in on an ICO they might be getting ahead of the game. These same people tend to know little about blockchain instead stating that it is ‘the next big thing’ and just have major FOMO. Without regulation there is little protecting newbie investors. What’s the difference between an ICO scam and all the other’s we’ve seen before now? Matt Levine of Bloomberg explains it perfectly: ‘an ICO scam is subtly different from a gold-mining scam in that, with an ICO scam, you can do a scam ICO. You don't have to get a publicly listed company and pump and dump its stock: You can just say "I'm doing an ICO, here's the address to send money," and people will send you money if you have scammed them correctly. Lord knows, it happens often enough. This does not work as well with gold: You can't say "I found some gold, please buy some," because buyers will want to see the gold. (Well, there are gold scams like that, but they seem harder to pull off.) With an ICO you may have to write a white paper explaining your token, but the quality bar for that is low, certainly lower than faking up some bars of gold. Lower even, I would think, than faking up a public company, making false filings with the SEC, doing wash trades to pump the stock higher, and then dumping it at the right moment on unsuspecting buyers.’ The government clampdown But this may now be about to come to an end. Seven-China based regulators took sweeping action against ICOs, putting both the practice and the future of the underlying tokens at risk. A joint statement released by the regulators explained: [ICO financing] is a kind of non-approved illegal open fund raising behavior, suspected of illegal sale tokens, illegal securities issuance and illegal fund-raising, financial fraud, pyramid schemes and other criminal activities. Subsequent statements have ordered that all fundraising activity cease and all completed ICOs be refunded. China is not the world’s biggest coin offering market but does account for 25% of the capital raised in the last year. There are 43 ICO platforms in China. By mid-July this year these platforms had raised 2.6 billion yuan ($399 million) from 105,000 investors. The China decision is not totally unexpected and comes on the back of both the US and Canadian regulators voicing similar concerns about ICOs. In the US the SEC has mentioned these potential ‘pump and dump schemes’ whilst the Canadians have suggested that ‘most ICOs need oversight.’ Both have referred to the tokens as potentially being ‘unlicensed securities.’ Just last week the SEC suspended trading of shares in four companies that had been talking up ICO-related activity. The four firms (First Bitcoin Capital Corp., CIAO Group, Strategic Global, and Sunshine Capital). None of the four firms are currently big deals by any means but it didn’t stop them from announcing as such. CIAO Group, for example announced a"$530 Billion [!!!] Blockchain and Cryptocurrency Target Market Collaboration" this summer. A total scam Not everyone running an ICO is out to scam you. One of the dangers of the press coverage is that its getting to be a little like the initial coverage of bitcoin, i.e. if you’re using it you must be a crook. This is certainly not the case for all entrepreneurs offering an ICO. ICOs can be an easy way to raise money. Even the SEC explained that not all ICOs are not intrinsically bad, stating that they "may provide fair and lawful investment opportunities." Anyone who has run a start-up knows how tough and time-consuming it is to raise capital. Should the ICO do well then the broad distribution of the token can provide some pretty powerful momentum for your business. It is also an interesting way for the bitcoin millionaires to use their new-found wealth. In the same way we see Silicon Valley entrepreneurs re-invest their wealth into startups, we see a similar effect taking place in the crypto world. However, they are unregulated with a serious lack of control regarding valuation, marketing and ethics. Worse than the dot com bubble We have seen a number of bubbles over the years, people still speak of the dot com bubble. Then of course there was the global real estate bubble that helped trigger this whole financial mess. With both situations inexperienced investors thought they had found quick and easy ways to make money. This in itself isn't how investing is supposed to work. A recent Sovereign Man blog explained this well: There’s a token issued by Stratis, for example, that is up 101,168% since its ICO last summer. The NXT token is up 672,989%. Those are not type-o’s. There’s another token that’s actually called “Fuck” which is up 370% in the last 24 hours. The returns are absurd… especially considering the assets are priced in Ether or Bitcoin, which have also soared to all-time highs. So on top of a 1,000% return in Bitcoin, ICO investors have also made a 100,000% return in the token. But I’m hearing exactly the same cackling that I heard from the real estate bubble days more than a decade ago. - It’s soooo easy to make money in ICOs. - It’s a foregone conclusion that the tokens will go up in value. Sorry, but it just doesn’t compute. If the tokens represent ownership in a business, then the only thing that matters is whether or not the underlying business performs well. Does the company have a compelling long-term strategic plan? More importantly-- are the managers successfully implementing the plan and achieving milestones? Is the company on a path to financial sustainability? Nobody seems to be paying attention to these details. They just buy tokens with the expectation that the price will rise. And even if a business performs well, it’s ridiculous to think that a startup company can be worth 100,000% more in a year. Or nearly 700,000% more in a couple of years. To put these numbers in context, Peter Thiel invested $500,000 in Facebook back in 2004 as the company’s first big investor. In 2012 he sold most of it for $1 billion. That’s a return of 200,000% in eight years… pretty tame by ICO standards. Does gold look dull or just stable? Earlier this year the bitcoin price surpassed that of gold for the first time. When it had previously reached parity with the precious metal it had subsequently experienced a fall back in price. Since then it has slowly but with major volatility recovered in price and reached a high of $5,000 last Saturday (Sept 2). Bitcoin’s stellar performance has prompted some respected investors to suggest that gold will be replaced by either bitcoin or another cryptocurrency. Many of the arguments for this surround the potential convenience of bitcoin plus the returns that investors have experienced over this period of time. Some have dubbed gold as ‘dull’ in comparison. The problem is that one is bought by and trusted by central banks, the other isn’t. Not only that but the infrastructure forming around bitcoin and its contemporaries is making regulators increasingly nervous rather than reassured. When governments get nervous about an industry it’s a bad sign for those hoping a cryptocurrency will succeed. In order to succeed a cryptocurrency needs a strong infrastructure surrounding it. Legendary investor Mark Mobius believes this is good news for gold. He told Bloomberg: “Cryptocurrencies are beginning to get out of control and it’s going to attract the attention of governments around the world,” Mobius said. “You’re going to get a reversion back to gold because people are going to wonder, can I really trust these currencies?” Currently it isn’t so much the cryptocurrencies that are getting out of control but instead part of the infrastructure. However this in itself get people nervous and wondering if they can trust a crypto as a store of value and medium of exchange. “People need a means of exchange and they need to trust that,” said Mobius, who was interviewed before China’s announcement. “Right now the trust is good -- with bitcoin people are buying and selling it, they think it’s a reasonable market -- but there will come a day when government crackdowns come in and you begin to see the currency come down.” That day is here now. News and Commentary Gold eases from near 1-year high as dollar steadies (Reuters) Safe Havens Maintain Gains as Korea Threats Linger (Bloomberg) Gold Prices Jump On Fresh North Korean Fears, Long Positions Increase Further (Economics Calendar) Perth Mint Silver sales slump to one-year low; Gold sales down 2.3% (Scrap Register) China’s virtual coin fundraising ban just the start of tighter regulations (Reuters) Source: Zerohedge.com We're addicted to debt and headed for a crash. It could be worse than 2007 (The Guardian) The Return of Meltdown Risk? (Handelsblatt) The Decline and Fall of America (In Numbers) (Medium.com) Ethereum, Bitcoin Crash After China Declares Initial Coin Offerings Illegal (Zerohedge) Mobius Foresees Cryptocurrency Crackdown Sparking a Rush to Gold (Bloomberg) Gold Prices (LBMA AM) 05 Sep: USD 1,331.15, GBP 1,029.51 & EUR 1,120.43 per ounce04 Sep: USD 1,334.60, GBP 1,030.98 & EUR 1,120.53 per ounce01 Sep: USD 1,318.40, GBP 1,020.18 & EUR 1,107.98 per ounce31 Aug: USD 1,305.80, GBP 1,013.17 & EUR 1,098.31 per ounce30 Aug: USD 1,310.60, GBP 1,014.93 & EUR 1,096.71 per ounce29 Aug: USD 1,323.40, GBP 1,020.34 & EUR 1,097.36 per ounce25 Aug: USD 1,287.05, GBP 1,003.90 & EUR 1,090.90 per ounce Silver Prices (LBMA) 05 Sep: USD 17.88, GBP 13.80 & EUR 15.03 per ounce04 Sep: USD 17.80, GBP 13.75 & EUR 14.95 per ounce01 Sep: USD 17.50, GBP 13.53 & EUR 14.69 per ounce31 Aug: USD 17.34, GBP 13.47 & EUR 14.62 per ounce30 Aug: USD 17.44, GBP 13.49 & EUR 14.60 per ounce29 Aug: USD 17.60, GBP 13.59 & EUR 14.62 per ounce25 Aug: USD 17.02, GBP 13.26 & EUR 14.40 per ounce Recent Market Updates - Gold Surges To $1338 as U.S. Warns of ‘Massive’ Military Response- 4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders- Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards- Gold Surges 2.6% After Jackson Hole and N. Korean Missile- Diversify Into Gold On U.S. “Political Instability” Advise Blackrock- Trump Presidency Is Over – Bannon Is Right- The Truth About Bundesbank Repatriation of Gold From U.S.- Cyberwar Risk – Was U.S. Navy Victim Of Hacking?- Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300- Mnuchin: I Assume Fort Knox Gold Is Still There- Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words- Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High- Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
