Radio Show Newsletter
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: Loonie Bulls Face Risk in Widening U.S.-Canada Two-Year Spread. Canadian dollar bulls, sporting a gain of nearly 8 percent against the U.S. dollar over the past three months, can’t ignore the widening yield gap between U.S. and Canadian two-year debt. The exchange rate is almost perfectly correlated with the yield differential over the past three months, and Toronto-Dominion Bank analysts say additional widening is possible as soon as Friday based on U.S. inflation data. If the loonie continues to follow its lead, the currency could extend its recent weakening against the dollar in the weeks ahead. A three-month correlation of 0.99 is “extraordinarily high” and well above the 0.61 average since January 2000, BMO Capital Markets strategist Greg Anderson said. The interest-rate spread has been a key driver for the loonie in recent months because of its sharp moves, Anderson said, as traders set positions based on the most volatile variables. Read more here-https://bloom.bg/2w2YF3q
-CHART OF THE WEEK: There’s a Reason People Are Worried About Low Volatility. Investors and policy makers who have worried about the historic slide in stock volatility the past year might have had good reason to do so: most market crashes are preceded by exactly that pattern. A study of 40 financial-asset bubbles conducted by researchers including Didier Sornette at the Swiss Finance Institute concluded that in about two-thirds of the cases the crashes followed a spell of lower volatility the “lull before the storm.” The study didn’t comment on current market levels. “Our main finding is that volatility is neither a reliable indicator of the maturation of a bubble nor of its impeding ending in a crash,” Sornette and his colleagues wrote in a study posted last month. That in turn casts “doubts on the supposed general relationship between risk and return,” they concluded. Read more here-https://bloom.bg/2uJKtN3
-CHART OF THE WEEK: U.S. Oil Drillers Keep Pressure on OPEC With Record Shale Output. Oil output from major U.S. shale plays is poised to reach a fresh record next month, further complicating OPEC’s efforts to support prices. The gain is being led by the oil-rich Permian basin of Texas and New Mexico, where production has risen steadily over the past two years. The Energy Information Administration projects Permian output to rise by 64,000 barrels in September, reaching a record of 2.6 million barrels a day. Read more here-https://bloom.bg/2uYSZTz
-CHART OF THE WEEK: Gates Makes Largest Donation Since 2000 With $5 Billion Gift. Bill Gates made his largest single gift since the turn of the century, giving away Microsoft Corp. shares that accounted for 5 percent of his fortune, the world’s biggest. The billionaire donated 64 million of the software maker’s shares to the Bill & Melinda Gates Foundation on June 6, according to Securities and Exchange Commission filings released Monday. The shares were valued at $4.6 billion at the time. It’s the largest gift of Microsoft shares that Gates, 61, has made since 2000. He gave away $16 billion worth of the stock in 1999 and $5.1 billion a year later, according to calculations by Bloomberg. Read more here-https://bloom.bg/2i3zc42
-Unemployment in the United Kingdom fell to 4.4 percent in the second quarter, the lowest since 1975, with basic wages rising 2.1 percent more than economists had forecast. While the Bank of England expects pay growth to remain below the rate of inflation for months to come, the outlook is for price rises to peak later this year. Bloomberg
-Federal Reserve Bank of New York President William Dudley said it isn’t unreasonable to expect an announcement on how the Federal Reserve plans to reduce its $4.5 trillion balance sheet in September, adding that he would be in favor of another rate hike this year if the economy holds up. In an unusual move, Dudley weighed in on the race for the position of Fed Chair, saying former Goldman Sachs Group Inc. executive and White House economic adviser Gary Cohn was a “reasonable candidate” for the job. Bloomberg
-Gold is only as low as $1,275 per ounce due to manipulation in the paper market. This is likely to fail as demand increases and holders of paper gold ask for delivery. That is when gold will jump $100s or more in a very short period. What we have seen in cryptocurrencies in rapid price rises will also happen with the gold price. The big difference is that the higher gold price will be sustained. And once the cryptocurrencies peak, that bubble will burst. You cannot compare gold, which has been money for 5,000 years and which has an intrinsic value, with an electronic entry on a computer which has been created out of thin air. In the next 5-10 years, all bubble assets such as stocks, bonds and property will decline 75-95% in real terms, which means versus gold. Egon von Greyerz
-On the 10th anniversary of the global financial meltdown, here’s what’s changed. Ten years ago Wednesday, French bank BNP Paribas blocked withdrawals from hedge funds that specialized in U.S. mortgage debt. That Aug. 9, 2007, marked the beginning of a credit crisis that caused investment bank Lehman Brothers to collapse a year later and usher in the Great Recession of 2007-09. “It’s true that the subprime mortgage crisis in the U.S. started a little earlier, in February 2007, but the money markets did not notice until that day in August,” said Alexis Stenfors, a former trader for Merrill Lynch who famously lost his company $450 million on currency bets. He is now a business professor at Britain’s University of Portsmouth. “We realized that this problem was going to be a lot bigger than American subprime mortgages and that it was going to spread to all markets everywhere.” A decade after the meltdown, here’s what’s changed. Read more here-https://usat.ly/2i6EXyd
-The Nordic Bank That Doesn’t Want Corporate Cash. Danske Bank A/S is telling corporate clients to think hard about what to do with their excess cash before Dec. 31, because Denmark’s biggest lender doesn’t want it in deposit accounts. After a world-record-setting half decade of negative interest rates, Denmark still has a few surprises up its sleeve that show how such a monetary regime works in practice. Though corporate clients need to pay to place their savings with the bank, Danske is struggling to deal with near-record amounts of deposits.
