If governments have proven anything to us over the last seven years, it is that they will do anything to keep the banks from going down. If just 10% of people hit their breaking points and withdrew their money in cash - there wouldn’t be enough cash in the system to support this demand. And the banks would subsequently collapse. When a government is bankrupt, the central bank is nearly insolvent, the banking system is illiquid, and an entire population suffers from interest rates that are either negative or below the rate of inflation, capital controls are a foregone conclusion. In fact, we expect the next round of capital controls will be designed to protect the banks... from you.
“The world economy is like an ocean liner without lifeboats ...” - HSBC.
Fail to prepare ... Prepare to fail ...
Smart money continues to maintain allocations or accumulate positions. U.S. mining financier Oskar Lewnowski is preparing to launch a base and precious metals fund. The 50 year old New Yorker has already invested almost $1 billion and hired a physical metals trader to handle supply.
On a turbo-charged illiquid day ahead of the Memorial Day weekend, stocks, bonds, USD, and commodities are turmoiling after this morning's hotter-than-expected CPI print. Stocks and Bonds were instantly sold (hawkish-er signal), the USD soared (hawkish-er signal) and crude, copper, and precious metals tumbled. Fundamentally speaking of course the US Open is soon and so the algos will, we are sure, rescue one of these (or will they)... and then there's Yellen at 1ET.
“You can’t stop an idea whose time has come.”
"we're beyond the point of being able to successfully manage this... and I worry about another leg down in the economy causing social disruption."
"Gold should be a part of everybody's portfolio to some degree because... it is the alternative money. Warren Buffett is making a big mistake."
Gold topped $1230 this morning - breaking to 3-month highs and up over 4% year-to-date - up 5 days in a row for the best run in 4 months. The surge comes causally or correlatedly coincidental with China's explicit shift into extraordinary measures (LTROs) but, as The FT reports, market participants are concerned that algo-based funds have created a "frenetic liquidity" environment as everyone from real money to central banks "aren’t trading the gold market the way they used to."
The World Platinum Council do not believe that platinum stocks will be completely depleted and reach zero because the amount includes long term holdings by private investors, sovereign wealth funds and hedge funds. It said that stocks typically held in vaults, excludes ETFs.
Un-Photoshopped Reuters photo sums up US foreign policy perfectly as Abdul Latif bin Rashid Al Zayani, representing the Gulf Co-operation Council, appears to leave U.S. President Barack Obama hanging during a welcome ceremony at the White House this week.
The last 3 days have seen precious metals surging. Silver is up over 7% - its biggest such rise since Aug 2013, and Gold up 3% - its largest in 4 months. Volume is heavy also. A specific catalyst is unclear but USD weakness is being cited, weak macro data suggesting further easing, China demand ahead of SDR-backing, and finally the realization that the Chinese shift to unconventional monetary policy (LTROs) is a slippery slope to full-blown QE from which few (if any) have ever escaped.
Marc Faber Contrarian Bet Against Market Consensus - US Treasuries
Special thanks to Dr. Marc Faber for giving us permission to publish excerpts from his May Gloom Boom & Doom Report.
Is bad news good? For now, stocks levitate in their ubiquitous run-stop opening ramp manner, bonds are leaking higher in yield but precious metals and currencies are extremely active...
Artificially low prices for the metal have forced mines to close in recent years. Supply may not be able to match increasing demand in the coming years.
As a diversification, art has some merit but only as a small part of an overall portfolio. For those of us who cannot afford a Picasso - as the great heritage of western art continues to be shuttered away in private Xanadus - gold remains an accessible and ideal store of value.