Approximately 60,000 residents of Germany’s financial capital, Frankfurt, will be ordered to evacuate their homes on Sunday as the city's emergency service staff will attempt to defuse a massive World War Two bomb, discovered recently at a local building site. The 1.4-tonne HC 4000 bomb dropped by the British air force during World War Two was uncovered on a building site on Wismarer Strasse in Frankfurt’s leafy Westend where many wealthy bankers live. “We have never defused a bomb of this size,” bomb disposal expert Rene Bennert told Reuters, adding that it had been damaged on impact when it was dropped between 1943 and 1945. Bomb disposal experts who examined it said the massive evacuation could wait until the weekend. “We are still working on the modalities of the evacuation plan,” a spokeswoman for Frankfurt police said on Wednesday. As a result, ahead of Sunday's planned evacuation, more than 100 hospital patients, including premature infants and those in intensive care, were evacuated from two Frankfurt hospitals on Saturday, city councillor Markus Frank told Reuters television. Every year more than 2,000 tonnes of live bombs and munitions are still found in Germany, even under buildings. In July, a kindergarten was evacuated after teachers discovered an unexploded World War Two bomb on a shelf among some toys. During World War II, Germany was pummeled by 1.5 million tonnes of bombs from British and American warplanes that killed 600,000 people. German officials estimate 15% of the bombs failed to explode, some burrowing six meters (yards) deep. And while local residents have been eager to comply with the unprecedented evacuation, the biggest since the war, Frankfurt fire and police chiefs said they would use force and incarceration if necessary to clear the area of residents, warning that an uncontrolled explosion of the bomb would be big enough to flatten a city block. Frankfurt’s residents have to clear the area by 8 a.m. on Sunday and police will ring every doorbell and use helicopters with heat-sensing cameras to make sure nobody is left behind before they start diffusing the bomb. Where this otherwise trivial evacuation takes on a more sinister, "Die Harder" spin, is when looking at what other structures are impacted by the 1.5 km evacuation radius: these include Frankfurt’s Goethe University, police headquarters, two hospitals, transport systems... oh and the Bundesbank headquarters, which as a reminder ten days ago completed the accelerated repatriation of 674 tonnes of gold - some three years ahead of schedule - from New York and Paris to its vault deep underground. According to Reuters, the Bundesbank vault which stores 1,710 tonnes of gold deep underground - approximately half the country’s reserves - is located less than 600 meters from the location of the bomb. Well, that particular vault which now holds $70 billion in gold (including $28 billion in freshly repatriated physical) and everything around it, is about to be evacuated. All that's missing are several dozen dump trucks to take advantage of the massive evacuation that will leave thousands of gold bars without security for 1.5 kilometers in any direction. While airspace for 1.5 kilometers around the bomb site will be closed, we doubt that will prove a major hurdle to anyone eager to take a stab at a real-life reincarnation of the second Die Hard movie. Still, to prevent anyone from getting any ideas of following in Simon Gruber's footsteps, a spokesman for the German Bundesbank said, that "the usual security arrangements" would remain in place while experts worked to disarm the bomb. The fate of half of Germany's gold aside, bomb disposal experts said they will make use of a “Rocket Wrench” to try and unscrew the fuses attached to the HC 4,000 bomb. If that fails, a water jet will be used to cut the fuses away from the bomb, Bennert told Reuters. The most dangerous part of the exercise will be applying the wrench, Bennert said. Roads and transport systems, including the underground, will be closed during the work and for at least two hours after the bomb is defused, to allow patients to be transported back to hospitals without traffic. It is not unusual for unexploded bombs from World War Two air raids to be found in German cities, but rarely are they so large and in such a sensitive position. Meanwhile, Frankfurters can spend the day at shelters set up at the trade fair and the Jahrhunderthalle convention center. Most museums are offering residents free entry on Sunday, and a few of them will open their doors earlier in the morning than usual.
Precious Metals Outperform Markets In August – Gold +4%, Silver +5% - All four precious metals outperform markets in August- Gold posts best month since January, up nearly 4%- Gold reaches highest price since US election, climbs due to uncertainty and safe haven demand- S&P 500 marginally higher; Euro Stoxx, Nikkei lower for month- Platinum is best performing metal climbing over 5%- Palladium climbs over 4% thanks to seven year supply squeeze- Fear, uncertainty and political sanctions are amongst biggest drivers for precious metals- Never been a better time to diversify and rebalance portfolios with stocks and bonds near record highs and looking vulnerable Editor: Mark O'Byrne Market Performance in August (Finviz.com) All four precious metals have made gains in the month of August. Whilst platinum and palladium's leading performances can largely be attributed to industrial factors they have also benefited from the safe haven demand which is driving gold and silver prices. Safe haven demand really came into its own this last month. Issues with North Korea have stepped up a level whilst markets have finally begun to question the complacency they have been feeling in regard to the US political and financial situation, geopolitical risk and the increasingly uncertain outlook for the global economy. Ultimately very little is known about what will happen with the US debt ceiling, increasingly overvalued stocks (both the NASDAQ and the S&P500), Trump's plans for corporate tax, dealings with North Korea and (not forgetting) Venezuela. We are living in very uncertain times indeed and investors decided to allocate funds to the ultimate safe havens - the precious metals. Gold shines as investors rush into safe havens This week gold rose to its highest point so far in 2017 as tensions between North Korea (but really, the rest of the world) and the US ramped up. For the month of August the price is up 3.59%. Silver was also up thanks to safe haven demand, but its 5% climb was also in part due to manufacturing demand. Currently, about 55% of all silver consumed is for industrial use. Gold has so far risen in every month, bar June. Gold's climb has in part been due to ongoing demand from countries such as China and India, but it has primarily been driven by the desire in the West to own a safe haven. This is not surprising given the ongoing concerns regarding North Korea, Venezuela, the Middle East and a lack of cohesion in the Trump administration. One of the dampeners on gold and silver has been the Federal Reserve's plans to raise interest rates. However, when they did so it had little effect. Expectations for further hikes are falling. Going forward Yellen and team are expected to slow down on further interest-rate increases which has provided an additional boost for the gold price. In the very short-term storm Harvey in Houston, Texas has also impacted the price of gold and silver. As a result of lost income and recovery operations, US GDP is expected to be lower in the third-quarter than was initially expected. In the long-term investors will look to gold and silver as they begin to price risk into the market. Yesterday we expressed our concerns over market complacency whilst other financial organisations have begun to warn clients about the overpriced equity markets and lack of perceived risk. It is also worth noting an expected climb in demand from China. Mark Tinker, Head of AXA Framlington wrote in a note that China’s pricing of assets in yuan (together with the plan by the Hong Kong Stock Exchange to sell yuan-priced physical gold contracts) could allow them to trade out of the banking system in the US “Having accepted payment for oil or gas in RMB, the seller, be it Russia or Saudi Arabia or anyone else for that matter, does not have to worry about having excess RMB, they can simply trade it back into gold,” Tinker said. “We are moving to a multi-polar world.” Platinum gains as Russia feels the pain Platinum has performed very well so far in the second half of the year. This most recent surge has likely come about thanks to further sanctions being placed on Russia by the US. Russia is the world's second biggest producer of the metal. The World Platinum Investment Council outlined the following arguments for platinum's role as a safe haven investment asset: - Supply demand fundamentals are strong and ETF holdings are stable, despite price volatility- Risks of supply declines are underestimated - cost pressure and falling mining investment continue - Downside risks to platinum automotive demand are overestimated- Futures positioning follows poor sentiment with high correlation to price- Platinum is undervalued against its past, its production cost and against gold Palladium climbs on Vauxhall’s woes Palladium is currently at a 16 year high. There is a major tightening in the supply of palladium because of increased demand for it in engines. 67% of palladium supply is used in car engines to clean exhaust gases from gasoline engines. There is obviously a major push for ‘clean’ transport and the Vauxhall emissions scandal and obviously helped boost demand. Inventories of palladium supply are down by abut 45% this year, whilst supply trails demand by the most in the seven years. Despite the increase in supply, there has been a significant number of redemptions in the the two main U.S. and European palladium ETFs - the ETFS Physical Palladium Shares and the ZKB Palladium. By the 22nd August $49 million had been traded in. Supply in the spot market is reportedly so tight that companies are being forced to trade in multiple ETF shares in order to redeem them with the issuer in exchange for physical palladium. ETFs are now being treated like palladium warehouses. It is also important to note that, like platinum, palladium is also hugely affected by the sanctions on Russia. It is also important to note that ETFs are a risky way to invest in precious metals and most investors would be better served owning actual precious metals rather than paper or digital proxies. Conclusion: Stars aligning? Outlook good for rest of 2017 Earlier this week we explained how investors shouldn't always be focused on price. Whilst it is nice to look at the metrics for August and see that all precious metals are up, we should instead focus on why they are up and most importantly the diversification benefits for our portfolios. Precious metals are largely climbing because the perceived risk in the political and financial system is also climbing. Interestingly many commentators do not feel some risky issues have been wholly appreciated by the markets. Problems such as North Korea are such serious risks that even someone who pays no attention to markets could spot it. The issue is that you have an overvalued stock market and a US President who cannot get his people together. This means that the US debt ceiling issue might ground the U.S. government to a halt. These issues are ones which have not yet been fully priced into the markets. They likely will be in the coming months and then the safe haven role of the precious metals and gold in particular will come into its own. News and Commentary Gold up 4% in August - largest monthly gain since January (Marketwatch) Gold steady near 9-1/2 month highs as N.Korea tensions persist (Reuters) Gold Scores Fifth Monthly Increase; US Mint Bullion Sales Slow in August (Coin News) Gold edges lower, but N.Korea worries lend support (Nasdaq) Massive wartime bomb to be defused near German gold reserves (Irish Times) Source: Marketwatch From Stocks to Bonds, the Bear-Market Signals Are Multiplying (Bloomberg) Rothschild reduces exposure to US stocks amid turmoil (Standard) Five charts show why millennials are worse off than their parents (FT.com) When the Butterfly Flaps Its Wings - Kunstler (Zerohedge) Buffett: North Korea situation is very concerning (CNBC) Gold Prices (LBMA AM) 01 Sep: USD 1,318.40, GBP 1,020.18 & EUR 1,107.98 per ounce31 Aug: USD 1,305.80, GBP 1,013.17 & EUR 1,098.31 per ounce30 Aug: USD 1,310.60, GBP 1,014.93 & EUR 1,096.71 per ounce29 Aug: USD 1,323.40, GBP 1,020.34 & EUR 1,097.36 per ounce25 Aug: USD 1,287.05, GBP 1,003.90 & EUR 1,090.90 per ounce24 Aug: USD 1,285.90, GBP 1,003.26 & EUR 1,090.44 per ounce23 Aug: USD 1,286.45, GBP 1,004.33 & EUR 1,091.68 per ounce Silver Prices (LBMA) 01 Sep: USD 17.50, GBP 13.53 & EUR 14.69 per ounce31 Aug: USD 17.34, GBP 13.47 & EUR 14.62 per ounce30 Aug: USD 17.44, GBP 13.49 & EUR 14.60 per ounce29 Aug: USD 17.60, GBP 13.59 & EUR 14.62 per ounce25 Aug: USD 17.02, GBP 13.26 & EUR 14.40 per ounce24 Aug: USD 16.93, GBP 13.20 & EUR 14.36 per ounce23 Aug: USD 17.06, GBP 13.32 & EUR 14.48 per ounce Recent Market Updates - 4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders- Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards- Gold Surges 2.6% After Jackson Hole and N. Korean Missile- Diversify Into Gold On U.S. “Political Instability” Advise Blackrock- Trump Presidency Is Over – Bannon Is Right- The Truth About Bundesbank Repatriation of Gold From U.S.