Bonds & Interest Rates

Pity the Poor Central Bankers: Playing Masters of the Universe Is No Longer Fun

It was fun playing Masters of the Universe when expectations were low.

Ah, the good old days, when a simple, completely empty promise to do whatever it takes could move the world. It was fun being a central banker back in the good old days–back then playing Master of the Universe was wondrously good fun.

Now–not so fun. Now that interest rates are drifting below zero, there’s not much room for fun left in that sandbox.

As for mortgage rates: they’re so low, some countries are effectively paying people to take out a mortgage, and the resulting bubbles and market distortions are no fun.

mortgage-rate6-16

…. continue Reading HERE

also:

The problem is that the FED, including other Central Banks, have waited too long and gone too far in their ‘zero interest rate’ policies and ‘quantitative easing’ programs so….. Don’t Bank On Rate Hikes!

 

  1. All institutional eyes are on the Brexit vote. In the short term, it’s the main driver of gold price discovery. 
  2. Please  click here now. In the big picture, a “Stay” vote is mildly positivefor the gold price, because England will want special privileges with its EU membership. That means other EU member countries will soon demand special privileges, too.
  3. A “Leave” vote is even more positive for the gold price, and if it’s followed by a rate hike from Janet Yellen in July, global stock markets could begin a horrific down cycle.
  4. Please  click here now. Gold is very sensitive to the price action of the US dollar against the Japanese Yen.
  5. Japan is the world’s largest creditor nation, and America is the world’s largest debtor nation. The Brexit turmoil is causing Japanese citizens and institutions to repatriate money from abroad. That puts heavy downwards pressure on the US dollar.
  6. Please  click here now. Double-click to enlarge. This hourly bars chart of the dollar versus the yen looks like a train wreck chart. 
  7. When the world’s largest creditor class goes into “risk-off” mode, powerful institutional money managers buy gold aggressively.
  8. Please  click here now. I’ve suggested that the SPDR fund (GLD-NYSE) could hit 900 tons in June, and as of this morning, it’s already at 896!
  9. During the “QE heydays” of 2009 – 2011, highly levered hedge funds were aggressive SPDR fund buyers. Sadly, that leverage meant they couldn’t hold their positions when the price dipped.
  10. Now, a lot of unleveraged private banks and value-oriented institutions are the buyers. They won’t be shaken from their positions, and they are buying gold consistently.
  11. In contrast to gold, the US stock market has substantial headwinds facing it. Value players don’t want anything to do with that market. 
  12. With QE finished, and a July rate hike looking imminent, the US stock market is looking very vulnerable. 
  13. Please  click here now . Double-click to enlarge this hourly bars chart of the Dow. It looks very toppy. For another look at that chart, please  click here now. Double-click to enlarge. 
  14. There’s a big head and shoulders top forming.
  15. The May unemployment report was truly abysmal, and the US business up cycle is about eight years old. It’s either ended, or close to ending. 
  16. Statements from Janet Yellen that the economy looks good are simply not enough to allay concerns from American money managers and creditors in Japan, about the inherent dangers in the US stock market.
  17. A rate hike that follows Brexit turmoil could put the Dow into crash mode, and send gold straight towards $1400.  
  18. Please  click here now. Double-click to enlarge this daily gold chart. 
  19. In the short term, my 14,7,7 series Stochastics oscillator suggests gold is now a bit overbought, but any weakness should be seen as a buying opportunity.
  20. Gold has a solid floor of bullish fundamentals underneath it now. That means the downside is very limited, but it’s difficult for Western money managers to overwhelm supply when India is in quiet mode, as it is now. 
  21. So, it’s important that gold market investors exhibit patience. Gold has really been trading sideways from mid-February, in a loose rectangular price pattern. Chinese New Year buying ended in February, and India is still one to two months away from serious Diwali-related dealer buying.
  22. The bottom line is that as Asian physical demand strengthens, Western money manager buying will push total global demand above total supply, and the next major leg higher for gold will be underway!
  23. Please  click here now. Double-click to enlarge. That’s the GDX hourly bars chart. Some analysts think that gold stocks have come “too far, too fast”, and perhaps bullion will outperform the gold stocks now. 
  24. I beg to differ. If gold can make it to the $1400 area, the profits made by gold companies can increase dramatically, and that would unleash a fresh round of powerful institutional buying. Gold stocks should not only continue to lead bullion in the second half of 2016, but they appear poised to increase that outperformance!

Thanks! 

Cheers
st

Jun 14, 2016
Stewart Thomson  
Graceland Updates
website: www.gracelandupdates.com

related:

George Soros Making Big Bets on Gold

Fed Will Sacrifice Dollar on the Altar of the Stock Market

pfPeter Schiff appeared on CNBC this week with a dire warning on America’s economic future – “It’s gonna be awful!”

Peter said this time around, we’re not looking at a financial crisis. We’re staring down the barrel of a currency crisis. Ultimately, the central bankers and government policy makers will sacrifice the dollar on the altar of the stock market. Their main goal is to make sure the stock market doesn’t crash again. Peter said they might succeed, but only at the expense of the dollar.

So we’re going into a currency crisis, and this crisis is going to be much bigger than a financial crisis. The impact it’s going to have on the average American, on his standard of living, on his way of life is going to be much more profound. And sure, people won’t lose as much money in their stock portfolio, but if they try to sell their stocks and spend the money, the purchasing power that they lose is going to be much greater then what was lost in ’08.”

