The U.S. Comex gold futures fell 1.51% last year but surged close to ten percent year-to-date, exceeding $1,300 again, a level last seen in August last year. This year, the gold futures have outperformed all other major market indices, with the Dollar Index rising 4.2%, the S&P 500 Index climbing 0.29%, the Euro Stoxx 50 Index jumping 5.7%, the CRB Commodities Index tumbling 29.55%, and the U.S. 10-year Treasury Bonds rising about 2.7%. The drama has been in the currencies where the Euro Dollar has fallen six percent and the Swiss Franc has jumped 15% against the dollar and 21% over the Euro month-to-date after the Swiss central bank has removed the cap of its currency against the Euro. The crude oil futures have plunged below $50 but may stabilize above the $45 level.
The ECB Delivers Sovereign QE The ECB has finally decided to launch a comprehensive asset purchases program with ...
The current situation is looking rather grim and almost every man for himself as central banks around the world is bracing to make changes in interest rate. Is it the fear of global deflation that summoned such drastic changes uncoordinatedly? Many investors deem the global economy is “steady as she goes”, it was a surprise move amid the stable outlook that was portrayed many times by high esteemed analyst and world economic organization (even the central banks) sounded more or less neutrally positive. Now it all seems like a big hoax, made to sell an ideology that was far from the ideal scenario. Not only has recent actions showed the lack of faith in the global economy, it paint that not one central banks can control or abate what is coming around the corner. Certainly there is an aspect of underestimating the overall situation which encourages the drastic move. One then wonder if 2015 has already started to bring false hopes and despite the safety light is off, one is better to have it on just in case more violent turbulence as the flight to stability (rather than prosperity) set to cause tremor.
Jan 23 (Wall Street Journal) — Gold and silver are getting another turn in the spotlight, luring investors worried about slowing global growth and surprises by central banks. On Thursday, the European Central Bank offered the latest reason to pile into precious metals by unleashing a bigger-than-expected bond-buying program amid continued worries about Europe’s economy. Gold futures ended above $1,300 a troy ounce for the first time since August, while silver neared bull-market territory, defined as a 20% increase from a recent low. Gold and silver are drawing buyers of all stripes, a sign fears about a worsening economic outlook run deep in financial markets. The metals are popular havens for nervous investors but had fallen out of favor after setting price records in 2011 as the U.S. recovery gained speed. Now these metals are luring back some money managers, as collapsing oil prices, fears of a recession in Europe and volatility in currency markets shake their faith in stocks and other investments.
Yesterday the European Central Bank acknowledged that the currency it manages is being sucked into a deflationary vortex. It responded in the usual way with, in effect, a massive devaluation. Eurozone citizens have also responded predictably, by converting their unbacked, make-believe, soon-to-be-worth-a-lot-less paper money into something tangible. They’re bidding gold up dramatically.
So after falling hard in 2013 and treading water for most of 2014, the euro price of gold has gone parabolic in the space of a couple of months. This sudden rather than gradual awakening is the standard pattern for a currency crisis, mainly because it takes a long time for most people to figure out their government is clueless and/or lying. But once they do figure it out, they act quickly.
We are so brainwashed by centralized models of state authority that few can even imagine a system where the solution is not one centralized monstrosity ruled by a political/financial Aristocracy but a competing profusion of opt-in, transparent solutions.
Many readers ask me for solutions to the current arrangement's many ills. Seeking solutions is a healthy and positive direction, for highlighting what's broken is not only much easier than proposing solutions, it's a dead-end. Pointing out what's broken is only the first step in crafting solutions.
But I've noticed that what most people want is not a real solution--they simply want what's easy, which means leaving the Status Quo in place but magically making it cheaper and more convenient for them. If the solution requires inconvenience, getting less, accepting more responsibility and making major trade-offs--then it can't be a solution because politicos have overpromised for so many decades that people expect everything to get cheaper (for them, not the system) and easier (for them, not the system).
Richard Russell: “In the 90 years that I have been on this earth I have never felt good about myself. But lately, after much soul searching, I finally accepted that I am a good person and deserve to treat myself better. I grew up during the Great Depression and I learned to always order the cheapest item on the menu in restaurants. In those difficult days, a penny saved was like a dollar earned.
