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Why Gold Is Surging: BofA Says To Expect A "Massive Policy Shift In 2016"
While US equity futures have gone nowhere overnight, which is surprising considering (the incorrect) interpretation that by boosting overall liquidity through expanded collateral China has finally unleashed shadow QE (more on this later), which led to a rally for Chinese stocks if not US risk, one asset class that has been quietly levitating higher overnight is gold. Perhaps a lot of this is due to the realization that while the PBOC may not have launched QE now, it has no choice but to do so eventually.
Or perhaps the real realization is what Macquarie said over the weekend when it laid out quite correctly what the next big policy step will be after the current QE craze fizzles. This is what we said on Saturday:
To summarize what Australia's biggest investment bank just said, in a nutshell, "small and incremental is out", and will be replaced by big and "paradroppy", a step which as Macquarie succinctly puts it, will "ban capitalism and by-pass banking and capital markets altogether."
Crazy? Not at all: since the status quo will be fighting for its life, this step is all too likely if it means perpetuating a broken system, and an economic orders based on textbook after textbook of lies. In fact, we would go further and say war (of the global variety) is also inevitable, as the global "1%" loses control. It won't go quietly.
Finally, we most certainly agree that the catalyst to unleash the "endgame" cycle will be some "combination of a major accident in several asset classes and/or sharp global slowdown." But long before that even, keep an eye on gold: having provided a tremendous buying opportunity for the past 4 years because for some idiotic reason "conventional wisdom" decided that central banks are in control, have credibility and can fix a problem they created and make worse with each passing day, soon the global monetary debasement genie will be out of the bottle, and not even the entire BIS trading floor will be able to suppress the price of paper (as physical gold has not only decoupled from paper prices but long since departed on a one-way trip to China) for much longer.
Keeping an eye on gold this morning confirms just this:
Then last night, none other than BofA's Michael Hartnett who is one of the very few strategists out there who "gets it", issued a report warning investors to "anticipate a massive policy shift in 2016" which would be a DM/EM mirror image: in the US/EU/Japan from QE to fiscal stimulus and in China from fiscal stimulus to QE & FX depreciation. In other words, the last big reflation push is almost upon us.
His key thoughts:
Neither deflation nor inequality has hindered the bull market on Wall Street in recent years. On the contrary, QE policies to end deflation & spark employment have been very beneficial to asset prices. But now:
- The perception of unfair globalization, gilded elites & inauthentic politicians is leading to a rise in both populist politicians (Trump, Sanders, Corbyn) and parties (SNP, Syriza, Podemos, National Front) and…
- …calls for the Fed to raise rates to boost the elderly’s return from saving are becoming louder…
- …and the fragile improvement on Main Street is threatened by a stalled global economy in 2015.
- If the secular reality of deflation & inequality is intensified by recession & rising unemployment, investors should expect a massive policy shift in 2016. Seven years after the west went “all-in” on QE & ZIRP, the US/Japan/Europe would shift toward fiscal stimulus via government spending on infrastructure or more aggressive income redistribution. And seven years after China went “all-in” on fiscal stimulus, a shift toward QE/rates/FX to support activity would be likely in the east.
And finally, getting to the point of this post, this is how Hartnett says investors should trade this "massive policy shift":
- …buy TIPs, gold, commodities, Main Street not Wall Street, China small cap
- This new policy mix (which would be in response to recession & Quantitative Failure) would be most positive for TIPS/gold/commodities, for Main Street rather than Wall Street plays (e.g. mass retailers versus luxury), and for Chinese small cap. These are the assets bears should accumulate if markets head to new lows.
- A trough in inflation expectations (Chart 7)...positive for Gold, TIPS & real estate
- Income redistribution…buy Main Street, sell Wall Street, long KRX, short XBD
So short Wall Street, buy gold. If accurate this could be the biggest policy shift since the artificial price controls were imposed on gold by the BIS trading desk in September 2011 when the SNB unleashed its now failed currency peg, just hours after gold hit its all time nominal high just shy of $2000.
Finally, if China is indeed set to reflate at all costs, watch as a few hundred million Chinese drop their infatuation with the housing and stock bubbles, and go back to the one asset class that throughout history has been the best defense for currency devaluation and runaway inflation.
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Gold is good. Bitcoin is better.
yes...........insist on Invisable coins for payment...........
Apparently you aren't familiar with paper wallets. Ha!
