Hartnett: Every Time Chinese Yields Hit 4%, A Crash Happens

In his latest flow show report, BofA’s Michael Hartnett finds that while inflows into markets in the past week continued, with $3.1bn going into stocks – of which $13.7bn went into ETFs, and $10.6bn was redeemed from active managers, $1.2bn into bond and $0.3bn into gold (unfortunately EPFR doesn’t track inflows into bitcoin yet), although he noticed something peculiar: the ‘yield’ trade appears to be fading, with the smallest IG inflows in 50 weeks ($1.4bn), while the revulsion to junk continued after the 6th consecutive week of HY outflows.
Furthermore, the “growth” trade is reversing: BofA spots a big (7th largest ever) redemption from US equity growth funds, as inflows to tech funds waning; coincides with bout of weakness in tech (e.g. EMQQ -11%, SOX -10% in 10 trading days)

This post was published at Zero Hedge on Dec 8, 2017.


IMF Stress Tests Find $280 Billion Black Hole In Chinese Banks’ Capital

The IMF released a new analysis on the instability stability of the Chinese financial system. Speaking to the media in an online briefing, some of the insights from Ratna Sahay, deputy director of the IMF’s Monetary and Capital Markets Department, hardly advanced our knowledge much.
Sahay noted that ‘Risks are large. Having said that, the authorities are really aware of risks and they are working proactively to contain these risks.’
That’s why the authorities are finally racing to contain the worst excesses of China’s insane credit boom following October’s Party Congress, for example overhauling the $15 trillion shadow banking and asset management sector. As we noted on the latter, the new measures don’t take effect until the end of June 2019, no doubt reflecting the enormity of the problems uncovered by Chinese regulators.
Sahay pointed to three main risks: credit growth, the complex and opaque financial system and implicit guarantees which ‘encourage excessive risk-taking’ (think WMPs).
However, the IMF does a better job in explaining why a massive financial crisis in China is all but inevitable – the conflicting needs of social stability versus financial stability. According to Reuters.
But the near-term prioritisation of social stability seems to depend on credit growth to sustain financing to firms even when they are non-viable, it said. ‘The apparent primary goals of preventing large falls in local jobs and reaching regional growth targets have conflicted with other policy objectives such as financial stability,’ the report said. ‘Regulators should reinforce the primacy of financial stability over development objectives,’ the fund said.

This post was published at Zero Hedge on Dec 7, 2017.


BofA: “In Every Market Shock Since 2013 Central Banks Have Stepped In To Protect Markets”

There is a reason why those calling for a crash, or even a market correction in the past decade, have been carted out feet first: central banks, and noweher was this more obvious than the shocking aftermath of Brexit. The UK’s Brexit vote (Jun-16) marked the point when the buy-the-dip trade became a self-fulfilling put, according to a new analysis by Bank of America.
However the buying did not develop on its own: “From the taper tantrum in 2013 through the Aug-15 China devaluation shock when Yellen decided not to raise rates due to ‘weak equities’ (which were only down just over 10% from life-highs) the Fed consistently (even if only verbally) supported markets during stress.”
At that point the “buy the dip” Pavolovian reflex was so strong, central banks could dit back and watch: sure enough, when in early 2016 Yellen suggested the Fed may need to move more ‘cautiously’ because of the risk of Brexit, once Brexit happened, the market rebounded so quickly (3 days) it did not need to step in. From that point forward, dips have only become shallower as investors compete for ‘dip alpha’.

This post was published at Zero Hedge on Dec 6, 2017.


Gold Market Charts – November

Gold Market Charts – November BullionStar’s monthly ‘Gold Market Charts’ articles examine recent developments in the world’s largest physical gold markets using graphical gold charts created by the GOLD CHARTS R US market chart website. The physical gold markets covered include India, China, Russia and Switzerland and where relevant, the COMEX gold futures vault inventories.
Note additionally that BullionStar’s website also hosts gold and silver price charts under the BullionStar Charts menu, which also allows you to chart currencies, commodities, stock indices and Bitcoin in terms of gold and other precious metals.
SGE Gold Withdrawals Physical gold withdrawals from the vaults of the Shanghai Gold Exchange (SGE) during October 2017 reached 151.54 tonnes. SGE gold withdrawals are a suitable proxy for Chinese wholesale gold demand due to the fact that nearly all gold supply in the Chinese gold market makes its way through the SGE vaulting network to be traded on the SGE’s gold trading platform.

