Ainslie Bullion - Daily news, Weekly Radio and Discussions

Discussion in 'General Precious Metals Discussion' started by AinslieBullion, Jun 12, 2014.

  1. AinslieBullion

    AinslieBullion Member

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    BREXIT Tonight's The Night!

    The polls have it neck and neck, though overnight many have Brexit just ahead of Bremain. The bookies are a different story where the stay camp is comfortably in front. This split dynamic is itself perhaps an insight into the bigger picture. Bookie's odds are set by the quantum of bets placed it's the dollar equivalent of a poll. The more money placed on an outcome the more that shortens the odds. Those with the most to lose from the UK leaving the Euro are those with the most money the so called 1%'ers. One of the biggest bookies, Ladbrokes, has revealed they are seeing a larger number of bets for a leave, but the remains are larger (6x !) dollar amounts placed over fewer bets. Indeed after the shooting of MP Jo Cox they took a $50,000 bet that moved the odds immediately before a wave of similar sentiment both in betting and financial markets ensued.

    We write often of the enriching of the rich at the expense of the middle class and poor, courtesy of the unprecedented monetary stimulus unleashed by the world's central banks. Until recently that stimulus has done nothing more than inflate financial markets that most people have only a modest-to-nil exposure to.

    The graph below is instructive on a couple of fronts. First it shows that things are getting a little desperate from the ECB (the Euro's central bank) as they ramp up monetary stimulus through quantitative easing (money printing) as markets are falling regardless. The ECB's balance sheet (indicating the amount of debt instruments (bonds etc) it has bought with printed money) is now higher than the 2012 Euro crisis. The 1%'ers need this stimulus to re-inflate their share portfolio. The masses are dealing with negative interest rates (i.e. savings return nil and may soon cost to keep in the bank), bureaucracy, and a general feeling of loss of control.

    This is not just a UK phenomenon either. Reuters just reported that the French voted just 38% in favour of the EU project and the polls indicate the NFP leader (who has promised taking France to an EU referendum) will lead the 2017 elections. Next week Spain votes and it is looking like the current ruling party will be ousted by the socialist coalition including an anti EU agenda.

    [​IMG]

    So whilst the Remain camp are touting financial Armageddon for the UK should she leave, the much bigger question remains of how long the EU project can stick together regardless. Many believe a project of this scale that whilst sharing a common currency, will never work with different cultures, debt burdens, and 'skin in the game'.

    No doubt gold might take a bit of a hit should the remain camp win, but the jump that will almost certainly happen on a leave win, is most likely just a bring forward of what still is looking more and more certain.
     
  2. AinslieBullion

    AinslieBullion Member

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    Beyond Brexit The Golden Cross

    "Sell the rumour, buy the fact". It's an oft quoted investment paradigm. Since the expectations or "rumour" of the Remain camp winning today upon the unfortunate shooting of the UK MP, we have seen a continual sell down of gold and to a lesser extent silver on that expectation. Whilst some expect gold to take a hit on such a win, others think it may have been oversold already in this 'rumour' front-running sell off and we may actually see a jump on the 'fact' even if that fact is Remain. No one knows.

    Amid these short term market influences it is often instructive to take a step back and look at the trend and the broader reasons for your investment. From a trend perspective the 10 year chart below shows we are still clearly in what many think is bull market territory. In February 2009 we saw what analysts call the 'golden cross' where the 50 day moving average crosses up through the 200 day moving average. That preceded the last bull run up to the 'death cross' in March 2013, which preceded the bear market since. In March this year we saw a 'golden cross' again which many think has set the scene for the next bull market. Despite the Brexit ups and downs that is still in tact.

    [​IMG]

    Beyond the technicals there remain the core reasons for owning gold and silver that we write about daily. As we suggested in today's Weekly Wrap podcast, if anything the panic over Brexit just highlights the underlying fragility of our global financial system and the need for gold and silver in your portfolio.
     
  3. SilverDJ

    SilverDJ Well-Known Member

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    They might start seeing an upward trend in unfortunate boating accidents...
    Under current SMSF rules you are allowed to store your own metal uninsured (you just have to note it), even keep it on your boat if you want to...
     
