Member Info for goldgnome

But then, magically, things turned around as the Fed announced a new program of intervention, whereby they would buy bonds, bond ETFs, both high quality and low quality.

hyg high yield index
Source: Bloomberg, Financial Sense Wealth Management. Note: Past performance does not guarantee future results.
The interest rates on corporate debt started to rise posing a financial risk to the markets, so the Fed expanded its mandate to support the corporate debt markets. Credit spreads, which had been widening, suddenly began to contract.

For a brief period, we were taking advantage of the higher interest rates and were able to lock in high short-term yields. That opportunity came to an end as bonds rallied thanks to massive bond purchases by the Fed, which lowered yields and raised prices.

Why did the Fed do this when in the past they stuck to Treasuries and mortgage bonds? The reason is simple. There was too much corporate debt, half of which was rated BBB. There was a risk of those BBB bonds downgrading to BB or lower, dropping them into the junk bond category. That would trigger a selling deluge by investment-grade bond and bond ETFs, which would have been forced to sell, triggering a financial crisis in the bond markets.

There is simply too much debt, so they intervened to keep the bond market from imploding, which is why they are expanding their bond-buying efforts to include corporate as well as Treasury debt. The Fed’s balance sheet will go from $4 trillion at the start of the crisis to $10 trillion by year-end and beyond.

Where is all of this leading us? As the government borrows massive amounts of money and as deficits become multi-trillion, it will be the Fed’s role to artificially suppress interest rates. This is good news if you are a debtor. Mortgage rates have never been this low and if you are a corporation you can borrow money at next to nothing. It is not good news if you are an investor, a pension fund, or a retiree. Cash yields next to nothing, money markets are at 0.0%, and even short-term treasury yields are below inflation rates. This means, as an investor, you are losing money after taxes and inflation on cash investments.

We anticipated this coming last year when we gave seminars in the fall to clients called “Zero Bound”. That is why we launched our income fund which is strategically a long-term investment account created to take advantage of the inflationary wave that is coming this decade (more about this later).

I want to discuss the rationale for what the government is doing and where we are heading in the years ahead and the remainder of this decade. The government strategy is being driven by MMT (Modern Monetary Theory). Simply stated, MMT is a macroeconomic framework that says sovereign countries like the U.S., U.K., Japan, or Canada are not operationally constrained by revenues when it comes to federal government spending.

Interesting notes ...
“Those who cannot remember the past are condemned to repeat it.” –George Santayana

This year marks my 40th year in the business. During these past four decades, I have seen fads and cycles come and go. When I began my career, the inflation of the late 60s and 70s was coming to an end along with a peak in interest rates. As shown in the graph below, interest rates peaked in August 1981, the result of Fed Chairman Paul Volker’s efforts to conquer inflation which reached as high as 14.5%.

Since the peak in 1981, interest rates have steadily fallen to where they are today. The rate of inflation has also fallen but the value of money has depreciated. The dollars you hold in your wallet buy less goods and services every year. I would like to demonstrate financial inflation in a way that impacts you personally, as an investor, as shown below. I begin with a million dollars and show what income it would produce for you each year over the past five decades if invested in 10-year US Treasury bonds.

$1,000,000 investment (annual income per year in each decade)
1980s: $140,000
1990s: $80,000
2000s: $50,000
2010s: $40,000
2020s: $7,000
While the inflation rate has steadily fallen each decade, the purchasing value of money and its return has also fallen dramatically. This is because the Fed has implemented QE and other methods—as it is doing today—to suppress the rate of interest for borrowing money. Why are they doing this? Because of the massive amount of debt held across the entire U.S. economy from government, municipal, corporate, to the consumer as shown below.
https://fred.stlouisfed.org/series/GFDEBTN, June 26, 2020.
The Fed is once again implementing a program to keep interest rates suppressed through massive interventions into the bond market to the tune of $1 trillion per month. This time they are actively intervening in the corporate bond market by financing new corporate debt ($500 B) and buying existing debt ($250 B).

Normally, in a business cycle, as the economy heads into a recession, credit spreads between Treasury debt and corporate debt start to widen as the risk of default rises on lower-quality debt. This is the result of an economic recession. Company debt on lower-quality issues can get downgraded as firms experience lower sales and profits as a result of the recession. Interest rates start to rise as the risk of default increases. Then investors start to demand higher interest rates to compensate for the increased risk of default or a debt downgrade.

