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WORLD FINANCIAL REPORT ON RADIO FEBRUARY 7TH 2019
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: Dollar Trapped in Negative Feedback Loop as Foreigners May Flee. The dollar has peaked and its weakness may become a negative spiral as foreign investors exit due to the poor currency-hedged returns of U.S. assets, according to Morgan Stanley. Markets are underestimating the potential for the dollar to fall based on shifts in U.S. growth and the Federal Reserve policy narrative, the bank said. It forecasts the yen climbing to 102 per dollar and the euro to $1.31 by the end of the year, while Nomura International Plc expects foreign selling to weigh against the greenback.
“Dollar weakness could feed on itself if foreign investors are forced to consider the poor FX-hedged returns of U.S. assets,” Morgan Stanley strategists including Andrew Sheets wrote in a note. “For investors outside the U.S., this cost of hedging U.S. assets back into local currency has almost never been higher.” Decelerating U.S. growth and the Fed removing its reference to further gradual interest rate increases last week are underpinning Morgan Stanley’s base case for the dollar weakening beyond consensus forecasts. It sees the potential for even larger downside moves linked to how investors handle hedging. Bloomberg
-CHART OF THE WEEK: Greed Is Back as Debt Markets Face an $8.6 Trillion Hangover. Prayers for a sudden return to dovish monetary policies have been answered, and now investors are living with the aftermath: a world awash with $8.6 trillion in negative-yielding debt. That’s one reason money managers are wading once more into the fringes of fixed-income markets across the globe. Consider the action over the past week: Serial defaulter Ecuador managed to sell $1 billion in new bonds even as the government is in talks for International Monetary Fund financing. Crisis-prone Greece received blockbuster orders for its 2.5 billion-euro ($2.9 billion) sale.
And the decidedly frontier republic of Uzbekistan, encouraged by risk-on markets, is meeting investors for a debut international offering. No wonder the world’s largest funds are betting the explosive rally in developing-economy debt still has legs. Meanwhile, U.S. high-yield is in the throes of a rebound, as traders bet easier monetary policy will prolong the business cycle. Lower-rated borrowers are in vogue after the asset class posted the biggest monthly gain in seven years. “We’ve seen a huge psychological swing toward greed from fear in the space of a few weeks,” said Jamie Stuttard, co-head of global macro fixed-income at Robeco Group in London, who’s paring credit exposure in developed markets. Bloomberg
-CHART OF THE WEEK: Slump in Canadian Consumer Confidence Shows No Sign of Reversing.A one-year slide in Canadian consumer confidence showed little sign of improving in January, with sentiment levels hovering at depressed levels amid turmoil in financial markets and signs the nation’s economy has hit a soft patch. The Bloomberg Nanos Canadian Confidence Index, based on weekly telephone polling, ended the month at 54.2, little changed from average readings since the end of November that are near the lowest in almost two years.
Household sentiment has been on a slow downward trend, even with the lowest unemployment rate in more than four decades suggesting Canadians either aren’t feeling the benefits of the expansion or are worried the economy remains fragile. “Maybe things are better on paper, but it doesn’t feel like it’s better off” for many Canadians, said Nik Nanos, chairman of Nanos Research Group. While pessimism remains strongest in the West, there are signs it’s spreading beyond the nation’s battered oil economies into Ontario, whose confidence gauge last week fell to the lowest since July 2015. Bloomberg
-CHART OF THE WEEK: Cold Blast Shrinks Canadian Gas Discount to Smallest in Year. A polar blast is boosting prices for western Canadian natural gas, narrowing the commodity’s discount to the U.S. benchmark to the smallest in almost a year. Temperatures were expected to plunge as low as minus 34 degrees Fahrenheit (minus 37 Celsius) in Alberta’s capital of Edmonton overnight and drop as low as minus 30 degrees Fahrenheit in Calgary, the province’s largest city. The cold has helped boost spot gas at the AECO hub in Alberta, where prices rose to $1.96 per million British thermal units on Thursday. AECO’s discount to Henry Hub natural gas in the U.S. narrowed to 89 cents per million British thermal units, the smallest gap since Feb. 21. Bloomberg
-CHART OF THE WEEK: Venezuelan Money Supply Is Surging at the Fastest Pace on Record. Venezuelan money supply rose 31 percent in the week through Jan. 25, according to central bank data. That’s the fastest expansion since at least 1997 and could indicate that a panicked government has boosted spending in the face of protests, sanctions and the withdrawal of recognition by a big chunk of the international community. Money-printing has been the driver behind Venezuela’s hyperinflation and the collapse of its currency. On this evidence, the recent strength in the black-market bolivar is illusory. Bloomberg
-CHART OF THE WEEK: Trump Era’s Biggest Winner Is Jeff Bezos, Presidential Nemesis. Two years into Donald Trump‘s presidency, the man who has profited most from the era is his foremost nemesis in the business world, Amazon.com Inc. founder Jeff Bezos. Trump has repeatedly vilified Bezos, threatening his company with tax increases, antitrust prosecution and higher shipping fees, attacking the Bezos-owned Washington Post as a “scam” and even mocking the billionaire for his pending divorce. No figure in corporate America is attacked more often in Trump’s Twitter posts.
