How is gold performing in the global market?

The price of gold, stock and oil prices, and the U. S. dollar all have very similar characteristics when comparing asset price inflations and momentum. The price of gold can affect the global market at various levels including the cost of oil and the world economy as a whole. It is still the world’s most valued commodities and the most important component of the global economy since 1945. Investing in gold and trading gold offers investors the same value, as the price of gold does not depreciate.
Some of the factors that may affect the price of gold include:
A recession – If the price of gold increases, this typically signals that the economy of the United States is struggling, and the dollar is probably weak. Inflation rates – If inflation rates increase, then typically the price of gold trading and investment increases. Low-interest rates – Low-interest rates over an extended period of time normally affect the price of gold and increase its value and price at that time. A strengthened dollar – In turn, if the dollar is particularly strong this decreases the price of gold The global economy
Gold and the U. S. dollar are very tightly linked. When one is strong, the other weakens in value. This affects the global economy. For instance, if the dollar is weak against the Japanese yen, the dollar is exchanged for a smaller amount of yen than in the past. As the dollar continues to weaken against foreign currencies, investors start to look for alternatives to investing in the dollar and turn to investing and trading in gold instead. This increased demand for gold causes the price of gold to inflate, as investors want a tangible asset that will hold its value.

This post was published at ZenTrader on Oct 30, 2015.

HOW INFLATION FOOLS PEOPLE INTO THINKING THEY ARE RICHER THAN THEY ARE

[The following is an excerpt from the October issue of TDV released to subscribers today] One of the biggest crimes against humanity is central banking and their constant devaluing of their currencies.
Some of the biggest names in history have identified central bank inflation correctly:
-‘By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.’ – John Maynard Keynes
-‘Inflation is taxation without legislation.’ – Milton Friedman
-‘In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.’ – Alan Greenspan
-‘The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.’ – Ernest Hemingway
Note how eloquently Ernest Hemingway described our world today.
But, Lysander Spooner said it best when he said, ‘In reality there is no such thing as an inflation of prices, relatively to gold. There is such a thing as a depreciated paper currency.’
And so, in this topsy-turvy world of centrally planned banking and printing of fiat currencies it is nearly impossible to gauge the real value of things.

This post was published at Dollar Vigilante on OCTOBER 30, 2015.

Come Into My TPP/TTIP Web Said The Globalists To You

From Waking Times:
TPP, TTIP and UN 2030 – Blueprint for a One World Corporate Government
Phillip J. Watt, Contributor
There have been some wild ideas floating about, which for some people have reinforced the lunacy of conspiracies, yet the labeling of genuine truthseekers as ‘conspiracy theorists’ just doesn’t hold the same power as it did even ten years ago.
This is because these ‘crazy’ theorists have actually had many of their beliefs proven correct, which has resulted in an increase of people engaging in alternative avenues for answers. The mainstream narratives are now being questioned to some degree by even those highly indoctrinated into the system, so slowly it’s becoming the new norm to question the ‘official’ story of anything.
This is a great sign for humanity’s future.
So when the most recent secret trade agreements came to light via Wikileaks, right from the get-go the awakening community was suspicious. After all, a previous trade agreement called the North American Free Trade Agreement (NAFTA) was an epic failure for the people and an epic success for the corporate cabal.

This post was published at Edge Trader Plus on Saturday 31 October 2015.

Mario Draghi Admits Global QE Has Failed: “The Slowdown Is Probably Not Temporary”

Undoubtedly, the most amusing this about the prospect of more easing from the ECB (as telegraphed by Mario Draghi last week) and the BoJ (where Haruhiko Kuroda just jeopardized his status as monetary madman par excellence by failing to expand stimulus) is that both Europe and Japan both recently slid back into deflation despite trillions in central bank asset purchases.
In other words, the market expects both Draghi and Kuroda to double- and triple- down on policies that clearly aren’t working when it comes to altering inflation expectations and/or boosting aggregate demand. Indeed, both Goldman and BofAML said as much last week. For those who missed it, here’s Goldman’s take
The subdued and increasingly persistent inflation dynamics that have prevailed in recent years may have eroded central banks’ best line of defence in the face of adverse disinflationary shocks. The energy-price-driven decline in Euro area inflation from 2012 to 2015 has thrown this possibility into even sharper relief. By embarking on unprecedented balance sheet operations and forward guidance, central banks in Europe have sought to ring-fence domestic inflation expectations and signal their intention to maintain monetary conditions easy for a protracted period of time. Mario Draghi himself described the ECB’s asset purchase programme as a way of ensuring that very low (and, at times, negative) inflation does not lead wage- and price-setters to adjust their behaviour to a perceived lower steady-state rate of inflation. However, judging from market-based implied measures of longer-term inflation expectations, the effectiveness of the ECB’s announcements has proved limited so far.