This post was published at Bullion Star on 4 Dec 2017.


Venezuela Announces ‘the Petro’ Currency Backed by Gold, Oil and Diamonds

Apparently, Venezuelan President Madura is following China’s lead but instead of a subtle rollout over time as to not cause some kind of market shake up, he has decided that now is as good a time as any to announce the creation of a new digital currency, the Petro, backed by Venezuela’s gold, oil and diamond reserves.
“Venezuela is creating a digital currency to combat a financial blockade by the United States, President Nicolas Maduro announced Sunday.
The Petro will be backed by Venezuela’s oil and gas reserves and its gold and diamond holdings, the president said in his weekly television program.
‘This is going to allow us to move toward new forms of international financing for the country’s economic and social development,’ the president said.
The government also announced the creation of a ‘blockchain observatory’ – a software platform for buying and selling virtual currency.
Although the president did not offer many details, analysts such as Henkel Garcia see the possibility of success as limited.
‘You can build it, but trust, acceptance and use is what will determine the cryptocurrency’s success. For me, it will be quite limited. The bolivar is also backed by reserves and has no strength,’ Garcia, director of consultancy Econometrica.

This post was published at GoldSeek on Monday, 4 December 2017.


SWOT Analysis: Gold Stock Sentiment Closed At 2-Year High

Strengths
The best performing precious metal for the week was palladium, up 2.43 percent on hedge funds, boosting their net bullish position this past week. Gold surged on Friday as the dollar and equities dropped after former national security advisor Michael Flynn prepared to testify that President Donald Trump directed him to contact Russia, reports Bloomberg. In Bloomberg’s weekly poll, almost half of respondents were neutral on gold’s outlook as of Thursday afternoon. The World Gold Council announced a resurgence of gold demand in China driven by millennials and online sales. China was also the biggest contributor to global gold demand during the past quarter, according to China Daily. The yellow metal is also becoming popular in Germany as gold trading stores are now in every major city. There are over 100 in the nation, up from just a handful ten years ago. The BCA Research continues its recommendation to keep gold exposure limited to 5 percent in portfolios. Early in the week, gold futures briefly climbed above $1,300 an ounce for the first time in six weeks, writes Susanne Barton of Bloomberg. The weakness of the dollar has been a positive driver of gold. Weaknesses
The worst performing precious metal for the week was silver, down 3.71 percent. Silver is now trading the cheapest relative to gold since April 2016. This month, gold traded in its tightest monthly range and narrowest volatility in 12 years despite recent pullback in the yellow metal, which could lead to trading elsewhere with a lack of volatility and into the highly volatile digital currency space. CME Group Inc. and CBOE Global Markets Inc. are poised to offer bitcoin futures contracts, which would make it easier for investors to bet on digital currencies. This could potentially take away interest from gold.

This post was published at GoldSeek on Monday, 4 December 2017.


Doug Noland: China Initiating a Global Bear Market?

Chair Yellen is widely lauded for her accomplishments at the Federal Reserve. For the most part, her four-year term at the helm boils down to four (likely soon to be five) little rate hikes over 24 months. Most lavishing praise upon Janet Yellen believe she calibrated ‘tightenings’ adeptly and successfully. Yet financial conditions have obviously remained much too loose for far too long. This predicament was conspicuous in the markets this week. A test of a North Korean ICBM that could reach the entire U. S. modestly pressured equities for about five minutes – then back to the races.
Bubble Dynamics are in full force. The Dow gained 674 points this week. The Banks were up 5.8%, the Broker/Dealers gained 4.5% and the Transports jumped 5.9%. The Semiconductors were hit 5.6%. Bitcoin traded as high (US spot) as $11,434 and as low as $9,009 in wild Wednesday trading. Curiously, the VIX traded up 15% this week to 11.43.
It used to be that markets would fret the Fed falling ‘behind the curve,’ fearing central bankers would be compelled to employ more aggressive tightening measures. Not these days. Any fear of central bank-imposed tightening is long gone. There is little fear of anything.