Yet no one has made more money than Bezos since Trump’s election. The president’s social-media huffing and puffing hasn’t hurt a solidly constructed business riding the rise of electronic commerce, web advertising and cloud computing. Since the election, Bezos has become the world’s richest person, his net worth swelling by $66.2 billion through Friday, surpassing the gains of the world’s second-fastest riser during that period, French luxury-goods tycoon Bernard Arnault, by 50 percent. Bezos’s wealth was valued at $134.8 billion, making his fortune a third bigger than Bill Gates‘s, according to the Bloomberg Billionaires Index. Bloomberg
-The stock market swoon in the fourth quarter of 2018 is threatening to compound the mountain of unfunded pension liabilities confronting U.S. states and local governments. The median government employee pension, whose assets are heavily weighted toward U.S. stocks, lost 7.5 percent in the fourth quarter, according to data released Wednesday by the Wilshire Trust Universe Comparison Service. Public pensions have lost 4.9 percent since the beginning of the fiscal year on July 1.
“Equity exposure weighed on plan performance in the fourth quarter as geopolitical concerns, earnings revisions, and higher interest rates led to a deterioration in investor sentiment,” said Jason Schwarz, president of Wilshire Analytics and Wilshire Funds Management in a news release. The stock market volatility is raising questions about how state and local pensions can manage through market turmoil, aging populations and rising fixed costs for retiree health-care. The median public pension has more than 40 percent of assets allocated to U.S. stocks and 13.5 percent targeted to international equities. The combined shortfall for state and local pensions exceeds $2 trillion, and if the funds’ fail to meet investment targets that average about 7.5 percent governments will need to make up the difference with higher payments, or cuts to services, to keep from losing ground.
A 10 percent investment loss would raise costs for the funds’ to “tread water” by around 35 percent in fiscal 2020, according to Moody’s Investors Service. In some cases the losses suffered by U.S. public pensions have yet to be amortized, meaning those losses still contribute to higher costs today, Moody’s said in a report Tuesday. “Additional investment losses would compound pension cost challenges, underscoring the importance of pension investment returns for state and local governments’ operating budgets,” Moody’s said. Bloomberg
-The world’s biggest pension fund posted a record loss after a global equity rout last quarter pummeled an asset class that made up about half of its investments. Japan’s Government Pension Investment Fund lost 9.1 percent, or 14.8 trillion yen ($136 billion), in the three months ended Dec. 31, it said in Tokyo on Friday. The decline in value and the rate of loss were the steepest based on comparable data back to April 2008. Domestic stocks were the fund’s worst performing investment, followed by foreign equities. Assets fell to 150.7 trillion yen at the end of December from a record 165.6 trillion yen in September. Bloomberg
-Digital-asset exchange Quadriga CX has a $200 million problem with no obvious solution just the latest cautionary tale in the unregulated world of cryptocurrencies. The online startup can’t retrieve about C$190 million ($145 million) in Bitcoin, Litecoin, Ether and other digital tokens held for its customers, according to court documents filed Jan. 31 in Halifax, Nova Scotia. Nor can Vancouver-based Quadriga CX pay the C$70 million in cash they’re owed.