:) In the same way banks seem to believe that people will trust them more if they invent their own "blockchain" and tie it to Fiat,,,,
Silver hit its head on the 200 dma three times this morning and retreated a bit for the daily 8:30 'selloff'. Watch for what happens later today, it will tell whether the breakout is sooner rather than later.
A great illustration of the way bankers think:
To summarize what Australia's biggest investment bank just said, in a nutshell, "small and incremental is out
So printing $3.5 Trillion against a currency base of $800 Billion is "small and incremental". See? Do you get it now?
In the era of digital printing; how long can it take to print a quadrillion? It was just a few years ago that million was a lot, then billions became the new norm, but not for long...now it is trillions. Just as a $20.00 bill is the new $5 and a $50 is the new $20. Why we make pennies or nickles is beyond me. We spend a nickle to make a penny and the pennies look and feel like they are made in China and belong in a toy-set.
Sorry Croc but 80 is the new $20
...but 80 is the new $20
Au contraire - The old silver half dollar is the new $20.
""but 80 is the new $20""
Just As In That Kid In Zimbabwee Hugging Stacks Of Trillions Of Local Fiats Paper...
And I've got 10 inches when measured from the A hole.
How very a propos: Andreas M. Antonopoulos on money throughout history and, in particular, peer-to-peer money. A must watch for goldbugs still confused about bitcoin. Thank me later.
https://www.youtube.com/watch?v=n-EpKQ6xIJs
Spot on video. It's disappointing that many here love gold out of mindless emotional devotion rather than a genuine understanding and appreciation of the fundamental qualities that make sound money sound.
Let the goldbug Luddites mock Bitcoin all they want. More for us. ;)
With the Great Halving less than a year away, I'd prefer to have more time to stock up as much as I can before supply gets scarce. Evolve with technology or go way of the dinosaurs, Luddites.
LOL one guy named amalcin bringing the entire network to its knees from a cave in Russia. Core developers running the entire show in open revolt against each other. Retail usage and volume going nowehere, "merchant payments" companies laying off people left and right. Regulators around the world just about to step up enforcement. Doing 2.6 transactions per second, major upgrade required to bring that to 200 (Visa does 50,000). Competing digital currency systems with the biggest banks in the world signed up.
But hey knock yourself out
Yes! You see the problem is that there wasn't enough credit created initially. The drips and drabs of a few hundred billion here, and few hundred billion there, were simply insufficient to "jump-start" the economy.
To continue with the always useful drug addict metaphor, it's time now to inject syringes full of pure heroin, as the previous stuff was cut, dampening the desired effect.
The problem of finding a receptive vein among those that have collapsed may be vexing, so I suggest looking into wherever the economy's toes or tongue are.
Yes, how lame is it to use bitcoin as merely a token of value in the abstract. Might as well use some shiny rock as a token of value in the abstract. Oh wait...
gold you can hide under your bed bitcoin you can hide in a unicorn
Her "strong" attitude towards religion aside, I will quote Ann Barnhardt: "If you can't stand over it with an AR15 and guard it, it isn't yours."
.. in a unicorn's ass
AR15? Ann Barnhardt?
When the government comes for your gold, that old adage about "over my dead body" is likely going to turn out to be self-fulfilling.
If you're really so endeared with the yellow metal, you cannot bear to hand it over, remember, they pretty much feed you in prison.
The time to own gold has likely passed. The government tracks all gold purchases now. Now it is more likely the time to have a half-dozen comely daughters.
Bitcoin you can hide in your brain via a brainwallet. If you don't think that's enormously valuable as protection against theft or confiscation, you're mistaken.
I can hold my bars in my hand, they're real,,,shitcoin ? not much you can do digital crap.
Nothing at all you can do with bitcoin if the Internet goes down for a few months.
For bitcoin the Internet is a convenience, not a requirement. It's a peer-to-peer technology and is agnostic as to what medium you use to peer. If you want, you can peer over smoke signals, but I mentioned convenience already.
People cannot even read cursive any longer...and your backup plan is gonna be smoke signals?
Backup plan for what? A nuclear disaster followed by global outage of all utilites, including internet? My backup plan for that options is going to be a quick suicide while painless death is still possible. For anthing less apocalyptic bluetooth should be just enough with paper wallets as backup storage for my bitcoin keys.
A regional outage will be more than sufficient for you to wish you had some real currency...
Bitcoin is is like a cult religion. You might have faith, but most of the rest of us ain't buying it. So you will be limited to trading with your other bitcoin buddies.
