Germany

When Time magazine announced the short list of its Persons of the Year for 2015, there was some consternation that the winner could be ISIS leader Abu Bakr al-Baghdadi or, maybe even worse according to the US press, Donald Trump. Instead, according to the just announced final results, the two gentlemen are in positions #2 and #3 respectively, with the winner being Germany's iron chancellor, Angela Merkel, whose position however in the aftermath of Europe's historic refugee crisis, has been downgraded from "iron" to quite shaky in recent weeks.

Overnight market action has largely been a continuation of Tuesday's key themes with European stocks falling as a selloff in mining companies extended to a 7th day, even as metals prices rose and crude oil rallied modestly from a six-year low after yesterday's API crude inventory draw. U.S. equity futures have rebounded from modest declines, as emerging-market shares extended their losing streak to a 6th day while Asian stocks dropped to 2 month lows.

Sales of American Eagle gold coins at the U.S. Mint surged in November, with gold demand nearly tripling month-over-month. China's gold reserves rose by another 21 tonnes in November, the biggest bout of gold buying since China began disclosing monthly data on it's gold reserves in June

Despite these very high levels of demand, gold prices fell sharply in November - from $1,141/oz to $1,070/oz or 6.6%.

The day of reckoning has arrived for the oil price. After a year of "Oil Price Crash" in October the world managed record production of 97.09 Mbpd. Production momentum built in the period of high price, 2007 to 2014, is proving very difficult to switch off. It must be switched off and it seems to me the most likely scenario is sharply lower oil price in the near term.

While no longer making headlines in the mainstream media, cash remains a scarce commodity in Greece. In response, Greeks have done what all people do when they cannot get enough currency - they improvise. Greece is right where Weimar Germany was in late 1922... In 1922, as in 2015, virtually everyone failed to recognise that monetary movement is circular in nature, not linear. All payments, for all goods and services, impact each other, in a domino effect.

The US Federal Reserve (Fed) and European Central Bank (ECB) have created a very dangerous situation. And it is one that few if any investors are assessing.

• Obama in speech to nation vows to defeat 'new phase' of terrorist threat (Reuters)
• Clinton Urges Social-Media Intelligence Sharing in Terror Fight (WSJ)
• Obama urges tech, law enforcement to address social media used for plots (Reuters)
• NATO says won't send ground troops to fight IS (Reuters)
• Le Pen Scores Historic Victory in France's Regional Elections (BBG)

Over the last few months, in a prime example of currency failure and euro-defenders' narratives, Finland has been sliding deeper into depression. Almost 7 years into the the current global expansion, Finland's GDP is 6pc below its previous peak. As The Telegraph reports, this is a deeper and more protracted slump than the post-Soviet crash of the early 1990s, or the Great Depression of the 1930s. And so, having tried it all, Finnish authorities are preparing to unleash "helicopter money" to save their nation by giving every citizen a tax-free payout of around $900 each month!

The system is beyond the point where it is merely showing stresses and fractures. Things are now falling apart and there may well be no way of putting them back together again. The media will continue to claim everything is fine, until the day of panic and reckoning when it will suddenly be the "next Greece" or "2008 all over again"... but worse.

But Gold and Silver I figured were dead in the water until the Fed announcement on December 16^th and they both showed signs of life from the long side on Friday.

Draghi’s Friday talk of a “no limit” ECB balance sheet must have Weidmann and responsible members of the ECB at their wits end. It’s the nature of monetary inflations that there’s always a need for more. Throughout history, it’s been ‘just one more round of ‘printing’’ or ‘just one more year and then we’ll rein things in’. But things spiral out of control – and there’s a lot of currency with a lot more zeros. It can end in hyperinflation, at least when monetary inflation is afflicting the real economy. Today’s strange variety is inflating securities market Bubbles. It will end with Bubbles bursting and confidence collapsing. Integral to the bursting Bubble thesis is that policymakers are losing control. Granted, such analysis has about zero credibility when markets are in melt-up mode. But perhaps the markets’ response to Draghi is a forewarning.

"In the year ahead, geopolitics likely poses the greatest potential to disrupt markets in terms of event risk. There is also the potential for geopolitical risks to intersect with economic fragility in the event of a downturn, amplifying both."

Saudi Arabia is at risk of becoming a major destabilizing influence in the Arab world, German intelligence has warned. Internal power struggles and the desire to emerge as the leading Arab power threaten to make the key Western ally a source of instability, according to the BND intelligence service. “The current cautious diplomatic stance of senior members of the Saudi royal family will be replaced by an impulsive intervention policy,” a BND memo widely distributed to the German press reads.

Magic ‘Super Mario’, the ECB’s monetary magician, disappointed markets yesterday as continuing and unprecedented monetary easing failed to prevent a sharp sell-off in stock and bond markets yesterday which has continued today.