Access to Quadriga CX’s digital “wallets” an application that stores the keys to send and receive cryptocurrencies appears to have been lost with the passing of Quadriga CX Chief Executive Officer Gerald Cotten, who died Dec. 9 in India from complications of Crohn’s disease. He was 30. Cotten was always conscious about security the laptop, email addresses and messaging system he used to run the 5-year-old business were encrypted, according to an affidavit from his widow, Jennifer Robertson. He took sole responsibility for the handling of funds and coins and the banking and accounting side of the business and, to avoid being hacked, moved the “majority” of digital coins into cold storage. Bloomberg
-The next time a polar vortex rips through the U.S., electric vehicle owners should be prepared to be frustrated if they don’t take special care of their battery-powered rides. Winter has come for Tesla Inc. and its army of car owners, which swelled in size last year. And some of those customers have cooled on the company along with freezing temperatures. Model 3 owners have taken to social media and online forums to air issues they’ve had with their sedans due to the frigid weather of the last week. Cold conditions are a drain on battery range, no matter the car brand. But other predicaments are particular to Tesla.
Ronak Patel, a CPA auditor in New Jersey, bought a Model 3 last August. He’s driven about 150 miles in the cold over the last few days. “My biggest concern is the cold weather drained my battery 20 to 25 miles overnight and an extra five to ten miles on my drive to work,” he said. “I paid $60,000 to not drain my battery so quickly.” Tesla isn’t alone in facing this flaw. “It’s Panasonic that manufactures Tesla batteries,” said Salim Morsy, an analyst with Bloomberg New Energy Finance. “It’s not something specific to Tesla. It happens to Chevy with the Bolt and Nissan with the Leaf.” Tesla delivered more than 245,000 cars last year, tripling its total from 2017, and much of its growth took place in the second half after overcoming what Elon Musk called “production hell.”Bloomberg
-One-time bond king Bill Gross to retire from Janus Henderson. Bill Gross, the one-time bond king at Pimco and later Janus Henderson, announces his retirement. Gross, 74, had once helped run the largest bond fund in the world but had been underperforming for several years running. “I’ve had a wonderful ride for over 40 years in my career trying at all times to put client interests first while inventing and reinventing active bond management along the way,” Gross says. CNBC
–Vancouver’s once red-hot housing market continued to cool last month as the number of home sales fell to the lowest level seen in January in 10 years. The Real Estate Board of Greater Vancouver says 1,103 homes were sold in Metro Vancouver last month, down 39.3 per cent from the same month a year earlier. Month-over-month, January home sales were up 2.9 per cent versus December 2018. The board says last month’s home sales were 36.3 per cent below the 10-year sales average for January, and the lowest January sales figure recorded since 2009.
The composite benchmark price for a property, which includes detached properties, townhomes and condominiums, dropped 4.5 per cent from a year ago to $1,019,600. Sales of detached homes fell 30.4 per cent year over year, while the benchmark price pulled back 9.1 per cent from January 2018 to $1,453,400. The benchmark price of an attached home last month dipped 0.3 per cent year-over-year to $800,600, while the benchmark price of a condominium fell 1.7 per cent to $658,600. CBC
-New home buyers finally reached their limit in Toronto last year. After years of frenzied price increases, sales of new homes in Canada’s biggest city sunk to the lowest in almost two decades in 2018 and the supply of unsold condos piled up, according to a pair of new reports released Friday. “Greater caution” should be taken when investing in new condo units, particularly over the short-term, as trends point toward slower appreciation, Shaun Hildebrand, president of condo research firm Urbanation, said in the report. The “market has started to normalize after unprecedented activity in recent years.”
Toronto’s housing market is dramatically cooling after higher interest rates and new mortgage regulations bite. The city joins other global metropolises such as London and Sydney seeing a slowdown as international investors retreat and domestic buyers balk at higher prices. Sales of new homes fell to 25,161 from 2017, according to the Building Industry and Land Development Association, which used data from Altus Group Ltd. That’s the lowest annual number since Toronto-based Altus started tracking the figures in 2000. Bloomberg
-Federal officials should revisit lending rules that were introduced last year, as the housing market rapidly cools and first-time buyers find it increasingly difficult to buy a home, industry groups say. Paul Taylor, chief executive officer of Mortgage Professionals Canada, said the country’s banking regulator should ease up on stress tests that require homebuyers to prove they can handle payments at 200 basis points above the contracted rate. He’s also urging the government to extend amortization periods back to 30 years for first-time buyers.
