This page has been archived and commenting is disabled.
The End Of The Supercycle? Commodity "Capitulation" Arrives
In a note by BofA's Michael Hartnett titled "When Supercycles end", the bank looks at the latest EPFR fund flows and concludes that the wave of commodity "capitulation" revulsion selling has finally arrived.
Specifically, looking at fund flows, the most recent week saw the biggest outflow from precious metals in four months and emerging market fund outflows reaching $10 billion over the last two weeks leading Hartnett to conclude that "capitulation is beginning in EM/resources/ commodities."
This is what the most recent flows looked like:
The fund flow details indicate a "Great Rotation" out of commodities, Emerging Markets and, curiously, the US, and into bonds and continued flows into Europe, which has now seen 10 straight weeks of inflows with the latest one of $6.0 billion also the largest in the past 4 months.
Inflows into fixed income have been across the board:
- $1.9bn inflows to IG bond funds (first inflows in 3 weeks)
- $0.5bn inflows to HY bond funds (2 straight weeks)
- $0.3bn inflows to EM debt funds (modest inflows but largest in 11 weeks)
- $2.1bn inflows to govt/tsy funds (3 straight weeks)
- $0.2bn inflows to muni bond funds (first in 7 weeks)
While in equities it has been a tale of two flow directions: out of the US and into Europe (and to a lesser extent Japan):
- Japan: first outflows in 8 weeks ($0.5bn)
- Europe: $6.0bn inflows (10 straight weeks & largest in 4 months)
- EM: $3.3bn outflows (2 straight weeks)
- US: $3.7bn outflows (outflows from both mutual funds & ETFs)
By sector, inflows to secular growth areas of healthcare ($1.3bn) & technology ($0.4bn)
To be sure, the best example of the paper flow capitulation is where else but gold, where in the past week algo, 1% of total gold/silver AUM has been wihdrawn!
But while gold has seen its share of pounding in the past 5 years, it is modest compared to the revulsion experienced by companies that have economic exposure to Emerging Markets. As BofA notes "US companies with high economic exposure to Emerging Markets at close to 13-year lows vs broad US equities."
The last chart may also explains why Ray Dalio, after largely ignoring the bursting of China's three bubbles (as shown here previously) finally threw in the towel, became bearish on China and admitted that "There Are No Safe Places Left To Invest." It also explains why increasingly fewer are "buying the dip" across markets despite one-off superstars like GOOG and AMZN.
»
- 93732 reads
- Printer-friendly version
- Send to friend
- advertisements -
Government regulations?
After the collapse there will not be a functioning Governement to exact taxes or enforce the plethora of regulations.
I have some sad news for you. Mommy Government, well...she...she...yeah...she is on her Death Bed.
And if you are not all grown up by now then you will be growing up really fast because you are going to have to take care of yourself.
You know the banksters have won,when 1 ounce of pure Gold,is now worth 1 share of Amazon stock..
Everytime that i see "keep on stacking" on these comments I have some laugh...
I got some stuff stacked. I have a hay stack, and a stack of firewood. I got a few potatoes stacked in the basement and a large stack of frozen meat in the freezer. I've got a stack of cash and a stack of gasoline and a stack of diesel fuel. The solar panels are stacked by the water well. My shiny is stacked at the bottom of the lake.
Stack On
All the goodies except where do you stack your sugarlips honeybuns? I stack that first as a priority.
One of these Days Alice ! there will be a StackMarket.
No wonder, we don't need commodities, we need more financial instruments.
I think PM,s are going to get bought next week. The paper selling has been massive and there's some good buying opportunities now.
Traders are also getting worried about the global bond markets and UST ain't the safe heaven it used to be with well over $18 trillion in debt.
Also China is selling us debt, and Japan(holds massive UST) will have to to raise cash if the equity markets continue to deteriorate.
if only Yellen was smart enough, she would print a $1 trillion and buy all the gold available anywhere, and just sit on it until it goes to $10,000 and then sell. But als, only if she was that smart
Perhaps they are.. You have to look at the underlying 'players' in the FED.
That will happen before this, first proposed in 1936:
http://www.telegraph.co.uk/finance/comment/9623863/IMFs-epic-plan-to-con...
Then, there's this:
Monetizing gold[edit]
A similar crisis was faced during the Eisenhower Administration in 1953. The debt ceiling was not raised until the spring of 1954.[102] To accommodate the gap, the Eisenhower administration increased its gold certificate deposits at the Federal Reserve, which it could do because the market price of gold had increased. According to experts,[103] the Secretary of the Treasury is still authorized to monetize 8,000 tons of gold, valued under the old law at approximately $42 per ounce, but with a market value worth over $1,600 per ounce.[104]
From;http://en.wikipedia.org/wiki/United_States_debt-ceiling_crisis_of_2011#M...
When it come to 'old coin' I don't see the 1% drop....
American government collapse.
No confidence.
Tangible assets will inflate in value.
More mobile the better.
The core sovereign is corrupt.