The bank’s deposits have risen 11 percent over the past 21 months, reaching 914 billion kroner ($145 billion) at the end of June (excluding repurchase agreements), second-quarter results show. Danske said it’s encouraging clients to place excess cash in other products offered by the bank, but declined to provide more details. Corporate and institutional clients have the biggest placement need, with savings growing 17 percent to 265 billion kroner. That’s a quarter of Danske’s total deposits. The cash adds to the cost of complying with Denmark’s strict liquidity rules. Read more here-https://bloom.bg/2wNxN5i
-Fed policymakers grow more worried about weak inflation. Federal Reserve policymakers appeared increasingly wary about recent weak inflation and some called for halting interest rate hikes until it was clear the trend was transitory, according to the minutes of the U.S. central bank’s last policy meeting. The readout of the July 25-26 meeting, released on Wednesday, also indicated the Fed was poised to begin reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities.
Last month’s meeting, which concluded with a unanimous decision to leave rates unchanged, was marked by a lengthy discussion about the recent soft inflation readings, the minutes showed. The central bank’s preferred inflation measure dropped to 1.5 percent in June from 1.8 percent in February and has remained below its 2 percent target for more than five years. “Many participants saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside,” the Fed said in the minutes. Read more here-http://reut.rs/2w34VZe
-With Next Recession Looming, Central Banks Better Make Peace With Negative Rates. Negative interest rates are back in the spotlight. Investors and analysts are redoubling their warnings that with global borrowing costs already so low, central banks will need to be prepared to cut interest rates deep into negative territory in the next economic downturn. The message is taking on urgency as anxiety builds that the U.S. is nearing the end of its current economic expansion cycle.
“I don’t think the central bankers would like to go back into negative rates once they get out of it, but the reality is they may well have to during the next recession,” Iain Stealey, the head of global aggregate strategies at JPMorgan Asset Management in London, said in a Bloomberg TV interview Monday. The market value of the world’s negative-yielding bonds has jumped almost 25 percent over the past month to $8.6 trillion amid slower-than-forecast inflation data and as investors piled into the safest securities as perceptions of geopolitical risk increased. That’s happened even after Federal Reserve officials started raising benchmark borrowing costs and said they would begin running off their $4.5 trillion balance sheet “relatively soon.” Read more here-https://bloom.bg/2vJC1uj
-Rogoff: The world’s central banks should get ready for negative interest rates in the next recession. Kenneth Rogoff, a professor at Harvard University and one of the world’s most prominent economists, said central banks across the globe must start preparing themselves to introduce negative interest rates during the next global recession. Negative rates are already in place in several major economies around the world, with the European Central Bank, the Bank of Japan, but other banks around the world would be wise to make preparations as well, Rogoff wrote in a new paper for the Journal of Economic Perspectives.
“It makes sense not to wait until the next financial crisis to develop plans and, in any event, it is time for economists to stop pretending that implementing effective negative rates is as difficult today as it seemed in Keynes’ time,” he said, citing the growth of cashless transactions as a reason to think that negative rates could be implemented more easily in future. “The growth of electronic payment systems and the increasing marginalisation of cash in legal transactions creates a much smoother path to negative rate policy today than even two decades ago.” Read more here-http://read.bi/2vGeKtq
-Bank of America Warns of an ‘Ominous’ Sign for Stocks. Money managers who’ve watched the surge in corporate profits take U.S. equities to records are starting to fret about earnings growth, and that’s an “ominous” sign, Bank of America says. Just 33 percent of managers in the bank’s latest survey say corporate profits profits will improve, down from 58 percent at the start of the year. The drop represents a “warning sign for equities over bonds, high yield over investment grade, and cyclical sectors over defensive ones,” chief investment strategist Michael Hartnett wrote in a note Tuesday.
