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Financial Markets: Pinocchio’s Enchanted Island
Financial Markets: Pinocchio’s Enchanted Island
The control of the commercials and the COMEX manipulators have is very depressing for the gold market investor. As soon as gold and the miners are about to get on another bullish leg, that the moving averages are positively aligned and re-crossing the 200-day MA, that the traders are standing by to get back in the market and are following the buying signals, BANG ! A new flash crash ! And, as usual, it is explained by vague and far-fetched reasons. The last example we have is what happened last Friday: Because of slightly better numbers on jobs creation in the United States, gold has been massively attacked and lost $40 in a single day ! Ten days like that would bring gold down to $834 ! This is gigantic ! One doesn’t have to look very far to realise that the manipulators are still running the show and are systematically keeping gold from resuming a bull market. They have failed to keep it under $1,200 for any length of time in 2014, but they are very active in keeping it under $1,300, because this would trigger technical buying orders.
The Fed will probably try to hike interest rates in June by 0.25%… so? The dollar is already too expensive and will hurt exports, the mountain of private and public debt in the U.S. will not be able to support a rate hike, and neither will the stock market, already in an historic bubble ! An interest rate hike in the U.S. would most likely totally extinguish what frail economic recovery there is. The Fed is about to make the same mistake Jean-Claude Trichet made for Europe: By over-estimating the capacity for economic recovery and by wanting to retain the weapon of rates reduction when recession hits, the central bank is going to choke an eventual recovery. The reality is that central banks are caught in a snare and the only weapon they have left is the destruction of their own paper money. One after the other, they go for competitive devaluation of their currency. After the Fed and the Bank of Japan, it’s now the ECB’s turn. Who will be next?
…click on the above link to read the rest of the article…
Head Of Largest Swiss Cantonal Bank Says Swiss Capital Controls Are “Certainly Possible”
Head Of Largest Swiss Cantonal Bank Says Swiss Capital Controls Are “Certainly Possible”
Yesterday, when we reported that the SNB had hinted at that most dreaded of possibilities for central planners, one which always implies full loss of central bank credibility, namely capital control, for some inexplicable reason various readers and even contributors (“Another misleading headline by the Tylers. What yellow journalism“) got offended that we dared to point out that the central bank which two days before it crushed FX traders by ending its CHF cap had sworn that “we are convinced that the minimum exchange rate must remain the cornerstone of our monetary policy.”
Turns out “yellow journalism” as some call it – usually those who have conflicts of interest and/or put trades in the opposite direction – was spot on once again. Because if yesterday, the SNB’s Jordan merely hinted at capital controls when as he was quoted by Bloomberg (not Reuters), as saying that capital controls “was not a measure that is at the forefront at the moment“,which as we explained “the best way to admit the possibility of capital controls is to not explicitly, and unequivocally reject them. That there is even a possibility of capital controls in a central bank’s arsenal, and everyone suddenly begins to pay attention” then today the head of the largest Swiss cantonal bank, and the fourth largest Swiss Bank, the Zurich Cantonal Bank or ZCB, came out and explicitly said what so many fear (and which warning they would ascribe to as the case may be “yellow journalism”), namely that “lowering Swiss National Bank’s already negative interest rate further or implementing capital controls would be “dramatic” but “certainly possible.”
This is what Zuercher Kantonalbank CEO Martin Scholl said in interview with newspaper Neue Zuercher Zeitung am Sonntag.
And just so readers (and so-called contributors) can blame the NZZ of fanning “yellow journalism” here is the explit quote from the interview:
…click on the above link to read the rest of the article…
Russell Napier: “The Most Dangerous Thing In Finance Is The Thing That Never Ever Moves – Until It Moves”
Russell Napier: “The Most Dangerous Thing In Finance Is The Thing That Never Ever Moves – Until It Moves”
The PBOC – How to fail in business without really flying
“Terrain seems a bit unstable…and there seems to be no sign of intelegent life anywhere”
– Buzz Lightyear (Toy Story)
“That wasn’t flying…that was falling with style”
– Woody (Toy Story)
Another day, another central bank failure. In a world of currencies backed only by confidence, every failure is masqueraded as success. Like the ballet dancer who transforms the stumble into a pirouette, central bankers, knocked to the ground by market forces, smile and pretend that this was all part of the routine. Financial market participants, having bet everything on the promised omnipotence of central bankers, do indeed seem happy to see genius in every stumble. However a fall is a fall regardless of the style of the descent. So when will investors see that the earth is rapidly approaching and that style is just style?
The key for investors today is to see behind the masquerade and the mask, the façade of those putting up a front behind a public face, and be able to tell the difference between the soaring flight of reflation and the perilous fall of deflation. The more attitude you hear from policy makers, the more you can be sure it’s style compensating for the lack of real substance and that this is falling and not flying. And as the attitude becomes more high-handed, the lower the altitude gets. The attitude quotient is rising rapidly.
