A pair of interesting articles came my way regarding gold.
The first is from Incrementum AG. It’s part 11 of a series entitled In Gold we Trust.
The second, The Risks of This Low Volatility Environment & What It Means For Gold Prices, is from end Stefan Wieler of Goldmoney via HedgeEye.
The HedgeEye article discusses volatility suppression because six major central banks alone have together now purchased nearly 20 trillion dollars in assets, which is equivalent to almost 40% of the combined GDP.
Here is a snip on volatility suppression under Greenspan.
Shortly after Alan Greenspan became Fed Chairman, U.S. equity markets crashed by more than 10% in one day. It seems that the preceding Fed policy was designed to avoid spooking markets at all costs to avoid a repetition of the 1987 crash. As a result, volatility in the equity markets continuously fell for several years until the mid-1990s. When volatility began to rise again later in the decade on the back of the Asian crisis and turmoil in the wake of the failing LTCM fund, equity markets nevertheless kept on moving higher.
Eventually, the Greenspan put era ended with the burst of the dot-com bubble in 2000, which wiped out close to 80% of the NASDAQ’s value and sent the U.S. economy into a recession. It’s naïve to assume that the outcome will be more benign this time around, given the vastly larger scale of central bank intervention.
In Gold we Trust
The In Gold we Trust PDF is a comprehensive 159 page PDF that provides a holistic analysis of gold and financial markets from an Austrian perspective.
Key Topics and Takeaways
- High expectations of Trump’s growth policy dampened the gold price increase in 2016 – Still up 8.5% in 2016 and 10.2% since January 2017.
- The further development of the normalization of monetary policy in the US will be the litmus test for the US economy.
- Bitcoin: Digital gold or fool’s gold?
- White, Gray and Black Swans and their consequences for the gold price.
- Exclusive Interview with Dr. Judy Shelton (Economic advisor to Donald Trump) about a possible remonetization of gold.
- 5 Reasons why the gold bull market will continue.
It’s difficult to snip something meaningful from 169 pages so I encourage readers to download the report and take a look. There is also a condensed version as well as versions in German.
- Extended Version English: 169 Pages
- Compact Version English: 29 Pages
- Extended Version German: 179 Pages
- Compact Version German: 28 Pages
Please check out one of the versions of In Gold We Trust.
Mike “Mish” Shedlock
Let’s see…
Runway spending and insane debt levels with nearly every government around the world. Which one will destroy the economic system of their host country? EU? Japan? China? USA?
Literally, a dozen military flash points around the world.
Businesses and stock markets that make no profits and run solely on debt and greater fools.
Housing bubbles, stocks bubbles, bitcoin bubbles, etc. Almost everything is in a bubble. And bubbles do pop…
Where to hide, where to hide? When the panic “investors” head to the exits. The only question is when.
And Trump wants to be the real manufacturing jobs president (not the coffee slinger jobs of obama).
That means:
Repeal obamacare
Reduce taxes – especially corporate taxes
Reign in unions
Reduce the insane EPA regulations (kinda check)
Leave NAFTA
Leave the Paris Accord (check)
Leave the TPP (check)
Lower the dollar. Much, much lower…
It also means cutting the size of the bureaucracy in Washington that administers all that useless cr@p.
Otherwise, the actual cost to taxpayers doesn’t go down.
Who outside Washington DC really cares if some lazy public employees can’t retire on full pension after 20yrs? Everyone else has to work 45yrs, and we don’t get a pension. Time for our “public servants” to have a reality check imposed on their delusional little world
As a lazy Federal employee who has to wait 34.5 years to retire (not 20 nor 45) with a 1/2 pension (we now get Social Security too), who greatly benefits from clean air and water (EPA), no domestic war in 200 years (defense spending), old people not standing in food lines a la Social Security (watch the Depression videos from that time), I understand that having your own deteriorating financial situation makes you want to lash out at anyone you think is “beating” you in life. Just make sure you do your factual research. 🙂
Factual research?
No domestic war in 200 years? Did you just sleep through class on the wars of 1812 and the Civil War? The bombing of Pearl Harbor? Indian Wars? War with Mexico? Does any of this ring a bell?
Ok. 150 years.
OK anonyous — remember when that plane flew into the side of the Pentagon a few years back on Sept 11th?
And you corrupt bureaucrats used the opportunity to further mess up every airport in the world with federal union members who are just as useless but twice as annoying and three times as expensive as the private sector security?
The private sector guys stopped exactly the same number of terrorists as you useless bureaucrats — and they did it for 1/3rd the cost.