“Further deterioration is likely to cause risk-off trades.” At the same time, a record 46 percent said equity markets are overvalued. Still, positioning by managers is “pro-risk” despite persistently high cash levels. The S&P 500 trades just above 21 times trailing 12-month earnings after touching above 22 in March, about 23 percent higher than the 10-year average. Read more here-https://bloom.bg/2uModxY and http://bit.ly/2w7SRGm
-Canadian Home Prices Tumble the Most Since 2008 Recession. Canada’s benchmark home price fell by the most in nearly a decade last month as Toronto led a fourth straight decline in sales. The nationwide benchmark home price declined 1.5 percent to C$607,100 ($476,000) from June, the Canadian Real Estate Association said Tuesday, the largest drop since the previous recession. In Toronto, the country’s largest city, the price fell 4.7 percent on the month. The steam is coming out of Toronto’s housing market after Ontario’s provincial government introduced measures in April that included a foreign buyer’s tax to cool what officials called unsustainable price gains. Mortgage costs have also started moving up from the lowest in decades after the central bank raised its benchmark interest rate last month for the first time in seven years. Read more here-https://bloom.bg/2uGnkLh and http://bit.ly/2wcbbNK
-Economist: Toronto home prices could drop up to 10% over next few months. Canadian home prices rose two per cent in July from the month before as prices in Toronto continued to climb, though there were signs parts of the city’s market were starting to cool, data showed on Monday. The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, also showed prices were up 14.2 per cent from a year ago. Toronto helped drive the national monthly increase with prices up 2.1 per cent. Still, the report noted there were signs of weakness creeping into the market, with prices for dwellings other than condos down 1.6 per cent on a non-smoothed basis. Read more here-http://bit.ly/2vBfn93 and http://bit.ly/2vBq6R8
-Toronto Has More Housing Than You Thought. When it comes to Toronto’s runaway housing prices, the most important question remains the extent to which speculation is driving demand. Ideally, fundamentals such as demographics and employment are at play, and the price gains reflect natural household growth getting ahead of supply. If that’s true, the market should eventually stabilize once new supply kicks in. A situation where speculators are bidding up prices would be much more problematic. Canada’s 2016 census, which the statistics agency is releasing piecemeal this year, is providing some insight into the debate. The results: supply may not be the big problem many people thought it was. Read more here-https://bloom.bg/2w7zs8y
-Vancouver Housing Posts Biggest Price Gains Since 1990. Just as Toronto’s housing market is beginning to slow down, Vancouver’s is roaring back to life. New home prices in Canada’s most-expensive market jumped 1.5 percent in June, and have gained 5 percent since March, data released Thursday by Statistics Canada show. That’s the biggest three-month increase since 1990. Prices for existing homes are also on fire, gaining 11 percent in the five months through July, according to data released this month by Vancouver’s real estate board. Read more here-https://bloom.bg/2uMDoam
-China’s debt on a ‘dangerous trajectory’: IMF. China’s massive debt is on a “dangerous” path, raising the risk of a sharp slowdown in growth, the IMF warned on Tuesday, urging Beijing to speed up structural reforms. The International Monetary Fund, which has repeatedly warned China over its ballooning debt, said in a new report that the world’s second largest economy must turn toward a sustainable growth path. “International experience suggests that China’s credit growth is on a dangerous trajectory, with increasing risks of a disruptive adjustment and/or a marked growth slowdown,” IMF experts wrote.
While the country’s near-term growth outlook firmed up, it is at the cost of “further large and continuous increases in private and public debt, and thus increasing downside risks in the medium term,” the report said. The IMF maintained its forecast of 6.7 percent growth for this year, but the report warned that the country’s debt load could soar from around 235 percent of gross domestic product last year to more than 290 percent in 2022. Read more here-https://yhoo.it/2x1HP1G
-Americans’ debt level notches a new record high. Americans’ debt level notched another record high in the second quarter, after having earlier in the year surpassed its pre-crisis peak, on the back of modest rises in mortgage, auto and credit card debt, where delinquencies jumped. Total U.S. household debt was $12.84 trillion in the three months to June, up $552 billion from a year ago, according to a Federal Reserve Bank of New York report published on Tuesday. The proportion of overall debt that was delinquent, at 4.8 percent, was on par with the previous quarter. However, a red flag was raised over the transitions of credit card balances into delinquency, which the New York Fed said “ticked up notably.” Read more here-http://reut.rs/2i4DoAI and http://bit.ly/2i2NS3z and https://bloom.bg/2fIAZLo
-Morgan Stanley: The euro will be worth more than the pound by next year. The euro will be worth more than Britain’s currency by the end of the first quarter of 2018, analysts from Morgan Stanley said in a client note circulated on Friday. In the bank’s latest FX Overview paper, a team led by strategist Hans W. Redeker argue that a combination of a stronger euro and a weakening pound will combine to make the euro more valuable than the pound for the first time in its history, and make it in terms of pure value the strongest major currency on the planet.
The euro has been on a huge tear during 2017, particularly against the dollar, as investors take note of the improving fortunes of the bloc’s economy, which has seen growth recover to its best levels since the eurozone debt crisis. It will continue to strengthen and will move “beyond parity” with the pound during the first three months of the year, hitting a peak of £1.02 before weakening a little as the year progresses, the team’s latest forecasts suggest. By the end of 2018, €1 will be worth £0.91. Read more here-http://read.bi/2uJeDjx and https://bloom.bg/2v2tuRn
-Everyone’s Dumping the Pound and Real Money’s Just Getting Started. The pound remains unloved across investor groups, with real-money sales of the U.K. currency only just getting started, data from Bank of America Corp. show. All client types corporate accounts, reserve managers, hedge funds and institutional accounts, like mutual funds, pensions and endowments have dumped sterling over the past two weeks, according to the U.S. bank’s analysis of flow data. “The overall GBP market position is neutral, but real money is long, suggesting downside risks as they have been selling in the last three weeks,” quantitative strategists Myria Kyriacou and Athanasios Vamvakidis wrote in a note Monday. Read more here-https://bloom.bg/2vEClMu