“If we continue to force those folks to rent, they’re going to see continuing escalating costs and the average Canadian is going to be a whole lot worse off in a decade,” Taylor said in an interview at Bloomberg’s Toronto office. His group’s 11,500 brokerages, lenders, and insurers originate more than 35 percent of all mortgages in Canada and 55 percent for first-time buyers, according to its website. Taylor is urging the Office of the Superintendent of Financial Institutions, the country’s banking regulator, to adjust the rate for stress tests to 75 basis points. Bloomberg
-Miami estate sells for a record $50 million. An estate on Indian Creek Island sells for $50 million, making it the most expensive single-family home ever sold in the Miami area, according to people familiar with the deal. The property was not officially listed but had sold in 2012 for $47 million. At the time, that also marked a record for the most expensive home ever sold in Miami-Date County. CNBC
-Trucking moves 71% of the freight in the United States. Most of the basic functions of society wouldn’t be effective if truckers were to stop working. And naturally, your packages would be delayed. Grocery stores would run out of food in just 3 days if long-haul truckers stopped working. Businessinsider
-The FBI reportedly raided a Huawei lab and set up a sting at CES as part of a previously unrevealed investigation. Last week the U.S. Department of Justice charged Huawei and its chief financial officer, Meng Wanzhou. The newly reported third investigation similarly deals with trade secrets, but carries the added weight of federal regulations around technologies with the potential for use in defense. The report sheds light on how far Huawei is willing to go for a competitive edge, and on the extent of FBI fact-finding operations involved in these investigations. CNBC
-A tiny Vancouver-based cannabis company whose former ticker was YOLO, short for “you only live once,” was declared the winner of the POT stock-symbol lottery in Canada. Weekend Unlimited Inc. shares surged as much as 65 percent in early trading after the pot firm said Friday that it won the first-ever random lottery for a Canadian ticker symbol. The company debuted on the Canadian Securities Exchange on Oct. 15, two days before the country legalized recreational marijuana. The stock had fallen 57 percent since the Oct. 15 market close, bringing its market value to C$28.6 million before trading opened Friday.
The cannabis-themed symbol, formerly belonging to Potash Corp. of Saskatchewan, came up for grabs on Canadian exchanges this week and approximately 40 companies applied for it, according to a spokeswoman for TMX Group Ltd., which owns the Toronto Stock Exchange. As a result of the high demand, the exchanges held their first lottery to determine the winner. “The POT lottery served to raise the profile of Canada’s leadership in legal recreational cannabis and we believe it will also serve to raise Weekend Unlimited’s profile,” Chief Executive Officer Paul Chu said in a statement Friday. Bloomberg
-Natural disasters cost $91 billion in 2018, according to federal report. Natural disasters cost the country $91 billion in 2018, according to a new report from the National Oceanic and Atmospheric Administration. The economic losses are due to 14 different natural disasters, ranging from hurricanes to wildfires to winter storms. The Trump administration has been historically resistant to take action on climate change. CNBC
-The minimum annual salary for a rookie active roster player with a one-year contract is $480,000, according to the collective bargaining agreement the NFL signed in 2011 with the NFL Players Association, which will be in effect until 2020. That minimum increases for each year a player spends in the NFL. A player with three years’ experience would command a salary equal to at least $705,000, while players with seven to nine years on the field must be paid at least $915,000. That’s great news for those lucky enough to last that long in the NFL, but many won’t ring in a seventh year on the job.