This post was published at Zero Hedge on 10/31/2015.

No Real Chance of Another Financial Crisis – ‘Silly’

I like Dean Baker quite well, and often link to his columns. On most things we are pretty much on the same page.
And to his credit he was one of the few ‘mainstream’ economists to actually see the housing bubble developing, and call it out. Some may claim to have done so, and can even cite a sentence or two where they may have mentioned it, like Paul Krugman for example. But very few spoke about doing something about it while it was in progress. The Fed was aware according to their own minutes, and ignored it.
The difficulty we have in the economics profession, I fear, is a great deal of herd instinct and concern about what others may say. And when the Fed runs their policy pennants up the flagpole, only someone truly secure in their thinking, or forsworn to some strong ideological interpretation of reality or bias if we are truly honest, dare not salute it.
Am I such a person? Do I actually see a fragile financial system that is still corrupt and highly levered, grossly mispricing risks? Or am I just seeing things the way in which I wish to see them?
That difficulty arises because economics is no science. It involves judgement and principles, and weighs the facts far too heavily based upon ‘reputation’ and ‘status.’ And of course I have none of those and wish none.
But it makes the point which I have made over and again, that all of the economic models are faulty and merely a caricature of reality. And therefore policy ought not to be dictated by models, but by policy objectives and a strong bias to results, rather than the dictates of process or methods. In this FDR had it exactly right. If we find something does not stimulate the broader economy or effect the desired policy objective, like tax cuts for the rich, using that approach over and over again is certainly not going to be effective.

This post was published at Jesses Crossroads Cafe on 31 OCTOBER 2015.

How the New Budget Deal Will Affect the Oil Market

This is a syndicated repost courtesy of Money Morning. To view original, click here.
The House of Representatives just voted to approve a budget deal to raise the U. S. debt ceiling. And buried in this last-minute accord designed to save us from another government shutdown is a provision to sell oil from the Strategic Petroleum Reserve (SPR).
The sales are not scheduled to begin until 2018 and run through 2025. In all, 58 million barrels will be sold – starting with an annual amount of 5 million and then doubling per year beginning in 2023.
In the past, the SPR volume was sold off to offset regional domestic shortages in distillate products or, more rarely, tried in an attempt to influence a price reduction when oil was well above $100 a barrel.
The former has not been a consistent policy and the latter (influencing prices) was a dismal failure.

This post was published at Wall Street Examiner by Dr. Kent Moors ‘ October 30, 2015.

New Jobless Claims: Slightly Better Than Expected

Here is the opening statement from the Department of Labor:
In the week ending October 24, the advance figure for seasonally adjusted initial claims was 260,000, an increase of 1,000 from the previous week’s unrevised level of 259,000. The 4-week moving average was 259,250, a decrease of 4,000 from the previous week’s unrevised average of 263,250. This is the lowest level for this average since December 15, 1973 when it was 256,750.
There were no special factors impacting this week’s initial claims. [See full report] Today’s seasonally adjusted 260K new claims was slightly better than the Investing.comforecast of 263K.
The four-week moving average is at 259,250, down from last week’s 263,250, is at a new low last seen in 1973.
Here is a close look at the data over the past few years (with a callout for the past year), which gives a clearer sense of the overall trend in relation to the last recession and the volatility in recent months.

This post was published at FinancialSense on 10/29/2015.

Silver COTs Downright Scary…Trick or Treat ?

Just in time for Halloween comes the Silver Commitments of Traders data for this past week. Scary, is too mild of a word to describe the composition of this market. Downright terrifying might be more apt.
I wrote a report on this last week but this week’s data is simply too astonishing to pass over without commenting upon it.
Take a look at the various charts I am going to post up here.

