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No Time Like The Present
Submitted by Clive Hale, from View From The Bridge
At the latest ECB press conference Draghi said that. “The monetary policy team had this week discussed buying all assets except gold”; qualifying a claim by fellow member Yves Mersch two weeks ago that gold bullion could be included.”
If central bankers truly believed in sound monetary policy the headline would have said “We’ll buy all your gold”. That would have propelled both gold and the European equity markets upwards. As it is markets on the continent get cheaper as the good doctor fiddles. “We may not do anything until January at the earliest”. Code for “It’s taking us longer to convince the Germans than we thought”. This has all the makings of a horrible policy mistake when one of the protagonists blinks. Draghi may even decide he has had enough and return to Italy to be president of the country there. With Merkel and Schauble in control of “finances” Draghi won’t beat the Bundesbank at poker and Jens Weidmann at the ECB helm would complete the German triumvirate which would put the French in a spot.
Bond markets in European sovereigns continue to display heroic confidence in the central bank when in reality they have done nothing - the buying of ABS and MBS securities, hailed as a success by some European fund managers, has been an abject failure. “Banks can borrow at 10bps and lend at a tasty margin to eager borrowers, thus in one swoop solving bank profitability and boosting economic activity”, they said. Not so M’lud; the ECBs balance sheet continues to shrink.
And with the latest fall in the oil price (Brent was over $70 when I started writing this piece) deflation is a certainty, but for how long? There are a lot of marginal producers out there in shale world whose pips are squeaking as are their bondholders who have lent with expensive oil as collateral. Once wells start getting moth balled and bond holders get a series of haircuts (at best) the oil price will sky rocket, high yield will actually revert to being proper high yield ie junk and the myth of cheap oil and its “benefits” for the global economy will be over. In Japan oil is now more expensive in yen terms as the BoJ manage the erosion of the currencies purchasing power in true central bank fashion.
As ever it’s all in the timing but do remember that when the bell rings the door will instantly turn into a cat flap. Now is the time to take risk off the table and add to those berated insurance policies of cash, ultra-high quality bonds if you can find any, deep value equities with more than a semblance of a decent balance sheet and some gold. As Kyle Bass eloquently put it, “gold is simply a put against the stupidity of the political system”.
With deflation lurking in the background cash becomes a much more attractive asset in the short term as does gold which is nobody else’s liability, unlike fiat money which in many instances in the past has been transformed into decorative wallpaper. Credit markets will also throw up value but don’t get greedy for yield and be prepared to be a long term investor. Liquidity in bond markets is going to disappear one day soon, but if the companies have the balance sheets to redeem the debt then hang on in there.
Same story with deep value equities. There aren’t too many bargains around right now as valuations get stretched higher and higher. If we are about to get a significant market correction – and we are starting to hear this refrain more often from market “professionals” - then market psychology tells us that as prices fall most investors will find it difficult to “pull the trigger” and buy at cheaper prices and then when the recovery phase kicks in it becomes even harder to get on board. So better to have a small toe in the water now and remember why you bought deep value in the first place.
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Buy AU and as much of it as you can.
Tyler, on a side note -- could you provide a link where we can download all of ZH in pdf format for redundancy sake? What shit gets crazy next year, I have my suspecision that ZH will be at the top of some DDoS attack, and having a few thousand copies of an almost up-to-date ZH floating out there would be really good for rebuilding/mirroring purposes.
If it's already yours.....just get it back.
I have literally no idea what you are talking about.
Get on your knees.....and pray for Germany with me.
It didn't work for Nixon.....and he looked pretty stupid doing it.....but it's worth a shot.
They Lied. They are leaseing gold and useing those leases as collateral. So while they are not buying gold they are buying the leases on that gold. Devious.
Agreed creating a torrent every month of a complete posting backup would insure the articles survive.
Here's a great article by GATA proving gold is fixed. (As if we didn't know)
http://www.gata.org/node/14840
interestingggggggggggg
If they buy all junk and exclude gold, then they are just showing their sheer stupidity and all they are interested in is propping up their own "wealth"
They're bankers.....they're pretty good at stupid.