  4. AinslieBullion

    AinslieBullion Member

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    Gold Jumps Most Since GFC on Brexit

    On the news of the Brexit gold was the best performing asset in the world, jumping 7.9% in USD spot terms and surpassing the other safe havens of US Treasuries and the yen. It was the biggest jump since the GFC. The news was even stronger in Australia with it surging nearly 12% before settling down a bit on a rebound of the AUD.

    We reported last Monday that futures contracts held by managed money (hedge funds etc) hit an all time high for gold and held near all time highs in silver. Saturday morning's COT report showed that just 2 days before the Brexit, that record was surpassed again, seeing these big investment speculators reap big profits on their gold bets.

    But reading any one of the myriad of articles over the weekend and you can't but conclude that there are more gains to come as the risk of financial and political contagion looms large. Indeed the normally gold-conservative Bloomberg held a poll of analysts and traders from New York to London on Friday and the median forecast for gold was another 7.7% gain to $1,424. Note this is assuming no financial or political catastrophic event takes place, something that can't necessarily be assumed with any confidence for some time.

    It's worth pointing out again that this is a USD spot price prediction. With the Aussie sitting at 74.3c at the time of writing and numerous analysts over the weekend talking of Australian trade being the loser in this vote, one would have trouble establishing a view that would see the AUD hold at this level. Indeed if it doesn't drop organically you could well expect the RBA to make sure of it at their next meeting. At the 60c and 50c many analysts are predicting that translates to $2,373 and $2,848 gold in Aussie dollars.

    To put the gold gains into context, here is what sharemarkets did on Friday: US down 3.4%, our ASX down 3.2%, Nikkei down 7.9%, U.K. initially down 8% before closing down 3.2%, Germany down 6.8%, Spain sank 12.4%(ytd down 18.4%!), Italy as bad at 11.8%, France down 8.0% (ytd down 11.4%), Netherlands down 5.7%, 6.4% in Belgium%, 7.0% in Portugal, 13.4% in Greece and 7.0% in Austria.

    And as a final reminder, gold went UP 7.9%.... However

    Gold hit $1900 in 2011 and has been in a bear market to the end of 2015. As we reported Friday morning (before the result) 2016 is seeing the beginning of what looks like the next bull market. Whilst $1327 (as this is written) is a nice jump on the start of the year, up 25% ytd, it still looks like this is just the beginning when you look at the charts. Likewise silver hit $48 in 2011, is now $17.80 after similar gains to gold on Friday, and is up 29% for the year. Brexit just gave them a boost.
     
  5. AinslieBullion

    AinslieBullion Member

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    Euro Contagion After Brexit

    There are many reasons gold and silver jumped as they did on Friday but none more than the fear of contagion in an already weak EU. We touched on this a couple of weeks ago. Euro stocks, particularly banks, continued their rout last night and the pound fell even further whilst gold rose again. The graph below from Bloomberg shows clearly the mood is not great within the Euro project and two of the biggest, Italy and France, are close to the same result with over 50% wanting a referendum to exit.

    [​IMG]

    Unlike the UK, both of these majors have the Euro as their currency. Should either choose to 'Itexit' or 'Frexit' the ramifications would be enormous. From Doug Noland:

    "Recalling the tumultuous 2011/12 period, Italy is again becoming a market concern. Ominously, Italian bank stocks sank 22.1% Friday, a crash that pushed 2016 declines to 52%. Friday trading saw the Italian stock market (MIB) sink 14.5%, increasing y-t-d declines to 34%. And with Italian 10-year bond yields up seven bps to a four-month high 1.62%, the spread to bund yields surged 14 bps this week to a two-year high 167 bps."

    Doug's latter point raises a key concern. Apart from gold and silver, bonds are the world's other 'safe haven'. With the literally trillions of Euros in bonds currently yielding negative returns on a 10 year horizon, they'd want to be pretty safe. So what do you think happens to faith in these bonds should the Euro experiment fail either on another exit and currency crash or a systemically large bank going down just on the Brexit fallout? Where does the flight to safety go then? From Hebba Investments:

    "In that world, both the US Dollar and gold would skyrocket as trillions of Euro holders try desperately to exchange their holdings for safer currencies. We wouldn't be talking about $1350 or $1500 gold - we are talking gold well over $2000 in that scenario and it would happen fairly quickly."

    As we've said a number of times recently, this is not just about Europe. The global financial set up is fragile on so many fronts. Ex US Fed chair Alan Greenspan summed it up:

    "This [Brexit] is just the tip of the iceberg,.The global economy is in real serious trouble."
     
