Three months ago, we discussed the increasingly close eye that regulators were keeping on Deutsche Bank (and in fact many other precious metal fix providers) as manipulation concerns shifted from conspiracy theory to conspiracy fact. At the time, Deutsche - among other banks - had suggested it would relinquish its role on the London Fixing committee and was actively marketing its seat to other LBMA members - it failed to find a willing buyer; the WSJ now confirms...
DEUTSCHE BANK SAID TO BE UNABLE TO FIND BUYER FOR GOLD SEAT
DEUTSCHE BANK RESIGNS SEAT ON GOLD, SILVER FIX, GIVES TWO WEEKS NOTICE - SOURCE
This is hardly surprising given previous comments that possible manipulation of precious metals "is worse than the Libor-rigging scandal." but it does leave us wondering who is left to do the manipulating? It seems no one wants to be part of the fixing process (critical for so many derivatives contracts) unless they are allowed to manipulate it to their own needs.
Conflict with Russia may have a “massively bullish impact on gold prices.” The concept of MAD or mutually assured destruction was what prevented war between the superpowers during the Cold War. Today, there appears to be a lack of awareness regarding the risk of mutually assured economic destruction.
The almost ubiquitous overnight levitation (thanks to JPY - bouncing off 102.00 overnight; and more Pharma M&A exuberance) gave way very quickly to more of the same from Friday as the high-growth, high-hope, high-hype, high-beta stocks get slammed. The dump of US equity indices at the open was then met with a "well, it's Tuesday tomorrow... oh and FOMC" mad panic buying scramble... Then the 'great' news that pendong home sales dropped YoY for the 6th month in a row confirmed the momo spike and sent bond yields spiking and gold prices tumbling because one data point MoM is all that we need to spark the algos into action... If you want to know why this idiocy is happening - look no further than USDJPY...
The early session risk on trade, which materialized after the Pfizer confirmation it was seeking to buy AstraZeneca, and which sent the GBPUSD to its highest level since 2009, and also sent the EURUSD and EURJPY soaring in the process lifting US equity futures, has started to fizzle on the most recent news out of Ukraine, where the pro-Russian mayor of Ukraine's second largest city of Kharkiv was shot in the back in an apparent assassination attempt, which happened hours before the US is set to announce more sanctions against the Kremlin and its closest financial oligarchs. As a result, futures have pared gaisn modestly, especially since AstraZeneca made it clear with its initial reponse it has no interest in Pfizer's offer in its current format.
One of the founding fathers of the United States famously remarked that death and taxes are the only certainties in life. And as tax day rolled around once again in the US, individuals the length and breadth of the country were participating in the annual ritual of filing their income tax returns with the federal government. Outside of the United States, banks, custodians, brokers and investment advisers are also working to meet a tax deadline coming soon—registration with the United States Internal Revenue Service to comply with FATCA. And so the diminished privacy that has become a feature of our modern lives now looks set to pervade the conventional banking system. Citizens will render unto Caesar the things that are Caesar’s, but the wisest among them will continue to avail of the privacy and asset protection offered in certain jurisdictions.
The ‘pensions time bomb’ looms: pension funds' lack of diversification, and overexposure to traditional assets may cost pension holders dearly according to research we have just released. Pensions allocations to gold are very low internationally and yet gold has an important role to play over the long term in preserving and growing pension wealth.
A ‘Perfect Storm’ of demography and debt will economically and financially doom almost every country on earth. It will be TEOTWAWKI – ‘The End Of The World As We Know It’. No, it’s not the end of life or even the end of civilization. However, when it’s all over, nothing will ever be the same and that includes the disappearance of much of the middle class. The good news - The storm won’t last forever. The bad news is there will be much more pain before it ends unless you make an effort to understand what’s happening and why.
What else should you do as Russian and Ukraine forces begin a serious un-de-escalation... sell precious metals with both hands and feet of course. The strength in stocks (whether channel-stuffed or not) is enough to make investors believe that we don't need no stinking Fed and that economy must be doing great all on its own. Gold is back below $1275, which SocGen warns could lead to $1233.
Despite the considerable risks created by the situation in eastern Europe, most western stock, bond and property markets, fed on massive central bank fiat liquidity, continue to flirt with new highs. This strikes me as an exercise in whistling past the graveyard. In the short term, investors may continue to profit from risk-taking in financial markets. In the larger picture, much of the geopolitical balance of power that has been in place for much of the past 25 years will be tested on the banks of the Black Sea. Investors should take a few minutes from their daily technical chart analysis to consider these major developments.
The charts below gives an indication as to the terrifying magnitude and speed of the recent decline in the value of the currency. Year to date, Ukraine’s national currency has collapsed by 69% against gold in less than four months. This has resulted in the cost of food, fuel and basic staples surging for ordinary people in Ukraine.
An explanation of how fractional reserve banking infringes on everyone’s freedom.
With JPMorgan and Deutsche Bank having exited the commodities business (and numerous other banks discussing it ahead of the Fed and regulators' decisions over banking rules of ownership), it appears a few short months of regulatory scrutiny is enough to warrant more broad-based cuts across bulge-bracket banks historically most manipulated and profitable business units. As The FT reports, Barclays, one of the world’s biggest commodities traders, is planning to exit large parts of its metals, agricultural and energy business in a move expected to be announced this week. This comes on the heels of Barclays shuttering its power-trading operations (after refusing to pay $470mm in fines) with CEO Jenkins expected to announce several thousand layoffs. This leaves Goldman (for now), Mercuria (ex-JPM), and Glencore to run the commodities world.
You know it's bad when... The central bank inspired nominal price surge in everything expensive has not quite exhausted the greater fool trend-chasing muppet "wealth-builders" yet. As HedgeCo reports, Classic Auto Funds Limited (CAF) is launching several investment partnerships using collectable classic cars as the "hard asset". Forget oil-wells, real estate, or precious metals, as Robert Minnick (senior managing partner at CAF) states confidently, "many investors are recognizing the rising returns in specific classic cars as a low-risk asset." A "low-risk" "investment" indeed... what could possibly go wrong?
First we deny, then we deny we ever denied, and then we forget we were ever in denial. Man is an extremely efficient organic computing machine, so this is just kid’s stuff we learn right out of the crib.
Another day, another epic ramp. Any "investor" watching the last two days of totally manic market behavior must be open-mouthed at the total lack of fundamental sanity behind any of the moves. Even the mainstream media is stunned by the moves embarrased into mere commentary and afraid to opine on any reason. The reason for today's rip - an economic assessment downgrade for Japan which smahed USDJPY higher and through magic of carry, lifted US equities. There was no let-up in Ukraine, no data to confirm growth hype, no US news... but the Russell and Nasdaq managed a 2.5% bounce in a stright line after the Japan headline. Away from the idiocy in stocks, precious metals were rammed lower early on but leaked back higher all day. The USD pushed higher but FX was relatively quiet aside from the idiotic moves in JPY. Treasuries rallied at the long-end on the day (despite the surge in stocks). "unrigged"