-Bitcoin Exchanges Struggle to Win Investor Confidence. Bitcoin needs “Downtown” Josh Brown more than he needs bitcoin. Brown, the chief executive officer of Ritholtz Wealth Management and author of a popular finance blog, has long been skeptical of the digital currency. He finally bought some, he said, “because the goddamn thing won’t go away.” Still, Brown, who helps manage half a billion dollars, isn’t really a convert quite yet, especially when it comes to security measures at bitcoin exchanges. He researched several before buying his bitcoins at Coinbase Inc. and wasn’t impressed, he said in an interview. “I don’t think any one service is safer than another. It’s too early to anoint any of them as the JPMorgan of bitcoin. I don’t think that exists.” Read more here-https://bloom.bg/2x3ZLc7
-Bitcoin Surges Past $4,000 on Speed Breakthrough. Bitcoin soared past $4,000 for the first time on growing optimism faster transaction times will hasten the spread of the cryptocurrency. The largest digital tender jumped to a peak of $4,298 Monday, a gain of nearly 20 percent since Friday, after a plan to quicken trade execution by moving some data off the main network was activated last week. The solution termed SegWit2x had been so contentious that a new version of the asset called Bitcoin Cash was spun off earlier this month in opposition. Read more here-https://bloom.bg/2x4dQXe and https://bloom.bg/2w1neOv
-Maersk Says June Cyberattack Will Cost It up to $300 Million. A.P. Moller-Maersk A/S said a cyberattack that hit the owner of the world’s biggest container shipping company at the end of June will wipe as much as $300 million off profits in the third quarter. Read more here-https://bloom.bg/2x5o8Gk
-Elvis’s Rhinestone Jumpsuit Tops $1.5 Million Memorabilia Auction. Forty years ago today, Elvis Presley left the building permanently. The original rock-and-roll superstar died Aug. 16, 1977, of a myocardial infarction, but his death gave birth to a multibillion-dollar industry that seems to be immortal. Read more here-https://bloom.bg/2fKWafS
-A $20 Million Aston Martin Tops the Auction List at Pebble Beach. If you’re a true vintage-car obsessive, this could be your year. Official estimates for the Pebble Beach auctions this week have set sales totals at $290 million, down 14 percent since 2016. It’s the third consecutive drop since a record $403 million in 2014. Not only are classic vehicles taking longer to sell in general, according to early reports by Hagerty Insurance, it’s more difficult to find highly desirable cars in the first place.
Over the past 12 months, auction sell-through rates for vehicles worth more than $250,000 has fallen 8.5 percent, to a five-year low. Though the soft market might make it more difficult for speculators and pure investors to find what they want, it’s a boon for real enthusiasts. “It’s a much more selective market right now,” said David Brynan, senior specialist for Gooding & Co. “Over the past few years, for really exceptional cars, the sales are really strong in any price category. People are paying for quality.” Read more here-https://bloom.bg/2w2WOfh
-Musk’s Electric-Car Vision Doubted by Major Parts Suppliers. Some of the world’s top auto-parts suppliers aren’t buying all the enthusiasm about the electric vehicles hyped by Tesla Inc.’s Elon Musk and larger carmakers trying to keep up. Executives at five of the 25 biggest suppliers to automakers in North America have all downplayed this month expectations for electric-vehicle sales. After Volvo Car Group made a splash with its pledge to put electric motors in every new car by 2019 and Musk predicted more than half of U.S. auto production would be electric in 10 years, the parts makers have issued modest forecasts and spoken in circumspect, even defiant, tones.
“There’s a lot of buzz and a lot of talk about how the world’s going to change to electrified vehicles overnight, and I’m here to tell you it’s not going to happen overnight, and it’s not going to happen for decades,” David Dauch, Chief Executive Officer of American Axle & Manufacturing Holdings Inc., said Tuesday at a JPMorgan conference in New York. “I’m a strong believer in the internal combustion engine. I think it’s going to continue to be here for some time.” Read more here-https://bloom.bg/2x1ERKN
-Rio Tinto reveals its largest red diamond at world exclusive preview in New York. Rio Tinto has unveiled the largest Fancy Red diamond in the history of its Argyle Pink Diamonds Tender, during a world exclusive preview in New York. The 2.11 carat polished radiant cut diamond, known as The Argyle Everglow™, is the dazzling centrepiece of the 2017 Argyle Pink Diamonds Tender an annual showcase of the rarest diamonds from Rio Tinto’s Argyle mine. Rio Tinto Copper & Diamonds chief executive Arnaud Soirat said “We are delighted to announce this historic diamond at our Tender preview, a testament to the unique Argyle ore-body that continues to produce the world’s rarest gems.”
Unprecedented in size, colour and clarity, The Argyle Everglow™ has been assessed by the Gemological Institute of America (GIA) as a notable diamond with a grade of Fancy Red VS2. In the 33-year history of the Argyle Pink Diamonds Tender there have been less than 20 carats of Fancy Red certified diamonds sold. Argyle Pink Diamonds manager Josephine Johnson said “The Argyle Everglow™ represents rarity within rarity and will drive global demand from collectors and connoisseurs in search of the incomparable.”
The 2017 Argyle Pink Diamonds Tender is named ‘Custodians of Rare Beauty’ in honour of its rich provenance and honourable pedigree. The 58 diamonds in the Tender weigh a total of 49.39 carats including four Fancy Red diamonds, four Purplish Red diamonds, two Violet diamonds, and one Blue diamond. The collection comprises five “hero” diamonds selected for their unique beauty and named to ensure there is a permanent record of their contribution to the history of the world’s most important diamonds:
• Lot 1: Argyle Everglow™, 2.11 carat radiant shaped Fancy Red diamond
• Lot 2: Argyle Isla™, 1.14 carat radiant shaped Fancy Red diamond
• Lot 3: Argyle Avaline™, 2.42 carat cushion shaped Fancy Purple-Pink diamond
• Lot 4: Argyle Kalina™, 1.50 carat oval shaped Fancy Deep Pink diamond
• Lot 5: Argyle Liberté™, 0.91 carat radiant shaped Fancy Deep Gray-Violet diamond
-Fancy coloured diamonds are exceedingly rare in nature, but the intensity of the colour is also an important quality of the stone. The Gemological Institute of America grades fancy coloured diamonds as such: Faint, Very Light, Light, Fancy Light, Fancy, Fancy Intense, and Fancy Vivid. Fancy vivid colours are the most sought-after. The amazing stone offered in this auction displays a very bright and deep fancy vivid blue colour. Even in the category “Fancy Vivid”, one can find different levels of intensity; the saturation and hue of this stone are absolutely mesmerising.