It wasn’t 150 years ago. It was less than 15. Try using one of the calculators you billed taxpayers $1000 for to get your calculations right
@Anonymous — are you the nameless loser that CNN keeps quoting in their lies? Or the one WaPo keeps citing?
No matter. Since you have your head up your rear end, collecting benefits the public you work for does not enjoy — let me clue you in on a few wars you somehow managed not to be effected by in the last 200 years.
There was that whole civil war thing where parts of your beloved Washington DC were attacked, along with many many suburbs. Apparently you were too busy counting benefits to notice this?
Then there were dozens of German U-boats off the coast of the US during WW2. Lots of people saw them. At least four operatives went ashore in Long Island, NY. Maybe you were at one of your stupid union meetings and didn’t get the memo.
Oh, and on September 11th, 2001 — some ass-hats that YOU BUREAUCRATS pissed off in the middle east in wars that we the people did not authorize … said asshats flew a giant passenger plane into the side of the Pentagon. A tribe of indigenous peoples in Africa somehow heard about this incident and sent a cow as condolences. It speaks volumes about your incompetence and unprofessionalism that you somehow still don’t know about it.
And for the record you ungrateful sh!t — you admit getting a pension after 37 years (presumably you are double dipping like your union brethren)… the public you are supposed to work for does not get a pension at all. Not after 20 years, not after 37 years, not at all. We have to fund our own IRA accounts and we are restricted in contributions to amounts that are way too small to fund much of anything at all.
You ungrateful and useless sh!t head.
By the way @anonymous… while you are taking credit for the lack of food lines (a la the great depression that government policies caused) — the taxpayers were the ones actually paying into social security. We also pay your current paycheck. And we pay for your benefits in addition to having to pay for our own. You contribute red tape and nonsense.
The EPA is guilty (during Obama’s term) of causing the largest hazardous waste spill ever — straight into the Snake River. You have also “licensed” waste disposal all over the place because you received a payment (what normal people call a bribe). Meanwhile, you have destroyed jobs in your over-zealous attempts to make yourselves feel important. You suck as human beings never mind as protectors of an environment you don’t see.
Lets talk about your “poverty” programs, which have resulted in lots more people on food stamps while you useless greedy bureacurats collect paychecks that are double what the average taxpayer makes. That’s based on your union bretheren over at the IRS — another disaster.
Lets talk about the TSA. They spend billions. They harass grandmas and kids in wheelchairs. They delay flights. They help beat up United Airlines passengers. OH, and they have not stopped a single terrorist. Not one.
Speaking of the TSA, did you know that bureaucracy was created after the DOMESTIC 9/11 attacks that you somehow don’t remember?
You useless greedy unprofessional sh!t.
No wonder you signed anonymous. No one would be proud of what you do.
Just make sure you send in your taxes on time. I need a new desk chair.
“Lower the dollar. Much, much lower…”
Just don’t forget that that means “Lower the standard of living. Much, much lower…”
They are two sides of the same coin. The higher the dollar, the cheaper stuff is to buy, and our standard of living goes up, but it’s hard to remain competitive making stuff. The lower the dollar, the more competitive our manufacturing is, but the less stuff we can afford to buy. Somewhere there is a happy medium, but without the rigors of a gold standard, we can go a long time out of balance, running huge trade deficits.
Nice list of fixes, but how about this: start a war to distract from the looming apocalypse. Preferably, the TPTB psychos would gang up on a minor, defenseless country, but that supply has been exhausted in the past decade. Now, you need to be bold, and the groundwork has already been laid, anyways. If I was a country whose name start with say R., I would be worried.
Gold price is pinned by the fiat currency central banks.
Your (and my) guess about where gold is going is only as good as your (and my) guess about what tomorrow will bring in terms of economic conditions and global calamity.
How many of us thought we’d get another big crash within 3 years of 2008? That we could never sustain the crony capitalism corporate welfare and bailouts? (Hand Raised).
Like with any other bet or gamble – you could win big or you could lose big on your guess on gold. I contend that skill is not a factor. It’s all comes down to LUCK!
As Mr. Eastwood once told us:
Do you feel lucky today, punk?
Well, do ya?
Winning big or losing big is not about the product. It’s about the timing. Anyone who thought financial markets were unsustainable in 2010 and decided to stay out lost big. Anyone who thinks the same thing today may also lose big.
And meanwhile Harry Dent is calling for a major crash in gold. I think that’s a bullish sign.