  6. Holdfast

    Holdfast Well-Known Member Silver Stacker

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    Europe is the pre-match...The USA is the Main-Event !
     
  7. AinslieBullion

    AinslieBullion Member

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    Euro Banks The Next Lehman?

    Yesterday we spoke of the contagion effect on bonds post Brexit. The other financial sector at real risk are the big banks exposed to currency fluctuations, capital plunges, sovereign debt default and systemic risk.

    A picture paints a thousand words and the chart below (courtesy of ZeroHedge) shows Euro banks saw the biggest plunge in just the first 2 days post Brexit ever, eclipsing the crises of LTCM, the GFC and 2012 Euro crisis. Euro bank shares plunged over 23% in just 2 days.

    [​IMG]

    And again it is the Italians most in the spot light, to the extent that on Monday their government revealed they are preparing to launch a Eur40 billion rescue package. This of course is in direct contravention of the EU rules outlawing government bail-outs in favour of shareholder and depositor bail-ins so there are tense discussions with the EU over its implementation.

    Italian bank shares have more than halved this year, wiping enormous amounts off their capital base in the process. They also have a horrific 18% of non performing (bad) loans on the balance sheet, the result of Italy's well publicised economic issues of low growth and high unemployment since the GFC. The bailout proposal comes after late last year where thousands of depositors lost their savings when 4 regional banks went under, something the government doesn't want to see again and on a much larger scale. Of course the Eur40 billion bailout would be courtesy of even more government debt (via bonds) when their debt to GDP ratio is already over 135%.

    But this is not just an Italian problem and it's not just because of Brexit. It is a much deeper and more dangerous problem. Over the past year, shares of Germany's biggest bank, Deutsche Bank, have plunged 56%. Swiss and global banking giant Credit Suisse is down an incredible 62% over the same period. The Euro STOXX Banks, encompassing 48 of Europe's largest banks, is down 48% over the past year and earnings of some of the biggest have halved, it's not just 'sentiment'. This is way bigger than Brexit, but Brexit could be the trigger for that next Lehman moment.
     
  8. AinslieBullion

    AinslieBullion Member

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    FY16 A Tale of 2 Halves

    Today marks the end of the financial year for most here in Australia. In review it was a year of two halves.

    In the first half we had the lead up to the US Fed's much anticipated rate rise, the first in 9 years, delivered on 16 December, and the lead up of which put pressure on gold and silver prices. Prior to that we had the turmoil in China's sharemarket which dropped 30% over just 3 weeks in July. That hit the world stage when they shocked global markets with an historic devaluation of the Yuan and we saw "Black Monday" on 24 August when Chinese shares dropped a further 8.5%. This precipitated big losses around global sharemarkets.

    The ASX200 finished the first half 2.6% down, Gold 5.1% down and Silver 7.3% down. This was a market confused between global market turmoil but the US Fed saying everything is awesome and we are going to raise rates. The former weighed down Aussie shares and the latter weighed down gold and silver. Not many winners.

    The second half is a very different story. The theme of the second half (first half of calendar year 2016) was clearly that everything is not as awesome as the US Fed wanted us to believe, that even that little 0.25% rate rise in December was weighing on markets, and maybe these guys have lost control. China shocked with another big devaluation in January and down came sharemarkets again. We saw massive inflows into 'investment' gold and silver and corresponding price rises. This half also included Brexit which may or may not be the thing that causes the central-bank-stimulus-inflated-strung-out-markets to collapse, but certainly illustrated to everyone this is a fragile global economic setup.

    The ASX200 finished down a further 3.3% (down 5.9% for FY16), Gold surged 21.5% (up 15.3% for FY16), and likewise Silver up 29.3% (up 19.9% for FY16).

    So shares have been a marvellous tax minimisation strategy (if you sell today) but FY16 may well go down in history as the year the broader investment public started to see that we could well be in the terminal stages of the biggest credit cycle in history and started to prepare themselves accordingly by buying gold and silver.

    (For new readers have a look at these 2 recent posts (here & here) regarding this credit cycle and gold).
     
