Yen

It has been a story of two markets so far, with China's Shanghai Composite up another 3% in today's continuation of the most ridiculous, banana-stand driven move of the New Normal (and there have been many ridiculous moves in the past 6 years) on the previously reported hints that the PBOC is gearing up to start its own QE, while Europe and the Eurostoxx are lagging, if only for the time being until Citadel and Virtu engage in today's preapproved risk-on momentum ignition, on Greek jitters, the same jitters that last week were "fixed"and sent Greek stocks and bonds soaring. Needless to say, neither Greek bonds nor stocks aren't soaring following what has been the worst week for Greece in months.

With the USDJPY's ascent to 125, 150 and higher having seemingly stalled just under 120, with concerns that the BOJ may not monetize more than 100% of its net debt issuance suddenly surfacing, the BOJ and the Nikkei would take any help they could get. They got just that an hour ago when Fitch downgraded Japan's credit rating from A+ to A, citing lack of sufficient structural fiscal measures in FY15 budget to replace deferred consumption tax increase. 

It feels like not a single soul is worried about the increasing amount of negative interest rates around the world. Ignorance or indifference?

The People’s Bank of China may have tripled holdings of bullion since it last updated them in April 2009, to 3,510 metric tons. It is worth noting that the U.S. refuses to allow their gold reserves to be publicly audited and the Bundesbank is having difficulty repatriating much of its gold stored with the Federal Reserve. This has led many analysts to speculate that the U.S.’s gold reserves have been leased out or sold or are encumbered as part of an ongoing effort to manipulate gold prices.

While the reality is that nobody has a clue what China's actual gold holdings are, the good news is that the answer is coming. As noted above, Chinese Premier Li Keqiang has asked the head of the International Monetary Fund to include China's yuan currency in its special drawing rights (SDR) basket.  If indeed China is serious about CNY inclusion in the SDR, it will finally have to reveal its cards, which would mean it finally will provide an update, with a 6 year delay, of just what its latest gold holdings are. As such, don't be surprised to wake up one morning to headlines blasting that Chinese gold holdings have gone up by 2x, 3x, 5x or (more x) since 2009, a long-overdue update which will catalyze the next major leg higher in the precious metal. 

In the simplest of terms, Abenomics was a form of economic warfare. It marked a transition in global Central Banking policy from an era of coordination to an era in which it is each country/ Central Bank for itself.

After trending sharply higher in recent months, the US dollar has entered a consolidative range against most of the major currencies.

Stanley Druckenmiller, the man who achieved the impossible 30%+ annualized returns during more than 30-years period active trading career just gave an interview and shared his market views.

* Fall 2015 turning point - civil unrest and riots globally says forecaster Armstrong
* European banks will collapse and “blood in the streets”
* Advocates diversification and holding bullion coins familiar to public such as $20 gold coins
* “Your portfolio has got to include everything … including bullion”

It appears being Special Adviser to Japanese Prime Minister Shinzo Abe comes with great prerssure to toe the line - as opposed to advise. Koichi Hamada yesterday said USDJPY 105 was "appropriate" and USDJPY 120 was "too weak"... that sent USDJPY tumbling. These comments were reiterated in the early Asia session and adding that he "doesn't think JPY will weaken much further." We wake up this morning and reuters reports that he has entirely flip-flopped his views saying now that "120 is appropriate," and that he " would not oppose further easing." It's clear someone got a tap on the shoulder...

Did the Japanese just get the tap on the shoulder from The Fed? Cabinet Office member and Special Advisor to Abe Koichi Hamada just jawboned the JPY higher (and USDJPY lower) with the following statement:

HAMADA: YEN AT 105/USD APPROPRIATE; WEAK AT 120 CONSIDERING PURCHASING PARITY

The reaction - an 80 pip plunge in USDJPY.

As many are increasingly coming to terms with the 'obvious failure of fiat currency', the inevitavble question arises "what next?" Earlier this year, we discussed the possibility of a Chinese- or Russian-currency backed by gold, amid the increasing calls (domestically and abroad) for an end to USD Reserve hegemony; but this weekend, as Bloomberg reports, Lord Meghnad Desai, chairman of The Official Monetary and Financial Institutions Forum, stated that IMF Special Drawing Rights (SDR) should contain some gold to help stabilize the currency.

“I just have the same horrific sense I had" before, Druckenmiller said to an audience at the Lost Tree Club in North Palm Beach, Florida (according to a transcript obtained by Bloomberg). "Our monetary policy is so much more reckless and so much more aggressively pushing the people in this room and everybody else out the risk curve that we’re doubling down on the same policy that really put us there."

There is much more going on than just a problem in the Japanese bond market...

The US dollar has been even stronger than this bull thought let alone the perma-bears.  Here's why,