Picking a horse to win in a field of 12 is timing too. But it’s not skill. It’s luck.
Placing a bet on gold is no different.
Of course picking horses is a skill. I think I learned how to read from comic books and racing forms. It’s getting the correct odds that is unobtainable, but the favorite, not always, but very often wins.
As for markets, luck helps, but skills are good too.
Favorites only win approximately 35% of the time, and finding value is certainly not “unobtainable”.
1- 35% is high. Well above the suggestion that the outcome is random and therefore there is no skill in determination of a favorite. Thank you for substantiating my point.
2- No one knows what the fair value of any traded asset is worth. Understanding value is about understanding equilibrium.
re: #2
Complete nonsense. The primary distinction between those who bet on horses and lose, and the small percentage who win, is that the latter understands how to identify good value, and manage their money accordingly.
@ Tinky. Means the same, an asset that is out of equilibrium is one that has an extra, or good, value attached. Obviously underpriced is what people search, overpriced sometimes has ways to obtain the difference, for example by shorting.
The only traded value that exists is at the moment an agreement is made at a set price. Fair? Who knows.
If picking horses were a skill the oddsmakers (who are the experts) would always get it right. Even you admitted that correct odds are “unobtainable”. You contradicted yourself.
Most of it (90%) is plain dumb luck.
The large majority who go to the pony races leave with less than what they entered with. Just like in Vegas – the house wins.
How else do the tracks keep their grounds so immaculate and pay their workers good salaries?
Same way Vegas keeps building those magnificent high-rises.
Dumb luck rarely pays off.
Always a good idea to ignore reports and see what the serious players are doing.
http://www.zerohedge.com/news/2016-11-23/putin-buys-dip-russias-gold-buying-october-largest-millenium
Listening to James Grant on MacroVoices podcast, 2016.
Meanwhile Banco Popular now under Santander wing as the smaller player designated as failing. At last.
5% – 10% gold isno bad idea, or 5% gold, 5% miners, to get some levered upside if it starts to move.
No one knows the future so hold a little insurance. Not without opportunity cost but NIRP makes it less of a lost opportunity cost and if you need the ballast gold offers in stormy waters the lost opportunity cost will be a very good investment.
300 0000 Banco Popular shareholders lose 1.3 bn.
Additional tier1 and tier2 or hybrid lose 2 bn.
http://economia.elpais.com/economia/2017/06/07/actualidad/1496816233_147482.html
Beats a state bailout.
No, no — collapsing banks and bailouts are all in your mind. Draghi gave banks free money, stolen from Germany’s taxpayers even though the German courts already ruled the practice illegal.
Everything is friggin’ wonderful. Eurocrats farts don’t stink. Everything is great. No banks are in trouble. So stop asking!
/sarc
Well from a more basic perspective the whole financial system is being bailed out by lower rates , there is no easy calculation as to who is paying for that, those that have the most are profiting though.
Below free market interest rates means the central bank is stealing from people with savings, to give to people buried in debt.
Germany and Netherlands have the savings — they are being robbed by Draghi.
The “Club Med” countries live beyond their means (aka debt) — they are being subsidized, after Draghi takes a nice cut off the top for himself and his fellow eurocrats
Yes, but you know it is more complex than that. Pumping money into the system maintains asset values, maintains all those with a stake in the existing system. Much of German savings would have been written off in southern default, for example, or property would have crashed making it more affordable to locals – poor investment is covered by rule changes, political encroachment, monetary policy etc… it is an argument that has no clear answer, all that is offered is centralized reconstruction of accounts and authority.
Could be worse. Try to mix a proverbial German and Spanish in one country say US, or Canada, and then unleash the financial repression. At least, in Europe you’ve got some geographic separation.
@chrysangle — German banks (and savers) were not on the hook for bailout costs until the criminals at the ECB started recycling reserve deposits into Greek debt that is not money good.
Before the ECB’s illegal activity, loans from Germany to Greece were very small. French banks were the big Greek lenders (with Italy second and I think Spain was third).
The EU’s own corrupt slush funds (EMSF ESF and a lot of alphabet soup) was unelected bureaucrats in Brussels committing 15 member states funds to a bailout — knowing full well that 13 of them couldn’t even bail themselves out.