This is exactly what was happening in February as the U.S. economy headed into a recession from government shutdowns. Corporate bond yields began to rise reflecting the increased risk to bondholders as a result of the recession. You can see this in the precipitous drop in the price of the popular junk bond ETF, HYG.
The bond fund lost 23% of its value in a matter of weeks.

I have been watching the CEY in West Africa story (great story, + 5 m ozs Ma nd I), and what has been missing is the game plan.
Given the geological/Mining opportunities in Egypt, where CEY has social liscense, operational, commerial, legal experience (etc), I would think in these times focus is needed.

West Africa acheivements so far have been impressive, but what do we do to best capture value (in our lifetime). Could I be so bold as suggest the following

1. Get a PEA done on Doropo and ABC, and lets flesh some financials out as to the ROI (etc).
2. Lets use these as a base case for establishing value for their 5 m ozs M and I Resources. The tother input would be their very impressive resource growth...which could translate into exploration discovery trajectory and VALUE ADD
3. Lets get an Inde valuation on the exploration potential of their 4,000 km2 ground holding.
4. Lets add these together to establish a fair value in the context of CEY investment so far in West Africa.
5. Lets go to some suitable Financial Types (they could do it themsleves of course), and look at how these assets with the above derived valuation would stack up as an investment proposition for a new West African old Focussed company, float on the best exchange for such a float.
If good, and hard to believe such a IPO would not be well received, then lets get key mngt and staff incentiised and make a public offering. CEY could positionitself to have x% now, and should the projects develop to acheive certain hurdles, then it gets additional performance options, and this be either for CEY or CEY holders as an in-species distribution...

It could be that CEY share holders could have shares in a new exciting IPO focussed on West African Gold which could turn out to be a lot better than Endeavour. CEY shareholders could end up owning 50% of a new $650m company?

Just an idle thought, but I would like to see some end game thinking AND ACTION, in WEST AFRICA. GREAT RESULTS SO FAR, but lets get some sharholder value NOW!

best

the gnome .........................................

The virus response seems to be a race with no defined end point, and a lot of people arguing about the course. Zero infections, zero deaths or reproduction number less than X (X yet to be determined) or what combination will be acceptable. Acceptable to who? So the world has taken off on a race..but to where?
Almost one in three businesses in Oz say their cash on hand would allow them to survive less than three months. Gulp? A June survey on business impacts of COVID-19 shows that two-thirds of companies experienced a revenue decline compared with the same period last year and only 8 per cent reported an income rise. More than 80 per cent of businesses in education and training, accommodation and food services, media and telecommunications, and arts and recreation posted a revenue fall. Universities in a spin, Rio decides to blow up 46,000 year old caves and so on...The country's top financial regulators on Wednesday noted that banks, regulators and governments would need to continue to show "flexibility" in unwinding emergency measures to support the economic recovery, such as the unwinding of six-month loan repayment deferrals due to expire in late September. Another run on toilet paper on Tuesday in Victoria...Australian Bureau of Statistics data shows five of the six hotspots in Victoria have more than a third of their residents born overseas, with India, Iraq, Sri Lanka, China, Vietnam and Italy among the leading places of birth. Language issues recognised in Virus communications...
?
Where, when is it going to end. A lot of the social contracts seem to be under review, if not being totally re-written.
Businesses in the UK suffering plunging revenue because of COVID-19 are seeking to avoid potential debt breaches by substituting last year’s profits in place of this year’s in the documents they present to their lenders...wow, all happening!!!
Worth having a look at the gold 1 year plus trends. $2,000 by June 2021 (or before, depending on hysteria). My bets on hysteria at the moment...

best to us all
the gnome

Correct the gold trade is in USD (worth thinking about this carefully), and hence this is what CEY sells into. The money would sit in a USD account and be transferred into GBP on as at need basis. If not needed and the CEY treasury view is that USD is the flavor of the month, then there it would stay. At the moment the GBP is inthe lowest quartile of 5 year trading range, and I cannot think of a compelling argument to go into GBP as a currency. Mind you I am having troulble with USD let alone AUD. But best to bet with the controllers of volume and velocity of global currencies is my 2 cents worth...USD and 10-15% exposure with that other strange currency...gold! and well disciplined (Capital mngt, Margins, resource replacement etc) gold stocks that return money to shareholders rather than go on M and A binges.

best to all
the Gnome.