I remember well during 1932, that real estate parcels in New York City were often for sale for $10,000 cash. Yet they didn’t sell because people were afraid to put down $10,000 cash on a New York City building. Anybody who had cash refused to part with it regardless of the huge possible return on their money. If you had cash, you thanked God that you had it and no investment was juicy enough to entice you to put down your money. Thus, New York real estate was selling at giveaway prices and it stayed that way until the Great Depression ended.
Well, that will be interesting. Click through for the rest.
Lacy H. Hunt, Ph.D., Economist Despite the Federal Reserve’s use of all its conventional techniques and numerous experimental measures, the US economy has continued to lose thrust. Over the first three quarters of 2014, real GDP grew at a 2% annual rate. Such an increase is entirely insufficient to raise the standard of living, which stands at the same level as 18 years ago.
Over the latest five years, real GDP grew a paltry 2.3%/year. From 1790 through 1999, before total private and public debt surged above the deleterious level of 275%, the growth in real GDP was 4% per annum. This observed loss in growth since 1999 is larger than the roughly 25% loss that the econometric studies predicted would occur at debt levels above 275%. As some researchers found, the post-1999 record is consistent with the negative consequences of debt rising disproportionately as debt relative to GDP moves above critical threshold levels.
Though the numbers for the fourth quarter are far from complete, year-over-year growth in real GDP for 2014 is unlikely to exceed the 2% pace of the past five years. The economy is limping badly: real consumer expenditures are growing at a paltry 1% annual rate early in the fourth quarter, down from a 1.8% growth rate in the first three quarters of the year. The highly cyclical vehicle sales have declined from highs reached earlier in the year. The current rate of growth in consumer outlays is shaky, since real average hourly earnings, which is the main source of income for nearly three-fourths of all households, rose a mere 0.4% in the past 12 months. Manufacturing output, which was the best-performing economic sector year to date, actually contracted slightly over the past three months. The previously explosive petroleum sector has slowed even more sharply in the face of a severe slump in oil prices. These developments are not merely statistics. In the extensive exit polling conducted by CBS on Election Day, 78% expressed negative views on the US economy.
Debt-serfs who make the difficult and risky transition to small-scale business owners find they have simply moved to another class of serfdom.
The core dynamic of debt-serfdom is that debt-serfs must borrow money to buy essentials while the wealthy borrow to invest in productive assets.
This is not merely a random result of free-market capitalism; it is the structure of cartel-capitalism in which highly profitable goods and services must be paid for with highly profitable debt.
This need to borrow to pay for essentials is already evident in student loans, vehicles and housing. The cost of these essentials is so high that few debt-serfs can borrow enough to pay for these essentials and then have enough borrowing power left to buy productive assets.
Money manager Michael Pento says, “We live in a world now where free markets have been completely obliterated. You can’t find a free market left on the planet, and that goes for commodities, equity markets, currencies and particularly goes for the bond markets. The bond markets now do not represent any vestige of reality whatsoever. That should be apparent to anyone with a pulse or an IQ better than a retarded ameba.”
On the recent Swiss National Bank move to remove the cap from the franc, Pento says, “It’s the steady erosion of the lack of faith we have as investors now in central banks and fiat currencies. In the case of the Swiss National Bank, they could no longer peg to the euro. Their currency dropped 12% against the dollar in one year. They did not want to suffer what was going to occur with the ECB’s (European Central Bank) decision for massive QE. It’s going to probably get announced on Thursday. If it doesn’t get announced, I will predict even more chaos.” If the ECB money printing is not big enough, Pinto says things will “blow up.” Pinto also says, “If they do print enough money, things are going to blow up. As I said, we have created a huge vacuum in markets.”
Credit Suisse Group AG (CSGN) and Saxo Bank A/S joined an increasing number of European financial companies warning that the Swiss central bank’s surprise decision to abolish its currency ceiling may dent earnings.
Credit Suisse, Switzerland’s second-biggest bank, indicated Monday that currency swings may hurt profit. Denmark’s Saxo Bank said some clients might not be able to settle unsecured amounts, which might cause undisclosed losses.
