The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
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A very nice mechanistic model goldgnome, but isn't the gist of it - too much money and nowhere to go ? AI is now the only growth game in town ? and overpriced ? Therefore BTC, gold, and other bubbles inflate. That used to be property but a recession will see to that. The tories saw property as a virtuous bubble because it had economic benefits in terms of employment, mobility and feel good but no one sees it that way anymore. Other bubbles to watch for - the green bubble - I see CARP is going bonkers - a military bubble in "defence" stocks (I've never thought of blowing up people has being defence or as sustainable but then I don't live in the Middle East). Ultimately growth is the only justification for rising real value wealth and with the AI revolution the growth will be focussed on a minute portion of business owners and most consumer led markets will fall (in real terms). Gold and BTC win (assuming AI stays overvalued). JMHO.
Major European markets traded mostly lower in Wednesday's premarket session as the area receives an important set of economic reports. Today, market participants will learn about the Eurozone inflation report and UK inflation data.
At 7:55 am CET, the DAX and the FTSE 100 were flat. Meanwhile, the CAC 40 fell 0.08%, and the pan-European Euro Stoxx 50 fell 0.39%.
On the currency front, the euro and the British pound were down by 0.07% and 0.06% against the dollar at 7:57 am CET, selling for $1.06108 and $1.24191, respectively.
Baha Breaking News (BBN) / JG
Happy hump y’al
Gold currently $2377.84
The Bank of Japan is refusing to raise rates above zero or halt bond purchases even though core inflation is 2.8 per cent and the Rengo wage round is running at 5.2 per cent. This is what a debt trap looks like. With a debt-to-GDP ratio above 260 per cent, Japan cannot return to sound money without risking a fiscal crisis.
Olivier Blanchard, global debt guru and former IMF chief economist, once told me how this would unfold by the mid-2020s. “One day the BoJ may get a call from the finance ministry saying please think about us – it is a life or death question – and keep rates at zero for a bit longer,” he said.
The European Central Bank is also in a debt trap. It continued to buy buckets of Club Med bonds even when inflation was over 10 per cent. This was patently a fiscal rescue for semi-solvent states. The ECB has backed off for now but will be forced to shield Italy again with fiscal transfers disguised as QE in the next downturn.
The Fed has largely monetised the Trump-Biden jumbo deficits. It now faces an invidious choice: either it stays the course against inflation, at the risk of a US funding crisis, a commercial property/banking crisis, and recession, all ending in a return to QE and fiscal dominance; or it cuts rates hard and fast before inflation is under control, also ending in fiscal dominance. Is gold sniffing this out?
Of course, the gold spike may be nothing more than wolf pack speculation by funds orchestrating a squeeze on bullion shorts through the options market, knowing that this sets off a self-fueling feedback loop. If so, the rally will short-circuit soon enough.
My bet is that a big animal with a Chinese accent is bracing for geopolitical or monetary disorder on a traumatic scale... great time for big animals of chinese decent
Lets take two stabs at this mystery, one geopolitical and one financial. It has been clear for three years that Russia, China and Iran are operating in collusion, each feeding opportunistically on each other. All three have fostered belligerent hyper-nationalism as a means of regime survival, and all aim to press their advantage against a fatally complacent West before the window of opportunity closes.
This menace on three fronts has reached a dangerous juncture. None of the major democracies have put their economies on a war-time footing despite the obvious threat.
The West has dropped the ball on Ukraine – or worse, it is preventing Ukraine from hitting Russian oil facilities – and has therefore left the door wide open for a knock-out blow by the Kremlin this summer.
Iran has been emboldened by Putin’s military comeback. It is also flush with money. Joe Biden is so worried about rising petrol prices that he has turned a blind eye to sanctions busting, letting Iran sell as much crude as it wants. This has enabled Tehran to advance its pawns in the Middle East, and now to risk a direct missile strike against Israel.
The third shoe has yet to drop, but China knows that the West has run down its stock of military kit trying to contain these other two crises. Xi Jinping may never have a better moment to tighten the noose on Taiwan with a naval and air blockade, gaining a stranglehold over the West’s supply of advanced semiconductors that can then be used as a bargaining chip. How would the democracies respond to this?
There is a strong suspicion among gold experts that China is behind the surge in buying, building up a war-fighting bullion chest through state-controlled banks and proxies. But others, too, can see that we are living through a fundamental convulsion of the global order, and that the dollarised financial system will not be the same at the end of it. Gold is the hedge against dystopia.