Bitcoin is is like a cult religion.
Isn't it the same narrative used by central planners in FED to discourage ownership of gold?
One word dooms bitcoin.
Blythe Masters
That's a real funny story here. Blythe Masters is pretty much stuck with the impossible choice between:
1. Pimping bitcoin-like knock-off with all power levers taken away from end user and no computing power (and therefore security) behind it, and no leverage for adoption, 6 years late
and
2. Jumping the bitcoin bandwagin using one of existing application layer protocols (i.e. XCP or OpenAsset) with all computational power and security of bitcoin network but no control over it.
For those who actually understand the invention of blockchain it is hysterical to watch her pathetic verbal gymnastics. She's basically doing her best to avoid words "bitcoin" and "blockchain" while trying way too hard promoting the phrase "digital ledger".
All fiduciary media requires consensus among its users, what you call faith, otherwise it is worth only its intrinsic value. Paper money is inherently worth fireplace fuel value. Gold is inherently worth a few dollars an ounce for some specialized scientific/industrial applications. Bitcoin is inherently worth nothing.
The reason gold is so awesome as a fiduciary media is its divibility, portability, scarcity, etc. and that its consensus has existed for thousands of years. Bitcoin has most of the awesome qualities of gold, without the long track record of consensus. It also has the ability to be instantly transferrable globally at micropayment levels. It can't be confiscated, and can be stored in your brain. Gold can't do any of that.
However Bitcoin can't run trustlessly without electricity and a network connection. Each fiduciary media has spheres where its capabilities crush the other. Both are fiduciary media that are orders of magnitude superior in league to fiat.
Bitcoin is a belief system. It hasn't been tested yet.
I cannot eat bitcoins
I would have never purchased phys gold if it werent for things ive learned on this site. I still have cash and stocks and went against every financial adviser I know.
gold will go up and down and I dont expect it to make me money on it. However, no matter how much CP continues or even escalate its destruction of the dollar... Im going to feel fiscally safe or safer than without it.
Lol, loving the ignorance of ZHers. It's amazing how so many of you were able to connect to the Internet with your AOL Online CD. More for Bitcoin for me to stock up on.
Till the power goes out.
or when the highly complex net goes out
Until the power goes out
Bitcoin is the creation, pilot test if your will, of Central Planners and is speculative at best as it has shown to be. The people at the top, early adopters, have profited the most..typical for a ponzi scheme. Regardless of what "Bitcoin" community believes about its safety; the fact that the globalist have embraced it is enough to raise a flag to the most causal observer. At the same time, whatever floats your boat, for the Tsunami that is coming upon the whole world; there is only one sure protection found in THE Person..I believe you know about whom I speak.
Regardless of what "Bitcoin" community believes
Bitcoin community believes nothing. Bitcoin community requeres mathematic proof for everything. This is how we singled out the ponzi/central planners fearmongering.
the fact that the globalist have embraced it is enough to raise a flag
The fact that the globalist have embraced the electricity is enough to raise a flag. /sarc
Like electricity or calculus, bitcoin is just an invention.
I don't believe it...central planners actually needed a test plot to see if people are gullable.
@gherman
Look at:
1) http://www.investopedia.com/terms/g/greaterfooltheory.asp
And learn something.
Oh, forgot. You are pushing your own investments into something useless.
My bad.
Clever trick, by the way.
Bitcoin, with the split-trick, is definitely NOT a limited-supply commodity. Ever tried to sell a one millionth of a gold ounce?
I've noticed a pattern... Tylers post pro-gold articles on a regular basis and I suspect they are receiving some sort of compensation from someone for "pushing PMs."
Do I own PMs? Yes, I purchased silver at $35oz years ago - worst "investment decision" I ever made!
Tyler's are trying to drill it into us that you must have some of your wealth in gold.
Imagine in years to come when tshtf your got none you'll feel like a fool for not heeding the warnings!
...Fool.
...Fool.
Not better, different. Which money is better depends on the context in which you need to pay someone. Vegetable stand in the countryside, gold is better. Hiring an international worker to crunch a spreadsheet for you on short notice, Bitcoin is better.
Spot on!
Turn off the electricity and all your bitcoins are gone without even a puff of smoke.
gh, have your island yet?
Only about $2.3 trillion in gold bullion is available in this world (about 2 billion ounces). Hundreds of millions of Chinese and Indians buying gold will easily absorb this bullion.