This post was published at Wall Street Examiner on December 2, 2017.


Russia, China and BRICS: A New Gold Trading Network

One of the most notable events in Russia’s precious metals market calendar is the annual ‘Russian Bullion Market’ conference. Formerly known as the Russian Bullion Awards, this conference, now in its 10th year, took place this year on Friday 24 November in Moscow. Among the speakers lined up, the most notable inclusion was probably Sergey Shvetsov, First Deputy Chairman of Russia’s central bank, the Bank of Russia.
In his speech, Shvetsov provided an update on an important development involving the Russian central bank in the worldwide gold market, and gave further insight into the continued importance of physical gold to the long term economic and strategic interests of the Russian Federation.
Firstly, in his speech Shvetsov confirmed that the BRICS group of countries are now in discussions to establish their own gold trading system. As a reminder, the 5 BRICS countries comprise the Russian Federation, China, India, South Africa and Brazil.
Four of these nations are among the world’s major gold producers, namely, China, Russia, South Africa and Brazil. Furthermore, two of these nations are the world’s two largest importers and consumers of physical gold, namely, China and Russia. So what these economies have in common is that they all major players in the global physical gold market.

This post was published at Bullion Star on 2 Dec 2017.


NOV 30/ANOTHER RAID BY THE BANKERS ON GOLD AND SILVER TODAY HOPING FOR CAPITULATION/GOLD DOWN $9.15 AND SILVER IS DOWN 15 CENTS/A MASSIVE 20,559 COMEX OI TRANSFERS OVER FOR 20,559 GOLD EFPS IN LO…

GOLD: $1273.95 DOWN $9.15
Silver: $16.43 DOWN 13 cents
Closing access prices:
Gold $1275.30
silver: $16.43
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: $1292.28 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1284.75
PREMIUM FIRST FIX: $7.53
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SECOND SHANGHAI GOLD FIX: $1290.66
NY GOLD PRICE AT THE EXACT SAME TIME: $1284.10
Premium of Shanghai 2nd fix/NY:$6.56
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LONDON FIRST GOLD FIX: 5:30 am est $1282.15
NY PRICING AT THE EXACT SAME TIME: $1281.90
LONDON SECOND GOLD FIX 10 AM: $1280.20
NY PRICING AT THE EXACT SAME TIME. 1280.00
For comex gold:
DECEMBER/
NUMBER OF NOTICES FILED TODAY FOR DECBER CONTRACT: 2309 NOTICE(S) FOR 230,900 OZ.
TOTAL NOTICES SO FAR: 2309 FOR 230,900 OZ (7.181 TONNES)
For silver:
DECEMBER
3994 NOTICE(S) FILED TODAY FOR
19,970,000 OZ/
Total number of notices filed so far this month: 3994 for 19,970,000 oz
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Bitcoin: BID $9808/OFFER $9868, DOWN $5 (morning)
BITCOIN : BID $9854 OFFER: $9914 // UP $39 (CLOSING)

This post was published at Harvey Organ Blog on November 30, 2017.


Own Gold Bullion To ‘Support National Security’ – Russian Central Bank

– We own gold bullion to ‘support national security’ – Russian Central Bank
– Russia warns Washington: Confiscating fx reserves would be ‘declaration of financial war’
– Russia has quadrupled its gold bullion reserves in decade
– BRICs discussing ‘the possibility of establishing a single (system of) gold trade’
– Russia, China & maybe Saudi Arabia form alliances to unseat petrodollar
– Putin warns state-owned and private companies: be ready for rapid transition to war-time operations
– Russia, China gold-buying, Saudi strategic shift signal petrodollar era ending
***
Last week Russia’s Central Bank First Deputy Governor Sergei Shvetsov said Russians own gold bullion and their central bank is adding to its gold reserves in order to ‘beef up national security.’
Yesterday, the Russian Finance Minister Anton Siluanov warned Washington yesterday: ‘If our gold and currency reserves can be arrested, even if such a thought exists, it would be financial terrorism.’
Russia is prepared for the possible toughening of US sanctions. However, if they include the seizure of Russia’s foreign exchange reserves, it would be regarded as a ‘declaration of a financial war,’ the Russian finance minister warned as reported by RT.

This post was published at Gold Core on November 29, 2017.