However, there is a parallel explanation. Covid finally broke our spendthrift governments. The talk in hedge fund land is that some big beasts are taking bets against “fiscal dominance” across the West.
It is a collective judgment that too many countries have pushed public debt beyond 100 per cent of GDP and beyond the point of no return under prevailing economic ideologies and political regimes. Budget deficits have broken out of historical ranges and are running at structurally untenable levels for this stage of the cycle.
Central banks will bottle it – under this scenario – in order to mop up issuance of treasury bonds. They will let inflation run hot to help states whittle down debts by stealth default. You might argue that this is what they already did by letting rip with extreme money creation during the pandemic.
Yep Mr T- can only go up or down :-)
Try not to no thinkee/lokee too much, but CEY SP move up against the FTSE 100 big time when all else were dropping.
True so then Mr Henderson still has a chance of being 50% right one way or the other!
The market is wrong about no conflict escalation because the Israeli war cabinet has been looking for an excuse to wipe out the Iran nuclear capability and so the usual market data isn't that relevant in such unpredictable times of a potential war.
Still I suppose if the nuclear tipped missiles start flying back and forth there will still be someidiot traders who are out of touch with the reality who will be opening up short positions for a quick profit to enjoy in the nuclear wasteland!
The answer from ordinary population masses is nothing. It is all about elite power and few who get everything out of it and leave the cost to everyone else. I grew up during the Vietnam War and saw older teenagers in my street in Illinois drafted in to fight that war. The posturing between Israel leadership and Iranian leadership if it leads to war is about as disgusting as to what happened in Vietnam. Fingers cross that peaceful alternatives win the day.
Mr Henderson was right once and then wrong.
Can't remember who made that comment, but possibly Mr Henderson may have some idea as to what the results my reveal?
If Martin Horgan is to regain trust tin the company strategy then some more than decent results are essential!
Atm
comex price
$2382.60 Now.
GLTA,
Dan
CEY had better hit target for ounces and so on...
I do recall a "softer" comment though that someone heard from the horses mouth on the the last webcast.
Any updates/view on the Q1 to be RNS released on Thurs?
Barrick news- (trading down about 6% as I type)
https://www.msn.com/en-ca/money/topstories/barrick-s-gold-production-continues-to-trail-estimates/ar-BB1lIlSe
Cont 3
In the press, QE was generally presented as “The Bank of England prints money and lends this to banks so that they can increase their lending into the economy”, but this is completely inaccurate.
In reality, through QE the Bank of England purchased financial assets – almost exclusively government bonds – from pension funds and insurance companies. It paid for these bonds by creating new central bank reserves – the type of money that bank use to pay each other. The pension funds would sell the bonds to the Bank of England and in exchange, they would receive deposits (money) in an account at one of the major banks, say RBS. RBS would end up with the new deposit (a liability from it to the pension fund), and a new asset – central bank reserves at the Bank of England.
Quantitative Easing therefore simultaneously increased a) the amount of central bank money, which is used in the system that banks use to pay each other, and b) the amount of commercial bank money (deposits in the bank accounts of people and companies). Only the deposits can actually be spent in the real economy, as central bank reserves are just for internal use between banks and the Bank of England.
https://positivemoney.org/how-money-works/advanced/how-quantitative-easing-works/
Hi Herbie, The FED is up the creek without a paddle because their Certel members thought they could just carry on creating ever more electronic dollars and on placing huge sells of paper gold to keep the price of physical gold under the cosh and the dollar strong, they were arrogant and complacent because in the meantime the BRICS members have been lapping up the cheap gold whilst Fort Knox remains in the main devoid of that much American owned gold.
That said our BOE and thev LBMA are nearly as bad !
Cont- 2
The effectiveness of QE is extremely controversial. Indeed, our position is that it does more harm than good – and there are much better alternatives, but we are getting ahead of ourselves here. In our next post, we go into more detail on the theory behind QE, and in later posts, we show how QE doesn’t work in practice – and instead leads to more financial instability and inequality, as well as higher house prices.
It’s worth noting that QE is supposed to increase the price of financial assets, making assets holders feel wealthier – encouraging them to spend more (the so-called trickle-down effect). It’s also intended to lower interest rates in financial markets. This means lower borrowing costs, encouraging businesses to issue more debt to finance investment.