“Diamonds obtain their colour from so-called “colour centres”. They are single or multiple non-carbon atoms that replace carbon in the structure of the diamond, causing a disturbance in the structure and sometimes giving rise to the colour. The distinctive blue colour in diamonds is attributed to trace amounts of the element boron in the crystal structure. Minute traces of boron are required to create the colouration. Less than one boron atom per million carbon atoms is sufficient to produce the blue colouration.” Excerpt from the Natural History Museum website
-Fancy Coloured Diamonds: The 17th century French merchant and adventurer, Jean-Baptiste Tavernier, was among the first to be intrigued by fancy coloured diamonds. In 1669, he sold the ‘Tavernier Blue Diamond’, also called the ‘French Blue’, to Louis XIV. In the first half of the 17th century, he was the first who made a reference to pink diamonds. Moreover, in 1642, he mentioned a very large rough pink diamond, weighing over 200 carats, shown to him by Moghuls in the Kingdom of Golconda.
This diamond, named ‘The Grand Table’ and valued at 600,000 rupees at the time, is still the largest pink diamond recorded to date. The French merchant also purchased two pale pink diamonds around 1668 and drew pictures of the stones in his travel book. Since the 17th century, the value of coloured diamonds increased considerably. Fancy coloured diamonds are rarer than their near colourless counterparts as their hues come from a disturbance during the formation process of the stone deep in the earth.
For all coloured diamonds except pinks, the colour comes from trace elements that interfere during the formation of the crystal. A diamond is composed of pure carbon; it is the intrusion of another atom that causes the colour: nitrogen for yellows, boron for blues. Concerning pink diamonds, the colour is a consequence of a distortion of the crystal structure during the formation of the stone. Although other rare coloured diamonds, such as pink and red, are found in India, Brazil and Australia, blue diamonds are primarily recovered from the Cullinan mine in South Africa. sothebys.com
-How much for that fancy red diamond? It’s kind of a secret. When the mining company Rio Tinto shows its latest batch of rare naturally coloured diamonds – stones with hues of pink, red and even “deep-grey violet” executives are delighted to go on about their beauty and scarcity. But details about pricing? That is when the lips draw shut. “It’s quite confidential,” said Mr. Arnaud Soirat, chief executive of Rio Tinto’s copper and diamond group, laughing. Read more here-http://bit.ly/2uyJQUK
-WSJ: Demand Soars for Colored Diamonds. Investors, seeking higher returns, have moved into an area once the preserve of wealthy collectors. While Rio Tinto still mines primarily for white diamonds, the ubiquitous wedding-engagement gem, the best 50 or 60 colored diamonds that it digs up every year are sold in an annual tender through sealed bids. Potential investors can attend viewings at secret locations in London, New York and Hong Kong, one of which was attended by a Wall Street Journal reporter. Prospective investors, one at a time, are allowed to examine the diamonds in a windowless room. Read more here-http://on.wsj.com/2s0a424
-CHART OF THE WEEK: Jeff Gundlach Gold’s chart has ‘one of the most bullish’ patterns around. Gold has been gaining steam over the last couple of days following news that North Korea could make nuclear warheads small enough to fit on missiles and the intense rhetoric that followed between President Donald Trump and North Korea’s army. The precious metal has rallied almost 3% since the news broke on Tuesday morning and is now trading at its best level in more than two months. And there may be more gains ahead, according to Jeffrey Gundlach, the founder, and CEO of DoubleLine Capital. “Cramer today was positive on a stock pointing out its “cup and handle” chart pattern, one of the most bullish.
He’s right. Gold has one too,” Gundlach tweeted. To be clear, Gundlach has not made a specific call for gold, and he has not specified what time frame he is looking at on the chart. However, taking a look at the gold chart, it appears Gundlach is talking about the action over the last year or so in the precious metal. A cup and handle pattern is such that an asset makes a run at previous highs, fails, and then proceeds to test those highs again over a much shorter time frame. The pattern is triggered on a breakout above the highs, which is also known as the neckline.