A seond ave of infections seems to be starting, which is going to have a dire effect on economies, most of which, in reality, are struggling now.
Confirmed 9.1M +152K today
Recovered 4.53M
Deaths 472K

Interesting to read the infection and death rate during WWI, due to flu/pneumonia...

"At the end of the war, came influenza. A spring wave began in March 1918, spreading through Europe, the USA and Asia over the following 3 months. It infected many, but mortality rates were unexceptional. The second wave spread globally from September to November; lethality was its hallmark. Not only did it kill the young and the old, there was also a peak of deaths in young adults aged 20–40, with half the deaths in the second wave occurring in this age group. In many, their illnesses moved rapidly from typical influenza to lethal pneumonia. US military data on this are particularly detailed [15]. Respiratory diseases killed 46,992 soldiers during the war, mostly from pneumonia. A fulminant course with ‘heliotrope’ cyanosis was characteristic, but attempts to prevent the spread of infection in military camps in the USA were unsuccessful, with both quarantine and face masks not working and antiseptic gargles increasing the incidence of infection."
https://www.futuremedicine.com/doi/full/10.2217/fmb-2018-0323

The IMF has described the decline as the worst since the Great Depression of the 1930s.
Although it said that the coronavirus has plunged the world into a "crisis like no other", it does expect global growth to rise to 5.8% next year IF the pandemic fades in the second half of 2020. Personally I doubt it, and then what happens when the seccond wave hits...More than 100 countries have travel descriptions.

This week, McKinsey researchers looked at ways to fill the gaps that COVID-19 has created in US state budgets. Worldwide, we estimate that government deficits could reach $30 trillion by 2023.

Gotti

I hope you are not suggesting that the magnificent machinations of the market and its hidden hands are not efficient. Gasp, another slap in the face for the economists, and their magnificent modelling machines. They may have to get a real job, and concern themselves with real GDP growth as well as real productivity drivers. Even get their hands dirty, and of course we couldn't have that !

best
The Gnome

Please allow me a small digression from gold ..I have passed comment on the mass hysteria being constantly whipped up by the mass media. Far worse in terms of creating anxiety than the virus! Just a small plug for the heart of democracy...
The Public Interest Journalism Initiative (PIJI) was established to ensure Australia develops a sustainable ecosystem of independent, pluralistic journalism. We are a non-partisan organisation conducting research, developing policy solutions and building a public conversation on the importance of this issue.
Public interest journalism is in crisis. An informed community is crucial to our democracy but the advertising revenue that once funded reporting has shifted away from journalism. Classifieds have moved onto dedicated websites like Craigslist and Gumtree. For every $100 spent in digital advertising, Google and Facebook capture $68, leaving everybody else to split the remaining third. Australia, like many other countries, has yet to find durable solutions to this problem.
As this business model has collapsed, newsrooms across Australia have shrunk and closed. An estimated 3,000 journalists have lost their jobs in the last six years through redundancies alone, with more expected. That has seriously affected the media’s ability to conduct public interest journalism, particularly in suburban, regional and rural Australia.
Independent public interest journalism is the cornerstone of democracy. Without it, ours is under threat.
https://piji.com.au/news/
the gnome

Thanks Prof,

For the U.S and Oz, financing an adult daycare facility — also known as lockdown — will create a short and long term economic disaster, no question about that - super-inflation, hyperinflation..don't know, prob latter? But expanding the money supply does not create inflation unless the real economy starts spending. Very difficult given the fear mongering 24/7 in the media. The trigger will be the government handing out free money, helicopter-style, directly to consumers - which we have started now in Oz, JOBSEEKER, JOBKEEPER, (etc etc, much more to come) reverting the long-standing trend of declining economic velocity which, right now, remains at an all-time low. The Unions in Oz are all over this, along with the quasi-socialists, social scientists of various flavours, various well meaning NGO's and a large group of surfers (think waves).
Most experts agree that assets negatively correlated to the U.S dollar will thrive in the next decade. Even the biggest dollar bulls think the end game is dollar destruction and gold supremacy — and yes: Bitcoin might have its day. Even the banks now prediciting large USD GP increases ..Bank of America target $3,000 per ounce. JimRickards believes no choice but to return to a 40% gold standard, bailing out the entire financial system by revaluing the gold price to roughly 40% of the U.S dollar supply. That’s $58,693 per troy ounce...now thats exciting! I'd be happy with $5,869.30 per ounce
There is, however, one thing Rickards fails to consider: the real supply of U.S dollars. The widespread myth that the U.S government and the Federal Reserve have total control over the global supply of dollar prevails. It’s the JPMorgan's, the Goldman Sachs’s, that create most of the money supply via offshore dollar markets such as the Eurodollar system: the so-called shadow banking layer that lies outside the U.S authorities’ jurisdiction. Say no more...but think larger prices again..
...but it’s best to think about gold as an insurance policy, not a speculative asset that will make you rich...a 10-12 % allocation to gold to protect your wealth from the government’s financially repressive actions, and thats about where I sit.
Remember Benjamin Franklin, “By failing to prepare, you are preparing to fail.” Now more than ever, protecting your purchasing power is something you won’t regret. Don't believe govt statistics and the media, watch the prices of the goods and services and govt taxes and fees that you use now...stay alert
best
the gnome