- Cyberwar Risk – Was U.S. Navy Victim Of Hacking?- Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300- Mnuchin: I Assume Fort Knox Gold Is Still There- Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words- Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High- Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard- World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2 Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
Gold Reset To $10,000/oz Coming "By January 1, 2018" - Rickards - Trump could be planning a radical “reboot” of the U.S. dollar- Currency reboot will see leading nations devalue their currencies against gold- New gold price would be nearly 8 times higher at $10,000/oz- Price based on mass exit of foreign governments and investors from the US Dollar- US total debt now over $80 Trillion - $20T national debt and $60T consumer debt- Monetary reboot or currency devaluation seen frequently - even modern history- Buy gold eagles, silver eagles including monster boxes and gold bars - Have a 10% allocation to gold, smaller allocation to silver Editor: Mark O'Byrne Source: Agora Financial A new monetary standard which will see the dollar "reboot" and gold be revalued to $10,000/oz according to best-selling author and Pentagon insider Jim Rickards. A monetary 'reboot' is not unprecedented Articles about an imminent return to the gold standard are not exactly infrequent in the gold world and it can be easy to become immune to them and dismiss them without considering the facts and case being made. Many of the articles are not just based one ever-wishful daydreams. Much of it comes from information that is true about today and is then applied to situations that we have seen in the past. Rickards makes this point himself. A monetary reset is not unheard of. Since the Genoa Accord in 1922 there have been a further eight reboots. The most recent was in 2016 in what Rickards refers to as the Shanghai Accord which purportedly saw deals done that would allow China to ease without leading to a sharp correction in the US stock market. Rickards isn't the only one who is speculating that there could be some big monetary changes on the horizon. In March intelligence service Stratfor wrote: Trump may consider unilateral or, failing that, multilateral currency interventions to bring it back down...Negotiating a new coordinated monetary intervention Stratfor's analysis was considering the threat of a strong dollar on Trump's plans to reduce the trade deficit. We have recently discussed the danger of political deadlock and uncertainty on the US Dollar and how this will benefit gold. Rickards' comments come from a similar viewpoint in that there is decreasing faith in the US dollar. This lack of trust is mainly driven by the more than $100 trillion debt ($20 trillion national debt and another $100 trillion in off 'balance sheet' liabilities) in the country and the ongoing dedollarisation by major economies. Should Trump continue to stumble, disappoint and provoke then we will no doubt see this issue snowball even faster. No longer banking on debt The Federal Reserve — America’s central bank — has lowered interest rates and printed nearly 4 trillion new dollars out of thin air since the economic crisis in 2008. That’s equivalent to nearly one quarter the size of the entire U.S. economy. The number one consequence of all of this money printing so far hasn’t been inflation at all… It’s been debt. Total U.S. debt — across all private sectors — has risen to nearly $60 TRILLION… That’s over three times as big as the entire U.S. economy. If you add the federal debt to that number, you get $80 trillion! That’s more than four times the size of the U.S. economy. Source: Jim Rickards via Agora In fact, the Government Accountability Office just reported this year that the U.S. is at risk of “fiscal failure.” And Harvard Economics Professor Kenneth Rogoff says, “There’s no question that the most significant vulnerability… is the soaring government debt. It’s very likely that will trigger the next crisis as governments have been stretched so wide.” And Investor’s Business Daily reports that: “Current total debt, at roughly 105% of GDP, is already in the danger zone — and based on historical economic studies, this is where nasty things can happen.” All of this is the result of too much debt… too many Obama policies… and too much meddling by the Federal Reserve. But what happens when there is too much debt? The dollar is still relatively strong so does it matter? Yes, says Rickards, 'many countries are relentlessly abandoning the dollar.' Too much debt to make America Great Again Countries aren’t sticking around to figure out whether the U.S. can really pay back its debt or wait to see if their dollar reserves are going to keep losing their value… Like billionaire investor Warren Buffett said “People are right to fear paper money… it’s only going to be worth less and less over time…” And he’s right. The U.S. dollar has lost 96% of its value since the Federal Reserve was created in 1913. Meanwhile the national debt has skyrocketed! The dollar and debt are two sides of the same coin: Source: Jim Rickards via Agora That’s why many countries are relentlessly abandoning the dollar. Typically most foreign governments invest their surplus or savings in U.S. financial assets. Global trade is typically conducted in U.S. dollars, too. The dollar is what’s called the “world’s reserve currency.” As one Forbes columnist put it, “ There is a global currency. It’s called the ‘U.S. dollar.’” But all of that is about to change if the dollar is not rebooted. The dollar is getting dumped around the globe because of our debt, spending and money printing. The total amount of “de-dollarization” is at least: $1.14 TRILLION… But it’s not just the “de-dollarization” of the world that’s making this so urgent. You see, countries have not only stopped buying U.S. Treasuries… but they're selling them at a record clip. Bloomberg reports, “ America’s Biggest Creditors Dump Treasuries in Warning to Trump .” The Economist says, “As America’s economic supremacy fades, the primacy of the dollar looks unsustainable.” Trump to call global summit and take control Rickards believes that the situation of dedollarization will get so bad that the US President will be forced to call a summit of world leaders and monetary authorities. Using his stature as leader of the free world, he’ll bring the financial leaders of the globe together. This would include delegates from the U.S., China, Japan, Germany, Italy, France, the UK and the International Monetary Fund. Then, they’ll agree to simultaneously revalue all of their currencies against gold until the price reached $10,000 per ounce. Will Trump really call a global summit? Who knows. His own team probably won't know until he tweets about it. But you should consider one element that Rickards mentions. Aside from a new monetary order, Trump is about to become the most powerful US president when it comes to looking after the US Dollar. You see, there are seven total seats on the Board of Governors of the Federal Reserve. That’s the group that makes our central bank’s decisions. The president appoints each governor. That means Trump could be able to appoint five governors in the coming months, including a chair and two vice chairs. Trump will have six out of seven board seats in Republican hands. In effect, Trump will own the Fed! The Republicans will also have the White House… And a majority in the House of Representatives and Senate… Conservatives will soon be a majority on the Supreme Court, too. And there are more Republican state legislatures and governors in the state mansions than at any time since Civil War reconstruction. This means President Trump could have zero resistance to changing the debt-dollar system we have. Whether Trump 'owning' the Fed means he would seek to upend the international monetary order is one thing. But, even if he doesn't do that, investors would be wise to consider what impact a Trump-controlled Federal Reserve would have on the world. Why $10,000 per ounce? It’s the gold price Donald Trump will need to use to “reboot” the U.S. dollar and the world’s international monetary system. This isn’t a far-fetched concept, by the way… Since the world financial crisis in 2008, many of the world’s governments have been buying physical gold in record amounts. In fact, according to a recent report by the Official Monetary and Financial Institutions Forum (OMFIF), world central banks have been buying gold at a rate of 385 tons per year since the 2008 crisis. Those are levels last seen when the world was on the gold standard pre-1971. Why are they buying so much gold? Because they know gold is going to be money again… And the more gold they own, the more leverage they'll have when Trump calls the world’s financial powers together to reform the monetary system at his Mar-a-Lago resort. As with chat surrounding soon-to-be gold standard, calls for $10,000/oz gold (or more) are also not uncommon in precious metal spheres. Since I began in the gold industry I have been reading about the imminent rise of the gold price to $30,000 even $40,000. In truth, I believe such outlandish predictions are damaging for the long-term reputation of the gold and silver investment community. Regardless of where you think the gold price and gold standard could head to, it is all relative to your own situation, your own portfolio and the currencies you buy it in. At the same time, while gold at $10,000 per ounce seems outlandish now, it is not impossible and indeed the scale of the levels of debt in the U.S. and internationally make it quite possible. When gold was trading at $250/oz in 2002, a rise of more than seven times and gold at $1,900 seemed outlandish to most. Whether or not you believe Trump will ever achieve a new gold standard in a currency reset, it is vital to consider the point that central banks have been net buyers of gold for some time. A lesson for all investors. And the most important nugget to takeaway from pieces such as this