This post was published at Trader Dan on October 31, 2015.

Haruhiko Kuroda – The Pressure to ‘Do More’ Rises

BoJ Leaves Policy Unchanged, but What Comes Next? The Bank of Japan has employed QE programs since March of 2001 (in February of 2001, it still claimed that ‘QE will be ineffective’ – it was right then, for the last time). These have had no effect apart from making a Keynesian government spending orgy possible that is unique in terms of its size in the post WW2 developed world. It is also unique insofar as it hasn’t yet blown up.
QE was briefly interrupted in 2006, when the BoJ reduced the monetary base by 25% within a few weeks (this barely affected the money supply, although we have to add the caveat that Japanese money supply data are not directly comparable to Western ones).

This post was published at Acting-Man on October 31, 2015.

Investors: Don’t Fall for an Earnings Trap

This is a syndicated repost courtesy of Economy and Markets. To view original, click here.
I’ll say it right out: I don’t know if the Federal Reserve will raise rates or not.
We’re stuck in this cycle where bad news supposedly equals good news. If the economy slips into a coma, the Fed won’t raise rates and stocks could march higher. Interest rates will remain low and investors will go where the money is.
I don’t buy it. The problem with that argument is that earnings stink.
Earnings estimates for the S&P 500 in 2016 have been trimmed by as much as 6%. A lot of the growth we have seen has been generated through financial engineering and accounting gimmickry – things like buying back shares.

This post was published at Wall Street Examiner by John Del Vecchio ‘ October 30, 2015.

The Quick “Bull” Vs “Bear” Case In 8 Charts

“What happens next?” Everyone wants to know the answer, but nobody has it (if they do, they are lying).
Still, one attempt at framing the narrative, comes from BofA’s Savita Subramanian. Here is the 30,000 foot cliff notes version of the two sides of the story.
First, the bear case, or as BofA calls it “an economic shock derails a fragile economy.”
Concern over global growth has become more wide-spread, as suggested by the charts below. We believe that outside of an exogenous geopolitical event, an economic shock would most likely be tied to credit, where signs of stress are building the most.
Growth expectations have come down over the past 12 months, per the Global Fund Manager Survey More investors are starting to believe we’re in the ‘late cycle’ There are signs of stress in the high yield market, with distress ratio increasing recently More companies in the S&P 500 are projected to lose money than those with negative EPS 12M ago.

This post was published at Zero Hedge on 10/31/2015.

Goldman’s 4 Word Summary Of Q3 Earnings Season: “Adequate Earnings, Dismal Sales”

Haven’t bothered to check in on the third quarter earnings season (which at this rate will mark the first two back-to-back quarters of earnings declines since 2009, aka an earnings recession)? Then here is the 4 word summary from Goldman Sachs: “adequate earnings, dismal sales.”
With results from 341 companies (77% of total market cap) in hand, the 3Q reporting season thus far can be summed up as simply as ‘adequate earnings, dismal sales.’ Earnings have been in line with history, with 48% of firms surprising on the bottom line (above the historical average of 46%), for an average EPS surprise of 4% versus the historical average of 5%. On the other hand, sales results have been disappointing, a function of slowing economic growth and a stronger dollar. Just 21% of companies beat consensus revenue estimates by more than one standard deviation, well below the 10-year average of 32%. Excluding Energy, 49% of companies has surprised on EPS, while 20% has surprised on the top line. If companies beat on earnings do they also beat on revenues?
Stocks delivering positive sales surprises have been more likely to surprise on earnings, but a top-line shortfall has not necessarily led to a bottom-line miss. 21% of firms has posted positive 3Q sales surprises, while 14% of stocks beat on both the top and bottom line, meaning firms that beat on sales were also likely to beat on earnings (see Exhibit 1). Stocks surprising on both the top and bottom-line include AMZN, JNPR, NOC. Interestingly, 71% of companies that beat on earnings either negatively surprised on revenue, or reported sales results in-line with expectations, suggesting that margins have surprised to the upside thus far.

This post was published at Zero Hedge on 10/31/2015 –.