Two weeks ago we noted the ‘flying’ undertaken by the Swiss National Bank as the market forced them to abandon their exchange-rate target. Deposit rates in Swiss Banks are now at such a low level that investors are better off converting deposits into bank notes and placing them under the bed. The Danish Central Bank has also instituted negative interest rates with the consequence that deposits in Denmark might also fly into paper. As the central bank managed to create over DKK106bn (US$16.3bn) in bank reserves, trying to stop a revaluation of their exchange rate last month, there will be no shortage of banknotes to go round should a ‘bank run’ from deposits to banknotes begin.
…click on the above link to read the rest of the article…
Debt In The Time Of Wall Street
Debt In The Time Of Wall Street
With all the media focus aimed at Greece, we might be inclined to overlook – deliberately or not – that it is merely one case study, and a very small one at that, of what ails the entire world. The whole globe, and just about all of its 200+ nations, is drowning in debt, and more so every as single day passes. Not only is this process not being halted, it gets progressively, if not exponentially, worse. There are differences between countries in depth, in percentages and other details, but at this point these seem to serve mostly to draw attention away from the ghastly reality. ‘Look at so and so, he’s doing even worse than we are!’
Still, though there are plenty accounting tricks available, you’d be hard put to find even one single nation of any importance that could conceivably ever pay back the debt it’s drowning in. That’s why we’re seeing the global currency war slash race to the bottom of interest rates.
Greece is a prominent example, though, simply because it’s been set up as a test case for how far the world’s leading politicians, central bankers, bankers as well as the wizards behind the various curtains are prepared to go. And that does not bode well for you either, wherever you live. Greece is a test case: ho far can we go?
And I’ve made the comparison before, this is what Naomi Klein describes happened in South America, as perpetrated by the Chicago School and the CIA, in her bestseller Shock Doctrine. We’re watching the experiment, we know the history, and we still sit our asses down on our couches? Doesn’t that simply mean that we get what we deserve?
…click on the above link to read the rest of the article…
Hounded by Evil Dollar & Collapsed Commodity Prices, Corporate America Clamors for Total Currency War
Hounded by Evil Dollar & Collapsed Commodity Prices, Corporate America Clamors for Total Currency War
Consumers are feeling practically euphoric. The Conference Board index jumped almost ten points to 102.9, the highest since August 2007, just before the whole construct came apart. Not that reality has suddenly improved that much. But hey, we’re born survivors. Sooner or later, we adjust to lower real incomes and reduced standards of living and start feeling good again.
This exuberance came just as our largest corporate citizens were hit by a tornado of problems that sank the stock market for the day: currency volatility, crashing commodities prices, disappearing XP computers, farmers switching from corn to wheat…. It was all there.
Freeport-McMoRan, one of the largest copper producers in the world, reported an 11% drop in revenues for the fourth quarter and a salty $2.85 billion loss, which included $3.4 billion in losses for its oil and gas business that it got into via two impeccably-timed acquisitions in 2013. The depressed price of copper isn’t helping. It cut its 2015 budget by $2 billion and might cut it some more. Shares dropped 6%.
Long-suffering Peabody Energy, the largest coal producer in the US, reported a net loss for the quarter of $566 million on revenues that declined 3.3%. It projected a much wider loss than expected for the first quarter and cut its dividends to nearly nothing. It’s all about preserving cash and hanging on in a desperately tough pricing environment for coal producers. Shares dropped 6.5% to $6.24, down from $72 during the glory days in early 2011.
…click on the above link to read the rest of the article…
“This Is A Race To The Bottom Where No Fiat Currency Wins”
“This Is A Race To The Bottom Where No Fiat Currency Wins”
Following another frustrating year in the previous metals markets, 2015 is showing signs that change is afoot. As Santiago Capital’s Brent Johnson notes in this brief presentation, while being ‘wrong’ for the last 2 years on gold has been painful, is it any less crazy to believe that it will turnaround that to believe the hype that The Fed will raise rates once again (just like it promised in 2010, 2011, 2012, 2013, 2014, and now 2015…) – who is really losing their credibility? With the world’s fiat currencies waging war and dislocations mounting, gold is no longer the ‘David’ underdog fighting against the ‘Goliath’ central banks… but is – as Alan Greenspan opined – “the premier currency. No fiat currency, including the dollar, can match it.”
The currency wars are here… and they are a race to the bottom where no fiat currency wins.”
Full note below:
…click on the above link to read the rest of the article…
Low Oil Prices And Money Worries For 2015
Low Oil Prices And Money Worries For 2015.
In response to the Ruble’s recent fall (over 50% against the U.S. Dollar), Swiss banks have begun taking extreme and extraordinary measures in what appear to be early signs of a currency war. There is now a negative interest rate of 0.25% on deposits made in Swiss Francs. In combination with pre-existing efforts such as Zero Interest Rate policies and quantative easing, we are now entering an era of Negative Interest Rate Policies. These kinds of policy decisions will do nothing to allay fears about economic slowdown in Europe and Asia and the looming threat of another financial crisis. Worries aboutdebt-bubbles propping up the US shale scene seem to already be influencing international banking policy, with strategies now revolving around insulating any potential risks should it all turn sour in 2015 for key global currencies.