  9. AinslieBullion

    AinslieBullion Member

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    Safe as A Bank? Introducing GSIBs

    A couple of weeks ago we reminded you of Deutsche Bank's eye watering $55 trillion derivatives exposure. Somewhat ironically that article reported on them warning of a "broken financial system" evidenced (or caused) by, at that time, negative yielding government debt exceeding $10 trillion. Today's Weekly Wrap Podcast reports that barely a month after exceeding $10t, negative yielding government debt (post Brexit) now exceeds $11.7 trillion! As the graph below illustrates, the speed this has unravelled and scale are incredible.

    [​IMG]

    Yesterday the IMF announced that very same Deutsche Bank poses the greatest systemic risk to the global financial system in their Globally Systemic Important Banks (GSIBs) report. This announcement came in the same week that Deutsche Bank failed the US Fed's annual stress test for the 2nd year in a row and S&P downgraded EU's credit rating to AA-. When we say 'systemic risk' we remind you often in these daily news articles of the interlinked nature of the global financial system now (that includes Australia with over $1 trillion in foreign debt). From the IMF:

    "Both Deutsche Bank and Commerzbank are the source of outward spillovers to most other publicly-listed banks and insurers. Given the likelihood of distress spillovers between banks and life insurers, close monitoring and continued systemic risk analysis by authorities is warranted." Or:

    [​IMG]

    And to highlight that this is not just a Deutsche Bank problem but far reaching, some other 'big names' aren't far behind:

    [​IMG]

    Last night the EC announced a EUR150 billion bank bailout program for Italian banks to try and prevent a run on deposits. GSIB may be an acronym you might hear a little more about going forward
     
  10. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    I also understand that the top four American banks hold high equity in the Australian banks.
     
  11. AinslieBullion

    AinslieBullion Member

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    Silver up 40% This Year Just The Beginning?

    Silver had another strong day on Friday, up another 5.3%. That takes silver up 40% for the year and the gold silver ratio down to 68 from its highs of 84 only a few months ago. So the big question is. is it time to take profits or just the beginning? For the record, no one, including us, knows. But let's look at some facts.

    The last big market high was in April 2011 when it hit USD48.70 or AUD44.50. As you can tell from this pairing, our AUD was worth MORE than the USD. The chart below shows the bear run silver investors have endured up to the end of last year. That was a lot more difficult for US investors than Aussies, as our dollar slid down to 60's and now 70's buffering out a lot of those falls.

    As you can see from the chart below we are in a clear upswing now and whilst those who bought at the beginning of this year are seeing 40% gains, older investors know that we are still seeing relatively cheap prices. A 40% gain is 'easy' when coming off such a low base.

    If you had sold or stopped buying in late 2008 after a similar 40% gain to that just experienced, you would have missed out on another 280% gain.

    The other key thing to note is that from that low in late 2008 the gold silver ratio went from mid 70's as we've just seen down to just 32 at the peak of the silver price in April 2011. If you were to apply the same move in the gold silver ratio to today's $26.45 silver & $1797 gold price you would see $57 silver with no change in the gold price from here. That alone is another 116% gain and remember gold is currently on the rise too, not stagnant.

    [​IMG]

    So we currently have 3 dynamics at play. We have a technical setup indicating more gains for gold (and silver) to come, we have a gold silver ratio still 116% over it previous lows and tracking lower (lower means higher silver price), and we have an Aussie dollar still up around 74c with many economists predicting 60's and even 50's. We are also still less than half the previous high.

    Now we all know the road in any bull market can be a rough one (that's why it's called bull not train), but history indicates there is still plenty of potential from here
     
  12. AinslieBullion

    AinslieBullion Member

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    Record Inflow to Gold ETFs in Perspective

    Two items of investment data came out in the last week that paint a picture of investors starting to get what's coming. Firstly we saw the Global Hedge Fund Index lose 1.1% up to 29 June this year. That makes the first half of 2016 the worst year for so called 'smart money' since the first half of 2011 when they lost 2.1%. We reported yesterday on what happened to silver (and gold followed) in that first half of 2011. History repeating?

    Yesterday Bloomberg reported that Gold ETF's (share traded gold) saw more than 500 tonne added since the price bottomed at the beginning of the year. On Friday, as everyone was transfixed on silver's meteoric rise, the gold ETF's saw the biggest single day inflow ever, with a whopping $263m.