The average career length is less than three years, meaning most players never advance beyond the lower rungs of that payment ladder. Of course, $480,000 is by no means a poor wage it just isn’t quite the seven-digit figure many football fans might expect. When you factor in all the players earning these minimum salaries, along with the payouts of a team’s golden boy, you’ll find that the average NFL salary was only about $2.7 million in 2017, according to The L.A. Times.The median salary for all NFL players is actually about $860,000, much closer to those sums outlined in the sport’s minimum payment guidelines, according to The Houston Chronicle. CNBC
–FanDuel Inc. reported losses of $5 million on Sunday’s Super Bowl suggesting the first big test of New Jersey’s nascent sports-betting business was better for customers than bookies. More than 75 percent of the money was bet on the favored New England Patriots, which beat the Los Angeles Rams in the lowest-scoring Super Bowl ever. Many customers also took advantage of an introductory offer that gave them favorable odds. But if you took the 53-1 they offered on either team, the payoff was in store credit. “All of this combined to leave New England as the big loser for the FanDuel Sportsbook,” the company said. “Very big in fact.” A U.S. Supreme Court ruling last year that allowed sports betting outside Nevada has set off a gold rush among casinos, online betting companies and sports teams. Eight states now allow sports betting, a number that could double this year, according to industry estimates. Bloomberg
-Asia welcomed the lunar Year of the Pig on Tuesday with visits to temples, family banquets and the world’s biggest travel spree. Celebrations took place throughout the region, from Beijing and Seoul to Hanoi and Singapore. The streets of Beijing and other major Chinese cities were quiet and empty after millions of people left to visit relatives or travel abroad during the year’s biggest family holiday. Families gathered at home for multigenerational banquets. Companies, shops and government offices closed for official holidays that ranged from two days in South Korea to a week in China. Read more here-http://bit.ly/2DdvKeL
-Star Trek–like replicator creates entire objects in minutes. A Star Trek–like replicator has arrived, but don’t expect it to synthesize a cup of Earl Grey tea (hot) on the spot. Researchers have come up with a new 3D printing technology that rapidly makes whole objects appear, seemingly from nowhere. Read more here-http://bit.ly/2Tyfg7L
-Harvard’s top astronomer says an alien ship may be among us and he doesn’t care what his colleagues think. Before he started the whole alien spaceship thing last year, the chairman of Harvard University’s astronomy department was known for public lectures on modesty. Personal modesty, which Avi Loeb said he learned growing up on a farm. And what Loeb calls “cosmic modesty” the idea that it’s arrogant to assume we are alone in the universe, or even a particularly special species. Read more here-https://wapo.st/2Gr5Xmk
-552-carat diamond found in N.W.T. now on display in New York. The largest diamond ever found in North America at 552 carats was on display at Phillips auction house in New York on Wednesday. The egg-sized fancy yellow diamond was discovered in October at the Diavik Diamond Mine in the Northwest Territories. The mine is about 300 kilometres northeast of Yellowknife. Dominion Diamond Mines and Rio Tinto Group unearthed the diamond, which is currently ranked 25th on the list of the world’s largest rough diamonds.
James Pounds, executive vice-president of Dominion Diamond Mines said the diamond’s value is unclear because it still needs to be cut and polished. “To me, it’s priceless,” he said. “To me, with someone born into natural diamonds, natural rough diamonds, I don’t even want to see it cut. I just think it’s beautiful as it stands.” Pounds said the company plans to consult with experts around the world, “on how we’re going to liberate the most beautiful piece of polished [stone] out of this.” The diamond will be on display at Phillips through Sunday. Read more here-http://bit.ly/2TFM6na
-“We are seeing a stagnant supply picture of important pink and blue fancy color diamonds. Rare pinks and blues are very hard to come by and continue to command significant premiums. After more than 18 months, we are starting to see some price stability in commercial yellow fancy color diamonds, in line with the performance of white diamonds, driven by lower availability.” Eden Rachminov FCRF Advisory Board Chairman
-Yellow Prices to Increase in 2019, Says FCRF. A reduced supply of vivid-yellow diamonds will drive a price increase this year, according to the Fancy Color Research Foundation (FCRF). “In the last three years we witnessed a substantial [quantity] of vivid yellows coming to market, mainly from the Misery Pipe at [Dominion Diamond Mines’] Ekati mine in Canada,” Jim Pounds, FCRF advisory board member and executive vice president of diamonds at Dominion, said Monday. “However, as the mine transitions from open-pit mining to underground, a substantially reduced [number] of stones will be available during 2019. Therefore, we anticipate a slight increase in vivid-yellow prices.”