The full force of the decision won’t be known for months and is “closer to a nuclear explosion than a 1,000-kilogram conventional bomb,” Javier Paz, senior analyst in wealth management at Aite Group, said in an e-mail Tuesday. “The aftermath is like a black hole that can suck massive amounts of credit from currency trading as we have known it.”
Citigroup Inc. (C), Deutsche Bank AG and Barclays Plc (BARC) suffered about $400 million in cumulative trading losses, people familiar with developments said last week. At Morgan Stanley (MS), owner of the world’s largest brokerage, Chief Financial Officer Ruth Porat said the effect was minimal.
Blowing speculative bubbles cannot possibly lead to organic growth because speculative bubbles fatally undermine the real economy.
An astute reader recently posed an insightful question: we all know who benefits from asset bubbles in stocks, bonds and real estate--owners of assets, banks, the government (all those luscious capital gains and rising property taxes), pension funds, brokers and so on. But who benefits from the inevitable collapse of these asset bubbles?
If asset bubbles end badly for virtually every participant, then why does the system go to extremes to inflate them? This is an excellent question, as it goes right to the heart of our dysfunctional Status Quo.
Broadly speaking, there are three possible answers:
1. The system has no choice left but to blow serial bubbles. ...
The most dramatic battle yet in the currency wars took place last Thursday. It was the financial equivalent of a Pearl Harbor sneak attack…
“I find it a bit surprising that he did not contact me,” IMF Director Christine Lagarde told CNBC’s Steve Liesman that day, “but, you know, we’ll check on that.”
You can almost imagine the conversation afterwards between Mario Draghi of the European Central Bank (ECB) and Swiss National Bank (SNB) President Thomas Jordan…
Mario Draghi: “Did you tell Christine?”
Thomas Jordan: “I thought you were going to tell her…”
Mario Draghi: “Wait, I thought you were!”
Switzerland had just abandoned its peg of the Swiss Franc to the Euro. The result was mayhem with an immediate 30% drop in the value of the Euro against the Franc, and billions of dollars of trading losses by banks and investors around the world. ...
ter months of waiting, the European Central Bank (ECB) finally carried through with its stated promise of unlimited monetary support to its ailing economy. The ECB announced its own version of quantitative easing (QE) on Thursday, a move which lifted the dark clouds that have recently hung over financial markets. In March the ECB will begin purchasing 60 billion euros' worth of government and corporate bonds through September 2016. In response to the announcement the equity markets of several major countries rallied while the price of gold and silver also rose. Gold also received a boost after the Danish central bank reduced its key interest rate for a second time this week
Gold on Thursday jumped past the $1,300 an ounce level following the announcement of a bigger-than-expected stimulus package from the European Central Bank. The metal is now trading up over $120 or just under 9.5% in 2015, having gained in nine of the last 10 trading sessions.
The latest breakout came after European Central Bank chief Mario Draghi in an effort to stimulate the economy of the bloc and stoke inflation announced the bank's own version of quantitative easing – an unconventional monetary policy tool to create money by buying sovereign bonds.
The ECB's historic move comes more than six years after the US Federal Reserve embarked on its QE program. On 16 December 2008, three months after the sub-prime financial crisis erupted with the collapse of investment bank Lehman Brothers, then Chairman Ben Bernanke launched the first round of QE.
Germany’s Bundesbank announced that the country repatriated 85 tons of gold from New York in 2014, far surpassing its previous estimates of 30 to 50 tons — and laying to waste a Bloomberg article you might have seen last summer insisting that the Germans were happy to keep their gold in American vaults. Turns out, not so much happiness. You might really label it: concern about keeping their gold in America.
Including the gold repatriated from Paris, Germany brought home 120 tons last year. And the Netherlands, meanwhile, removed 122.5 tons of gold — about one-fifth of their total gold stored overseas — from New York, bringing it back to Amsterdam.