    SRSRocco estimate that 500t as closer to 550t and in the chart below add the 68t of gold added to COMEX inventories to show a total global gold ETF and fund net inflow of 622 tonne. As you can see that has only been surpassed by the full year inflows of GFC 2009.


    [​IMG]


    To put that 622 tonne (20m oz) into perspective:

    622 tonne represents 41% of total global gold production over that period;
    After that surge we have total gold ETF's & Funds worth around $108 billion and the same for silver worth around $16 billion, totalling $124 billion of 'paper' and mostly leveraged gold and silver. On the Friday after Brexit the world's 400 richest people lost $127 billion. i.e. that could have bought ALL the 'paper' gold and silver in the world.
    This latter point is critical as it reinforces what we try to get across in terms of the size of financial markets and the size of the gold and silver market. When even a fraction of that market tries to get into gold and silver it can be very quickly and completely be overwhelmed. Those with physical gold and silver (not 'paper') will be the big winners. When more and more mainstream investors see charts like the one below from Bloomberg's, the momentum we have seen thus far in 2016 can increase exponentially.

    [​IMG]
     
  13. AinslieBullion

    AinslieBullion Member

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    Flight to Safe Havens

    As a follow on from yesterday's article about the size of the 'paper' gold and silver markets we expand the discussion to the total gold and silver market as a reminder of the sheer scale of the difference. We've reported before that gold accounts for about 0.58% of global financial assets. What we haven't seen before is the amount silver equates to. Sharelynx.com have recently produced the two charts below which show that currently silver only accounts for 0.013% of global financial assets.

    The last estimate of the total of global financial assets was around $295 trillion. That includes shares, bonds, etc. We discuss this in our new Why Buy Bullion download. If you haven't already, it's worth a look (even for old timers).



    [​IMG]
    [​IMG]

    As we've seen in 2016 to a comparatively very small degree, when financial markets get spooked they go to safe havens like gold and silver. Whilst gold and silver are up 25% and 41% at the time of writing for the year, they are small gains to what has historically happened before when there is a flight to safety.

    The other safe havens of bonds and the US dollar have their own challenges at present. Firstly, over a third of global government debt (bonds) is now yielding negative returns. Apart from the nonsensical prospect of paying for the privilege of holding government debt, with the fragile nature of the global economy (principally because of that same debt burden) maybe bonds aren't as safe as they seem. That leaves the USD. There is already plenty of expectation that the US Fed will unleash QE4 and even talk of negative rates (NIRP) for the US in one final fling to try and save the system. Any such move would see the USD plummet, so again, not a great prospect. That leaves gold and silver, and probably why they have performed this role time and time again over thousands of years.

    So, again, ask yourself what happens to the price and availability when that $295 trillion tries to get into the 0.58% and 0.013% spaces. To paint a clearer picture for the gold case with the 'flight' analogy an Airbus A380 with 850 passengers catches fire. Everyone tries to get on the adjacent 5 seater Cessna. What will tickets cost? With silver there is only one seat in the Cessna.
     
  14. AinslieBullion

    AinslieBullion Member

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    "Brexit II"

    The front page of today's AFR carries the headline "Brexit II pushes Aussie bonds to record low". We spoke just yesterday about the ever declining yields on government bonds, with over $11.7 trillion now in the negative globally. The AFR article reports on Aussie bonds hitting an all time record low yesterday of just 1.84% for a 10 year bond. Such is the fear in markets that people are either happy to earn 1.84% for 10 years on a piece of paper debt OR they expect it to get worse and see gains in the bond price as more pile in to bonds. The other safe haven, gold surged to a high not seen since 2011 (and don't get us started on silver). And for those who are fixated on gold coming off in a rush to USD's check this out over the Brexit scare period

    [​IMG]

    So what has spurred on this Brexit II move in markets? Well for a start we had a move by large British commercial property funds to freeze $15.5 billion worth of assets after investors were rushing to withdraw their funds. Bank of England's chief Mark Carney gave a stark warning of a "material slowing" of the UK economy and the Pound hit another post Brexit and 31 year low. But the bigger news is a deterioration of the Euro banking situation. There is growing tension over the Italian government's proposed bank rescue package with strong resistance from Germany as it essentially breaks the EU's (and G20) rules around no bail outs (government bailing out the bank), only bail in's (shareholders and depositors bailing out their bank).