The organization’s Fancy Color Diamond Index for yellows fell 2.1% year on year in the fourth quarter, while prices of blues climbed 4.1%, the FCRF said. Pink fancy-color diamonds inched up 0.1%, with the overall index rising 0.2%. In 2018, prices for all fancy-intense categories increased by 0.7%, while fancy-vivid stones rose 1.5%. Prices of fancy-intense-blue diamonds increased 1.9% versus the previous quarter, while 2-carat pinks rose by 1.1% overall, with fancy-vivid pinks increasing 2.1% and 10-carat fancy pinks falling 0.8%. Fancy-vivid-yellow diamonds weighing 5 carats grew 1.2% during the period. The index tracks prices of yellow, pink and blue fancy-color diamonds in Hong Kong, New York and Tel Aviv. Read more here-http://bit.ly/2WKAZvc
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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
-Central Banks Are on the Biggest Gold-Buying Spree in a Half Century. Central banks bought more bullion last year than anytime since 1971, when the U.S. ended the gold standard. Governments added 651.5 tons of gold to their coffers in 2018, a 74 percent increase from the previous year, according to a report from the World Gold Council. Russia, which is “de-dollarizing” its reserves, was the biggest buyer, followed by Turkey and Kazakhstan. Hungary also made a large purchase, citing gold’s lack of counterparty risk and role as a hedge against changes in the international finance system, the WGC said. “Central banks chose to significantly increase their gold reserves, reinforcing the importance of gold as a reserve asset,” the WGC said.
Central banks are expected to acquire an additional 600 tons this year, according to the consulting firm Metals Focus Ltd. The buys, which will help the banks diversify their foreign-exchange assets in a time of extraordinary political volatility, signal a growing confidence in the metal’s value moving forward. The banks “were not net buyers even a decade ago,” said Juan Carlos Artigas, director of investment research at the WGC, in a telephone interview.
“As their foreign reserves expand, they are increasingly diversifying away from pure dollar exposure.” Slowing global growth, a weaker U.S. dollar and a drive by central banks to expand the amount of gold they hold could be a winning trifecta for investors seeking a recovery in the metal’s price after its first annual loss in three years. Gold prices ended 2018a little changed, but rallied toward the end of the year amid concerns about Brexit, a falling stock market and expectations for a less aggressive U.S. monetary policy. The trend has continued this month, with bullion climbing to the highest since May. Bloomberg
-Swaha Pattanaik: Some Central Banks Have Gold Fever, and It Might Be Sensible. Gold bugs aren’t always rational. That’s not the case for central banks, whose purchases of the yellow metal last year were the highest since the United States broke the link between gold and the dollar in 1971. For these institutions, it’s less a short-term gamble that prices of the precious commodity will rise, and more a concern that dollar dominance could gradually be eroded.
Central banks bought 651.5 tonnes of gold in 2018, the second highest annual total on record and up 74 percent from the year earlier, according to the World Gold Council. As in the past three years, Kazakhstan, Russia and Turkey were significant buyers, but were last year joined by the likes of Hungary, India and Poland.
Official foreign exchange reserve managers tend to be tight-lipped. But Hungary in October explained that it had increased its gold reserves tenfold for long-term stability reasons, rather than short-term investment considerations. The precious metal was in limited supply and it had no credit or so-called counterparty risks, because it was not a claim on a specific institution or country. Such thinking may seem like a version of one reason individual investors stock up on gold: because they are terrified of holding ostensibly riskier assets, like shares and bonds. With geopolitical tensions rife, that would be understandable. Read more here-https://nyti.ms/2GsNypk
-Maduro Sold 40% of Venezuela’s Gold Last Year Amid Cash Crunch. President Nicolas Maduro blew through more than 40 percent of Venezuela’s gold reserves last year in a desperate bid to fund government programs and pay millions to bondholders. The government sold a total of 73 tons of gold to two firms in the United Arab Emirates and another in Turkey, opposition lawmaker Carlos Paparoni told reporters in Caracas on Wednesday. That drained reserves to about 110 tons at the end of last year from 184 tons, according to a person with knowledge of the situation, who corroborated Paparoni’s data.