Peter went on to defend his position, arguing that the only reason the dollar is so strong right now is because people actually believed Federal Reserve policy is working. What are people going to do when they finally figure out that it was a failure and we’ve been in a phony recovery?

Highlights from the interview:

“They’re just still little cubs. I mean, they haven’t really matured into full-blown a bear yet. They have no idea just how bad it’s going to be. It’s going to be awful.”

“Do you guys remember the financial crisis of 2008? Did you think that was bad? This is going to be worse.”

“It’s not necessarily going to be concentrated in the stock market. See, I think that the government, the Federal Reserve, their main goal is to make sure that the stock market doesn’t collapse again, to make sure the real estate market doesn’t collapse again, and they may succeed. But only by sacrificing the dollar. So we’re going into a currency crisis, and this crisis is going to be much bigger than a financial crisis. The impact it’s going to have on the average American, on his standard of living, on his way of life is going to be much more profound. And sure, people won’t lose as much money in their stock portfolio, but if they try to sell their stocks and spend the money, the purchasing power that they lose is going to be much greater then what was lost in ’08.”

“The dollar only started to rally because everybody believed the Fed’s program actually worked, that we had a real, sustainable recovery, that the Fed could actually normalize policy, raise interest rates, shrink its balance sheet, and everything was going to be fine. That’s why the dollar started to rally…Now people are just beginning to realize that that wasn’t true – that the policy didn’t work. If fact, it not only didn’t work, it made everything worse. We’ve dug ourselves into a deeper hole. People are going to find that out now when the Fed can’t raise rates, when they have to go back to zero and when they have to do QE4, and so I think the dollar is going to implode.”

“The dollar is falling and gold is rising when people still expect the Fed to raise rates. Imagine what is going to happen when they expect a cut.”

“Once the Fed has to admit that we’re in a recession, what are they going to do? They’re going to cut rates. They’re going to start printing up a bunch of money. The dollar is going to tank. Commodity prices are going to rise. And all of a sudden a lot of the emerging markets are going to be in better shape.”

“Even though the Fed hiked rates in December, real rates are lower today than they were in December because inflation has increased more than that quarter-point rate-hike, and that’s going to continue. So, imagine what happens when the Fed starts cutting rates as inflation is getting worse. And then real rates really tank and the dollar just drops through the floor.”

“All we’re doing now is giving more drugs to a drug addict and that is not going to solve the drug addict’s problem.”

elated:

A list of where the Big Money Boys are investing their money – George Soros Making Big Bets on Gold

Polls show increasing support for Brexit; Murdoch’s Sun backs ‘Leave’

A profound example of Mike’s rejection of the elites –

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Britain’s “Leave” campaign opened up a 7-point lead over “Remain” ahead of a referendum on membership of the European Union an opinion poll showed late Monday, while the nation’s biggest-selling newspaper urged readers to vote to quit the bloc.

The result of the June 23 referendum will have far-reaching consequences for politics, the economy, defense, migration and diplomacy in Britain and elsewhere.

Recent polls are suggesting that momentum has swung towards the “Leave” camp, or a so called Brexit, unsettling investors. “Leave” in recent days has focused its campaign on the issue of immigration.

According to the YouGov poll for The Times, “Leave” held 46 percent support compared with 39 percent support for “Remain.” Undecided voters were 11 percent, while 4 percent won’t vote.

Last Monday The Times/YouGov had reported a 1 percent lead for the “Remain” campaign.

In another, though not unexpected, boost for “Leave,” media tycoon Rupert Murdoch’s Sun newspaper called on its readers to vote to quit the 28-member EU.

“The Sun urges everyone to vote Leave. We must set ourselves free from dictatorial Brussels,” said the tabloid, which has a circulation of 1.7 million.

Other polls published on Monday also put “Leave” ahead, while betting odds on Brexit narrowed.

An ORB poll for The Daily Telegraph put support for “Leave” at 49 percent, compared with Remain’s 48 percent, while two ICM polls, one online and one conducted by telephone, found “Out” held 53 percent support compared with 47 percent support for “In,” the Guardian newspaper, which sponsored the telephone poll said.

That compared with a 52-48 percent split in favor of “Out” in ICM polls two weeks ago, the Guardian said. Those polls excluded respondents who answered “don’t know.”

A poll published on Friday which gave “Out” a 10 percentage-point lead added to pressure on sterling and pushed the cost of hedging against huge swings in the exchange rate to record highs [GBP/]. 

ICM said it interviewed 1,000 adults by telephone and 2,001 adults online between June 10 and 13.

Including people who said they did not know how they would vote, the telephone poll showed 50 percent of people backed “Out,” 45 percent supported “In,” and 5 percent were classed as “don’t know”, ICM said.

related: 

A list of the Big Money investors and where they are directing their funds –  George Soros Making Big Bets on Gold

The U.S. And China: The Dollar/Renminbi Dance

23dc4818f6bd2820Summary:

  • China is becoming a significant enough force in the world that officials at the Federal Reserve are going to have to pay more attention to world currency markets.
  • The US/China economic and financial relationship is so important to China that the People’s Bank of China has reduced its currency reserves by $470 billion since last August.
  • Importance? Since the Federal Reserve announced it was stopping its quantitative easing in the summer of 2014, the PBoC has seen its currency reserve drop by around $800 billion.

….read more HERE

related:

USDCAD Set To Resume Bear Rally