"They're bankers......they control the printers" -- fixed (for now).
The printers are made in China.....can you spot the problem?
That which cannot be sustained, won't be. I am very wealthy, but then again I might define wealth and money a bit differently than most. Don't like the game, don't play.
Once China gets to expensive they can have them built in Africa.
"Made in Africa": Synonymous with Excellence and Quality.
Yeah, I can see it now... The people lining up (at Walmart?) and NOT lining up (everywhere else).
when the FRN dies, we get our jobs back.........
Could be....even the illegals don't work for free.
Yeah right. You're not thinking this through. We produce virtually noyhing. The bulk of our eCONomy revolves around skimming from another person's pool of "money". Once the dollar collapses our jobs and wages will be on par with the rest of the world.
The bankers aren't stupid, fuck look how they rule over us. They are buying gold, but they sure as hell aren't going to admit it. Look at what they are doing to the mining companies. Thet'll all be bankrupt and the bankers will own then for pennies on the dollar.
They're using your grandkids money to drive it down.....then they're buying it.
There use to be a time when we left the kids out of it......not so much today.
I'm pretty sure we are a couple generations past the grand kids by now.
If you're going by math......it's pretty much mission impossible.
my recurring visual.. if the U.S. were a sinking ship the banksters are stepping on the shoulders of drowning women and children to get in the life boats first.
Buy all assets except AU? What, they got PBOC guys on board?
"No, lound eye. You no laise plice of gold. China want buy gold cheap".
Even when they're "self-serving", they're Dumb Asses! (which seems redundant, given that an Ass is a donkey, and they are dumb to begin with).
Vague promise of free money from China, still for now anyway better than gold! (Or reality)
No time like the present?
This title makes no sense.
"Now is the time to take risk off the table and add to those berated insurance policies of cash, ultra-high quality bonds if you can find any, deep value equities with more than a semblance of a decent balance sheet and some gold."
Weidmann take the wheel!
First stop the car wash.
"... all assets except gold”
Since when did gold become an asset? Wish these guys could make up a story and stick to it, but at least there is some entertainment value in watching them squirm.
Stack on!
The ECB should try selling garbage assets as collectables. I know quite a few people who have Zimbabwe dollars, and we probably all paid far higher than book value. $100T Zim is probably like $3 US, but I paid about $15 for it.
The banks dont need to buy gold and they know it. They'll just confiscate it like that fuckhead FDR did.
At this point the central banks have no choice but to continue to intervene. If they throw in the towel, or fail anyway, the masses will revolt. The standard of living in Europe and America will plunge if the markets tank. Millions will be wiped out financially with the Dow back at 7k. Consumers will quit spending and GM will go bankrupt, this time for good. If our government went on an austerity program and laid off 1/4 million unneeded employees, the same result would happen. A chain reaction into the abyss. We are now 100% dependent upon Fed balance sheet largeness and ever increasing debt just to stay afloat. They will jawbone, then quietly intervene, then announce more QE. They will lower lending standards for home buyers, do everything they did the last time, they have no choice.
But when the day arrives that faith in Fed ends, the bears will be get to see a bloodbath. Inflated property values will plunge and those will cash will pick up assets cheap. Patience required.
You are wrong, the rents may stop but that just breeds creativity. We can then solve problems instead of creating new ones, once the rent has stop that problem may then be solved. Solutions end rents but it there is no rent then no protest on the slolution of that problem.
There are may problems we can solve once the rents stop.
So we're saying that once this is over, the central banks will own everything and anything they could find (except gold, haha) purchased with monopoly money that they printed.
Hmmm, sounds like great work if you can get it.
Buying assets. And that is for the benefit of exactly who?
The ship will not be "allowed to sink" till the banksters are off it safely using all the lifeboats that are available. This could mean pumping up asset prices with freshly minted money to buy time for the said banksters to get to the lifeboats.