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.

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.

Is Bitcoin Demand Hurting The Price Of Gold?

The popular narrative that has gripped the financial media searching for reasons that the price of gold is sluggish for reasons other than overt western manipulation, is that Bitcoin interest is diverting cash that would otherwise be going into gold. However, I would argue that the type of trading funds playing in the cryptocurrency ‘sandbox’ is little more than ‘action junkies’ looking for anything to buy with high upside velocity. These ‘investors’ never buy gold other than perhaps chasing gold-related securities when the price of gold speeds higher in price (like from early 2016 through August 2016). In fact, a recent report attributes a large amount of recent volume in Bitcoin trading to Japanese retail traders / Japanese men dominate Bitcoin trading (Deutshe Bank)
Seeking Alpha has published my analysis explaining just some of the reasons that the idea that cryptocurrencies are diverting capital away from going into physical gold is little more than anti-gold propaganda.

This post was published at Investment Research Dynamics on December 15, 2017.

The Results of Financialization – Part IV – A Fiat Currency Failure

By Gordon Long
Since the US lifted anchor on the Gold Standard in August 1971 making the US Dollar a Fiat Reserve Currency, the US economy has been propelled forward, no-longer tethered to the principles of Sound Money. Unfortunately, the reality is that this sort of political expediency is the equivalent of building a house on a foundation of sand versus solid bedrock, dooming it to be unable to withstand the economic storms and turmoil that inevitably lie ahead.

As a consequence International Balance of Payments were by 1980 forced to be settled through the use of credit. Credit which then exploded in growth with the mounting US trade deficits financed by Foreign and Japanese mercantilism, where the BOP settlement credit was used to buy US Treasuries, thereby triggering a steady fall in interest rates.

This post was published at GoldSeek on Friday, 8 December 2017 / Friday, 8 December 2017.

Fun on Friday: You Can’t Do that with Bitcoin

How would you like to walk on gold?
You can do it at the Akron Art Museum.
Artist Rachel Sussman has filled cracks in the museum floor with gold.
Yes. Real gold. Stuffed in cracks in the cement floor.
It’s art.
I guess.
Sussman used an ancient Japanese technique to repair cracks in the floor with a resin made out of gold dust. Associate museum curator Theresa Bembnister explained Sussman’s work in a statement. (This is really highbrow, so you’ll get a better effect if you turn on some classical music and imagine this being read by an NPR reporter.)
Rachel Sussman’s installation should take visitors by surprise. She will ‘repair’ a system of cracks in the museum lobby floor using a Japanese technique known as kintsukuroi … Rather than disguise cracks or breakage, kintsukuroi is meant to honor a repair as part of an object’s history.’

This post was published at Schiffgold on DECEMBER 8, 2017.

Bank of Japan Tapers (Quietly), QE Party Over

No flashy announcement, to avoid alarming the markets. After years of blistering asset purchases, the Bank of Japan disclosed today that it held a total of 521.6 trillion in assets as of November 30, including Japanese Government Bonds (JGBs), gold, corporate bonds, Japanese REITs, equity ETFs, loans, etc. That is quite a pile, so to speak. It amounts to about 96% of Japan’s GDP.
By this measure, the BOJ’s balance sheet dwarfs the Fed’s balance sheet, which amounts to 23% of US GDP. When it comes to QE, no one can hold a candle to Japan. Its holdings of JGBs alone rose to 443.6 trillion. Its balance sheet looks like a typical post-Financial-Crisis central-bank balance sheet on steroids (chart in trillion yen):
There a couple of differences compared to other central banks: One, the BOJ started QE long before anyone even called it ‘QE,’ but in 2013, it really got going, and those giant moves made the prior periods of QE look minuscule. And two, the BOJ actually unwound some of its earlier QE starting in late 2005 but soon gave up on it.

This post was published at Wolf Street on Dec 4, 2017.

What Trumps Dollars and Gold?

I have commented and written extensively on the generally negative correlation of the US dollar and gold. In simple terms, when the US dollar moves up or down, the price of gold tends to do the opposite. This makes sense because the price of gold is quoted on world markets in good ol’ American greenbacks.
That said, there are many other factors that contribute to the price of gold. These include: world economic health; geopolitical events; physical demand for jewelry, investment, hoarding, and industrial use; central bank buying and selling; ETF purchase and redemption; and speculative trading of gold in paper markets and derivative instruments such as futures and options.
Strong negative correlations of the US dollar and gold usually occur during times of volatility and sustained movements to the upside or downside in said fiat currency. United States dollar metrics are best determined by the dollar index (DXY), a weighted basket of six relatively stable, developed-world currencies that include the Euro (57.6%), Japanese Yen (13.6%), UK Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%) and Swiss Franc (3.6%).
Indeed, my friends at track the change in gold price attributable to the change in the US dollar index on a daily basis.
The benchmark price of gold in US dollars and other currencies is fixed twice daily (am and pm) by a consortium of 12 large banks and financial institutions and is based on the spot price of gold traded by the London Bullion Market Association (LBMA). The LBMA is a highly-leveraged, fractionally reserved, paper gold system with daily trading volumes averaging 1.7 times the amount of gold that is mined on an annual basis. In 2015, 88% of the world’s paper gold trade occurred there.
Another daily metric for gold is the New York spot closing price, posted seven hours after the London afternoon fix. In the treatments below, I use NY close for both the dollar index and gold.

This post was published at GoldSeek on 28 November 2017.

Nasdaq Slammed As Japanese Media Signals North Korea “Preparing Toward Ballistic Missile Launch”

Japanese government detecting signal from #NorthKorea on preparation towards a ballistic missile launch according to local media
— michiyo ishida (@MichiyoCNA) November 27, 2017

Update: While the initial reaction to the headlinews were muted, once the story hit Bloomberg wires, USDJPY snapped lower and gold jumped…
And as USDJPY fades, so stocks drop (S&P and Nasdaq now red)…

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

China Busts Gang That Smuggled $3 Billion Out Of The Country

China’s crackdown on capital outflows has been a boon for organized crime in the region, with Chinese triad gangs and even Japanese Yakuza organizations partaking in the smuggling bonanza. Over the summer, we reported on a case of Yakuza gangsters teaming up with wealthy Chinese to smuggle thousands of tons of gold out of the country, using Japanese regional airlines as unwitting mules while taking advantage of a loophole that allows them to circumvent customs.
But the Yakuza isn’t the only criminal group that’s capitalized on the desperation of wealthy Chinese to preserve their wealth by moving it offshore: Local triad gangs have helped smuggle tens of billions of Chinese yuan offshore, reaping enormous profits in the process.
To wit, Chinese police say they have broken up a gang that smuggled 20 billion yuan ($3 billion) out of the country. According to the Associated Press, which cited reports from China’s Xinhua News Service, seven suspects were detained in the case centered in the southern city Shaoguan near Hong Kong but as many as 10,000 people might have been involved, the official Xinhua News Agency reported.

This post was published at Zero Hedge on Nov 26, 2017.