    From AP:

    "The country's third-largest lender, Banca Monte dei Paschi di Siena, has been ordered to sharply reduce its load of bad loans, and has until October to come up with a plan to do that. The bank has already tapped investors several times for more money. Its shares have plunged to 0.28 euro cents year from 1.28 euros at the start of the year."

    In response to the kickback from Germany on the proposed bail out the Italian Prime Minister quite bluntly reminded them of the scale of Deutsche Banks issues (as we reported here):

    "If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred. This is the ratio: one to one hundred,"

    He is referring to the $400 billion in bad loans that can't be repaid in Italian Banks compared to Deutsche Bank's 100 fold derivative exposure And just a reminder on how Deutsche Bank is going:

    [​IMG]
     
  15. AinslieBullion

    AinslieBullion Member

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    Gundlach "Shaky and Feeling Dangerous"

    Another Wall Street legend, Jeff Gundlach, head of the $100 billion DoubleLine fund and who Barron's famously called the "King of Bonds", is voicing warnings of what's to come and advising gold as the place to be. Gundlach joins the chorus of billionaires we've reported recently of (click to read) Druckenmiller, Soros, Icahn, Singer and Gross recommending gold.

    On bonds (US Treasuries) and as we reported Wednesday:

    "You're seeing people who hated the '2 percent' 10-year suddenly loving it at a 1.38-1.39 percent revisit of the all-time low closing yield..If you buy 10-year Treasuries now, I would say, it is a terrible trade location. In fact, it is the worst trade location in the history of the 10-year Treasury."

    So to be clear, the Bond King wouldn't touch bonds with a long pole at the moment.

    On the Euro banking crisis:

    "Banks are dying and policymakers don't know what to do.. Watch Deutsche Bank shares go to single digits and people will start to panic... you'll see someone say, 'Someone is going to have to do something'."

    That something would be the ECB increasing their already aggressive/desperate Eur1.2 trillion QE (money printing to buy bonds) program and possibly even more negative rates. Not surprising then, on gold:

    "gold remains the best investment amid fears of instability in the European Union and prolonged global stagnation, as well as concerns over the effectiveness of central bank policies. Things are shaky and feeling dangerous. I am not selling gold."

    Indeed Gundlach is on record predicting US$1400 this year.
     
  16. AinslieBullion

    AinslieBullion Member

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    Gold & Silver Defy 'Awesome' NFP

    What a turbulent old night on Friday night. After the worst US NFP jobs report in 6 years last month, the June report exceeded all expectations with a print of 287,000 new jobs. To make May all the more remarkable, that already awful 38,000 was revised down to just 11,000 new jobs in a population of 320m... Such a strong June number should have everyone rejoicing that everything is awesome again. However the cautious/sceptical theme of 2016 continues so whilst, indeed, shares rallied with the S&P500 nearing all time highs, we saw the financial anomaly of gold and bonds rallying in the same session. After gold was rather suspiciously smacked down BEFORE the data was released it rallied straight back. Likewise bonds hit all time low yields (high bond price). Check out the price action of gold on the night (and silver was the same). Note the simply enormous amount offloaded instantly (you know, as you do when you want to maximise profit not.)

    [​IMG]

    The reaction on the night could be for a couple of reasons. Firstly the NFP (non farm payrolls) number always comes out with the Establishment and Household Surveys. Normally the two are fairly consistent. This month however we saw a much much weaker Household survey with only 37,000 new jobs added and the number of unemployed jumping 347,000 to 7.78 million. Behind the headline number in the Establishment survey showed weakness too with a very large proportion in the minimum wage category and hence only 0.1% increase in average hourly earnings. Maybe headline readers buy shares and critical thinkers buy gold and bonds?

    Secondly, the very suspicious (orchestrated?) price smash down before the data release presented a great buying opportunity for those seeing it for what it was, and in they jumped. For those who follow the commercial bank manipulation theory, the response was yet another of recent trends showing they may well have lost control and there may now be no stopping gold and silver on their ascent.
     
  17. AinslieBullion

    AinslieBullion Member

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    Wall St Piles Into Gold

    It only seems like yesterday that Wall Street considered gold a "pet rock", unnecessary in a world of easy-money-fuelled financial asset growth.

