The Fed Gets Spooked By the Monster It Created

The Federal Reserve released the minutes from its most recent FOMC meeting on Wednesday and it appears the monster they created has finally spooked the central bankers.
The Fed was pretty optimistic about the prospects for continued economic growth, but expressed concern that financial markets might be getting out of hand.
In light of elevated asset valuations and low financial market volatility, several participants expressed concerns about a potential buildup of financial imbalances,’ the minutes said. ‘They worried that a sharp reversal in asset prices could have damaging effects on the economy.’
The central bankers at the Fed aren’t the only ones worried about the ballooning stock market bubble, although they don’t call it that. Last week, a Bank of America analyst called overvalued equities combined with simultaneously falling cash positions ‘an indicator of irrational exuberance.’

This post was published at Schiffgold on NOVEMBER 24, 2017.


Market Report: Firm undertone

Gold and silver prices on balance drifted with an upwards bias over the week, with a firm undertone. Interest was impacted by the US Thanksgiving Holiday. Given the near-certainty of a rise in the fed funds rate next month, plus the upcoming expiry of active contracts on Comex, this is something of a result. Monday saw a $2bn notional sale of gold futures (15,000 contracts, or 47 tonnes of gold), deliberately timed, it seems, to drive the price lower, which it did by $17. Gold on the week is down only $3, having recovered from Monday’s hit, to trade at $1290 in early European trade this morning, and silver is down 18 cents at $17.10. However, there could be significant volatility in the next few trading sessions, because the last trade date for November gold and silver futures is next Tuesday – 28th November. As of last night, there were 165,772 November gold contracts outstanding, either to be rolled into February, or closed. The slightest excuse for the shorts to bang the gold price will undoubtedly be taken. In silver, there’s 59,236 contracts to roll, so the situation there is equally fragile.

This post was published at GoldMoney on November 24, 2017.


Buy Gold As Fed Shows Uncertainty And Concern Over Financial ‘Imbalances’

– FOMC minutes show uncertainty and concern about markets are affecting officials’ decision-making
– Officials were cautious when evaluating market conditions and the ‘damaging effects on the economy’
– Worry about ‘potential buildup of financial imbalances’ and a sharp reversal in asset prices’
– Members seem oblivious to impact of inflation on households and savings
– Physical gold and silver remain the only assets for real diversification and safety
***
After nearly a decade of pumping up the US and global markets, Janet Yellen and team are now starting to show some concern for financial market prices. The FOMC is concerned that they are getting out of hand and are a danger to the US economy.

This post was published at Gold Core on November 24, 2017.


Rate hikes and what it means for gold

For the first time since the onset of the credit crisis, we believe the market is beginning to price in a higher probability that the Fed is finally in the position to raise rates both continually and more frequently. The prevailing view is that central bank rate hikes are the natural enemy for gold prices. Analyzing rate cycles and the gold price from 1971, we find that gold tends to do better in hiking-cycles than cutting-cycles. We find that the positive performance during hiking-cycles can be explained with the three drivers identified in our gold price framework. Given the outlook for these three drivers, gold will likely do well over the coming quarters even as the Fed keeps raising rates.
View the Entire Research Piece as a PDF here.
In recent years, the Fed has persistently indicated that it was going to hike rates several times per year over the next few years until rates are ‘normalized’. So far, the Fed has fallen short on delivery, having hiked only once in 2015, once in 2016 and so far twice in 2017. While that doesn’t sound like a lot, compared to its peers, the Fed is a hawk.

This post was published at GoldMoney on November 21, 2017.


NOV 22/GOLD RISES $10.40 TO $1292.40 AND SILVER RISES 13 CENTS/SILVER SEES COMEX SILVER OI RISE BY 1919 CONTRACTS AND ON TOP OF THAT ANOTHER 1231 EXCHANGE FOR PHYSICAL CONTRACTS MOVE FOR A LONDON…

GOLD: $1292.40 UP $10.40
Silver: $17.13 UP 13 cents
Closing access prices:
Gold $1292.60
silver: $17.15
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1290.11 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1279.65
PREMIUM FIRST FIX: $10.46
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1291.12
NY GOLD PRICE AT THE EXACT SAME TIME: $1282.65
Premium of Shanghai 2nd fix/NY:$8.47
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1283.95
NY PRICING AT THE EXACT SAME TIME: $1282.85
LONDON SECOND GOLD FIX 10 AM: $1286.95
NY PRICING AT THE EXACT SAME TIME. 1288.00
For comex gold:
NOVEMBER/
NUMBER OF NOTICES FILED TODAY FOR NOVEMBER CONTRACT: 0 NOTICE(S) FOR NIL OZ.
TOTAL NOTICES SO FAR: 1053 FOR 105,300 OZ (3.375 TONNES)
For silver:
NOVEMBER
1 NOTICE(S) FILED TODAY FOR
5000 OZ/
Total number of notices filed so far this month: 885 for 4,425,000 oz
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Bitcoin: BID $8260 OFFER /$8287 up $173.00 (MORNING)
BITCOIN : BID $8175 OFFER: $8199 // UP $81 (CLOSING)

This post was published at Harvey Organ Blog on November 22, 2017.