is that governments are in a completely unsustainable, debt-laden position. The current state of the global economy is unprecedented. We are also in unknown times when it comes to technology, cyber threats and nuclear sabre rattling. Governments buying gold is sensible portfolio diversification. Buying gold coins and bars a prudent way to hedge coming currency devaluations Rickards, Stratfor and even us here at GoldCore cannot predict what will happen in terms of the gold price. What we do know is that gold has played a very important role throughout history - especially as a hedge against currency devaluation. Currency devaluations are coming and currencies are set to fall in value against gold as they have done throughout history. The only question is how much fiat currencies will fall versus gold and silver. History has taught us that governments rarely know what they are doing when it comes to financial and monetary planning. It has also taught us that when times are tough countries turn on one another and war becomes common. Trade wars lead to currency wars lead to real wars. We are seeing that today. Investors and savers are wise to think small. They should consider their own form of gold standard and how they can protect themselves. Buying gold bars, gold eagles and silver eagles including monster boxes is a prudent way to hedge the real risk of global currency debasement today. The extracts are taken from an article which originally appeared on Agora Financial. Gold eagles can currently be acquired from GoldCore at record low premiums of 3%.Please call to secure coins as this is a phone call offer only and not available online. Gold and Silver Bullion - News and Commentary Gold slips on stronger dollar; geopolitical risks support (Reuters.com) Asian markets rebound, shrugging off North Korea tensions (Marketwatch.com) Crude slips, gasoline jumps as storm shuts a fifth of U.S. fuel output (Reuters.com) ICE to take over London silver benchmark on Sept. 25 (Reuters.com) Wall Street insiders sell bank shares as Trump rally reverses (Irish Times) Source: GoldCore Gold to surge to $1,400 by early 2018 as rates stay low - BoA (Gulf News) The Battle for India's $45 Billion Gold Industry Has Begun (Bloomberg) Stevenson-Yang Warns "China Is About To Hit A Wall" (Zerohedge) U.S. may revalue gold if debt ceiling isn't raised - Rickards (Daily Reckoning) Gold may assume traditional role as "risk mitigator" ... Cryptocurrencies "vulnerable" - El-Erian (Bloomberg) Gold Prices (LBMA AM) 30 Aug: USD 1,310.60, GBP 1,014.93 & EUR 1,096.71 per ounce29 Aug: USD 1,323.40, GBP 1,020.34 & EUR 1,097.36 per ounce25 Aug: USD 1,287.05, GBP 1,003.90 & EUR 1,090.90 per ounce24 Aug: USD 1,285.90, GBP 1,003.26 & EUR 1,090.44 per ounce23 Aug: USD 1,286.45, GBP 1,004.33 & EUR 1,091.68 per ounce22 Aug: USD 1,285.10, GBP 1,000.71 & EUR 1,091.95 per ounce21 Aug: USD 1,287.60, GBP 999.82 & EUR 1,096.52 per ounce Silver Prices (LBMA) 30 Aug: USD 17.44, GBP 13.49 & EUR 14.60 per ounce29 Aug: USD 17.60, GBP 13.59 & EUR 14.62 per ounce25 Aug: USD 17.02, GBP 13.26 & EUR 14.40 per ounce24 Aug: USD 16.93, GBP 13.20 & EUR 14.36 per ounce23 Aug: USD 17.06, GBP 13.32 & EUR 14.48 per ounce22 Aug: USD 17.02, GBP 13.27 & EUR 14.48 per ounce21 Aug: USD 17.02, GBP 13.20 & EUR 14.48 per ounce Recent Market Updates - Gold Surges 2.6% After Jackson Hole and N. Korean Missile- Diversify Into Gold On U.S. “Political Instability” Advise Blackrock- Trump Presidency Is Over – Bannon Is Right- The Truth About Bundesbank Repatriation of Gold From U.S.- Cyberwar Risk – Was U.S. Navy Victim Of Hacking?- Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300- Mnuchin: I Assume Fort Knox Gold Is Still There- Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words- Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High- Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard- World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2- Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War”- Gold Has Yet Another Purpose – Help Fight Cancer Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
Gold Surges 2.6% After Jackson Hole and N. Korean Missile - Gold surges as N. Korea fires ballistic missile over Japan- Safe haven buying sees gold break out to 10-month high after Jackson Hole and rising North Korea risk of attack on Guam- South Korea's air force dropped eight MK 84 bombs near Seoul; simulating the destruction of North Korea's leadership- Gold rises from $1,291 to $1,325; Silver surges 3.2% from $17.05 to $17.60- Volatility as seen in VIX surges as stocks fall; FTSE -1.1%- Yen rises in short term but no safe haven in long term with gold haven risen 9.8% per annum in JPY (see chart)- Gold was moving higher after Jackson Hole and had broken through crucial $1,300/oz level- Asian geopolitical risk allied to U.S. political instability increasing safe haven bid- $20 trillion U.S. debt ceiling storm looms Editor: Mark O'Byrne This morning the price of gold has rallied to its highest point since the Trump's election. North Korea's firing of a missile over Northern Japan which landed in waters off Hokkaido in the Pacific, has sharply escalated tensions in the Korean peninsula and in Asia. This latest move by Kim Jong Un was intended to show that an attack on Guam is possible at any time, according to North Korea's Mun-hwan. Source: Yonhap via ZeroHedge There had previously been concern that the war of words between Trump and Kim Jon-Un would result in others getting caught in the crossfire. This was confirmed this morning when Japan was made a clear target. “North Korea’s reckless action is an unprecedented, serious and a grave threat to our nation”- Japanese Prime Minister Shinzo Abe Immediately after the missile launch was detected the Japanese government’s J-Alert system interrupted radio and TV to warn citizens of the possible missile and urged them to take refuge in solid buildings or underground shelters. Bullet train services were temporarily halted and warnings went out over loudspeakers in towns in Hokkaido. South Korea's air force has staged a live-fire drill simulating the destruction of North Korea's leadership. Earlier this morning four South Korean fighter jets bombed a military firing range north of Seoul after President Moon Jae-in asked the military to demonstrate capabilities in a show of strength to North Korea. North Korea refers to these missile launches as 'tests'. But they are more than tests of the equipment, they are also tests on the patience, nerves and self-control of those who feel threatened by Kim Jong-Un. Observers and surrounding countries believe this saber-rattling is growing ever more serious and dangerous by the day. As Yonhap notes, "the North's provocation is another slap in the face to Moon and U.S. President Donald Trump as they have sought to resume dialogue, and could bring tensions on the peninsula to a new high." Trump is also left red in the face after his comments that Kim Jong Un "is starting to respect us." Yet another idiotic comment from the current incumbent of the White House. Safe havens rise as risk assets fall from record highs Fear in the markets has been expressed by the climb in price of gold and the ongoing support for the Japanese Yen, Swiss Franc and US Dollar. While the yen has risen in the short term, the notion that it is a 'safe haven' in the real sense of that term - as a medium and long term hedge for investors - is inaccurate. This is clearly seen in the table above and the chart below which show that the yen has fallen nearly 10% per year versus gold in the last 15 years. Gold rose in yen prior to the crisis from 2002 to 2007 and again during the height of the crisis from 2009 to 2012. Seeing as Japan is at risk of a nuclear attack and being sucked into a war - wars are expensive things - the yen is actually vulnerable and will likely fall in the coming months. Gold in JPY - 15 Years - Goldprice.org The rise in the price of both gold and silver is expected given the events of last night, however they do not come without support elsewhere. The outcome of Jackson Hole and growing concern over the looming US debt ceiling have been providing growing support for the climb in gold and silver. Where does it end? Currently there are two major drivers for the price of gold, both of them related to President Donald Trump himself. These are: US political instability and tensions in Asia including with North Korea. Following Trump's election markets had expected Trump's plans for fiscal stimulus to do great things for the economy. A planned $500 billion infrastructure spending program was expected to lead to strong US economic expansion, higher interest rates and a more robust dollar. However, nothing has materialised and Trump now has the problem of a potential government standoff as the $20 trillion debt ceiling issue looms in September. Many might argue that Trump inherited these huge economic challenges that will likely lead to political instability. But, one problem he has definitely made worse and arguably added to (in the short-term) is that of North Korea. A major difference with the North Korea problem is that for the first time in modern history the US has a president who is happy to be confrontational and threatening. He does not appear to want to be conciliatory and work to find a multi-lateral solution. With this in mind it is near impossible for investors to know how this will end. At the time of writing there has been no official response from the White House or tweets from President Trump. How the situation with North Korea will unfold relies heavily on what happens in Washington. No doubt, If Trump decides to tweet and escalate the matter the situation will become even messier prompting a sharp sell off in risk assets. Uncertainty drives the gold price Once again the short-term support for gold is being solidified by uncertainty. This combined with the long-term support that is driven by the irrevocable damage governments have done to our markets and currencues, means that we are left with a strong basis for an ongoing climb in the gold price. Investors are turning to gold today because one of the world's most advanced economies is under threat by one of the last closed-dictator regimes. The situation will be helped or hindered by others in the western world who are also concerned for their own country's safety. We are very much on the brink of something which could affect lives for generations to come, much like the last two major wars that dragged every corner of the globe into them. In previous scenarios when countries' safety and sovereignty have been under threat, gold has acted as a safe haven for those who are concerned about the safety of their assets, currencies and wealth. They have invested in gold, safe in the knowledge that it cannot be deleted by a cyber attack or told it cannot be used when they cross borders. They know that it is the ultimate safe haven. The market reaction to events overnight shows again that diversification is key. Gold should be treated as a currency and added to a balanced, diversified portfolio to ensure financial insurance in the coming months and years. News and Commentary Gold climbs to 9-1/2 month high on rising North Korea tensions (Reuters.com) Gold Jumps on Haven Demand as N. Korea Lobs Missile Across Japan (Bloomberg.com) Asian markets jolted by North Korean missile test over Japan (Marketwatch.com) North Korea fires missile over Japan, sharply escalating tensions (Reuters.com) Stocks Drop, Yen Jumps After Korea Missile Launch (Bloomberg.com) Source: Marketwatch Gold rise is "trend we’ll continue to see until data or politics changes" - Stepek (MoneyWeek.com) Finland's Largest Pension Funds Dumps US Stocks Because "There Is No President In The US" (Bloomberg.com) Unloading Dollar Assets Would Be Most Effective - Chinese State Media Unveils Trade War 'Countermeasures' (ZeroHedge.com) Are You Prepared for These Potentially Disruptive Economic Storms? (GoldSeek.com) One look at this chart and even the haters might be tempted to buy some gold (MarketWatch.com) Gold Prices (LBMA AM) 29 Aug: USD 1,323.40, GBP 1,020.34 & EUR 1,097.36 per ounce28 Aug: No LBMA prices today as UK holiday25 Aug: USD 1,287.05, GBP 1,003.90 & EUR 1,090.90 per ounce24 Aug: USD 1,285.90, GBP 1,003.26 & EUR 1,090.44 per ounce23 Aug: USD 1,286.45, GBP 1,004.33 & EUR 1,091.68 per ounce22 Aug: USD 1,285.10, GBP 1,000.71 & EUR 1,091.95 per ounce21 Aug: USD 1,287.60, GBP 999.82 & EUR 1,096.52 per ounce Silver Prices (LBMA) 29 Aug: USD 17.60, GBP 13.59 & EUR 14.62 per ounce28 Aug: No LBMA prices today as UK holiday25 Aug: USD 17.02, GBP 13.26 & EUR 14.40 per ounce24 Aug: USD 16.93, GBP 13.20 & EUR 14.36 per ounce23 Aug: USD 17.06, GBP 13.32 & EUR 14.48 per ounce22 Aug: USD 17.02, GBP 13.27 & EUR 14.48 per ounce21 Aug: USD 17.02, GBP 13.20 & EUR 14.48 per ounce Recent Market Updates - Diversify Into Gold On U.S. “Political Instability” Advise Blackrock- Trump Presidency Is Over – Bannon Is Right- The Truth About Bundesbank Repatriation of Gold From U.S.