238 Billion Nonperforming Loans at Spanish Banks Despite ECB’s Helping Hand

Via translation, El Confidential comments on the Banking Drag of 238 Billion Nonperforming Loans at Spanish Banks.
The profitability of banks has plummeted. And only the loose monetary policy of the ECB has improved the results. That is underscored by a report on the performance of Spanish banks by International Financial Analyst (AFI).
The report estimates the Spanish banking sector accumulated 238 Billion poor credit and foreclosed assets (8.8% of the balance), with coverage average of 44%.
Only the ECB’s monetary policy, its strategy of zero interest rates and asset purchase, keeps the banks alive.
The ROE of the banking sector, has been reduced by 6.8 points, reaching levels of 5.3%, mainly due to higher capital requirements.

This post was published at Global Economic Analysis on Saturday, October 31, 2015.

The Mises Week in Review: October 31, 2015

On Wednesday, the Federal Reserve once again reaffirmed its zero-interest rate policy. Amusingly, this commitment to the monetarystatus quo is being seen by some as ‘hawkish’ which, as Ryan McMaken points out, ‘shows just how much the goal posts have been moved in recent years.’ Unfortunately all the spin and promises of future rate hikes doesn’t change the fact that we are nearing the seven year anniversary of ZIRP with an economy Janet Yellen doesn’t think is strong enough to survive the reversal of the Fed’s monetary morphine. Hopefully our central bankers will one day realize their war on deflation is leaving us poorer, but in the meantime – at least we can laugh about it.
In this edition of the Mises Weekends, we have the third in our series on the current state of healthcare. Our first episode featured Charles Hugh Smith who discussed the consequences of a healthcare market taken over by government regulators and insurance lobbyists. Our second featured Dr. Michel Accad giving his perspective as a practicing doctor in a post-Obamacare world. This week, Robert Murphy discusses his new book, The Primal Prescription, which he co-wrote with Dr. Doug McGuff. Murphy not only applies his understanding of Austrian economics to highlight the problems plaguing us today, but offers advice on how to navigate through the current state of American healthcare.

This post was published at Ludwig von Mises Institute on OCTOBER 31, 2015.

S&P 500/US Dollar Index Ratio Warns: October Rally Will Fail, Bear Market is Here

Ugly warning sign for the market. By Geoffrey Caveney, Dr. Strangemarket: Historically, the performance of the S&P 500 Index relative to the US Dollar Index has been a good indicator of bull and bear markets. This relationship is expressed in a ratio – the value of the S&P 500 index divided by the value of the U. S. Dollar Index:
In bull markets, the S&P 500/US Dollar Index ratio moves upward, the 200-day moving average slopes upward, and the ratio is above the 200-day moving average. In bear markets, the ratio moves downward, the 200-day moving average slopes downward, and the ratio is below the 200-day moving average. Typically this ratio stalls out about a year in advance of a looming bear market: see 1999 and mid-2007. And in mid-2014, over a year ago, it stalled out again….

This post was published at Wolf Street by Geoffrey Caveney ‘ October 31, 2015.

Did The PBOC Just Exacerbate China’s Credit & Currency Peg Time Bomb?

Submitted by Doug Noland via Credit Bubble Bulletin,
October 30 – BloombergView (By Matthew A. Winkler): ‘Ignore China’s Bears: There’s a bull running right past China bears, and it’s leading the world’s second-largest economy in a transition from resource-based manufacturing to domestic-driven services such as health care, insurance and technology. Just when the stock market began its summer-long swoon, investors showed growing confidence in the new economy — and they abandoned their holdings in the old economy. These preferences follow Premier Li Keqiang’s directive earlier in the year at the National People’s Congress to ‘strengthen the service sector and strategic emerging industries.” Bubbles always feed – and feed off of – good stories. Major Bubbles are replete with great fantasy. Even as China’s Bubble falters, the recent ‘risk on’ global market surge has inspired an optimism reawakening. August has become a distant memory.
In the big picture, the ‘global government finance Bubble – the Granddaddy of all Bubbles’ is underpinned by faith that enlightened global policymakers (i.e. central bankers and Chinese officials) have developed the skills and policy tools to stabilize markets, economies and financial systems. And, indeed, zero rates, open-ended QE and boundless market backstops create a ‘great story’. Astute Chinese officials dictating markets, lending, system Credit expansion and economic ‘transformation’ throughout a now enormous Chinese economy is truly incredible narrative. Reminiscent of U. S. market sentiment in Bubble years 1999 and 2007, ‘What’s not to like?’
Never have a couple of my favorite adages seemed more pertinent: ‘Bubbles go to unimaginable extremes – then double!’ ‘Things always turn wild at the end.’ Well, the ‘moneyness of Credit’ (transforming increasingly risky mortgage Credit into perceived safe and liquid GSE debt, MBS and derivatives) was instrumental the fateful extension of the mortgage finance Bubble cycle. At the same time, Central banks and central governments clearly have much greater capacity (compared to the agencies and ‘Wall Street finance’) to propagate monetary inflation (print ‘money’). Most importantly, this government ‘money’ and the willingness to print unlimited quantities to buttress global securities markets now underpin securities markets on a global basis (‘Moneyness of Risk Assets’). And unprecedented securities market wealth underpins the structurally impaired global economy.