Prof
The other aspects of gold and fiats are well traced out. On April 23, 2020, the gold price breached €51,000 euros per Kg for the first time in history. The gold price in euros has increased by 555% since the euro was created in 1999. Put another way, Voima Gold found in 1999 it took one euro to buy 0.13 of a gram of gold. Today the ratio has diminished to €1=0.02 gram, meaning over the past 21 years, the euro has lost 85% of its value versus gold. Put another way, a gold dealer used to be able to buy 13 hundreds of a gram for one euro. But now, the same euro can only buy 2 hundreds of a gram. The purchasing power of the euro versus gold has fallen significantly. Measuring the value of currencies against each other is interesting, but most important is what this means for the purchasing power of currencies locally. The end goal of every participant in the economy is goods and services. What truly matters for a currency is its purchasing power.
https://www.voimagold.com/insight/since-inception-the-euro-has-devalued-by-85-against-gold
The fiats are a bad story, which cannot be hidden anymore. It will get a lot worse.
The choices for the politicians and economists are few. Fed Chair Jerome Powell ..considering “yield curve control.” Previously, in the 1940s, when the Federal Reserve controlled the yield curve, it created deeply negative real interest rates. If repeated today, this would cause the gold price to sky-rocket.
good luck all...we may all need it!
the Gnome.

Prof,

A good place to analyse gold is at
https://goldprice.org/
You can see the gold price variations now and historically in USD and also in a plethroa of other currencies.
Gold has been a very solid investment for since 2005 for all but one (2013) year. Sharp contrast to the buying power of the fiats, not to mention the games people play with the FOREX rates.
Interesting to try and think through how this "virus inspired" conundrem is going to play out. Australia has co-signed with 131 other countries a statement from the UN warning that COVID-19 had “created conditions that enabled the spread of disinformation, fake news and doctored videos to forment violence, [and] to divide communities”. Gosh if we didn't have enough fake news aready, pe-virus? The mass media has been driving anxiety ridden biased infromation into the communities for decades (I am so thankful that all of my children ignore the wailing) Research although still very embryonic, show that there is a active process of deglobalisation and decoupling under way, especially if one focuses on trade between the world's two largest economies. This will have profound consequences for portfolio construction that all investors should try to understand.
...I love the ZOOM and TEAMS meets, but they are never going to be the same as the real meeting, where you have a polite dinner after, or a coffee... especially in a world where trust and cooperation seems to have walked out the door. The world is changing (again!) and global trade willl not be the same, which is probably a good thing. Pehraps we will see the third world countries be allowed to develop, instead of what has happened in the last 5 decades?

best of luck to all

the Gnome

Dalio's Bridgewater warns of 'lost decade' for stocks...as governments wonder what they are aiming for...zero virus infections, zero deaths from the virus, 1.84m social distancing law (etc)...so the plan in the mean time is what? create growth in employment (govt not known for creating high productivity employment positions in the last few decades, and how do they do this-taxes or debt?), zero growth, negative interest rates, prop up the equity markets?
A reversal of the strong growth seen over the years in US corporate profit margins could lead to a "lost decade" for equity investors, Ray Dalio's Bridgewater Associates warns.
The margins, which have provided a big chunk of the excess return of equities over cash, could face a shift that would go beyond the current cyclical downturn in earnings, Bridgewater analysts wrote in a note to clients dated June 16.
"Globalisation, perhaps the largest driver of developed world profitability over the past few decades, has already peaked," the analysts said. "Now the US-China conflict and global pandemic are further accelerating moves by multinationals to reshore and duplicate supply chains, with a focus on reliability as opposed to just cost optimisation."