- Cyberwar Risk – Was U.S. Navy Victim Of Hacking?- Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300- Mnuchin: I Assume Fort Knox Gold Is Still There- Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words- Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High- Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard- World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2- Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War”- Gold Has Yet Another Purpose – Help Fight Cancer- Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
Trump Presidency Is Over - Bannon Is Right “‘The Donald’ has been White House-broken,” writes Bill Bonner in his must read daily missive on Bonner and Partners “‘The Donald’ has been White House-broken,” was what we were trying to say, translating the phrase into something that may make sense to a French listener. But it was too clever and complicated. “Well, let’s just say the president has been brought into line,” we simplified. Social Season This is the social season in the French countryside. Weddings, cocktails, receptions – people use the month of August to reconnect with friends before returning to work, school, and retirement in the fall. Yesterday, we drove about a half hour over country lanes to a gracious 18th-century farmhouse. There, about 100 people had gathered on the lawn. “You are American?” we were asked several times. “What do you think of Trump?” We dodged as best we could. Inevitably, we were forced to explain that, yes, he is a disgrace… but, no, we would not prefer Ms. Clinton… and, no, we do not like [French president] Mr. Macron, either: “None of them has the strength or independence you would need to buck the trend.” “What trend is that…?” “Oh, it’s a long story… and it is such a beautiful evening…” The guests were a wide assortment of local farmers and Paris-based hedge fund managers. The former complain about the weather. The latter complain about the markets. Both complain about the government. But here at the Diary… we don’t complain. We just want to know when to pack an umbrella. Payoffs and Pimping Yesterday, we looked at how Washington insiders have brought President Trump to heel. He said so himself: “Decisions are much different when you sit behind the desk in the Oval Office.” Many people believe the White House elevates its occupants so they become better people and make better decisions. Candidate Trump may be a scoundrel or a scalawag, lusting for fame and fortune, when he announces his candidacy, they say. But when he enters the White House, the slime, incompetence, and corruption are washed down the drain. The man is born again… as POTUS. If this were true, the Pennsylvania Avenue sewer would clog up after each election. Instead, it runs clear… because the wheeling and dealing… the payoffs and pimping… are still going on! Alas, the White House elevator goes in both directions. This week, President Trump hit the “down” button. Against his own “instincts”… reneging on his promises to the people who voted for him… he agreed to go along with the generals in their plan to kill more people… and spend more money… so as to make their crony friends richer and advance their own careers. That is how things work in the “swamp.” Today and tomorrow, we connect the dots back to the financial world. End of an Era Win-win deals increase prosperity. Win-lose deals reduce it. The swamp is where the win-lose deals breed. Since the 1970s, it has grown to cover half the U.S. economy. There, wasteful spending, stifling regulations, phony money, misleading financial signals, zombies – corporate and individual – and all the many excesses and absurdities we watch daily here at the Diary are warping honest price signals, destroying real output, and transferring real Main Street wealth to the swamp’s insiders. Donald J. Trump promised to pull the plug. But he couldn’t even if he wanted to. And now his decisions are Oval Office decisions… that is to say, those that suit the Deep State. He cannot drain the swamp; he is now a part of it. There will be no cutback in domestic spending (no genuine or important reform of O’care, for example)… and no cutback in the empire’s wars abroad. That still leaves the possibility of tax reform. But even that is extremely unlikely. The last major tax reform program was 35 years ago. The president has neither the political skills nor the ideological commitment needed to pull off another one. No “skinny budget”… no spending cuts… no tax reform… no relief from the swamp. And that, friends (and we don’t have to spell it out), is why Breitbart’s Steve Bannon is right: The Trump presidency is over. Where to next? Tune in tomorrow… Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter. Gold Prices This Week (LBMA AM) 25 Aug: USD 1,287.05, GBP 1,003.90 & EUR 1,090.90 per ounce24 Aug: USD 1,285.90, GBP 1,003.26 & EUR 1,090.44 per ounce23 Aug: USD 1,286.45, GBP 1,004.33 & EUR 1,091.68 per ounce22 Aug: USD 1,285.10, GBP 1,000.71 & EUR 1,091.95 per ounce21 Aug: USD 1,287.60, GBP 999.82 & EUR 1,096.52 per ounce Silver Prices This Week (LBMA AM) 25 Aug: USD 17.02, GBP 13.26 & EUR 14.40 per ounce24 Aug: USD 16.93, GBP 13.20 & EUR 14.36 per ounce23 Aug: USD 17.06, GBP 13.32 & EUR 14.48 per ounce22 Aug: USD 17.02, GBP 13.27 & EUR 14.48 per ounce21 Aug: USD 17.02, GBP 13.20 & EUR 14.48 per ounce Market Updates This Week - The Truth About Bundesbank Repatriation of Gold From U.S.- Mnuchin: I Assume Fort Knox Gold Is Still There- Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words- Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High- Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard- World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2 Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
The Truth About Bundesbank Repatriation of Gold From U.S - Bundesbank has completed a transfer of gold worth €24B from France and U.S.- Germany has completed domestic gold storage plan 3 years ahead of schedule- In the €7.7 million plan, 54,000 gold bars were shipped and audited- In 2012 German court called for inspection of Germany’s foreign gold holdings- Decision to repatriate from Paris and New York was ‘to build trust and confidence domestically’- 1,236t or 37% of German holdings remain in New York Fed facility- Bundesbank wants to hold gold bullion- U.S. government declines to audit gold reserves ... doesn't want world to realise gold's importance in the global monetary system Editor: Mark O'Byrne Last Monday, U.S. Treasury Secretary Mnuchin feigned to inspect the U.S. gold reserves in Fort Knox and joked flippantly that he assumed it was there. A day later the Bundesbank, announced that they had repatriated much of their gold reserves from the U.S. and France. Coincidence or coordination? In 2013 the Deutsche Bundesbank announced plans to store half of its gold reserves in Germany. At the time, only 31% was stored in the country. The Gold Storage Plan involved bringing gold home from both Paris and New York. The plan was expected to take seven years. At the time many asked why it would take so long to return just 674t of gold. The Bundesbank has completed the plan three years ahead of schedule. The German gold repatriation was in response to the critics and or in order to safeguard the German gold reserves and ensure they are owned in a safe, allocated and segregated manner by the Bundesbank. In the last five years the German central bank has 374t and 300t from Paris and New York, respectively. The Bundesbank opted to keep 432t in the Bank of England vaults. Whilst the tables above (from the Bundesbank) show the repatriation of gold was ultimately successful, it has promoted much discussion about the security of gold in central banks. The decision to move the gold back to home soil has also vindicated many who have long argued about the murky gold reserve dealings of the United States. Why was the gold abroad and why move it? Many countries choose to hold proportions of their gold on foreign soil for both security and practical reasons. Practical reasons as it makes sense to have reserves in diversified locations so you have access to markets should you need to trade the reserves. In 2013 a Bundesbank spokesman said “we have no intention to sell gold” adding that the decision to relocate the foreign held gold “is in case of a currency crisis." This leads on to security reasons. During the Cold War the Bundesbank wanted to keep its gold in the West in case of an invasion from the Soviet Union. It was also a way of supporting the country’s currency knowing there were reserves held securely abroad, should the country need to use them. Campaigns and concerns in the last decade have made the German population and central bank rethink what the modern security and practical threats are, prompting them to bring some of the gold home. It was in the wake of the U.S. subprime crisis, the Lehman collapse and then the ensuing eurozone and global debt crisis in 2012, that prompted voices in Germany to call for an audit of the precious metal held abroad. Campaigners also suspected the gold might have been tampered with or not be fully allocated and non leased. In response to the calls for greater transparency the Bundesbank agreed to hold 50% of the gold in Germany. When the Bundesbank announced their plans to keep 50% of the gold at home it came just three months after they had defended their reasons for keeping the gold on foreign soil: ‘To function as reserve assets, it would have to be possible for the gold holdings to be exchanged, if necessary, into a commonly used reserve currency without any logistical constraints. That is the reason for storing parts of the gold reserves at partner central banks in other countries.’ Then, in early 2013 the central bank announced: ‘By 2020, the Bundesbank intends to store half of Germany’s gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.’ It is also worth mentioning that in 2012 the German Court of Auditors ordered an audit of the gold reserves. The court clearly wanted to ensure that the nearly 3,400 tons of gold existed - 'because stocks have never been checked for authenticity and weight'. Why were the Germans worried about the safety of their gold? Few people have raised eyebrows about Germany’s decision to bring gold back from Paris. The Bundesbank gave the following reason for doing so: ‘Given that France, like Germany, also has the euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise. As capacity has now become available in the Bundesbank’s own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt.’ However, no specific reason was given for the US, other than the need to ‘build trust and confidence domestically.’ The announcement by the Bundesbank to move 300t of gold from New York sent ripples through the gold community. Many wondered if the plan was expected to take seven years because New York did not have Germany’s gold. Was this where the need to build trust and confidence came from? More recently, with the election of President Trump, there might have been more cause for concern when it comes to the safety of a country’s gold. "We have a lot of discussions about (U.S. President Donald) Trump, regarding implications on monetary policy, macroeconomics, etc., but we trust the central bank of the U.S.," Bundesbank board member Carl-Ludwig Thiele told a news conference in February of this year. But, "Trump has not triggered a discussion about the storage facility in New York." The Gold Anti-Trust Action Committee (GATA) and Germany’s homegrown ‘Repatriate our Gold’ movement have been the loudest voices when it comes to concerns over the existence of gold and the nature of that gold's ownership in the US Treasury’s possession. In 2017 Sputnik News reported on the successful repatriation of Germany’s gold from the US. In the report, a Russian commentator suggested Germany had received the wrong gold. Russian economist Vladimir Katasonov, a professor at the International Finance Department at the Moscow State Institute of International Relations, told Sputnik that the U.S. had not been ready to give the bullion back. The professor suggested Germany's gold bars had been disposed of at the United States’ own discretion. "There are a lot of signs that the gold was not physically present in the New York vaults when Germany called it back. Of course, the U.S. began to return it to Germany but there is one interesting detail. When you leave your suitcase in the luggage storage, you expect to get back the same suitcase. But Germany took the wrong 'suitcase,'" Katasonov told Radio Sputnik. According to the economist, the gold bars that Bundesbank repatriated have different labels. He suggested that the U.S. might have replaced the German bullion with different gold bars bought from the market. Katasonov explained that the U.S. managed to return the yellow metal thanks to favorable conditions in the precious metal market. "I think there was a favorable environment in the market and the Americans managed to quickly buy the gold and give it back to Germany. They were not ready for this, but finally managed this replacement," he concluded. It is worth mentioning that Carl-Ludwig Thiele told journalists that there were no issues with the gold received, ”We've checked every ingot against authenticity, fineness, and weight. We have nothing to complain about.” Why did it take so long? The Banca d’Italia, the Bundesbank and the International Monetary Fund make up the three largest gold holders at the New York Federal Reserve. Together they account for over 4,000 tonnes. However, there has not been (to our) knowledge an audit to confirm that this is the case. There is no evidence these holdings have changed or been audited since the 1970s. When it came to the 374t to be repatriated from New York many asked ‘If you have the gold why would you not just return it all in one ago, straight away?’ Why was it expected to take seven years? Previously Germany had repatriated 940 tons of its gold from the Bank of England without delays. Theories abound as to why this could not happen. But they all centre around the theory that the gold is not there or if it is it may have two or more owners in gold leasing arrangements. This is something we briefly mentioned earlier in the week. The move to repatriate the gold to Germany was partly driven by rumours that much of the gold held offshore may have been “rehypothecated” as suggested by GATA. In fact, the US has appeared to have repatriated all of the requested gold to Germany three years ahead of schedule. If the gold not been in the vaults then the US would have had to buy the gold or unravel gold leasing contracts. Was there reason to be concerned? Earlier this week we reported on the US Treasury Secretary’s visit to Fort Knox. His jokes about the existence of the gold prompted much coverage about the debate surrounding this very issue. In response, respected commentator Jim Rickards argued that ‘all the evidence tells me that the gold is in Fort Knox and at West Point.’ ‘Let me say it right now: Yes, the gold is there. I actually have some evidence that the gold is there from military sources.’ Now, some people like billionaire precious metals trader Eric Sprott argue that the gold could very well be at Fort Knox, but it’s been leased out to commercial banks. And yes, it could very well be leased. But leasing is a paper transaction. It doesn’t mean the government surrenders possession of the gold. And what about the lack of audit? If you are the Fed or the Treasury and you want people to think that gold is unimportant — which they do — why would you audit it? You audit things that are important. You do not audit things that are unimportant. If the Fed doesn’t want you to think that gold is important, it follows that they would not audit it. Auditing it pays gold too much respect. I am in favor of an audit, just to be clear. But the fact that the government does not audit the gold does not tell you that the gold is not there. They just do not want you to pay any attention to it. Audit or no audit, gold or no gold, the fact is the Germans felt the need to bring back some of their gold. Conclusion: Protect your gold The move by the Bundesbank was a prudent one, whether there was ever any real cause for concern or not. The fact is the US may well have all the gold that was ever stored there, or they may not. It is also true that the eurozone is near breaking point and the continent is increasingly under threat from various geopolitical forces. It makes sense to have the gold in a place where they can audit and access it. When you own gold you should expect to have access to it whenever you so wish. You should not expect others to have access to it and you should certainly expect to receive regular reports on its existence, security and your outright ownership of individual coins and bars that can be taken delivery of with a phone call. All reports suggest that this was not the case. It suits the majority of countries to avoid pushing the debate on the existence of gold holdings. Should a country like the US be unable to meet requirements when Germany demands its gold back in one go then it could place the two major world currencies (USD and Euro) at risk. The whole world would wonder what farce had been going on all this time. However, Germany clearly wanted their gold back because of concerns about both how the US were looking after it and the future of global stability both politically and financially. Individual investors should take the same approach. The main lesson of note here is that central banks want to own gold. They see it as the ultimate safe haven. Because of this Germany want to hold it in a segregated and allocated manner. Luckily for savers, that secure bullion storage option is readily available. Related Content Germany to Review Bundesbank Gold Reserves in Frankfurt, Paris, London and Federal Reserve Bank of New York Bundesbank Announces Repatriation of 120 Tonnes of Gold from Paris and New York Federal Reserve Bundesbank “Reassures” Re. Gold Bullion Reserves as Deutsche Bank Shocks With €6 Billion Loss Warning News and Commentary Gold steady ahead of central bank speeches at Jackson Hole (Reuters.com) Gold price remains dull on futures correction (DailyTimes.com.pk) Gold settles lower as investors look to Jackson Hole (MarketWatch.com) U.S. Stocks Fluctuate Before Yellen; Oil Declines (Bloomberg.com) Dixons Carphone Plunges as Mobile Slowdown Leads to Warning (Bloomberg.com) Gold's out performance of S&P500 in 10 years - Bloomberg via Stansberrychurchouse.com Gold outperforms US stocks in 10 years since financial crisis (Stansberrychurchouse.com) U.S. stocks haven’t been this extreme since 1929 and 2000 (MarketWatch.com) Did The Economy Just Stumble Off A Cliff? (ZeroHedge.com) Epsilon Theory: Always Go To the Funeral (EpsilonTheory.com) Jackson Hole: Yellen to play safe and not warn of asset bubbles (MoneyWeek.com) Gold Prices (LBMA AM) 25 Aug: USD 1,287.05, GBP 1,003.90 & EUR 1,090.90 per ounce24 Aug: USD 1,285.90, GBP 1,003.26 & EUR 1,090.44 per ounce23 Aug: USD 1,286.45, GBP 1,004.33 & EUR 1,091.68 per ounce22 Aug: USD 1,285.10, GBP 1,000.71 & EUR 1,091.95 per ounce21 Aug: USD 1,287.60, GBP 999.82 & EUR 1,096.52 per ounce18 Aug: USD 1,295.25, GBP 1,004.34 & EUR 1,102.65 per ounce17 Aug: USD 1,285.90, GBP 998.12 & EUR 1,096.74 per ounce Silver Prices (LBMA) 25 Aug: USD 17.02, GBP 13.26 & EUR 14.40 per ounce24 Aug: USD 16.93, GBP 13.20 & EUR 14.36 per ounce23 Aug: USD 17.06, GBP 13.32 & EUR 14.48 per ounce22 Aug: USD 17.02, GBP 13.27 & EUR 14.48 per ounce21 Aug: USD 17.02, GBP 13.20 & EUR 14.48 per ounce18 Aug: USD 17.15, GBP 13.30 & EUR 14.60 per ounce17 Aug: USD 17.02, GBP 13.23 & EUR 14.55 per ounce Recent Market Updates - Cyberwar Risk – Was U.S. Navy Victim Of Hacking?- Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300- Mnuchin: I Assume Fort Knox Gold Is Still There- Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words- Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High- Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard- World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2- Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War”- Gold Has Yet Another Purpose – Help Fight Cancer- Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold- Great Disaster Looms as Technology Disrupts White Collar Workers- Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat- Silver Mining Production Plummets 27% At Top Four Silver Miners Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