Maduro raided the central bank’s vaults of the 2.34 million ounces of gold (worth about $3.1 billion at current spot prices) as debt piled ever higher and financing options dried up after the U.S. imposed sanctions against his regime. Amid an international push to persuade the authoritarian ruler to cede power to a transitional government, the opposition is also seeking to thwart further gold sales to prevent a ransacking of the country during Maduro’s final days in power. Bloomberg
-Gold Is One Wealth Fund’s Refuge in World Gripped by Turmoil. For Azerbaijan’s sovereign wealth fund, nothing beats the safety of gold in a world increasingly vulnerable to trade disputes and geopolitical risk.
Known as Sofaz, the fund is looking to almost double its holdings of the precious metal in 2019 to 100 tons after resuming purchases in 2018 following a five-year break. By contrast, it’s steering clear of larger bets on bonds and especially equities, an approach that Executive Director Shahmar Movsumov says allowed the fund to avoid losses last year.
“We would want to have something that is not someone else’s credit risk,” Movsumov said in an interview in the capital, Baku, on Friday. “In a world where you see the changes in geopolitics, changes in reserve currencies, changes in the dynamics between superpowers and their imminent impact on the financial sector, you want to be on the safe side.” As a traditional haven in times of turmoil, bullion is seeing a resurgence of demand after the U.S. Federal Reserve signaled that interest-rate increases could be off the table for now.
Signs of a global slowdown and the prolonged U.S.-China trade war have added uncertainty to financial markets. With sentiment toward gold brightening since mid-October, it finished last year with its best quarter since March 2017 as stock-market volatility and a partial U.S. government shutdown also spurred demand. Movsumov said Sofaz will buy even more gold if oil prices are higher than the government’s expectation for $60 per barrel this year. If crude falls to $50, the fund will buy less. The difference will be “marginal. We’re talking about plus or minus 5 tons,” he said.
Sofaz, whose holdings now exceed 80 percent of Azerbaijan’s gross domestic product, was established in 1999 to manage oil and natural-gas income of the third-largest crude producer in the former Soviet Union. The fund expects its assets to rise by $2.3 billion and hit a record high of $40 billion this year, Movsumov said. In 2012, Sofaz started to diversify by adding gold, equities and real estate. While the regulations allowed the fund to invest as much as 25 percent of its holdings in equities last year, it opted to keep those investments as low as 13 percent to 14 percent.
“We decided that it was not the right time to increase investment in equities, and we were right,” Movsumov said. “As life showed, last year was a very bad year for equities.” Azeri President Ilham Aliyev signed a decree in December to change Sofaz’s guidelines, allowing it to double the allocation for gold to 10 percent of its investment portfolio. The share of bonds and money-market instruments was reduced to 55 percent from 60 percent. The fund made a “very small” profit in managing its assets last year but probably avoided losses thanks to the decision not to increase exposure to equities.
