According to a report issued by Goldman's Eugene King looking at commodity scarcity, the chart below "shows that there are only 20 years of known mineable reserves of gold and diamonds."
Hint: Take a look at the latest COT reports!
After a few days of dollar weakness due to concerns that the Fed's rate hike intentions have been derailed following some undisputedly ugly economic data (perhaps the Fed should just make it clear there will never be rate hikes during the winter ever again) the USD has resumed its rise, and as a result risk assets, after surging early in the overnight session driven by the Nikkei225 and the Emini, the "strong dollar is bad for risk" trade has re-emerged, with the Nikkei dropping almost 500 points off its intraday highs, with US equity futures poised to open lower once more, sliding nearly 20 points in the overnight session, and surprising the BTFDers who have not seen five consecutive days of "risk-off" in a long time.
The collapse of phantom-wealth bubbles could occur in the next year or two, or be delayed for another 5 to 6 years. But the implosion of phantom-wealth bubbles is assured by the internal dynamics of bubbles.
After three days of unexpected market weakness without an apparent cause, especially since after 7 years of conditioning, the algos have been habituated to buy on both good and bad news, overnight futures are getting weary, and futures are barely up, at least before this morning's transitory FX-driven stop hunt higher. Whether this is due to the previously noted "blackout period" for stock buybacks which started a few days ago and continues until the first week of May is unclear, but should the recent "dramatic" stock weakness persist, expect Bullard to once again flip flop and suggesting it is clearly time to hike rates, as long as the S&P does not drop more than 5%. In that case, QE4 is clearly warranted.
Basically, investing in the gold/silver shares has been a waste of time and money for the last 17 years. If you had told me that when The Café opened for business in September of 1998, I would have said, "No Way!" … especially since gold went from below $300 back then to $1900+ and silver was below $4, and would rise to $49+..
Banks and insolvent governments desperate for cash likely also dislike safety deposit boxes as they are a means for people to protect and grow wealth and protect themselves from bail-ins and deposit confiscation. A percentage of box holders also store cash and bullion.
It is a centrally-planned "market" and everyone is merely a bystander. Last night, following a dramatic China PMI miss, which as previously reported tumbled to the worst print since early 2014 and is flashing a "hard-landing" warning, the Shanghai Composite first dipped then spiked because all a "hard-landing" means is even more liquidity by the PBOC (which as we suggested a month ago will be the last entrant into the QE party before everyone falls apart). Then, this morning, a surprise beat by the German (and Eurozone) PMI was likewise interpreted by the algos as a catalyst to buy, and at this moment both European stock and US equity futures are their session highs. So, to summarize, for anyone confused: both good and bad data is a green light to buy stocks. In fact, all one needs is a flashing red headline to launch the momentum igniting algos into a buying spasm.
Does it get any funnier than this? Well, arguably, we’ve already seen an even funnier episode from these financial “Wile E. Coyotes”. But let’s begin with a look at the most recent “botched operation” by the psychopaths of the One Bank.
The inverted relationship between gold and the dollar broke down in November 2011. The dollar soared from July to the present, spiking 21% against the other major currencies. Most of the negative commentary regarding gold in recent months misses the rather bigger point that the gold price has held up remarkably well given the extent of dollar’s move.
Quad-witching days are volatile on normal days, so in an environment of virtually zero liquidity, in which the market careens from one extreme to another simply based on whether the Fed utters one single word, in which volatility across asset classes is soaring, and in which it is all about igniting algo momentum, today's quadruple withicng should be memorable, which is good since there is virtually no macro data today to speak of.
"Under our central case, gold prices are likely to rise gradually, eventually breaking through the USD2,000/oz level within the next decade. This is the most likely outcome, to which we assign a 45% probability," ANZ analysts say, in a note explaining how a number of factors are converging to make the outlook for gold particularly bullish.
History never repeats itself, but it always rhymes...
Many analysts regard this as further evidence that the Fed is caught in a bind. What is yet to be appreciated by most analysts is that it is unlikely that the massively over-leveraged and debt-saturated financial system can weather increases in interest rates.