Stocks and Precious Metals Charts – Thankfulness

“At times our own light goes out and is rekindled by a spark from another person.
Each of us has cause to think with deep gratitude of those who have relighted the flame within us.”
Albert Schweitzer
The Fed minutes noted that inflation remains persistently subdued.
No surprise there, since top down stimulus to my knowledge has never worked, and is certainly not doing anything now except distorting the economy with asset bubbles and straining the social fabric.
So let’s pass a massive tax cut that favors, to a remarkable degree, the already wealthy.
Peak hubris.
Today was a very productive day, despite the cold and wind interspersed with fluffy clouds and sun. It was almost a type of what life is like, with the good mixed with the not so good.

This post was published at Jesses Crossroads Cafe on 22 NOVEMBER 2017.


Tactics For The Gold Bull Era

Gold surged higher on Friday. Then it gave all the gains back yesterday. Looking beyond this short term noise, gold is not an exciting market right now. What could make that change? Please click here now. Double-click to enlarge. Gold is trading in a rough sideways trend with an upside bias. This bias continues to strengthen, albeit very slowly. The technical action reflects the fundamentals and liquidity flows and clearly, patience. On that note, please click here now. I jokingly refer to the SPDR fund as ‘Spider Man’. Chindian demand is decent, but Spider Man looks like he’s caught in his own web; while there’s no significant selling, buying has come to a standstill. If Chindian demand is solid, gold doesn’t really need a lot of Western fear trade buying to move higher, but it must have some. That’s just not happening right now. The winds of change may be in the air, with US wage inflation pressures intensifying, an approaching debt ceiling debate, and a new Fed chair who stands ready to significantly reduce bank regulation. Without a bull cycle in money velocity, gold stocks and silver stocks will have a very hard time outperforming bullion on a consistent basis. The good news: these winds of change (especially the small bank deregulation favoured by Fed chair Powell) mean there is a very high probability that US money velocity ends its two decade bear market in 2018.

This post was published at GoldSeek on Tuesday, 21 November 2017.


The US Treasury Market Smells a Rat

The yield spread collapses to lowest since 2007.
Prices of US Treasury securities fell across the spectrum on Monday, and yields rose. From the two-year yield on down, yields set new nine-year highs.
This sell-off – and the accompanying surge in yields – has occurred for months without downdraft in stocks and without a slowdown in economic growth. It’s a dreamy scenario where the Fed’s tightening has no negative impact on the economy. But the Treasury market at the longer end smells a rat.
Not for this year. But for later.
On top of it there comes a big bout of Fed uncertainty. Janet Yellen, who will be replaced next year by Jerome Powell as Fed Chair, announced today that she would also vacate her slot as governor on the Federal Reserve Board – a job she could have hung on to until 2024 – thereby making room for a fifth Trump appointee to the powerful Board of Governors. In early October Trump nominated and the Senate approved Randal Quarles as a member of the Board. Leaves four slots to fill on the Board of seven members. And no one knows what the Fed will look like next year.

This post was published at Wolf Street by Wolf Richter ‘ Nov 20, 2017.



On The West’s Demise To The Sidelines Of History…

The world is changing, but the west is clinging on to a unipolar vision of the world that has passed. It’s attempts to discard this changing reality in exchange for a western worldview expressed in their politics and media are so ungrounded, it’s comical as it is dangerous. This western bubble of reality laid down before the wests general public seems to hold up for now, although fragile and less and less by the day. Really, Russia again? Outside this western bubble however, credibility is lost daily as the west places itself on the sidelines of history.
The fundamental building blocs in western hard power and soft power are not under attack as the mediapolitical landscape could make us feel they are, it is more that they are revealed for what they are without the sugarcoating. As the multipolar world creates the political and economic power to pursuit alternatives and show new perspectives and interpretations, they now have the power to reflect the actions of the west mirrored back upon themselves as apposed to ‘just the way things are’ in the world.
Suddenly we are presented with another version of reality that also begs for a different version of history for the past decades. Our economic system seems to benefit the few as those few have a well managed grip on politics. Local business and craftsmanship, the real economy, have given way to the privileged multinationals and the financial world, the world of tax breaks and tax havens.
Whilst the real economy is breaking down, the central banks were printing money like never before to keep the banks and the familiar names afloat -so long as the Apple’s and Facebook’s and other household names keep the indices up, all is good. At the root of this infinite printing of money lies of course the petrodollar. The 1973 deal with Saudi-Arabia where the US would support the house of Saud so long as OPEC would sell all oil in US dollars only and buy US bonds, creating an immense need for dollars in the world and preventing inflation as the Federal Reserves printing presses make way for the economic, political and military US might since. Since, the whole international trade system has been dollar based. If Bolivia wants to sell logs to Venezuela, it will still use dollars. And by US law, every dollar has to be cleared by the bank of New York, thus making this transaction subject to US law. And don’t you dare circumvent it. Blocking Iran from the dollar-trade for not selling oil in dollars, and thus blocking it from the swift-system, and thus from world trade, was therefore the nuclear bomb in economics. Their currency devalued 50%. The earlier threats to the petrodollar -Libia selling oil for gold, Iraq for euro’s- have been met with heavy resistance. Now, in Syria, it seems the world has changed. The predominantly Saudi-US creation of ISIS to destabilize the nations of Iraq and Syria into chaos has now failed. Could we again see Syria, Iraq and Iran work together to create the Friendship Pipeline (a.k.a. the Islamic Pipeline in the west), exporting oil from Iran to Europe? Or will it be more of the same political-economic-monetary-military export of the west, with freedom, democracy and human rights as it’s sugarcoating?

This post was published at Zero Hedge on Nov 20, 2017.