Market Report: A beautiful bigly squeeze to end the year

Doubtless, that is what this year-end rally would be called in Trumpian lingo, and the ‘bigliest’ of squeezes is in silver, where shorts have been closing more rapidly than longs being opened, leading to a fall of 13,000 contracts as the price rallied. That is very unusual.
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Gold and silver had another good week, correcting the oversold conditions of early December. Gold rallied a further $19 from last Friday’s close, to $1296.5 in early European trade this morning, and silver by 47 cents to $16.86. That leaves gold up 12.4% since January 1, and silver up 5.7%. Silver has lagged gold badly this year, so on that basis appears undervalued relative to gold. However, since the turn on December 11, silver has begun to outperform gold again.

This post was published at GoldMoney on December 29, 2017.


How Much Death and Destrution Awaits Us in 2018?

The New Year is one full of economic, political, and war threats.
Among the economic threats are stock, bond, and real estate markets artificially pumped up by years of central bank money creation and by false reports of full employment. It is an open question whether participants in these markets are aware that underlying reality does not support the asset values. Central banks support stock markets not only with abundant liquidity but also with direct stock purchases. The Japanese central bank is now one of the largest owners of Japanese equities. Central banks, which are supposed to provide economic stability, have created a massive fraud.
Throughout the Western world politics has degenerated into fraud. No government serves the public’s interest. (See: ) Except for some former Soviet satellites in Eastern Europe, European governments have defied the will of the people by admitting vast numbers of refugees from Washington’s wars and others pretending to be refugees. The European governments further imperil their citizens with their support for Washington’s rising aggression toward Russia. The universal failure of democratic politics is leading directly to war.

This post was published at Paul Craig Roberts on December 30, 2017.


Bitcoin In 2018: “There Will Be At Least 4 Crashes Of 40% Or More”

When you see something titled ‘Bitcoin 2018 Predictions’, you are probably most interested in just one thing: ‘Where will it go?’ So let’s start there, but then add some other observations on a variety of topics.
#1: We expect bitcoin will trade for between $6,470 and $21,600.
Here’s how we get there:
Bitcoin’s primary ‘real’ use case right now is personal asset protection. Yes, that includes money laundering and tax evasion. But it also incorporates the legitimate desire of honest people living in countries with less-than-exemplary rules of law to shield some of their assets. At the moment, the primary instrument used globally for these purposes is the $100 bill. Yes, the European Central Bank also issues high denomination notes. But the gold standard of paper currency is the American C-Note. (Oxymoron intended).

This post was published at Zero Hedge on Dec 27, 2017.


Bubble Watch: The Fed KNOWS We’re in a 1999-Type Mania

The Fed raised rates another 0.25% the week before last.
This marks the 5th rate hike since the Fed embarked on its policy tightening in December 2015 and the fourth rate hike in the last 12 months. The Fed’s latest statement also indicates it plans on raising rates three more times in 2018.
It is easy to gloss over the significance of this, but the Fed’s actions are indeed unusual; other major Central Banks (the Swiss National Bank, Bank of Japan, European Central Bank and Bank of England) are all currently running QE programs (the BoJ, ECB and BoE) or openly printing new money to buy stocks outright (the SNB).
What precisely is the Fed doing? Why the urge to tighten when other banks are all printing new money by the billions?
The following quotes from Fed offer us clues.
Fed Monetary Policy Report, June 2017:
‘Forward price-to-earnings ratios for equities have increased to a level well above their median of the past three decades,
Fed minutes, July 2017:

This post was published at GoldSeek on 26 December 2017.


Citi: ‘What If?…”

One month ago, Citi’s credit team laid out its outlook for the coming year in what – in our opinion – was one of the gloomiest reports for the coming year, and included the following fascinating revelation according to which central bankers appears to have lost control: “That seems to be a growing fear among a number of central bankers that we have spoken to recently. In our experience, they too are somewhat baffled by the lack of volatility and concerned about the lack of response to negative headlines…. Our guess is that sooner or later in the process of retrenchment they will end up going too far – though that will only be obvious with hindsight.” As we said at the time, “frankly, that’s about the scariest admission from one of the world’s biggest banks that we have read in a long time.”
And while Citi’s “base case” was clearly bearish (our summary can be found here) – what was left unsaid was even more interesting, if not troubling. As the bank’s credit team writes “what about the outcomes that didn’t quite make it into our base case? The scenarios that aren’t central, but which aren’t entirely implausible either – both bullish and bearish.
So ‘What if…’:
idiosyncratic risk is returning to credit? European corporates get more aggressive? global growth & commodity prices disappoint? inflation accelerates as output gaps close? the US yield curve inverts? central bank tapering really is a non-event? the market doesn’t like the choice of ECB successor?”

This post was published at Zero Hedge on Dec 24, 2017.


Market Report: Books are balanced, time to party

At least, that’s how the bullion bank traders must be thinking. Ahead of the Fed’s quarter-point rise in the Fed funds rate, they spooked the longs out of their positions to close their shorts, profitably. Nice bonuses all round.
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This is the third time in succession this year-end ploy has worked. Our headline chart tells us that silver has been extremely profitable for the bullion banks, gold less so perhaps, but given the trading opportunities taken during the year, it has been pretty good on balance.
This week, gold rose $12 from last Friday’s close by early morning trade in Europe this morning (Friday) to $1268, and silver 12 cents to $16.20. Pre-Christmas trade has been subdued. Over the year, the dollar price of gold is up 10.4% from January 1, and silver is up a miserly 1.26%. However, this is mostly down to dollar weakness, with gold performing not nearly so well measured against other currencies, as our next chart shows.

This post was published at GoldMoney on December 22, 2017.