The pandemic-induced collapse in demand has already resulted in a huge fall in profit margins in the short term, the analysts added.
A rejig of globalization, would see it move from a profit base to a more sustainable and continuous supply base?

best
the gnome

As stock markets roar back from the coronavirus-led rout, advisers to the world's wealthy are urging them to hold more gold, questioning the strength of the rally and the long-term impact of global central banks' cash splurge. THE GOVTS ARE DOING THEIR BEST TO HIDE
1. REAL UNEMPLOYEMENT
2. REAL INFLATION.
Before the COVID-19 pandemic, most private banks recommended their clients hold none or just a tiny amount of gold.
Now some are channelling up to 10 per cent of their clients' portfolios into the yellow metal as the massive central bank stimulus reduces bond yields - making non-yielding gold more attractive - and raises the risk of inflation that would devalue other assets and currencies.

Demand remains red hot but new masters of gold control the trade now.
The global gold market is breaking up
While gold prices have already risen 14 per cent since the start of the year to $US1730 an ounce, many private bankers bet that gold - a hedge for both inflation and deflation - has further to run.
"Our view is that the weight of monetary supply, expansion, is going to ultimately be debasing to the dollar, and the Fed commitments, which [are] anchoring real rates, make the case for gold pretty sturdy," said Lisa Shalett, Chief Investment Officer, Wealth Management at Morgan Stanley.

'People have become nervous'
Nine private banks spoken to by Reuters, which collectively oversee around $US6 trillion in assets for the world's ultra-rich, said they had advised clients to increase their allocation to gold. Of them, four provided forecasts and all saw prices ending the year higher than they are now.
UBS, the world's biggest wealth manager, said gold could hit $US1800 by year-end in its base-case scenario, driven by ultra-low interest rates and investors seeking gold to hedge their portfolios, or even touch a record high of $US2000 in the event of a second wave of novel coronavirus infections.
Morgan Stanley added a 5 per cent position to commodities including gold in all its models at the end of March.
Four reasons gold is going to $US2000
While the bank was unlikely to advise a position above 10 per cent in commodities like gold, Shalett said it could get there, especially if inflation picks up materially.
The boost in demand could be a self-fulfilling prophecy for the metal's price, as any shift in allocation from bond and equity markets, estimated at up to a combined $US200 trillion, has a much larger impact on the smaller gold market, estimated at less than $US5 trillion.
GOOD LUCK ALL!
THE GNOME

I saw an interesting case in Australia some years ago, where shares in a start-up would always end nearly every day with a flourish of small positive trades, which meant that the price movement for the day was up, and there was a consistent "up" pattern over the weeks. Took the regulators a little while to figure out, but they did eventually, and the father of the CEO of the startup spent some time in jail. Lets hope the regulators on London exchange are vigalent!
Very odd CEY share movements indeed.

best

the gnome

The Fed had very little choice. The language will of course be polite, the hieroglyphics will increase, the value (buying power) of fiat has and will continue to go down (don't believe the stats just have a look at the prices of the things you need and you buy...do your own research!
Not only have they got little choice, they have even got less of a clue as to what to do. They need to simulate employment, minimize underemployment (endemic), increase discretionary spends in the populace..etc and how are they going to do this?

Mr Powell said the Fed's move to buy corporate bonds, which fulfilled a pledge first telegraphed on March 23, was "out of an excess of caution" rather than a desire to distort normal market signals. So what? distort the markets they have and will do. Not much choice here.

Although the Fed's corporate bond buying sent Wall Street off on another rally that raised benchmark equity indices about 2 per cent on Tuesday, critics argue such tools distort normal "price signals" that markets provide – such as warnings of future inflation – and may be difficult to reverse. Equity market is frothy, over stimulated, and we are doing more of the same...flight to quality, flight to gold

best
the gnome

The other part of my post relates to an analysis (there are a few) which suggest companies which manage ESG best return the best for shareholders. Has implications to the Mining Industry.

A $38b investor says ESG bets outperformed in selloff

The chief investment officer of a $US26 billion ($38 billion) fund in Helsinki says the market crisis triggered by COVID-19 has revealed just how resilient ESG assets are.

Securities that meet environmental, social and governance standards have proved a better bet so far this year than those that don't, according to Hanna Hiidenpalo, chief investment officer at Elo Mutual Pension Insurance Company.
Hanna Hiidenpalo: "The world is changing." Elo Mutual Pension Insurance Co
"During the crisis, we discovered that the business models of responsible companies are often based on a more solid foundation, which is also reflected in better valuations," she said.

