February 11th, 2016
This is the best quarterly performance for Gold in 30 years... "It’s been crazy – it’s been the best week since 2012. We’ve had people queuing round the block..."
First, it was The BoJ's utter collapse from omnipotence to impotence. Then came the collapse of The Fed's credibility in the short-term.... and the longer-term. And now it is the turn of Mario Draghi's ECB to face total failure, as the European banking system - the prime beneficiary of "whatever it takes" - has crashed back to pre-Draghi levels.
Day after day we are told that the plunge in oil prices (just like the collapse in The Baltic Dry freight index) is a "supply" issue... it's transitory and global demand is doing fine thank you very much. Sadly, as everyone really knows deep down inside their Keynesian hearts, this is utter crap and as Barclays shows the shocking 18% YoY crash in distillates "demand" - something that has never happened outside of a recession - blows the one-sided argument of the energy complex out of the water.
Neither USDJPY nor Japanese stocks can hold a bid in the early going in Asia markets which has dragged both into the red post-QQE2. Since Kuroda took over from The Fed by doubling down on his cunning plan in October 2014, Japanese stocks are down 11.4%, USDJPY is unchanged, and only Japanese bonds have made any gains (up 3.7%). So what we want to know is - how will Abe et al. explain to the Japanese people how they lost so much of their retirement funds by forcing GPIF to allocate so much to stocks?
“We have listened to feedback and as a result decided to change the way these cost savings are to be achieved"...
Short-term, oil prices are a function of sentiment and manipulation. Here's how that works.
"The preservation of an insolvent currency system requires that the owners of currency have no way to protect it..."
“This would mean a regional war. Mistakes can’t be tolerated, especially with the tension mounting around the region. It’s not about Iranians, but about all troops on the ground fighting with the Syrian army. How would the Syrian army deal with a foreign country on its soil, without its permission, and maybe aiming [guns] at them?"
Since The Fed stopped its money-printing extravaganza things have changed a little for the status-quo "believers"...
"Do they really think they would win such a war very quickly? That's impossible, especially in the Arabic world. There everyone is fighting against everyone... everything is far more complicated. It could take years or decades."
The news is filled with the everyday zigzags of those competing against each other for the Democrat and Republican Party nominations to run for the presidency of the United States. But one of the most important issues receiving little or no attention in this circus of political power lusting is the long-term danger from the huge and rising Federal government debt.
Here is the real reason why suddenly high denomination bank notes are the target: it is not because "drug dealers" and tax-evaders use them, but because between banning Europe's €500 bill and the US $100 bill, over half of all physical currency currently in circulation would disappear.
"...gold at $1,200 an ounce, what does that tell you? It tells you that in a flight to quality, in a safe haven, people have more confidence in gold than in bank deposits or paper money. I think things have gotten out of control."
- Bob Michele, Global CIO & Head, Global Fixed Income, Currency & Commodities Group"
In his latest communication with the outside world, Gundlach said that gold prices are likely to reach $1400 an ounce "as investors lose faith in central banks", Reuters reported. "The evidence that negative rates are harmful and not helpful has piled up to the point that the 'In Central Banks We Trust' mantra has finally been laid bare as a hoax,"
The key take-away: focus on owning income-producing assets, not a primary residence. Don't finance your assets with debt; finance your income-producing assets with savings and sweat equity, not borrowed money.