Anybody trading EFT gold and silver must be mentally ill, or deranged, because when it pops nobody will be receiving the physical. Comex is leveraged up to its eyeballs and will be the first to go bust, when the shit hits the fan. I've missed the gold boat and have amassed a little over 2kgs of gold over the last 15 years, which is worse than chicken feed in the grand scheme of things. I simply don't have the money to purchase the amount I desire. So I have sunk all my money mainly into silver 1kg bars, with a few silver 5kg bars when I've had a good month and have more than my bodyweight in silver. I'm merely holding tight and will not sell the physical until we go to FIAT 2.0. By then the new FIAT I believe will have to be backed in gold and silver(which is my hope). Gold for the top 10% Silver for the plebs, as it’s always been. I'm looking at silver to be $700+ an ounce and gold to be around $30k an ounce, at current prices. Am I dreaming about those figures? Possibly. Am I gambling? Yes and like most gold and silver metal holders on ZH. I just hope I'm right.
A question to all Zero Hedgers. How much an ounce/kilo will gold and silver be after the shit has hit the fan? It will be interesting to hear some opinions.
Are we talking physical or paper price?
I'm talking Physical. Paper gold and silver isn't worth shit, especially paper gold and the physical gold they have, is leveraged and rehypothecated to the moon and back.
It will be woprth what it costs to dig out of the ground. Five dollars*.
*Five (new) dollars is alot of money.
How many dollars are out there? For that matter, how many different KINDS (classifications) of dollars are out there? It's all kinds of dollar denominated debt and how much are you willing to monetize with gold. That doesn't even consider monetizing other fiat currencies, just the $! Are there units of trillions of dollars or tens of trillions of dollars or hundreds of trillions of dollars? Ten years ago I calculated over $50,000/ounce to monetize the dollar denominated fiat that I could identify at that time and I wasn't all that sophisticated. Obviously, silver as a monetizing metal would also sop up some of the dollar debt. The sky's the limit in this racket!
First let's ask another question...
How much will a Fiat Currency Unit be worth after the "Shit Hits The Fan"?
My personal bet is on a very short term Hyperdeflation followed by a Hyperinflationary Inferno which destroys most currencies.
Well WHEN that happens here in the US of A then the answer to that question is THE DOLLAR WILL NOT BE WORTH MUCH IF ANYTHING AT ALL.
With that as a background...
You are going to have to divorce youself from conceptualizing costs and prices measured in that of a DEAD CURRENCY.
Understanding that is the first key.
You probably need to acclimate yourself, CURRENTLY, to thinking in terms of Gallons of Gas/oz Ag,, Pounds of Sugar/oz Ag, or Resdidential Property/oz Au, as examples.
For instance a gallon of Gasoline costs about 0.2 oz Ag currently, depending upon your location. How many loaves of Bread can you get for an Ounce of Silver (Ag) today? (Seven to Ten?) A loaf of Bread is still, roughly. a Silver Quarter.
An easy way to do this is get yourself some Grocery Ads...from the 1950s when we were still dealing with Silver Coins. Look at your 1950s ads and that is what things will cost using 90% US Silver Coin Business strikes.
It will be a shock to many who do not think about this price structure naturally as they are nowhere mentally prepped for the collapse of the United Stated Dollar.
To be completely prepared one must be Physically prepared (Materials, land, HEALTH, food stocks, seed stocks, fuel, etc.), Mentally prepared (knowledge, knowledge, and more knowledge, along with the PRACTICE of the application of the knowledge), and Spiritually prepared (where your Faith, Trust and Confidence is not placed upon Human Power as Humans are corrupt and falliable, but upon the Universal Creative Power to see you throughout your life.)
Hope this helps.
Why Gold Prices Are Lower
·
The largest banks such as JPMorganChase are dealing in large quantities of gold derivatives which are lowering the price of physical gold at a time when interest rates have not changed for 7 years.
·
China and Russia are moving away from the US dollar and getting half of the world’s countries to do the same.
·
And the Fed supports pumping up the dollar while keeping the gold price low.
Here is proof:
http://michaelekelley.com/2015/07/20/dear-fed-plz-raise-gold-price/
http://www.zerohedge.com/news/2015-07-09/are-big-banks-using-derivatives-suppress-bullion-prices/
Here is where the next recession will start:
http://michaelekelley.com/2015/04/28/next-recession-will-start-with-this-country/
Here are some more signs of a coming recession.
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record...
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
DEMAND IS DEAD WORLDWIDE. PEOPLE PAYING THEIR DEBTS OR ARE BROKE. GLOBAL ECONOMY COLLAPSES AS WE SPEAK.
THE ONLY ECONOMY LEFT IS BILLIONAIRE ECONOMY AND THEIR SPOILED BRAT CHILDREN GLUTTONY.
Everything else is just fin speculation to make money on that realization among those in establishment that believed in the lie that perpetrated.
Very good on the outflows from EM. More than Commodities, the romance with EM papers has just reached the beginning of an end.
<---- 30%+ 'Correction' in US Stock Market in Sept/Oct and a US Dollar Crash by years-end.
<---- Stocks, US Dollar, and Economic Collapse avoided, and all is well by the next election.
Thanks for your votes!
4-5% stock retraction - dollar booms