While virtually nobody expects anything market shattering, or even moving, to be released during either Janet Yellen's or Mario Draghi's speeches tomorrow (recall from our preview what UBS said: "Don't expect news at Jackson Hole. Chair Yellen has told us what she wants to about normalization, for now. Financial stability matters, but it isn't new" and as such it will be "nothing to skip lunch over"), moments ago the full agenda of the 3-day central banker, tenured economist and assorted hanger-on symposium was released, and as expected both Janet Yellen and Mario Draghi are speaking, at 10am and 3pm ET respectively. What is strange is that while Yellen has only 30 minutes dedicated for her opening remarks, Draghi's luncheon address is a full hour long. Reminder of what bears look like at Jackson Hole The full agenda of tomorrow's key events is below. There are some additional panels held on Saturday which can be found on the Kansas City Fed's website. As another reminder, unlike previous years, few analysts expect anything material to be unveiled in tomorrow's academic setting as the ECB got cold feet on unveiling tapering once the EURUSD approached 1.20. Our full preview can be read here, and if that's not enough, here is a cheat sheet from the WSJ on what to expect. Talk of the Lodge The theme of this year's conference is "Fostering a Dynamic Global Economy": Kansas City Fed President Esther George will host an opening reception Thursday evening, but the conference will kick off in earnest Friday morning. At 10 a.m. EDT Friday, Fed Chairwoman Janet Yellen will deliver a speech on financial stability. Then, two research papers will be presented and discussed, followed by a panel discussion on international trade. Around 3 p.m. EDT, European Central Bank President Mario Draghi will deliver a much-anticipated luncheon address. On Saturday, two more research papers will be presented and discussed, followed by another panel discussion. Beyond the Agenda The formal program will focus on serious economic questions, but a number of subplots will play out as well into the weekend: This is Ms. Yellen's third Jackson Hole appearance in four years, but it could be her last as chairwoman. Her term is up in early February, and it isn't known if President Donald Trump will reappoint her -- plus, she hasn't said if she would accept the nomination. Handicapping who might replace her could be a topic of discreet discussion during the gathering. Mr. Draghi's Friday speech will be closely watched for clues about the path forward for the ECB's quantitative-easing program, with potentially big implications for European and world markets. The Fed already has signaled it may begin to shrink its balance sheet as soon as September, but officials have been split over whether a rate increase should be on the agenda for later this year. In interviews on the sidelines of the conference, Fed officials are likely to drop more hints about the path forward for monetary policy. For the fourth year in a row, the liberal Center for Popular Democracy's Fed Up campaign will be on hand for the Jackson Hole gathering. It organized a Thursday panel on why some economists think the Fed should consider raising its 2% annual inflation target and a Friday press conference "in which dozens of workers will rally in support of another term as chair for Janet Yellen with signs, costumes and theater," the group said. Last year, several top Fed officials sat down with the activists. You can take the central bankers out of Washington, but it seems likely that events back in the capital will still be on their minds. Mr. Trump's coming appointments to the Fed, possible changes to postcrisis regulations, the prospects for an overhaul of the tax code, the potential for unexpected shocks from trade disputes or a fiscal-policy mishap -- they could all be topics of conversation in Wyoming. Roll Call It's a star-studded attendance list for this year's conference, at least for the world of central banking: Fed governors Lael Brainard and Jerome Powell are in attendance, along with many leaders from the Fed's 12 regional banks, including New York Fed President William Dudley , Boston Fed President Eric Rosengren, Chicago Fed President Charles Evans , Cleveland Fed President Loretta Mester , Dallas Fed President Robert Kaplan , Minneapolis Fed President Neel Kashkari , San Francisco Fed President John Williams , Atlanta Fed President Raphael Bostic and, of course, Ms. George. In addition to Mr. Draghi, the roster includes a number of foreign central bankers, including Bank of Japan Gov. Haruhiko Kuroda , European Central Bank executive board member Benoît Coeuré , Bank of England deputy governor Ben Broadbent , Bank of Mexico Gov. Agustín Carstens , Riksbank Gov. Stefan Ingves and Bundesbank President Jens Weidmann . Several former Fed officials also will be in attendance, including former Fed Vice Chairmen Alan Blinder and Donald Kohn , former Kansas City Fed President Thomas Hoenig , and former Fed governors Kevin Warsh and Randall Kroszner . The list also includes a handful of current and former government officials: Andrew Olmem , special assistant to Mr. Trump on financial policy on the National Economic Council; David Malpass , the Treasury undersecretary for international affairs; Keith Hall , director of the Congressional Budget Office; Jason Furman , former chairman of the Council of Economic Advisers under President Barack Obama; and Glenn Hubbard , who was chairman of the Council of Economic Advisers under President George W. Bush. And of course, the conference is full of high-profile academics, such as Harvard University's Martin Feldstein (a former CEA chairman under President Ronald Reagan), Carmen Reinhart and Kenneth Rogoff ; Stanford economist John Taylor ; Alan Auerbach of the University of California-Berkeley; and Kristin Forbes of the Massachusetts Institute of Technology. --A number of those people -- including Messrs. Hubbard, Taylor and Warsh - have been in the mix as Fed watchers try to predict who might replace Ms. Yellen if she doesn't serve a second term at the Fed's helm. National Economic Council Director Gary Cohn , who Mr. Trump has said is a top candidate to lead the Fed, won't be in the audience. The attendance list has some notable absences: Vice Chairman Stanley Fischer isn't among the participants this year, nor is Philadelphia Fed President Patrick Harker or St. Louis Fed President James Bullard . Jackson Hole, 2016
On January 16, 2013, the Bundesbank - one of the biggest gold holder in the world, with 3,378 tonnes - shocked the world: out of the blue, the German central bank announced that by December 31, 2020, it intends to store half of Germany’s gold reserves in its own vaults in Frankfurt, up from only 31% at the time. The plan would mean repatriating a total of 674 tonnes of gold, 300 from the New York Fed's gold vault, and another 374 from the Bank of France. The transfer, the Bundesbank explained, was meant to "build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centers abroad within a short space of time." The "politically correct" motives for the transfer, as well as the logistics and the mechanics behind it were explained in a March 2015 video released by the Bundesbank... ... the real reasons, however, is that following several reports on this website which cast doubts on Germany's gold holdings, in late 2012 the German Court of Auditors demanded that the Bundesbank undertake an audit of its gold reserves. Specifically, the court wanted to ensure that the nearly 3400 tons of gold, of which more than 2,000 tonnes held offshore, is in fact in existence - 'because stocks have never been checked for authenticity and weight'. The move to repatriate was only accelerate following rumors that much of the offshore-held gold might have been "rehypothecated", and not be there anymore, that it might have been melted down, leased, or sold. Ironically, at the time, Bundesbank Board member Carl-Ludwig Thiele told the Handelsblatt that these moves were a “trust-building” measure, and he tried vigorously to put the rumors about the missing gold to rest. Of course, repatriating your gold from foreign central banks is precisely the opposite of a "demonstration of confidence." Even more ironic is that speaking to Forbes, a Bundesbank spokesman said in Jan 2013 that “we have no intention to sell gold,” adding that “[the relocation] is in case of a currency crisis." A mildly paradoxical argument since the officially stated reason for the repatriation the gold was to "build trust and confidence domestically, and to have the ability to sell gold quickly If needed." What made matters worse is that at the end of 2013, the Bundesbank announced it had managed to repatriate only 37 tonnes of the total 700 scheduled for redemption, further spooking the local population and suggesting that conspiracy theories that the gold was missing were in fact accurate. As a result, following blowback from both the media and the public, the Bundesbank accelerated its activity, and repatriated 120 tonnes in 2014, 210 in 2015, and another 216 in 2016, implying that the Bundesbank's faith in its foreign central bank peers had declined in inverse proportion to the accelerating redemption schedule. Finally, Germany's push to redomicile its gold also prompted a similar partial gold repatriation by the Netherlands. * * * So fast forward to August 23, 2017 when in what appears to have been a very big hurry, and well over three years ahead of schedule, the Bundesbank today announced it had "completed its gold transfer process earlier than originally planned." The news should not come as a surprise: back in February the Bundesbank announced that it had already concluded the transfer of all the planned gold from New York, leaving only French gold to be repatriated. And, as of today, that too has been completed. From the press release: The Bundesbank has completed its gold transfer process earlier than originally planned. After the gold in New York was able to be transferred ahead of schedule in 2016, roughly 91 tonnes of gold still remained in Paris. This was relocated to Frankfurt this year and as a result, there are no longer any German gold reserves in Paris. "This closes out the entire gold storage plan – around three years ahead of the time we were aiming for," reported Carl-Ludwig Thiele, Member of the Bundesbank’s Executive Board, referring to the gold storage plan unveiled in 2013. This plan saw the Bundesbank storing half of Germany’s gold reserves in its own vaults in Frankfurt am Main from 2020 onwards, requiring the phased transfer of approximately 300 tonnes of gold from New York and about 374 tonnes of gold from Paris. The following table gives an overview of the gold transferred. The Bundesbank had verification measures in place throughout the entire transfer process – from when the gold was removed from the storage locations abroad until it was placed back in storage in Frankfurt am Main – to ensure that it was Germany’s gold reserves that were being transferred. Once they arrived in Frankfurt am Main, all the transferred gold bars were thoroughly and exhaustively inspected and verified by the Bundesbank. When the inspections of transfers had been concluded, no irregularities came to light with regard to the authenticity, fineness or weight of the bars. In spring 2018, the Bundesbank will publish an updated version of its gold bar list as at 31 December 2017 on its website. And so, Germany's repatriation of 674 tonnes of gold - or 53,780 bars of gold - is complete, lifting the amount of gold held domestically to 1,710 tonnes or 50.6% of the total. Going forward, Germany will still have 1,236 tonnes held at the NY Fed, and another 432 tonnes of gold at the Bank of England. Why this unexpected scramble to repatriate $28 billion in physical gold 3 years ahead of the stated schedule, remains a "mystery."