;p'The long-anticipated collapse of the euro is here. When European Central Bank president Mario Draghi unveiled an open-ended quantitative easing program worth at least 60 billion euros a month on Thursday, stocks soared but the euro plummeted like a rock. It hit an 11 year low of $1.13, and many analysts believe that it is going much, much lower than this. The speed at which the euro has been falling in recent months has been absolutely stunning. Less than a year ago it was hovering near $1.40. But since that time the crippling economic problems in southern Europe have gone from bad to worse, and no amount of money printing is going to avert the financial nightmare that is slowly unfolding right before our eyes. Yes, there may be some temporary euphoria for a few days, but it is important to remember that reckless money printing worked for the Weimar Republic for a little while too before it turned into an utter disaster. Now that the ECB has decided to go this route, it is essentially out of ammunition. The only thing that it could potentially do beyond this is to print even larger quantities of money. As the global financial crisis begins to unfold over the next couple of years, the ECB is pretty much going to be powerless to do anything about it. Over the next couple of months, we can expect the euro to continue to head toward parity with the U.S. dollar, and eventually it is going to go to all-time lows. Meanwhile, the future of the eurozone itself is very much in doubt. If it does break up, the elite of Europe will probably try to put it back together in some sort of new configuration, but the damage will already have been done.
Today the man who 52 days ago remarkably predicted the collapse of the euro against the Swiss franc just issued a second terrifying prediction. This King World News interview takes a trip down the rabbit hole of desperate central banks, massive losses and total global collapse.
Eric King: “Egon, the ECB has just announced this 1.1 trillion euro package in a desperate attempt to fight off deflation.”
Greyerz: “These decisions by the central banks have virtually no impact whatsoever on the underlying economy over the longer-term. They did what they had to do because the European banking system as well as the economy is in dire straits.
Central banks still believe that by printing money they can kick-start their economies and save the financial system. That’s not the case. There is no chance whatsoever to change the outcome of an indebted and bankrupt European economy….
By Jeffrey Saut, Chief Investment Strategist at Raymond James
January 22 (King World News) – "Rocky Horror Picture Show" was a satirical film production done as a tribute to the science fiction and horror "B" movies of the late 1930s through the 1970s. I was reminded of the flick recently when one portfolio manager I saw in Fort Lauderdale said to me, "The first few weeks of the New Year have been an absolute horror show!" Horror indeed for in those weeks the D-J industrial Average (INDU/17511.57) has traveled nearly 3100 points as measured by its movements between the intraday highs and lows.
That caused another Wall Street Wag to lament, "Periods of low volatility have always been followed by periods of increase volatility." Surprisingly, however, the senior index is still within 1.75% of its December 31, 2014 closing price. The frantic movements are kind of like rocking in a rocking chair, lots of motion getting you nowhere. Yet, readers of these missives should not have been surprised by what's transpired year to date.
In the aftermath of last week's historic Swiss move, today the Godfather of newsletter writers, 90-year old Richard Russell, proclaimed that the gold bull has just spit in the Fed's face by breaking out of its massive base, even as the worldwide depression continues to grind on.
Richard Russell: “The world depression has settled down on mankind. In the meantime every nation is struggling to cheapen its currency. One way of doing this is that central banks are creating new trillions of assorted world currencies. It’s rapidly dawning on the wealthy one percent that the fiat currencies they hold are fast becoming worthless. The worst of the fiat currencies have suddenly come into question. The reaction of big money is to swap their garbage currencies for the only currency that has held its worth in all of history – gold.
Already you can feel the sweep of the new rush into gold. The base is now complete for the resumption of the bull market in gold.
Breaking the stranglehold of vested interests is the essential step to rebuilding an economy that isn't totally dependent on manipulated money and statistics.
The word manipulated has the sour taste of officially sanctioned distortion in service of an Elite's interests. At a minimum, manipulation smacks of intent to defraud. If there is no intent to defraud or mislead, then what's the purpose of manipulating statistics, media coverage and official narratives?
As a result, the unsavory reality of our massively manipulated economy is masked by insipid words such as stimulus, easing and investing in our future--as if borrowing and squandering trillions of dollars to further enrich the few at the expense of the many is anything but blatant grift, fraud and embezzlement of taxpayer funds.
There is no question that the world economy is very exposed to the fast decline in the oil prices. Over a week ago the Saudis said unofficially that they could see the oil price fall as low as $20. That would collapse so many businesses if it were to unfold. Some estimates show that more than half the fracking industry could be thrown into bankruptcy if oil prices continue to remain weak. Eric, that is not a small thing from the Fed’s point of view.”