    Coincidence or not, but since the December US rate rise (as discussed in that Pet Rock story) gold has seen 25% price growth (30% in USD spot terms) as the world started seeing the inevitable wobbles one experiences under the weight of all the debt that easy money expansion entailed. Throw in a Brexit and some worrisome Euro banks and it can shrug off even the 'best' of news out of the US as we saw Friday night.

    But the real irony of gold's price surge is that a lot of it is being driven by the Wall St type vehicles of ETF's (Exchange Traded Funds) and COMEX Futures. As you can see below, the first graph shows aggregated ETF gold holdings exceeding 2,000 tonne for the first time in 3 years. That is a figure greater than China's reported gold reserves.

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    This second graph shows that, yet again, last week saw a new all-time record high for long positions by the Managed Money category in COMEX futures.

    [​IMG]

    There is also a growing chorus of major banks and institutions calling the bull market as in for gold. UBS have called this as the early stages of the next bull run, predicting US$1,400 in the short term and ABN Amro likewise are calling $US1,425 this quarter.

    Of course whilst Wall St is comfortable with all these paper claims to gold, we mere mortals can buy the real thing, physical gold with no counterparty risk, and store it for less than the annual ETF charges
     
  18. AinslieBullion

    AinslieBullion Member

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    Ying and Yen

    Just when you thought it couldn't get any crazier in Japan, the world's most indebted country, courtesy of years of one of the world's most aggressive monetary stimulus policies, is doubling down.

    After a landslide victory in last week's elections Abe signalled more monetary stimulus is on its way as the Yen has been surging since Brexit, and that doesn't suit any central bank now does it. On the announcement the Yen about faced and plunged by the biggest 2 day fall since late 2014 when he previously flagged much bigger stimulus to come (and delivered!). Predictably sharemarkets around the world rallied on the news the free money game is back with a vengeance. Global shares are now back to above pre Brexit highs. All rejoice.

    There is endless speculation now that given the bond and equities purchasing program hasn't 'fixed' anything in Japan, and has been so rampant that there really aren't any more bonds to buy, that the only option left is 'helicopter money' whereby the freshly printed money is injected directly to the people. Such is the desperation for inflation. Coincidence or not, but the original proponent of that concept, ex US Fed chair Ben Bernanke (aka "Helicopter Ben") was very recently in Japan as a guest of Abe. Joining the dots.

    Not surprisingly then there are reports of rampant physical gold purchases by the Japanese as they swap high Yen for gold before the Yen (and maybe their whole economy) drops further. Sound like the set up somewhere else Australia?...

    Amongst all this 'risk on' bullishness, gold and silver came off a bit last night, but in the scheme of things only slightly. Given how strongly they have run this year they could have been more susceptible to a bigger pull back on such a risk-on rally. However the very basis of the sharemarket rally is ultimately very bullish for gold and silver as, yet again, it is based on central bank stimulus not fundamentals. Japan, like most other developed countries is fighting a currency war where no one wins as they (we) all keep fighting to the bottom. Our Aussie dollar jumped to over 76.5 overnight and has settled down to a still high 76.2. There is no way the RBA are going to sit tight and let it stay there. We are as just a part of the currency war as Japan. One currency will stand tall in the end and that is gold and silver. That has been the theme to 2016 and the Japan news just confirms it further. Gold is the Ying to the currency war's Yang.
     
  19. SilverDJ

    SilverDJ Well-Known Member

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    They do, but it's hard to know exactly how much, as I believe the exact details are hidden behind various corporations and trusts etc.
     
  20. AinslieBullion

    AinslieBullion Member

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    The Deutsche Domino

    We've written a number of times about Deutsche Bank, most recently here when the IMF announced it poses the greatest systemic risk to the global financial system. Why are we harping on about it? The world's financial system was brought down in the GFC by the failure of Lehmans Bank precipitating a debt based domino type collapse. That collapse was halted before fully playing out through the monetary stimulus intervention of central banks around the world. Today we find ourselves in a system with over 40% more debt than before the GFC, more overvalued financial assets (bubbles) everywhere, and clear signs of distress in the system. Gold, silver and bonds are surging just on these initial signs alone. But this time there is little ammunition left to the central banks to catch it. Some prominent economists and analysts are saying the next crash will make the GFC look like a hiccup. So take good note of the following pictorial and keep a close eye on what could well be the next Lehmans tipping of the dominos

    [​IMG]
     

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