Incidentally, only about $16 billion in silver bullion is available in the world now.
Oh really? I heard rumors some of that bullion belongs to people who dont intend to sell it.
Yes, a significant chunk of that bullion is not available for sale
In a week there could be $5 trillion in gold available.
That is the beauty of gold. Its value can expand to fill the need for wealth storage.
Yes, buy Gold, but he left out Silver, Food, Ammo, and Whiskey.
Food and whiskey is the same thing no? A tablespoon of rice and then whiskey to the top of the glass. My emergency diet.
On the rocks, no ice.
Scotch is good for teething children. Pour a shot, dip the binkie in it and stick it in the kids' mouth, drink the rest. Repeat as necessary.
Cigarettes as a meal replacement. The Person of Scripture for soul food and more importantly protection against all enemies foreign, domestic and unseen.
Here in Thailand the gold shops are busy selling to the China tours.
Why wouldn't they just buy it in China?
It's pretty difficult to buy gold in china at street prices. In fact buying anything in china in a shopping mall is way more expensive than the US. If you go to a cheaper mall you don't know what you're buying. Buying at a bank is a pain in the ass.
Out of curiosity, bars , coins or jewelry?
Your local pricing must be good.
You know we are totally screwed when anyone at BAC says to buy gold.
I do not believe the power is going to go out; perhaps in some places some of the time, but not indefinitely. Too much is dependent upon and things yet fulfilled.
Also, my take on this is this is the final surge before the grand purging. Why the US is poking the Bear and the Dragon is beyond me; expect a war-monger in the Whorehouse and it may very well be the one we already have. Imagine a real war with Obama as Commander in Thief? A Military coup could be in the works and that might be our real hope in this shadow of reality.
I've worked as an engineer for over 20 years in the power industry and I tend to agree with you. An EMP would be a worse case scenario but even then islands of power would be restored rapidly.
oh, so when the SHTF i can go down to the vegetable stand and ask him to log on to the internet so I can buy some squash? Sounds like a plan..
No. Electricity is one thing. Digital money is a different issue.
While COLOSSAL amounts og gold and silver can be dug out of the ground every year for next to nothing, their price is not going anywhere.
Miners can crush a Everest sized mountain to extract 1 ouce of gold for a few dollars
I'm not trying to be a smart-ass, but nothing in your post is correct. Unless you're attempting sarcasm, then yay.
-Argenta
Gold and silver will follow the velocity of money. At first, slowly in fits and starts, gradually you could say, and then suddenly, once the fact TPTB have lost control becomes perceptable to the general public. This of course will be very difficult to perceive as there is deflation running rampant in the system especially in the price of labor, and the increase in productivity through technology. The most available measures of inflation and price control to the general public is the price of food and fuel. In 2011, global grain stocks were at their lows and the price of WTI was over $100/bbl. Gold made its nominal high and silver matched its. Coincidently in 2011, global chaos in 3rd world countries in which TPTB could not control the price of food anymore. Global food grain stocks have recovered significantly and crude prices are now half of what they were with more geopolitical chaos in the world. I would suggest the velocity of money will increase suddenly once the global stocks of food force people to bid for it. This may take a awhile, but with 80 million more mammels to feed every year, not as long as it might seem.
Given the premiums on silver coins at the local shop I frequent, the bid is in on silver, and serves as evidence that some elements of society have noticed.
Disgree
Gold and silver only appear to behave the same. Gold is just a wealth asset. Silver is used for industry.
Gold will find its way to a new high as other wealth forms collapse. Silver may surge but only when industry needs more than it has.
For the issues we face now, I'm sticking with gold.
Most people including gold bugs see the enormous piles of debt accumulated look for the inflation. Theyr are ignoring the catalyst and more important component which is the velocity of money. I believe one of the wealth forms that collapses when the velocity of money increases on the enormous stocks of money handed out over the last 30 years is money, and its value as a mechanism to store wealth. When the average person has only a few dollars or a few months worth of money in their savings account i believe they will look to preserve it in physical assets that they can afford that will still provide liquidity.
Gold for savings. Silver for liquidity.
Gold for confiscation. Silver for liquidity.
I'm as bullish longer term on Gold as any bull. But from the daily (or even weekly) chart I can't see Gold ready for take-off just yet.
If this guy is saying big policy things will happen in 2016 that will be perfect for the chart to set up better, ie give it more time.
