European and Asian stocks rose after the early scare from the latest Fukushima quake dissipated, with the global risk on mood spurred by another jump in crude, which was up 1% in early trading, with the commodity complex now enjoying its biggest three-day rally since May, after Nigeria signaled optimism that OPEC will agree a supply-cut deal next week in Vienna. S&P futures are up 0.3%, with the cash index set to open at new record highs.
The big story in financial markets this week was the breakout to 13-year highs by the U.S. Dollar, and if there has been any asset class most effected by the movement of the Dollar, it is probably precious metals. While all eyes remain on gold and the psychologically important $1200 levels, it is silver prices that are testing a confluence of potential support levels.
All this talk of massive new infrastructure spending financed with a tsunami of freshly-minted currency should be lighting a fire under gold. That it hasn’t is a testament to how out-of-whack the precious metals market had gotten during the first six months of this year.
Gold ETF Holdings have collapsed by 1.93 million troy ounces in the days since Donald Trump's election. This is the biggest decline since July 2013, a period when gold prices plunged to $1200 before ripping almost 20% higher in the next few weeks.
Violent rotation: record inflows to equity ETFs, record inflows to financial sector funds, biggest bond redemptions in 3½ years, record redemptions from EM debt, largest equity inflows in 2 years ($28bn), biggest bond outflows in 3½ years ($18bn); widest weekly disparity between stock & bond flows ever.
Gold prices are down almost 10% from Trump victory highs, testing down towards $1200 once again and pressing 5-month (pre-Brexit fear) lows. At the same time the USD Index has spiked back above 100 - the highest in over a year - as Offshore Yuan crashes to over 6.85/$, the weakest since inception... Simply put turmoil continues...
Wednesday saw a bloodbath in global developed bonds. Yesterday saw Emerging Market currencies and bonds collapse. Today, it is the turn of the commodity complex as Copper erases a 7% gain intrday and crashes red, WTI Crude tumbles near a $42 handle (Trump lows) and precious metals are clubbed like baby seals...
Bullion Banking is fractional reserve gold banking. The proliferation of unallocated gold credits has created a system in which very little physical gold backs up huge amount of claims on that same gold.