Archive - Aug 3, 2010 - Story

The moment many gold bulls have been waiting for - the Chinese Central Bank has just released a directive informing everyone it is commencing the development of a healthy gold market. In the release (below), the PBoC stressed the need to develop the market to serve the overall situation of China's gold industry, based on improving the competitiveness of China's financial markets, effectively strengthening innovation, and promoting the formation of multi-level market system. The PBoC has asked the Shanghai Gold Exchange, Shanghai Futures Exchange and commercial banks to become actively engaged in developing a national gold market. With China owning a mere 1,064 tonnes of gold (sixth in the world and well behind both France and the GLD ETF in terms of holdings), which represent just 1.6% of its reserve holdings, there is only one way to interpret this borderline revolutionary press release. China has now officially entered the gold market.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 03/08/10

Jon Hilsenrath is out with the latest rumor of what the Fed will decide to do to stimulate a double dipping economy next week, and while it is already well known that Bullard is all for QE 2, and the idea of reducing the interest rate on excess reserves has been widely pondered and for now at least, snubbed, the WSJ confirms that the latest plan is to use proceeds from maturing mortgages to buy treasuries. The result: a 2 Year that is at a fresh all time record low yield of 0.542%, and a 10 Year flirting again with the 2.9% barrier. Stocks and bonds are once again terminally disconnected, as the market attempts to front run the Fed in buying up Treasuries, even as the marginal buying isoccurring in stocks since the Fed has essentially announced that anything yielding less than 4% is risk free. Of course, as Jon points out: "Any change—only four months after the Fed ended its massive bond-buying program—would signal deepening concern about the economic outlook. If the Fed's forecast deteriorates significantly, it could also be a precursor to bigger efforts to pump money into the economy...The Fed's mortgage buying pushed investors to buy other assets, including corporate bonds and stocks. Any extension of that program, even in the form of reinvestment, could help support the recent rally in such riskier assets." So can we at least stop pretending the economy is not double dipping and that stocks are in way even remotely indicative of fundamental values. Tangentially, and as frequent readers will recall, any message from the WSJ is very likely to have had the prior stamp of approval of the New York Fed, implying it is vastly more than mere speculation.