Hong Kong

Take note, Gold is officially money for the most powerful entities in the world. They are not only accepting Gold as collateral but are openly trying to insure that they have their own Gold in safe custody.

"An 'oil-debt nexus' could create a vicious circle whereby overindebted companies pump more oil to ensure they can pay interest on their loans, adding to the current global oil glut, and further depressing energy prices," WSJ notes, citing a BIS report. The interplay between the industry's growing debt pile and falling prices is a microcosm of the deflationary dynamic that’s taking hold in the macroeconomy and that serves, in Citi's words, to destroy creative destruction, creating "zombies" along the way.

An inauspicious start to China's local government debt swap initiative has the PBoC scrambling to determine the best way to facilitate the successful issuance of new municipal securities as several provinces have reportedly canceled or delayed offerings. Now, the question is whether Chinese LTROs will be enough, or whether outright QE will ultimately be the only option.

• Maryland Governor Calls in National Guard to Control Baltimore Riots (BBG)
• Fed Seen Delaying Liftoff to September to Push Down Unemployment (BBG)
• Nepal PM says toll could rise to 10,000 (Reuters)
• China Readies Fresh Easing to Tackle Specter of Debt (WSJ)
• ‘Damned Lies’ Threaten to Overshadow U.K. GDP in Election Fight (BBG)
• Uncertainty Over Impact of a Default by Greece (NYT)
• Why the Cost of Hedging European Banks Stocks Has Soared (BBG)
• Carinthia cash crunch gives Austria its own mini-Greece (Reuters)

"How the agency obtains GDP figures is 'anybody’s guess,'" one economics professor tells WSJ, referring to the ambiguity surrounding China's official GDP data. Amid a worsening economic situation which includes industrial production data that doesn't match up to the headline GDP figures coming out of Beijing, analysts weigh in with their own projections for how the world's economic growth engine is really performing.

This new nothingness is creating a youth, a political system and an economic outlook which is based more in peoples’ heads and minds than it is in reality.

At a certain point, even central bankers will realise they can go no further.

• Nepal earthquake toll crosses 3700 (Reuters)
• Greeks Add Pressure on Tsipras to Compromise as Talks Resume (BBG)
• With No Deal on Greek Bailout Aid in Sight, Some in Europe Suggest ‘Plan B’ (WSJ)
• BOJ Shouldn’t Ease Further; Yen Fell Enough: Business Lobby Head (BBG)
• Clinton Foundation admits making mistakes on taxes (Reuters)
• Here’s the Old Nemesis Starting to Spook Bond Traders Again (BBG)
• Deutsche Bank to Trim Investment Banking (WSJ)
• China’s Stocks Rise to Seven-Year High on SOE Merger Speculation (BBG)

While sentiment towards gold in the West is abysmal - even as gold languishes at record lows when adjusted for inflation - Asian demand remains insatiable. It would be wise for investors to inform themselves as to why this should be so. Demand for gold in Asia is often written off by Westerners as an irrational impulse of uneducated Asian peasant farmers and workers. 

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.

Are foreign investors buying into China's world-beating, self-feeding equity rally or is it a classic case of domestic banana merchant-driven multiple expansion? JP Morgan weighs in.

• Obama’s Drone-Strike Rules to Be Reviewed (WSJ)
• Hostage locations difficult to track - and may be getting harder (Reuters)
• Varoufakis Said to Take Hammering From Riled EU Ministers (BBG)
• EU Frustration Mounts as Greeks Try to Bypass Aid Process (BBG)
• Kleiner Perkins seeks almost $1 million in costs in Pao case (Reuters)
• Google Misses, Caps Costs as Growth Slows (WSJ)... stock surges 
• Oil prices trade near 2015 highs on Yemen worries (Reuters)
• Pentagon Announces New Strategy for Cyberwarfare (NYT)
• Bloomberg Oil at $65 Seen Freeing 500,000 Barrels From Shale Fracklog (BBG)
• ‘Flash Crash’ Trader Navinder Sarao: It Was Wits, Not Bits (WSJ)

“It’s absolutely possible we’ll see some draconian measures from the regulators,” a UBS strategist tells Bloomberg, referring to steps Beijing may have to take to curb China's equity mania. Meanwhile, in a new note, the bank says that "the challenge with almost all retail-driven liquidity rallies (like this one) is that they generally don't abide by the more fundamental rules we follow." It's all liquidity and "animal spirits" in China folks — look out below.

Gold developments may not be a golden opportunity.

"China has a $28 trillion problem. That’s the country’s total government, corporate and household debt load as of mid-2014... equal to 282 percent of the country’s total annual economic output," Bloomberg notes, adding that efforts to deleverage this massive debt burden aren't compatible with the measures Beijing needs to take to boost economic growth. But if you thought the debt problem was bad now, it's going to get worse because as Reuters notes, China is about to activate the ABS machine.

Ask yourself: where do you think this is going? Do you really think your home country will be more free and more prosperous in five years? If not, it’s time to come up with a Plan B...