Now to be fair, while it does look like the pattern is taking shape, it has not yet been triggered with a breakout above the neckline. However, should that break out come, it looks like gold has a bit of room to run. Measuring from the late 2016/early 2017 low up to the neckline is good for about $166 ($1,294-$1,128). Add that $166 to the neckline ($1,294) and you get a gold target of $1,460, a move of almost 14% above its current price of $1,284. That surely seems reasonable should the back and forth between Trump and North Korea go on for much longer. Read more here-http://read.bi/2w2fyLW
-The Investment Bank Tipping Gold to Hit $1,400. Gold prices are set to jump to a four-year high of $1,400 an ounce by the end of the year over mounting tensions between North Korea and the U.S., and surging demand in the world’s biggest consumers, according to the head of precious metals at a Russian investment bank. Bullion could rise to $1,360 within three months before climbing higher, fueled by global political risks and buying from China and India, said Evgeny Ananiev at VTB Capital JSC, the investment-banking unit of Russia’s second-largest lender VTB Group. “We may see some correction, but I don’t think gold will drop below $1,200 as it’s well supported,” he said in a weekend interview in Goa. Read more here-https://bloom.bg/2x6btTw
-Some Investors See Bitcoin Better Than Gold, Morgan Stanley Says. Bitcoin’s meteoric rise is leading some investors to argue that bitcoin is a better hedge against inflation and turmoil than gold, according to Morgan Stanley. Tom Price, a London-based equity strategist, said he’s been fielding more cryptocurrency questions after prices recently soared past $4,000 a bitcoin, a fivefold increase from November 2016. Both bitcoin and gold offer similar benefits as a store of value, such as being fungible, durable, portable, divisible and scarce, but it’s too soon to call bitcoin a superior investment, he says. “Over millenia, gold has demonstrated its ability to endure and preserve value under all circumstances,” Price said in an Aug. 14 report. “By contrast, bitcoin’s global platform literally requires the lights to stay on.” Read more here-https://bloom.bg/2vFnvFF and http://bit.ly/2w3pRyY
-Dalio Recommends Gold as Hedge Against Rising Political Risk. Hedge fund manager Ray Dalio recommends investors consider placing 5 percent to 10 percent of their assets in gold as a hedge against current political and economic risks. Dalio, the idiosyncratic billionaire who leads the world’s largest hedge fund at Bridgewater Associates, said the market may be challenged by current events, according to a LinkedIn post on Thursday. “The emerging risks appear more political than economic, which makes them especially challenging to price in,” wrote Dalio, who rarely makes specific market recommendations.
Among the risks Dalio mentions: “Two confrontational, nationalistic, and militaristic leaders playing chicken with each other” and “the odds of Congress failing to raise the debt ceiling (leading to a technical default, a temporary government shutdown, and increased loss of faith in the effectiveness of our political system) rising.” While Dalio says his firm has no “unique insight” regarding the outcome of these matters, “we can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit, so if you don’t have 5-10% of your assets in gold as a hedge, we’d suggest that you relook at this.”
Gold has risen 12 percent this year, helped by a falling dollar and signs of tame inflation that could slow the Federal Reserve’s hand in raising interest rates. Low rates boost the appeal of gold because it doesn’t pay interest. This week, U.S.-North Korea tensions boosted demand for the metal as a haven, sending prices to the highest since early June. Read more here-https://bloom.bg/2vK2VST and http://read.bi/2w35Zwf
-Paulson And Other Hedge Funds Rewarded as Angst Fuels Gold. Hedge-fund managers including billionaire John Paulson are being rewarded as investor worries over everything from uneven economic data to U.S.-North Korean tensions fuel a rally in bullion. At the end of June, Paulson & Co. owned 4.36 million shares of SPDR Gold Shares, a U.S. government filing showed Monday. That’s unchanged from the three months through March. Bridgewater Associates, the world’s largest hedge fund, added the ETF to its portfolio in the quarter, with the purchase of 577,264 shares valued at $68.1 million, a regulatory filing showed Aug. 10. Templeton Global Advisors Ltd. boosted its stake in Barrick Gold Corp.
Investors poured $870 million into SPDR Gold in the second quarter, taking the fund’s total assets to $34 billion as U.S. inflation continued to undershoot the Federal Reserve’s target, putting at risk policy makers’ projection for rising interest rates. While the prospect of monetary policy tightening remains, investors recently turned their focus on geopolitical strains as North Korea’s Kim Jong Un threatened the U.S. territory of Guam, boosting demand for bullion as a haven. “Prospective risks are now rising and do not appear appropriately priced in,” billionaire Ray Dalio, who manages Bridgewater, said in a LinkedIn post, as he recommended investors allocate 5 percent to 10 percent of their assets to gold. Read more here-https://bloom.bg/2wgSZTi
-Greg Hunter: Egon von Greyerz Interview, Risk Greater Than Ever. Financial expert Egon von Greyerz says the central bankers did not fix the problem that caused the last global economic meltdown. EvG points out, “Did they save the system? For ten years they did, but they didn’t save it. They made the problem a lot bigger. Global debt has gone from $120 trillion in 2006 to $225 trillion today. Central banks have printed another $18 trillion. So, the situation right now is a lot worse than it was then. So, the bubble is much bigger.
And remember last time, interest rates worldwide were around 5% to 6% ten years ago. Today, they are zero or negative in many countries. They cannot achieve anything by adjusting interest rates. Well, they can make them more negative, but people are not going to give them any money with negative interest rates.” EvG vaults gold for wealthy clients in secret vaults in Switzerland and in Asia. What is he seeing first hand from his global clients? EvG says, “It’s interesting that we are seeing big money now starting to actually come into the gold area.