All of the gold Sofaz buys overseas is transported to Azerbaijan to be stored in its new building on Baku’s Heydar Aliyev Avenue. Asked why the fund doesn’t want to keep at least part of its gold holdings abroad, Movsumov said it’s a purely commercial decision and has nothing to do with trust. “If you look at the returns on gold investments, they are so miserable that if there is a small change in tariffs on imports of gold, that will simply eat up all your returns,” Movsumov said. “So why bother? It’s better keep it in your vault downstairs.” Bloomberg
-Forget oil: Here’s why gold is key to Venezuela’s crisis-stricken government. Political tensions in the South American country are reaching boiling point, with the oil-rich, but cash-poor, country in the midst of the Western Hemisphere’s worst humanitarian crisis in recent memory. Thousands of anti-government protesters took to the streets of the capital city over the weekend to demonstrate against President Nicolas Maduro. CNBC takes a look at some of the driving forces behind the growing importance of gold. Read more here-https://cnb.cx/2MS53ki
-Ross Norman: Gold Getting Set For Bull Run. If, as they say, it is darkest just before the dawn, then surely for gold at least, the sun must be cresting the horizon now? After seven disappointing years in US dollars at least it is hard to shake off some scepticism. That said, gold is showing vigour in no less than 72 currencies where it is at or close to an all-time high see here. Looking ahead it is our view that gold is currently firing on 2 cylinders out of 4. So the best is yet to come. Read more here-http://bit.ly/2Dc6jKC
-Fund Managers Bullish In Gold, Silver As Of End Of 2018. Money managers were collectively bullish in both gold and silver futures as 2018 came to an end, new data from the Commodity Futures Trading Commission show. Read more here-http://bit.ly/2UHBILZ
-Greg Hunter: Jim Sinclair & Bill Holter Interview, We’re Flash Crashing to Hell. Financial writer Bill Holter and renowned gold and financial expert Jim Sinclair warned last summer there were big problems coming in the global financial system. Today, Sinclair says, “We destroyed everything. We not only destroyed the financial markets, we destroyed society. I’m going for June of this year. The reset button gets reset after a few days of a flash crash that can’t be stopped. We’re flash crashing to hell, piece by piece by piece, until all of a sudden, the motion of the entity cannot be stopped.” In closing, Sinclair says, “The dollar standard is over. We were on a gold standard, and then poof, Nixon, and out. What has happened to the petro-dollar? Poof, it’s out in comparison to what it was. What system is next? The marbles standard? Gold is going back to a store house of value.” Watch more here-http://bit.ly/2DWOOiP
-Greg Hunter: David Stockman Interview, Fed is Enemy of MAGA. Stockman has been touting gold as a must-have insurance policy. Stockman says, “The essential attribute of gold is that it is a contra central bank asset. It’s the one asset that can’t be influenced, manipulated, created or destroyed, for that matter, by the central banks. It’s the one asset that history has proven, without a doubt, can retain its value regardless of the mayhem and financial disorder caused by governments. Gold is the alternative asset to a bubble ridden financial system that is driven by the central banks.” Watch more here-http://bit.ly/2Da4TA0
-Adam Hamilton: Silver Outperforming Gold.Silver recently started outperforming gold again, a watershed event. For long years this white metal has mostly lagged the yellow one, relentlessly battering silver sentiment. But gold surging into year-end 2018 finally sparked some life into moribund silver. This is a bullish sign, as silver has soared in the past once rising prices reach critical mass in attracting new investment capital. Silver looks to be nearing that point again. The bottom line is silver has started outperforming gold again. After getting pummeled near a quarter-century low relative to gold, silver started surging late last year.
Following past extreme SGR lows, silver powered higher in major-to-massive mean-reversion uplegs and bull markets. Their advents have been signaled by silver beginning to rally faster than gold after suffering long periods of underperformance. That’s now happening again, which is a super-bullish omen for silver. Capital inflows are accelerating as gold’s gains restore more-favorable sentiment. As long as gold continues meandering higher on balance, silver buying will beget more silver buying. That portends big gains coming in silver and especially the stocks of its miners. Silver mean reversions higher out of extreme lows relative to gold can run for years. Read more here-http://bit.ly/2MX8036
-The Silver Institute: Silver Market Trends 2019. Read more here-http://bit.ly/2DbHNJr
-The Silver Institute: Silver News December 2018. Read more here-http://bit.ly/2WLWzj7
-Hightower Report: Silver To Get Its ‘Precious Status’ Back. Silver is looking to regain its “precious status” this year as all major signs are pointing to a bullish outlook, according to the Hightower Report. Read more here-http://bit.ly/2t6uHIO
-Jeff Clark: The One Reason Silver & Silver Stocks Will Explode Higher. Precious Metals Analyst Jeff Clark as he gives you an expert’s perspective on the incredible upside potential of silver. Watch more here-http://bit.ly/2DgmWox
-Craig Hemke: Mr. Palladium punches back.Palladium may be the first metal to bust out of the price-suppressing derivatives cage built for it by the futures markets and the banks and central banks that control them, the TF Metals Report’s Craig Hemke writes today at Sprott Money. The gap between physical supply and futures delivery commitments is enormous, Hemke writes. Read more here-http://bit.ly/2TznVac