This post was published at Zero Hedge on 10/31/2015 –.

Greek Bad Debt Rises Above 50% For The First Time, ECB Admits

It was almost exactly one year ago, on October 26, 2014, when the ECB concluded its latest European Stress Test. As had been pre-leaked, some 25 banks failed it, although the central bank promptly added that just 9.5 billion in net capital shortfall had been identified. What was more surprising is that to the ECB, the Greek banks – Alpha Bank, Eurobank Ergasias, National Bank of Greece, and PiraeusBank had entered Schrodinger bailout territory: they had both failed and passed the test at the same time. To wit:
These banks have a shortfall on a static balance sheet projection, but will have dynamic balance sheet projections (which have been performed alongside the static balance sheet assessment as restructuring plans were agreed with DG-COMP after 1 January 2014) taken into account in determining their final capital requirements. Under the dynamic balance sheet assumption, these banks have no or practically no shortfall taking into account net capital already raised. Got that? According to the ECB, last October Greek banks may have failed the stress test, but under “dynamic conditions” they passed it. What this meant was unclear at the time, although as we explainedthis was nothing more than an attempt to boost confidence in Europe’s banking sector. This was the key quote from the ECB’s Vtor Constncio: “This unprecedented in-depth review of the largest banks’ positions will boost public confidence in the banking sector. By identifying problems and risks, it will help repair balance sheets and make the banks more resilient and robust. This should facilitate more lending in Europe, which will help economic growth.”
It didn’t.

This post was published at Zero Hedge on 10/31/2015 –.

WAR OF THE WORLDS

‘We know now that in the early years of the twentieth century this world was being watched closely by intelligences greater than man’s and yet as mortal as his own. We know now that as human beings busied themselves about their various concerns they were scrutinized and studied, perhaps almost as narrowly as a man with a microscope might scrutinize the transient creatures that swarm and multiply in a drop of water. With infinite complacence men went to and fro over the earth about their little affairs … In the thirty-ninth year of the twentieth century came the great disillusionment. It was near the end of October. Business was better. The war scare was over. More men were back at work. Sales were picking up.’ – Opening monologue of War of the Worlds broadcast – October 30,1938
It was 77 years ago this week that Orson Welles struck terror into the hearts of Americans with his live radio broadcast of the HG Wells classic War of the Worlds. The broadcast began at 8:00 pm on Mischief Night 1938. As I was searching for anything of interest to watch the other night on the 600 cable stations available 24/7, I stumbled across a PBS program about Welles’ famous broadcast. As I watched the program, I was struck by how this episode during the last Fourth Turning and how people react to events is so similar to how people are reacting during the current Fourth Turning. History may not repeat exactly, but it certainly rhymes.
It was the ninth year of the Fourth Turning. The Great Depression was still in progress. After a few years of a faux recovery (stock market up 400% from the 1932 low to its 1937 high) for the few, with the majority still suffering, another violent leg down struck in 1938. GDP collapsed, unemployment spiked back towards 20%, and the stock market crashed by 50%. The hodgepodge of New Deal make work programs and Federal Reserve machinations failed miserably to lift the country out of its doldrums. Sound familiar? The average American household had not seen their lives improve and now the foreboding threat of war hung over their heads.

This post was published at The Burning Platform on 31st October 2015.