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Silver had its biggest quarterly rise in nearly 30 years in the first three months of 2016 as ETF investors, buying of silver coins (now VAT free in UK and EU) and bars and speculators in the futures market pushed prices higher. Silver prices are likely to rise further as there is “supply trouble brewing” as strong industrial and investment demand are confronted by declining supply. 

"A Scramble For Gold Has Begun"

For a century, elites have worked to eliminate monetary gold, both physically and ideologically, and yet, like Banquo’s ghost, gold insists on its seat at the monetary table. After decades as net sellers of gold, central banks became net buyers in 2010. A scramble for gold has begun... When it comes to monetary elites, watch what they do, not what they say.

"Swimming Naked" - Chinese Corporate Bond Market Worst Since 2003

A week ago we highlight the "last bubble standing" was finally bursting, and as China's corporate bond bubble deflates rapidly, it appears investors are catching on to the contagion possibilities this may involve as one analyst warns "the cost has built up in the form of corporate credit risks and bank risks for the whole economy." As Bloomberg reports, local issuers have canceled 61.9 billion yuan ($9.6 billion) of bond sales in April alone, and Standard & Poor’s is cutting its assessment of Chinese firms at a pace unseen since 2003. Simply put, the unprecedented boom in China’s $3 trillion corporate bond market is starting to unravel.

China Retaliates In Trade Wars - Increases Steel Output To Record High

A funny thing happened when US slapped a major tariff on China's steel exports... prices exploded higher. But the almost 50% surge in steel prices since mid-December back to 15-month highs have left traders equally split on what happens next. Will record production levels exaggerate a global glut amid tumbling exports and rising tariffs, or will China's trillion-dollar surge in credit fuel yet more so-called "iron rooster" projects driving domestic demand even higher. For now, it appears the former is more likely as US Trade reps suggested further protectionism looms.

China Embraces Gold In Advance Of Post-Dollar Era

To challenge the US dollar hegemony and increase its power in the global realm of finance, China has a potent gold strategy. Whilst the State Council is preparing itself for the inevitable decay of the current international monetary system, it has firmly embraced gold in its economy. With a staggering pace the government has developed the Chinese domestic gold market, stimulated private gold accumulation and increased its official gold reserves in order to ensure financial stability and support the internationalisation of the renminbi.

Size Matters: Analysts Mock Italy's Tiny "Atlas" Bailout Fund Meant To Support €360BN In Bad Debt

Yesterday Italy announced that it had taken the long-anticipated first step to alleviate investor concerns surrounding the stability of the banking system. Local banks, insurers, and asset managers have agreed to fund a €5 billion backstop for these troubled loans. Speculation of the imminent deal had sent Italian (and European) bank stocks soaring yesterday. The deal is named Atlante, or Atlas, after the mythological god who held up the sky. This is appropriate, as it truly is a myth to believe that setting aside 1.5% to resolve a €360 billion bad debt problem will solve anything.

"The People Aren't Stupid" - Germany Takes Aim At The ECB, May Sue Draghi: Spiegel

The alienation between Germany and the ECB has reached a new level. Back in deutsche mark times, Europeans often joked that the Germans "may not believe in God, but they believe in the Bundesbank," as Germany's central bank is called. Today, though, when it comes to relations between the ECB and the German population, people are more likely to speak of "parallel universes."... Should it come to helicopter money, Berlin would have to consider taking the ECB to court to clarify the limits of its mandate. In other words: the German government and Draghi's ECB would be adversaries in a public court case.

The End Is Near For Brazil's Ultra-Corrupt Government

"We could lose a decade of economic growth in three or four years," one official exclaims, "in other words, a decade of growth would be lost during Dilma’s mandate if she continues on as president." This recession, and concurrent high inflation, has been magnified by the biggest scandal in political memory...“It is considered common sense now that she will be impeached. Only a miracle can save her. All the factors are pushing that way."

Frontrunning: April 7

  • U.S. readies bank rule on shell companies amid 'Panama Papers' fury (Reuters)
  • Co-Founder of Mossack Fonseca Defends Law Firm at Center of ‘Panama Papers’ (WSJ)
  • Fed's Cautious Approach on April Rate Hike Raises Stakes for June (BBG)
  • Dollar sinks again after Fed remains cautious (Reuters)
  • New Tax Rules on Inversion Deals Are Met With Protest (WSJ)
  • Fed Chairs Since 1979 Offer Peek Into Central-Bank Philosophy (BBG)

April "Fools" In March

It may be almost impossible to underestimate the gullibility of professional Fed watchers. At least Lucy van Pelt needed to place an actual football on the ground to fool poor Charlie Brown. But in today’s high stakes game of Federal Reserve mind reading, the Fed doesn’t even have to make a halfway convincing bluff to make the markets look foolish.