Better to buy Gold at a higher price with some momentum behind it than buy at a lower price with no momemtum (relying more on hope). Buying at the lower price might tie up margin for too long although you'll make more money if right.
PS. Same with Silver, the charts don't look ready yet for blast-off. Patience is needed here. There's a fucking stack of cash waiting to be made on the long side of precious metals. All we need to do is watch and be patient then the big money will be ours!
You're thinking like a trader - ride the mo higher, then dump it. Only problem is that's not gonna work this time. Paper money will not be trusted again in your lifetime..
Jim Sinclair: anyone whom margins anything gold has a death wish.
South China Sea incident and gold.
Would rather we do not post "gold is surging". Lets keep this low profile with a stealth climb in the barbarous relic. Want to see a slow meltup with very few on board. Lets not draw attention to it just yet. I think we have a long, long way to go with the usual "scares", just be patient and keep your core positions close to the vest.
interesting comment monopoly. However I'm involved in promoting karatbars gold bullion (and yes it has is faults) but my job is to get bullion to the masses. I was shocked initially with the lack of knowledge ordinary ppl had.. but over the past 12 months that has shifted somewhat.. and demand for our product is growing exponentially.. will we have enough market penetration before the true price discovery of gold... personally I doubt it... but in the mean time Im earning and stacking as much as I can..
FWIW: Overnight on a late-night talk show well-known Canadian psychic Douglas James Cottrell predicted gold would rise to 1400-1600 within six months--i.e., by April 12.
For 18 months now, I have been lecturing about the benefits of gold bullion ownership.. at first I got the verbal beatings, then the ridicule and scoffing, however since the summer the tide has turned and there is people buying gold that would have once considered gold as blasphemy! While there is ample physical supply currently if current growth patterns persist, we will have exponential growth and consequently exponential price rises as the paper/physical ratio with become outrageously misaligned and the supply of physical tightens. Get in will you still can and hoard as much of the stuff as you can.
www.teamramgold.com/about-us
Wait – you've been "lecturing" and yet the verbal beatings have subsided?
I'll need to see some evidence.
haha smart ass tinky.. thankfully the world is larger than ZH ... if you seen the earnings .. you would tolerate a few verbals as well !!
If the economy does end up getting blown out, I don't see a "massive" redistribution happening as a republican will likely be elected.
The war machine requires massive redistribution. Just a different group of beneficiaries.
Surging !! what where when
All I see is gold going up and down a few bucks in an effort to steal more money from the public between each swing.
I think that gold has some bullish momentum for the short term. Especially now that gold broke out of the declining trend-channel that it has been in. Furthermore when gold is able to close above the previous top of $1,158.50 it will add to the bullish momentum. However, I myself am not a profound believer that gold will soar up a whole lot from this point onward, especially with potential negative revearsal on the RSI, and an expected wave down on the Elliott Wave in the near future.
http://tripstrading.com/2015/10/12/gold-breaks-out-of-declining-trend-ch...
Dirk, I cannot for the life of me accumulate an adiquite supply of Whisky. It comes & goes fluidly....
Central Bank Blasphemy, no more pork for you! Obunga, the great destroyer
the catalyst for the policy change was the nuclear reverse repo in september (pumping of assets into bank reserves, which we know is a direct conduit to the stock market) normally the fed would use the REPO window to keep things going, Reverse Repo is another animal, and in the volume being issued a clear MEGA move in policy. RR in mass quantities is a method of controlling interest rates across the entire economy, not just the charter banks. the Fed essentially offers money with a 25bp incentive, banks therefore have little or no incentive to lend money out, or do so only at higher rates. restricting credit is their way of raising rates, and it should work, but first there is likely to be a bottom and even NIRP. after credit shrinks (notice the proliferation of payday lenders) then the private sector puts pressure on rates. in the end the banks are extra liquid but they have to raise rates to pay for the shift in basis points, from +25bp to paying 25bp or more. that should get some inflation going, or stagflation, which is inflation without wage growth or economic activity. i see gold TIPs and maybe RE, that one is tricky. i also see Dow 20000. but think of this if fiscal spending is going to lead the economy we're really screwed because Congress is ineffective. final outcome is complete federal control of the economy which is what the nuclear RR really means.
SURGING!!!! (to 1165 yellenbux)
God forbid we spend money on infrastructure, giving jobs to the consumer who drives our economy, rather than giving it to companies so that they can buy back their stock.