They are increasing (holdings) or coming in for the first time, which I would say is quite new, in the last few weeks. People are sensing it. People understand what’s happening. We have our clients we’ve had for the last 15 years, and they are increasing their holdings, but we have new money coming in, and it hasn’t been on the scale we are seeing now. There are people that smell things before they happen. People don’t know why, but people are sensing something is going to happen.” Read and watch more here-http://bit.ly/2fNmB4F
-Greg Hunter: Lynette Zang Interview, They Want to Get Rid of Cash. Market analyst Lynette Zang says get ready for a “money standard shift.” A reset in how we buy and sell things is being put into place. Zang contends, “Look at the crypto currency area because they know that’s where they want to go. They have to take us there so they can get rid of cash, and they can control everything directly. Generally speaking, all these new crypto coins that are coming out and are making lots of money and people marry that money because of nominal confusion, what is really happening is they are preparing us for a money standard shift.”
Zang explains that the U.S. dollar has lost about 96% of its value since inception of the Federal Reserve, and its value is “nearing the bottom. So, there is no place else to go but to digital currency,” says Zang. On interest rates, Zang says with all the massive debt out there globally, rates cannot be allowed to rise, and central bankers “need interest rates to be negative.” Zang says, “Interest rates will not go up too much further because that will trigger the derivative market unless they are ready for the shift because all that debt keeps coming due.
It’s not like they are paying that debt off, they are just rolling it into additional debt. Rising interest rates will cost everybody more money.” If rates go up to around 4%, Zang contends, “That would be a trigger and cause a derivative event that will implode all the markets.” Zang says every fiat currency will reset against gold and silver, and if it happened today, she estimates “gold would be more than $9,300 per ounce” and “silver would be more than $625 per ounce.” Zang says, given all the unpayable debt in the world, those are conservative estimates. Read and watch more here-http://bit.ly/2vER8Hk
-Michael Pento: Jim Rickards Interview, What Are You Waiting For, Get Your Gold Before Your Not Going To Get It Anymore. Watch here-http://bit.ly/2v3aAJW
-John Embry: Deep State Operatives Becoming Desperate As Gold & Silver Near Major Breakouts. “The reality is that there are so many things the markets should be factoring in besides a geopolitical event. To a considerable extent this has been reflected in the staggering rise of Bitcoin. But in the end, the real story for monetary value will be turn out to be gold and silver. I have believed for some time that we are in the endgame for the global bailout that occurred in the wake of the financial crisis of 2008.
Absolutely nothing has been corrected. The bubbles are dramatically larger and the powers that be have little left in their arsenals other than unlimited money printing accompanied by propaganda that attempts to obscure reality. Gold, silver, platinum, and their respective equities remain on the bargain counter while virtually nothing else is, with conventional stocks, bonds, and real estate being hideously overvalued.” Read more here-http://bit.ly/2wRrbme
-Lawrie Williams: Gold Rhetoric and U.S. economy calling the price. While there is little doubt that the USA has a much larger and proven nuclear arsenal than North Korea, Kim Jong Un will know that to deploy this against the relatively small Asian nation is fraught with problems in that nuclear fallout as a result of any such attack could also have an impact on China and South Korea the one a potentially even more dangerous adversary and the other an ally. Whereas if North Korea were to take out say Guam with a nuclear strike, which it has threatened to do, the impact on other nations would be far less. However we feel either scenario is unlikely, although one can’t rule out an escalation into conventional warfare. Read more here-http://bit.ly/2wbZx6A
-Katy Burne: The Fed Has 6,200 Tons of Gold in a Manhattan Basement, Or Does it? Eighty feet below the streets of lower Manhattan, a Federal Reserve vault protected by armed guards contains about 6,200 tons of gold. Or doesn’t. The Fed tells visitors its basement vault holds the world’s biggest official gold stash and values it at $240 billion to $260 billion. But “no one at all can be sure the gold is really there except Fed employees with access,” said Ronan Manly, a precious-metals analyst at gold dealer BullionStar in Singapore. If it is all there, he said, the central bank has “never in its history provided any proof.”
Mr. Manly is among gold aficionados who wonder if the bank is hiding something about what it’s hiding. Other theorists suspect the gold beneath the New York Fed’s headquarters at 33 Liberty St. may be gold-plated fakes. Some conspiracy-minded investors think the Fed has been secretly leasing out the gold to manipulate prices. “There has to have been a central bank spewing their gold into the market,” said John Embry, an investment strategist for Sprott Asset Management in Toronto until 2014 who once managed its gold fund. “The gold price didn’t act right” during the time he was watching it and the likely explanation for the movement was Fed action, said Mr. Embry. Read more here-http://fxn.ws/2i7Ky7v
Gold to silver ratio at 80 to 1 with gold at $2,000 the silver price would be $25.00
Gold to silver ratio at 70 to 1 with gold at $2,000 the silver price would be $28.57
Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33
Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00
Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00
Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67
Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00
Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33
-Palladium spot price jumps 45% on year in H1 2017, outlook strong: Norilsk. The spot price of palladium increased 45% year on year in the first half of 2017, making it the best-performing commodity in Russian miner Norilsk’s portfolio, the company said Tuesday. The price averaged $792/oz over H1, according to the miner’s data. “Strong demand from the automotive industry up 4% on year driven by increase in SUV sales globally, ongoing shift away from diesel to gasoline engines in Europe and tightening emission legislation” were factors in the price firmness, Norilsk said. Still, the real boost came from a tight spot market, possibly exaggerated by a dominant position. Read more here-http://bit.ly/2w3wod7
-“There have been unusually large withdrawals of metal from the SLV over the past month and week. Over the past month, more than 13 million oz have “come out” of SLV, with 3.8 million oz this [past] week alone. Remember, silver has rallied $1.50 over the past month with more than half of the gain coming this week. Normally (whatever that word means in our increasingly crazy world), higher prices denote net investor buying, as the buyers are more aggressive than the sellers, and that results in new shares outstanding being created and more metal deposited into the trust to back those new shares.