Мир теряет веру в доллар как в самую надежную валюту. Волна недоверия поднялась после того, как Немецкий федеральный банк потребовал репатриации огромного количества золота, хранящегося в Федеральной резервной системе США. Некоторые обеспокоены тем, что национальные вклады других стран не будут в безопасности в США. Да и находятся ли они там вообще? Подробности в репортаже корреспондента RT Гаяне Чичакян. Подписывайтесь на RT Russian - http://www.youtube.com/subscription_center?add_user=rtrussian RT на русском - http://russian.rt.com/ Vkontakte - http://vk.com/rt_russian Facebook - http://www.facebook.com/RTRussian Twitter - http://twitter.com/RT_russian Livejournal - http://rt-russian.livejournal.com/
О GATA и «золотом картеле» Еще в конце ХХ века наиболее въедливые эксперты стали подозревать, что на рынке золота происходит что-то неладное. А именно: даже если жёлтый металл не дешевеет, то цены на него всё равно отстают по темпам роста от динамики цен на многие другие товары мирового рынка. Золото дешевело также на фоне индексов фондовых рынков, цен на недвижимость и т.п. Никаких крупных месторождений золота в это время не было открыто, золотые метеориты на Землю не падали. Заниженные цены на желтый металл больно били по компаниям золотодобывающей промышленности. Представители нескольких компаний этой отрасли решили разобраться в загадке, для чего и создали организацию под названием GATA (Gold Anti-Trust Action). В буквальном переводе - «Действие против Золотого Треста». Как следует из названия, учредители GATA подозревали, что на мировом рынке золота действует группа злоумышленников, объединенных в трест, который манипулирует ценами на золото в сторону их занижения. В своих публикациях GATA чаще использовала термин «золотой картель». Постепенно удалось вычислить основных участников этого картеля. Среди них - Казначейство США, Федеральный резервный банк Нью-Йорка (главный из 12 федеральных банков, составляющих ФРС США), Банк Англии, ряд крупнейших коммерческих и инвестиционных банков США и Западной Европы (здесь особо выделяется «Голдман Сакс» - инвестиционный банк с Уолл-стрит). Это – ядро картеля. Время от времени в поле зрения GATA попадали и другие организации, участвовавшие в операциях картеля. В том числе центральные банки некоторых стран. 1990-е годы были периодом наибольшей активности США на мировых рынках активов. Проще говоря, американцы организовывали приватизации государственных предприятий по всему миру (в том числе в России), а для таких операций нужен был сильный доллар. Финансовые аналитики и спекулянты прекрасно знают простое правило: чем ниже цена на золото, тем крепче доллар. Самый простой и дешевый способ укрепить доллар – «прижать» цену на «желтый металл», который явно и неявно выступает конкурентом этой резервной валюты. Однако чтобы «прижать» цену, надо обеспечить повышенное предложение этого металла на мировом рынке. У тех, кто хотел сыграть на «понижение» золота, взоры обратились к несметным запасам золота, сосредоточенным в подвалах казначейств и центральных банков. Эти запасы лежали там без движения с тех пор, как в 1970-е гг. рухнула Бреттон-Вудская валютно-финансовая система. В новой Ямайской валютно-финансовой системе золото перестало быть деньгами, оно было объявлено одним из биржевых товаров – таким как нефть, пшеница или бананы. Версия о золотых манипуляциях центральных банков Как можно использовать это золото для манипуляций ценами? Первое и главное условие сводится к тому, чтобы полностью засекретить официальные запасы желтого металла и все операции денежных властей с ними. Еще более повысить независимый статус центральных банков, для того чтобы «народные избранники», органы финансового контроля и прочие любопытствующие элементы не совали свои носы в дела этих институтов. Не допускать государственных аудиторов до «золотых закромов». В США, например, Главное контрольное управление (Счётная палата Конгресса) последний раз посещало главное хранилище официального золотого запаса США Форт Ноксболее 60 лет назад. Далее под завесой секретности можно начинать операции с золотом. Однако не продавать его, а передавать разным частным структурам «на время», оформляя эти операции как кредиты или лизинг желтого металла. А вместо золотых слитков оставлять в хранилищах бумажки, которые являются с бухгалтерско-юридической точки зрения «требованиями», «расписками», «сертификатами» и т.п. То есть золото на балансе центрального банка сохраняется, только оно имеет не металлическую, а виртуально-бумажную (или даже электронную) форму. А «народу» это знать не обязательно. Если в эти «золотые аферы» втянуть десяток-другой центральных банков, то каждый год на рынок можно выкидывать не одну сотню тонн драгоценного металла и сбивать на него цену. Эксперты (в том числе эксперты GATA) находили многочисленные подтверждения тому, что все это не вымысел, а результат преступного сговора центральных банков с частными банкирами и спекулянтами. И тут сразу возникают вопросы: кому центральные банки передавали золото? Было ли это золото возвращено назад в сейфы центральных банков? Известны ли эти махинации законодателям? Сколько на сегодняшний день реально осталось физического золота в хранилищах центральных банков (и государственных казначейств)? Отметим, что отдельные попытки разобраться в том, что представляют собой официальные золотые запасы, насколько официальная статистика золота отражает истинное положение дел, кто и как управляет официальным золотым запасом, предпринимались парламентариями, политиками, общественными активистами в разных странах. Например, в США такие попытки регулярно предпринимал член Конгресса США Рон Пол. Регулярные запросы в разные инстанции делала также GATA. Денежные власти предпочитали отмалчиваться. Или же ответы были крайне лаконичными и сводились к тому, что «золотой запас страны находится в неприкосновенности». Такую же позицию занимали на протяжении последних 15 лет (с тех пор, как начались разговоры о «золотом картеле») и международные финансовые организации: Банк международных расчетов (который, кстати, активно занимается операциями с желтым металлом и был заподозрен в участии в «золотом картеле»), Всемирный банк, Международный валютный фонд (1). Утечка информации из МВФ И вот последняя новость в этой области. Речь идет о материале, размещенном на сайте GATA в декабре 2012 года (2). Это полученное одним из экспертов GATA секретное исследование Международного валютного фонда 13-летней давности. Оно касается мирового рынка золота и роли центральных банков в операциях на этом рынке в 1999 году. Поскольку оно секретное, то его автор позволяет себе писать полную правду об операциях центральных банков. «Информация о рынке золота неоднородна», – говорится в исследовании. «Для транзакций характерна высокая степень секретности. Наряду с относительно небольшим количеством открытых торгов на биржах, продажи золота представляют собой приватные внебиржевые сделки, о таких операциях сообщается скупо. … Официальные данные о ссудах в золоте практически отсутствуют». Вот ключевые факты и цифры из этого материала МВФ. В 1999 годуболее 80 центральных банков ссудили 15 процентов официальных золотых запасов рынку (имеется в виду величина непогашенных обязательств по золотым кредитам). В числе центральных банков, предоставлявших ссуды в золоте, были Бундесбанк Германии, Швейцарский национальный банк, Банк Англии, Резервный банк Австралии и центральные банки Австрии, Португалии и Венесуэлы. В исследовании подтверждается, что центральные банки играли на рынке золота на «понижение»: «…высокая степень мобилизации резервов центробанка через кредитные операции в золоте оказала понижающее влияние на наличную цену золота, поскольку перекредитуемое золото обычно связано с продажами золота на наличном рынке». Далее в исследовании МВФ говорится, что «кредитование в золоте заставило центробанки проявлять активность на рынке производных финансовых инструментов золота, где участвуют банки по операциям с драгоценными металлами и производители золота, продавая золото через форвардные сделки и опционы. В свою очередь, банки по операциям с драгоценными металлами приложили все усилия для защиты и укрепления долгосрочных отношений с центральными банками». Вот еще выдержка из документа МВФ: «Доля промышленно развитых стран на всём рынке официального кредитования в золоте выросла с 33 процентов в конце 1995 года до 46 процентов к концу 1998 года, поскольку некоторые центральные банки промышленных стран повысили уровень кредитования; в то же время на рынке появились новые кредиторы, в частности Бундесбанк и Швейцарский национальный банк». А вот комментарий эксперта GATA, разместившего данный материал:«При столь значительном количестве центральных банков, секретно предоставляющих ссуды в золоте тем финансовым организациям, чей основной талант, как можно было видеть в последнее время, состоит в рыночных махинациях, кто станет отрицать, кроме обычных агентов дезинформации, что рынком золота манипулируют именно для того, чтобы не позволить всему миру пользоваться свободными рынками?» 2013 год: ждём новых «золотых» скандалов и «золотых» сенсаций Раскрытия страшной тайны золота ждут уже много лет. Ещё в 2004 году Лондонский банк Ротшильдов заявил о своем выходе из «золотого фиксинга» - процедуры ежедневного определения в узком кругу цены на жёлтый металл в лондонском Сити. Тем самым Ротшильды заявили миру, что они выходят из золотого бизнеса, которым занимались на протяжении двух столетий. Однако это – всего лишь эффектный жест. Из золотого бизнеса они не ушли, а продолжили заниматься им через структуры с другими вывесками. Чувствуя угрозу надвигающегося скандала с разоблачениями «золотого картеля», эти олигархические круги решили своевременно отойти от эпицентра возможного взрыва… Возбуждение общественности и политиков по поводу официальных запасов золота резко обострилось в 2012 году. Выяснилось, что на мировом рынке активно идет торговля фальшивым золотом в виде вольфрамовых позолоченных слитков (хотя специалистам об этом стало известно еще в 2004 году, трубить об этом мошенничестве мировые СМИ начали только в 2012 году). Возникли подозрения, что в подвалах центральных банков и казначейств находятся груды вольфрама. Рон Пол добился проведения выборочной проверки брусков металла в подвалах Форт-Нокс и Федерального резервного банка Нью-Йорка. Германия потребовала от США вернуть золото из своего официального запаса (Бундесбанк), которое хранилось в подвалах ФРБ Нью-Йорка, но встретила глухое сопротивление со стороны казначейства и ФРС США. Кончилось это тем, что председатель Федерального резерва Бен Бернанке заявил, что недавний ураган Сэнди… «уничтожил» немецкое золото. Ничего лучшего он придумать не смог. Все это лишь подкрепило мнение тех, кто давно обвиняет ФРС и другие центральные банки в мошенничестве с золотом. Думаю, что в 2013 г. тема золота центральных банков станет еще более горячей. Например, все с нетерпением ждут обнародования результатов выборочной физической проверки слитков золота из закромов Казначейства США. Власти обещали сообщить об этом в начале 2013 года. От Германии все напряженно ожидают реакции на заявление Бернанке о таинственном исчезновении немецкого золота. Появились вопросы и к Банку международных расчетов (БМР), активно практикующему коммерческие операции с желтым металлом - и собственным, и тем, который центральные банки предоставляют БМР в виде депозитов или кредитов. Отчётность БМР об этих операциях крайне лаконична и не даёт представления о деталях сделок, их контрагентах и конечных бенефициарах. Международный валютный фонд будет продолжать настойчиво требовать от Китая раскрытия истинной информации об официальном золотом запасе. В 2009 г. Народный банк Китая (НБК) сообщил, что его золотые запасы увеличились сразу на 76% и составили 1054 тонны. С тех пор официальные цифры золотого запаса НБК не менялись. Мало кто верит в то, что эти цифры отражают реальное положение дел. Считается, что денежные власти Китая сильно занижают цифры, тайно переводя часть своих несметных валютных резервов в желтый металл. В Конгрессе США ожидается окончательное решение вопроса о том, будет ли ФРС подвергнута серьезному аудиту - впервые за век ее существования. Если такой аудит всё-таки состоится, то полной проверке должны подвергнуться все операции Федерального резерва с золотом. Почти все серьезные эксперты ждут от этой проверки сенсационных разоблачений. (1) Подробнее о манипуляциях «золотого картеля» см.: В.Ю. Катасонов. Золото в экономике и политике России. – М.: Анкил, 2009, с. 57-63. (2) «IMF study in 1999 found 80 central banks lending 15% of official gold reserves». December 9, 2012 (http://www.gata.org/files/IMFGoldLendingFullStudy1999.pdf)