Elo doesn't break out ESG-specific returns. But Hiidenpalo said that "companies with high ESG-ratings have produced better returns", particularly in the US. They've also seen their earnings estimates "lowered less than on average", she said.

Overall, the near-term investment horizon remains largely unchanged, with low interest rates here to stay. That means "there are very few opportunities to earn an investment return outside corporate risk", Hiidenpalo said.

Given performances like BHP, Vale, RIO there will be more competition for the investment dollar.
Mining Companies with strong ESG performance (as opposed to rhetoric) will attract more investment dollar in the future. I expect the reverse will be true.
best
the Gnome

Been some explosive news downunder. The news reverberating around Australia follows from the obliteration of 46,000-year-old archaeological treasures and has led to Rio's forfeiture of industry leadership in Indigenous affairs. There is already an amazing cost and time delay in mineral exploration in Oz, which decreases the return on investment and delay the potential discoveries of minerals in Australia, and now we have this act. If you want to explore now, you have to get indigenous clearance (different to mining - gulp?) from all claimant groups. There can be several. For each drill site. One parcel of land took 26 years to determine who the rightful claimant groups are, and how they might lay claim and manage their claims. And so on. Cost is born by the investors. Silks did well!
Another revelation in Rio Tinto's secretly recorded internal briefing last week for concerned employees is that the company "will be conducting a review" of the Juukan Gorge incident "and we want to make sure that is a comprehensive process". One wonders why there was no comprehensive process in the first place and who might have been asleep at the wheel.

The review will be conducted "with an Indigenous leader" and will have "significant board oversight".
The active supervision of this process by Rio's board would suggest the directors lack confidence in the ability of Jean-Sébastien Jacques' management team to conduct the company's external relationships. The word is many Rio employees are aghast at mngt performance. At this point, who could blame them?
In the recent past, Rio has an interesting history (that repeats itself) destruction through the communities in which it operates.
Only in February, New Zealand's Environment Minister, David Parker, labelled Rio's attitude "outrageous" after toxic waste from its Tiwai Point aluminium smelter nearly caused an ecological disaster and Rio reneged on the rehabilitation plan it had agreed with local authorities. "I can't reconcile it with their statements of corporate responsibility," Parker lamented.
Meanwhile, the people of Bougainville are begging Rio to rehabilitate the Panguna mine pit, which still spews poisoned water into the surrounding river system. The precinct resembles the surface of the moon and its residents suffer from skin lesions that never heal. In Madagascar, the locals get lead and uranium in their drinking water downstream of Rio's mineral sands plant. In the far past of Rio we have the lunar landscape of waste dumps that prevail in the Huelva Province of Spain.
...And let's not forget that only two weeks before the caves at Brockman were detonated, Rio management was disowning chairman Simon Thompson over his unauthorized pronouncements on climate change action. An organization chronically bereft of consensus. The chickens will come to roost. There is a lot to learn, and things will have to change now. Sold my RIO
Centamin record is social responsibility vastly superior

Well there is lots of fallout from the Virus, and the jury is out on whether the treatment was worse than the disease. Time will definitely tell. I expect it wont be a great story.

The next genie to emerge out of the "virus cures" has been the move to being a cashless society. So all of that archaic swapping of virus ridden paper and coin is going to cease, its dirty and historical, so why do it. We have the technology, we can buy, sell, trade, build more enormous amounts of debt and generally do whatever we (politicians and economists and masters of the universe) like on the internet. A hackers heaven is emerging, and I am so glad I made investment in the HACK ETF!

It will be so easy to fleece the lemmings and novices, charge negative interest rates and more effectively redistribute wealth according to the latest ideologies?

Cashless drift places negative rate floor in doubt...(and lets hack our way out of here)

London | A(nother!) funny thing has happened to us over the course of the coronavirus pandemic. We've stopped using cash. It's dirty and unhygienic; and anyway, we're not getting out so much.

Even the WHO has told us to switch to contactless payment (and they know best?). And the aversion to cash has proved highly contagious (more than the virus I suspect): in Australia, ATM withdrawals hit a 19-year low in April. In Britain, they were down 60 per cent on a year earlier.
A cashless society could help negative interest rates juice up the economy. iStock

British ATM provider Link (no relation to the ASX-listed company) has said the decline in ATM use that it had projected over five years would now probably happen in five months.