So I just reported the opposite strong buying on higher prices with metal coming out of SLV instead of going in. What gives? What gives is that JPMorgan has ramped up its accumulation of physical silver through the share to metal conversion route in SLV and this alone accounts for the phenomenon of big metal withdrawals on rising prices. The motive for JPMorgan is obvious accumulate more physical metal without having to disclose that fact. Not only is my explanation the only one offered, it is the only explanation I can possibly conceive. And I would point out that there is more silver in SLV than in any stockpile in the world, which should make the question of the recent notable withdrawals of prime interest to anyone who follows silver.
Yet unless I’m reading in all the wrong places, I haven’t heard any discussions on the big recent withdrawals or the reasons for them. That is astounding to me. Between conversions of shares to metal in SLV and deposits into its own COMEX warehouse (by skimming from the weekly physical turnover), I would estimate that JPMorgan has acquired more than 17 million oz of physical silver over the past month or so. That means the world’s most crooked bank now holds a lot more than the 600 million oz I pegged them at some months back. Silver analyst Ted Butler Aug 12 2017 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-“In essence, JPMorgan was the sole commercial silver short seller over the past three reporting weeks (since the raptors were selling out long positions, not adding shorts). As such, can there be any doubt that silver is just a racket run by JPMorgan? Last Wednesday, 02 August, I wrote that the key test to come in silver was whether JPMorgan would add to silver short positions to cap the price and whether the CFTC’s Enforcement Director, James McDonald, would allow this. While that’s still the key test to come, the increased short selling by JPMorgan through last Tuesday, 01 August, is beyond troublesome and is nothing short of a personal slap in the face to McDonald.”
“Normally, JPMorgan adds COMEX silver short positions as a price move up, matures, and nears completion, with the crooked bank serving as the short seller of last resort, providing just enough new short sales to provide whatever amount of selling at the margin is necessary to cause silver prices to top out and then decline. This time, these crooks came bursting through the door with both short selling guns blazing; a distinct change from past pattern.” Silver analyst Ted Butler Aug 5 2017 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-James Turk: This Will Trigger The Price Of Silver To Skyrocket. “Everybody should be watching silver very closely here. We are very close to a critical pivot point that I expect will set the primary trend of silver for months, and maybe years to come. In fact, the pivot point is already moving in silver’s favor. In that spectacular 2010-2011 rally, silver started breaking away to the upside in August 2010. With the head and shoulders pattern now formed, silver is repeating what it did back in 2010 with another August break-out. So I expect silver to continue heading toward $50 and touch it some time next year, and then it starts to get exciting. Silver is the only major commodity that has never exceeded its 1980 high price that concluded the inflationary 1970s. When silver finally exceeds $50, it will be breaking out of a multi-decade base to really begin its bull market.” Read more here-http://bit.ly/2x5OSX9
-John Embry: Silver Set To Soar As World Markets Approach Day Of Reckoning. I think we are finally getting closer to a major turn in the price trend for silver. The cartel’s many years of relentless downside assault on the silver price on the Comex paper market are finally having an effect on the physical market. Very simply, at this ridiculously low, totally uneconomic price level, silver mine production is beginning to collapse in most constituencies. This is very important in that, unlike gold, a significant proportion of new silver mine supply and scrap recovery is consumed in new industrial and medical applications.
“Thus, a dramatic drop in new mine supply will ultimately lead to silver pricing taking place in the physical market, rather than in the totally fraudulent paper markets controlled by the bullion banks, central banks, Western governments, et al. However, this could be a classic case of be careful of what you wish for. Gold and silver’s traditional role, besides representing real money as opposed to the fiat garbage currently in vogue, is to act as the so-called ‘canary in the coal mine’ when it comes to judging the validity of the current monetary policy. When the ludicrous global monetary policy currently in effect is totally discredited by sharply rising gold and silver prices, financial mayhem is guaranteed to occur. Read more here-http://bit.ly/2fMEEYs
-Avi Gilburt: Silver looks like it’s setting up for a huge rally. As I read posts across the internet, I see utter disgust with the metals complex. It seems this sideways action in 2017 has worn investors out. I have seen many cash in their chips in utter disgust over the last few months. Yet, all we have been doing in 2017 is moving sideways, while maintaining over support.
This is simply how the market works. Before you are able to see any major rally, most in the market have to either be out of the market or positioned the wrong way. Just consider where all the money has to come from that chases a 3rd wave into a parabolic rally. And, based on what I am reading out in the blog-o-sphere, along with the BPGDM being down in the 25 region, it certainly seems the market is doing its job of pushing investors out.
Overall, I cannot say that much has changed since last week, other than in silver. Silver did get a higher high to complete what I ideally view as a 3rd wave off the recent bottom, followed by what I would also like to view as a 4th wave pullback. And, as many of you know, I like it when charts provide us textbook structures. Thus far, silver still needs one more rally to provide us with a more solid 5 waves up off the recent lows. And, as long as we hold the 16.10-16.20 support region, I can still see the potential for a higher high in silver for 5 up. Read more here-http://read.bi/2i7fDb8