In addition to the Ruble’s near 50% decline against the dollar, the Japanese Yen is down 20% against the U.S. Dollar since the summer. This comes as welcome news for struggling Japanese industry as it improves export prices against import prices in favor of Japanese workers. As part of the Abenomics strategy unveiled over two years ago by the Japanese Prime Minister Shinzo Abe, by flooding the market with Yen he hopes to reinvigorate domestic industry. Given his re-election this December, his policy seems to be popular if somewhat unsuccessful thus far. Off the back of this election victory, the pro-nuclear Liberal Democratic party has greenlit the re-opening of two nuclear reactors in the Takahama project, bringing the current approved number to four with a final total of nine expected to come online in total in 2015. The restarting of these reactors could prove crucial as Japan struggles with expensive, dollar-linked imports of commodities such as LNG and crude oil. It will likely have a positive impact onlanguishing uranium markets should the go-ahead be given for all nine but only time will tell.
New York Times on Benefits of Gold in Currency Wars | www.goldcore.com
New York Times on Benefits of Gold in Currency Wars | www.goldcore.com.
The New York Times published an important article this week in which the benefits of gold to nation states during a period of currency wars was highlighted. The article was noteworthy as the New York Times has rarely covered gold in a positive manner.
The article, entitled ‘The Golden Age’ is about the growing use of gold in geopolitical affairs. They drew attention to the gold repatriation movements in Europe and to the accumulation of the precious metals in vast quantities by the central banks of the East – particularly Russia and China.
The Times attempts to get into the mind-set of the central banks who are buying gold or attempting to repatriate their current stocks of the metal. It presents two major rationales for the current trend.
“Some that’ve interpreted the metal’s mini-comeback as an indication that financial Armageddon, in the guise of runaway inflation, is approaching. Others have read the recent move as a symbolic way for central banks and governments to make a show of strength in nervously uncertain economic times.”
…click on the above link to read the rest of the article…
The Return of Currency Wars by Nouriel Roubini – Project Syndicate
The Return of Currency Wars by Nouriel Roubini – Project Syndicate.
NEW YORK – The recent decision by the Bank of Japan to increase the scope of its quantitative easing is a signal that another round of currency wars may be under way. The BOJ’s effort to weaken the yen is a beggar-thy-neighbor approach that is inducing policy reactions throughout Asia and around the world.
Central banks in China, South Korea, Taiwan, Singapore, and Thailand, fearful of losing competitiveness relative to Japan, are easing their own monetary policies – or will soon ease more. The European Central Bank and the central banks of Switzerland, Sweden, Norway, and a few Central European countries are likely to embrace quantitative easing or use other unconventional policies to prevent their currencies from appreciating.
All of this will lead to a strengthening of the US dollar, as growth in the United States is picking up and the Federal Reserve has signaled that it will begin raising interest rates next year. But, if global growth remains weak and the dollar becomes too strong, even the Fed may decide to raise interest rates later and more slowly to avoid excessive dollar appreciation.
Read more at http://www.project-syndicate.org/commentary/world-government-reliance-monetary-policy-by-nouriel-roubini-2014-12#sbgdimz14CWVVMDs.99
Putin “Prepares For Economic War”, Buys Whopping 55 Tonnes Of Gold In Q3 | Zero Hedge
Putin “Prepares For Economic War”, Buys Whopping 55 Tonnes Of Gold In Q3 | Zero Hedge.
Just as China is buying ‘cheap’ oil with both hands and feet, so Russia, according to the latest data from The World Gold Council (WGC) has been buying gold in huge size. Dwarfing the rest of the world’s buying in Q3, Russia added a stunning 55 tonnes to its reserves, as The Telegraph reports, Putin is taking advantage of lower gold prices to pack the vaults of Russia’s central bank with bullion as it prepares for the possibility of a long, drawn-out economic war with the West.
Russia bought more gold in Q3 then all other countries combined…
* * *
…click on the above link to read the rest of the article…
charles hugh smith-Why the Rising U.S. Dollar Could Destabilize the Global Financial System
charles hugh smith-Why the Rising U.S. Dollar Could Destabilize the Global Financial System.
I have been suggesting for several years that the U.S. Dollar would confound those anticipating its demise by starting a long secular uptrend.
In early September I made the case for a rising U.S. dollar, based on the basic supply and demand for dollars stemming from four dynamics:
- Demand for dollars as reserves
- Other nations devaluing their own currencies to increase exports
- “Flight to safety” from periphery currencies to the reserve currencies
- Reduced issuance of dollars due to declining U.S. fiscal deficits and the end of QE (quantitative easing)
Since then the dollar has continued its advance, and is now breaking out of a downtrend stretching back to 2005—and by some accounts, to 1985:
…click on the above link to read the rest of the article…