"We could be in a virtually cashless society in two years' time," Link boss John Howells has said.

Before they thought it would take 5 + years, now the estimate is 5 months ...

Good luck all !!! I am going to bury a few more bars in the back yard...

the Gnome...

If you dont read Ed Yardeni of Yardeni Research...can I recommend to you ... a taste below

As of Friday June 5, the S&P 500 was up 42.8% since March 23. This 52-day meltup is historic. It is the best since bigger gains were recorded during August-September 1932 (up as much as 109.2%) and May-June 1933 (up as much as 73.2%).
The meltup started the day after March 23, when the Federal Reserve announced QE4Ever and started carpet-bombing the financial markets and the economy with B-52s full of cash (Fig. 1). Since then, the Fed’s balance sheet rose by $2.5 trillion to a record $7.1 trillion during the June 3 week (Fig. 2). Its holdings of Treasury securities increased $1.6 trillion over the same period to a record $4.1 trillion (Fig. 3).

The Fed actually started its bombing campaign on March 15, when it announced $700 billion of QE4 purchases of US Treasuries and mortgage-backed securities and lowered the federal funds rate by 100bps to zero. The European Central Bank (ECB) joined the allied bombing campaign on March 18 with its Pandemic Emergency Purchase Programme (PEPP), committing to buy €750 billion of private- and public-sector Eurozone securities. On June 4, the ECB upped the ante by €600 billion to a total of €1,350 billion (Fig. 4). The total assets of the Fed, ECB, and Bank of Japan have soared by $3.9 trillion from mid-March through the end of May to $19.1 trillion (Fig. 5).

The result has been the Mother of All Meltups (MAMU) (Fig. 6).

During the bull market in stocks from 2009 through 2019, some bullish investment strategists claimed that “there is no alternative” to stocks. “TINA” was their stock market rallying cry. In fact, there was a good alternative to stocks, namely bonds. The 10-year Treasury bond yield was 2.89% on March 9, 2009, when the previous bull market started. It fell to a record low of 0.54% on March 9 of this year.

TINA makes more sense during the current bull market than it did during the previous one. The embrace of Modern Monetary Theory (MMT) by US monetary and fiscal policymakers during the week of March 23, when the Fed announced QE4Ever, and on March 27, when the CARES Act was signed into law, triggered a huge wave of TINA rebalancing out of bonds and into stocks. It is likely to continue for the foreseeable future.

The stock market equation since March 23 has been: TINA + MMT = MAMU.

MMT ended the latest bear market, which lasted for just 33 calendar days from February 19 through March 23. During that period, there were 23 trading days, with the S&P 500 down by 20% or more during only seven of those days. Technically, it was still in bear market territory, as the S&P 500 rocketed 18.9% for 11 more trading days after the March 23 bottom, through April 7, before entering correction territory.
etc
http://blog.yardeni.com/
best
the Gnome

Hmm, I could see gold cruise through $2,000 and CEY go through GBP2, as what is going to "hit the fan" in Sept/Oct are a lot of quarterly report figures, from various governments, plus some corporate reporting which is going to look marginally short (optimistic) of being catastrophic.

Australia is 100 days from an economic cliff..so the news flow reads
>>> Economists dub the sudden end of government stimulus a "fiscal cliff".
Circle your calendar for the end of September: we're approaching an economic cliff in 100 days.

Sept 2020 will see billions of dollars in financial stimulus end — almost simultaneously.

"It's a bit like trying to whip out the tablecloth from under your set of china," warns a prominent economist
"It's not going to come away smoothly — there's going to crashes and broken plates everywhere."

To save lives, governments moved quickly to stop the spread of coronavirus. When the economy was crushed by restrictions on movement and "normal life", extraordinary and expensive measures were put in place in March. Cash here, a splash there...short term fixes creating long term problems, and very significant problems at that.

"The economy is going to take a .… a substantial hit, if this all comes off in one day," or a month for that matter!

"We could potentially see a couple of percentage points come off GDP (gross domestic product) in that quarter if that is all unwound in one hit."
The list of expiring programs, and the breadth of people they're supporting, is extensive:

The economists models are as usual, all over the place, but none of them showing a glittery future.

So Sept 2020 is the date to watch, and carefully position your investments to take advantage of what is going to happen.

good luck to us all,

the Gnome