It no longer matters. Merkel and Draghi have stolen German savings out the back door — so now they have real serious exposure. Should be fun if German citizenry figure that out before the German election in Sept
While talking Spain, this is disgusting :
Echeverría, Spanish, who takled an assailant in London who was stabbing a woman, and was last seen lying on the pavement, is missing. It is three days now that his family and the Spanish Embassy have been petitioning UK authorities for information, have provided all relevant details including fingerprints, and the UK keeps telling them to wait another 24/48 hrs, will not allow family to verify amongst those under UK ‘possession’ , be they injured or otherwise.
http://politica.elpais.com/politica/2017/06/07/actualidad/1496833674_164362.html
Simply have to face it – people come second to protocol, whatever it is or is being used for.
Killed.
Apparently after he left his friends to tackle one aggressor, the other two laid in to him from behind.
Valiente.
Él no será olvidado.
Also related, Santander Totta now becomes Portugal’s biggest bank
http://www.theportugalnews.com/news/santander-totta-becomes-portugals-biggest-private-bank/42168
I was hoping the link would be in Portuguese (if that’s still even a language).
First you made an ignorant comment on horse racing (above), and now this? Portuguese is the sixth most spoken language in the world, with roughly 215 million native speakers)
1- Him and I have a running joke. The comment was meant to be stupid.
2- Subtract Brazilians from your 215 million since most are illiterate and barely speak Portuguese (most certainly don’t know how to speak in the damn plural) and you are left with Macau.
…and as for ignorant comments on horse racing – see reply- then learn math.
Ah, yes, I missed the mathematics course in which “very often” was used to represent a specific number.
@ wrldtrst
‘The comment was meant to be stupid.’
No, it wasn’t. It does sometimes takes a little while for the light of day to shine through, so I leave you time to fully realise your errors.
sheesh… of course it was. I am fluent in Portuguese. Vai tomar no cu!
I see you need more time.
@ wrldtrst – just to keep you happy.
http://www.jornaldenegocios.pt/empresas/banca—financas/detalhe/santander-totta-vs-millennium-bcp-qual-o-maior
http://www.tvi24.iol.pt/economia/banco-popular/santander-totta-deixa-mensagem-a-trabalhadores-e-clientes-do-popular
muitíssimo obrigado.
De nada.
So vultures can start circling Santander. It reminds me of bank mergers in 2008-ish. Eventually, all had to be rescued with taxpayer money.
Fed will raise again here in June. So far, equities keep chugging along right through each Fed raising. What has gold been able to do about it?
The bitcoin section of “In Gold we Trust” is reasonable, but a bit outdated. The Bitcoin network is currently experiencing a power struggle between a Chinese cartel engaged in Bitcoin mining and the production of mining hardware, and other constituencies of the bitcoin network including individual users, exchanges, software developers, merchants, other entrepreneurs, and even other miners. If this power struggle is resolved in a way that minimizes disruption and restores/preserves the decentralized nature of bitcoin, then I believe the value of Bitcoin will greatly increase. If not, the opposite will likely happen.
Just want to remind everybody that the “Greek contagion is well contained” despite what those pesky Greeks keep saying. Not only that, “Mario Draghi will do whatever it takes”
In an unrelated development, Banco Popular in Spain just collapsed. Greece still can’t pay its debts, France’s Macron is kissing up to Putin in ways that make NATO seem irrelevant, Turkey just banned Germany from its NATO bases… and England is still leaving the EU, albeit with an establishment police state as their PM.
In short: All pigs are fed and ready to fly!
Gold, silver, etc. are manipulated markets and thus risky to invest.
“Please check out one of the versions of In Gold We Trust.”
…
Does watching Kelly’s Heroes count??
We hear a lot about precious metals being manipulated, but not so much about stock manipulation. It’s true that gold does best when stocks are selling off. All these years since 2009 when stocks sold off hard as the VIX index shoots up in the last 30 minutes of trading. the VIX would get hammered and stocks would recover hardly ever closing on the days low. Some say it’s the Fed and Treasury working together, some call it the PPT plunge protection team, so I guess this can continue for a while longer if that’s all true.
Mish I understand why I wasn’t posted. Nevertheless do you agree with most of what I said?
Mish I understand why I wasn’t posted. Nevertheless do you agree with most of what I said?
since you posted anonymously – I do not even know what you said. I sometimes approve anonymous comments but they also go straight to the bit bucket.
It’s also possible your comment was approved a bit ago.
I was late today in reviewing comments.
anonymous comments always get reviewed
Since gold is primarily a hedge against govt, whose to say govt won’t confiscate gold again? Until the US dollar is replaced as the reserve currency, how exactly is the dollar going to be suppressed when soveriegn defaults wreak havoc on the euro and yen?