Low interest rates mean low returns for investors, and theoretically should encourage them to look for riskier, higher yielding investments. Finally, pension funds and insurance companies should buy riskier assets to replace the ones they sold to the Bank of England, all of which is intended to redirect credit and investment to businesses.
Hi 3Bear, I would go further although th general public, our politicians and indeed the majority of out financial journalists are either ignorant of or simply ignore QE is where central banks, such as the Bank of England, create new money out of nothing to buy financial assets (economic jargon for government and corporate debt in the form of bonds) from financial entities such as pension funds, insurance companies and investment banks, etc.
In the media, QE is presented as a process whereby the Bank of England prints money and lends this to banks so that they can increase their lending into the economy. But in reality, no actual physical cash is ever printed and most people (let alone banks) don’t ever see the money created via QE.
What actually happens is the Bank of England creates new digital money, central bank reserves, which are then used to predominantly buy government debt (and more recently corporate debt). From 2009 to 2012, the Bank of England created £375 billion of new money.
This programme is still on-going. In fact, more recently the Bank of England announced that it would be expanding the programme by another £70 billion, bringing the total to £445 billion. Concerned that investment and spending might drop due to the Brexit vote, the Bank of England will purchase another £60 billion worth of government debt, and £10 billion worth of corporate debt.
cont
Yes but expect the Fed to short gold at 14:30 UK time as they did fruitlessly yesterday - buying opportunity.
3 bear,
The rally was very stable up to 20 March. Beyond that time frame it started to become over extended and not just a spring seasonal rally. On 2 April the rally was approaching $2300 spot price which should have been a top with a 14.5% rise but then it started to go parabolic. The momentum then hit 17% rise at 2350 spot price where only a handful of rallies have surpassed this. The peak was around 20%. The rally started on 12 February. Central banks (especially India and China were behind the move from 12 February to 29th February) and published data of late shows this was the case.
The concern some of us have is that the rally was taken over by Options traders and they have to take physical delivery on 25th April. I therefore believe the answer to your question will soon reveal itself. My belief is that part of the rally is permanent and it needs to retreat to a level to attract buying in the physical market for delivery. Over the course of 2024 we may get more rallies and pull backs. The jewellery market has to restock gold at a price where they can sell it later on and it just takes time for the physical market to absorb increases. Otherwise we get bear markets in gold later on. Tony
3bear we all hope so but when markets collapse, as we have experienced before, holders can also sell gold to raise liquidity, or buy it as a hedge; gold is marvellously fickle a bit like the spouse, always keeping one on one's toes as for any action the reaction may be unpredictably one way or the other. Above all we have learnt not to count our golden flip flops before we have worn them so to speak.
There was a good FT piece yesterday by Rana Foruhar headed'Gold is back and it has a message for us' , which inspired me to buy a book it mentioned 'The New World Economy in 5 Trends' by BNP Paribas chief strategist Fortis Philippe Gijsels, and the chief economist Koen De Leus which predicts gold running to $4000 in the not too distant future but who really knows. Anyway I will read it.
Anyone share my view that this rise in the GP is permanent and largely due to 2020's colossal international QE finally feeding through to all corners of the financial system?
Grabbed some more at 1.264 in the isa at 8am. Will then sell the same from trading account hopefully higher. Prefer that to Isa bed and breakfast
Major European markets traded lower ahead of Tuesday's session as investors awaited the release of more economic data. Today, market participants will receive reports on EU economic sentiment and the trade balance. Italy will release its latest CPI data.
At 8:06 am CET, the DAX lost 1.17%, the CAC 40 fell 1.32%, and the FTSE 100 declined 1.19%. Finally, the pan-European Euro Stoxx 50 fell 1.34%.
On the currency front, the euro and the British pound were down by 0.09% and 0.19% against the dollar at 8:07 am CET, selling for $1.06148 and $1.24224, respectively.
Baha Breaking News (BBN) / JG
Gold currently $2386.12
Exactly, the signs are well recognised and documented now.
Its just a matter of how the final chapter is written. They started with a few bangs and thats the way they may well go out (with a bit of interest, so to speak). Worship of invididualism plays into the hands of the second law of thermodynamics, which leads into huge energy losses in the system for very little gain. Sad .. cest la vie
the gnome