Moments ago, the FOMC members formalized their opinion on where inflation is heading: "Most members continued to anticipate that, with longer-term inflation expectations stable and the existing slack in resource utilization ...
It's not like Bill Gross hasn't been vocal about what he's thought about the economy or the Fed's role in it. He and El-Erian have both been pretty blunt about the situation. Good to see that they are putting their money where their mouths have been. Even the Kings of Bonds have to realize that chasing the last bit of DV01 capital gains is just being piggish after a generation of not fighting the Fed.
As Jim Sinclair always says, the middle 60-70% of any move is what you want to capture and leave the rest on the table for the God of Greed.
China’s largest gold producer is already a force to be reckoned with. But if the visionary head of China National Gold Corporation gets his way, it’s going to be much, much bigger.
The fact that China is talking about the role of their gold reserves now, in the Financial Times no less, speaks volumes as to where they are in achieving their reserve ratio of gold to foreign exchange reserves for the Yuan. It's a well-known secret that China has effectively nationalized their mining industry with not an ounce of production leaving the country for export or exchange purposes (except to buy the ood lot of Iranian oil at cut-rate prices) and that they've been doinng this for years.
The last time they announced a change in their official Gold reserves it was June 2009 and it shocked the markets. from that point forward central banks have been net buyers of gold on a monthly basis far more often than they were net sellers. The hoarding of Gold for reserve purposes had begun with that announcement.
The timing caused maximal damage to the U.S. politically as well. It is also no secret that China and the U.S. are headed for a real showdown. Military showdown? I don't think so. I think WWIII is already happening and it's happening in the oil fields of the Middle East and the OTC derivative and gold swap markets in London, NY and Hong Kong.
So, what do we expect to happen with the next announcement? My guess is it will ignite a massive sale of the Dollar and a commensurate rush into Gold. China has inked no less than 30 bilateral trade agreements with countries around the world. They are needing fewer dollars to facilitate their trade and this loss of flow is what is staying the Fed's hand on above-board QEIII. The Fed has been in a tightening/sterilizing mode for months trying to use the Dollar and the Euro-zonefear tradeto attack its rivals in the currency markets.
With the Bond markets topping I'm wondering if the acceleration of gold importation is being done now with U.S. treasuries and not just recycled trade dollars now that the U.S. economy is falling off a cliff.
The rout in U.S. Treasuries is becoming biblical. 30 Year Bond futures dropped 1.5 points, crashing through horizontal support at 147 and 146.5 to close Wednesday afternoon’s trading at 146.01. The yield climbed to 2.91%. 10 Year Treasury yields rose to 1.80%, up 0.071%. This sell-off in Treasuries is particularly worrisome because there has not been a commensurate rise in equities. The S&P 500 (AMEX:SPY) rose just 1.60 to close at 1405.53 (0.11%). If the money is rotating out of U.S. Bonds and Securities and not flowing into U.S. equities, where is it going?
Gold is significantly #winning today - well ahead of stocks and the USD after being closely synced with them since the lows last Friday pre-ramp. The question is why? We have an idea.
Gold is winning because the petrodollar flow is more than the Fed can handle. Now that they'ze started open repo operations, even more flow is being added to the system, hence the bids are coming in at forward physical price. Sept/Oct contracts are still flat to negative, implying a very tight physical market which cannot be manipulated for very long. The closer we get to futures expiry in this condition the more likely we will see a pop above $1650 as settlement worries loom driving shorts to cover at higher prices.
A weekly close over $1632 would be a massive technical breakout both of horizontal resistance from the July High and the 144 EMA. Volume being very low implies the market is ready to move.
Normally when a new bullish wave within the precious metals bull market begins it is Gold (AMEX:GLD) that leads the charge. Silver’s (AMEX:SLV) industrial characteristics usually allow it to lag behind, languishing along with the mediocre equities and other secondary commodities while Gold and oil (AMEX:USO) take center stage. Then, when Gold is finally too expensive does money rotate into Silver, a much thinner and more volatile market, and it explodes to the upside, destroying over-confident short-side operators and making short-lived millionaires of the few crazy enough to play its game.
Why gold (AMEX:GLD) is trading as a risk asset with equities and not a risk-averse asset is odd to me, but that is the situation. Gold is rising with bond yields along with equities. Now the last time I checked the gold bears were still of the opinion that once bond yields started to rise gold would be pulled down to somewhere south of $1200 per ounce. Well, since the U.S. treasury market topped on July 23rd, yields on the 10 year U.S. Treasury note (AMEX:UST) has risen from 1.382% to 1.845%, a 33.5% rise in yield.
Corn, Wheat and Soybean futures are all hanging around near all-time highs. Corn has been the single best investment of the past 5 years, followed very closely by Gold (AMEX:GLD). But, somehow, because farmers are losing crops due to the drought and those that haven’t are securing record prices, and presumably solid profits as a result, American taxpayers need, in Obama-world, to transfer even more of their wealth to these people because of the vagaries of Mother Nature.
I'm not sure Draghi has put anything concrete in place like Axel is suggesting but he's certainly making it very clear as to what he wants. An integrated Euro is what has been on the table for over 60 years and this is just one more move in the game.
There is still a significant amount of risk in the system that central planners like Draghi and Bernanke cannot account for. Axel Merk is smart enough to know that there are many forms of tail risk. Yes, Draghi's words have made it clear that he has lessened the most important source of it: uncertainty in the competence of the E.C.B.'s leadership. That creates a put underneath the fear trade.
I'm one to bet on stability in almost all things as the most likely outcome. In the end we play the probablities, and the probabilities state that there is enough will on the part of central bankers to preserve their system at our expense even if they get the timing wrong and it costs them more than they wanted it to.
But, chaos is also a possibility that has to be accounted for. In either case Gold wins as an investment.
Sharing your scoops to your social media accounts is a must to distribute your curated content. Not only will it drive traffic and leads through your content, but it will help show your expertise with your followers.
How to integrate my topics' content to my website?
Integrating your curated content to your website or blog will allow you to increase your website visitors’ engagement, boost SEO and acquire new visitors. By redirecting your social media traffic to your website, Scoop.it will also help you generate more qualified traffic and leads from your curation work.
Distributing your curated content through a newsletter is a great way to nurture and engage your email subscribers will developing your traffic and visibility.
Creating engaging newsletters with your curated content is really easy.