China Curbs Gold Buying as US Stocks & Dollar Rise Before Fed

Prices to buy gold in London’s wholesale market headed for a 1% weekly drop Friday, slipping to $1166 per ounce as the US Dollar extended its gains following Donald Trump’s US presidential victory, denting currencies worldwide including China’s Yuan ahead of next week’s Federal Reserve decision on interest rates.
US stock markets rose further from yesterday’s new all-time highs, while commodity prices also gained and bond prices slipped – nudging longer-term interest rates higher.
Silver prices held above $17 per ounce, adding 1.7% from last Friday for US Dollar buyers.
The Fed is almost certain to raise its key Dollar interest rate ceiling to 0.75% next Wednesday according to futures market bets.
Listen to Avi Gilburt on Gold, S&P 500, and Market Timing
Despite the falling Yuan – now down near 8.5-year lows to the Dollar – Chinese premiums to buy gold, over and above London prices, held at $29 per ounce at Friday afternoon’s Shanghai Gold Fix.
That was just shy of last month’s 3-year highs, as traders continue to report a cut in the number of import licenses issued by the authorities, apparently seeking to stem outflows of capital to buy gold and help halt the Yuan currency’s extended decline.

This post was published at FinancialSense on 12/09/2016.

How Inflation Bites Much More than the Official Hoax

No one escapes, not even the Japanese suffering from ‘deflation.’
This is a principle every consumer has experienced: Official inflation is low, and there is scaremongering by central banks and the media about deflation even. But in reality, when it comes time to buy big-ticket items, prices are much higher than they’d been a few years ago. Everyone who bought new vehicles over the years knows this. It’s called ‘sticker shock.’ But it purposefully doesn’t show up in the inflation numbers.
The situation is particularly blatant in Japan, a country that is supposed to have been in a ‘deflation spiral’ for two decades. So here is the example of the prices of cars. According to a retail price survey conducted by the Ministry of Internal Affairs and Communications, cited by the Nikkei:
The average price of top-selling cars with engine displacements of 1.5 liters or less has jumped 18% over the past ten years, to 2.01 million. The average price of cars with 1.5- to 2-liter engines has skyrocketed 50% over the past ten years to 3.19 million. The average price of compacts has soared 30% over the period. The price changes occurred as manufacturers built cars of higher quality and with more gadgets and features, such as heated seats, more elaborate safety devices such as automatic brakes, better batteries for hybrids, and what not.
Here are a few examples, cited by the Nikkei. But this sort of thing is happening in every country, across all brands and models:

This post was published at Wolf Street on Dec 11, 2016.

Gold And Gold Stocks Setup for Post-Fed Rally

Gold and gold mining stocks have been very oversold but have struggled to rally. The sector looked to be starting a rebound until Friday’s decline which pushed Gold to a new low. However, positive divergences remain in place as gold stocks and Silver remain above their recent lows. While the Federal Reserve could say something hawkish next week, the setup continues to favor a rebound in the precious metals sector rather than an immediate decline to new lows.
The monthly chart of Gold is shown below. Gold closed last week at $1162/oz after trading as low as $1157/oz. The weekly chart (not shown) shows key support (and closes) at $1158-$1165/oz while the monthly chart shows support from $1142 to $1157/oz. That range marked key support or resistance from the end of 2014 through most of 2015. It is highly unlikely that Gold does not hold this level in its current oversold state. However, that does mean Gold could test as low as $1142/oz before rebounding.

This post was published at GoldSeek on 11 December 2016.

Welcome back debt! Total household debt rose by $63 billion last quarter pushing total household debt to $12.35 trillion. More than half of the debt increase came through auto loans.

The appetite for debt is now back in a furious way. Total household debt was up $63 billion last quarter driven largely by auto loans. Auto loans increased by $32 billion and the amount of auto debt outstanding is stunning. There is now a total of $1.14 trillion in auto loans floating in our economy. We’ve discussed that a large part of the growth has come in the form of subprime auto debt and that trend seems to be continuing. While Americans in many cases are too broke to afford a home, they are now able to purchase depreciating assets that lose value the minute they roll off the lot. This is unfortunately a bad omen since many families are trying to keep up the pretense of being middle class by buying cars that they cannot afford on credit. Debt is back and it must feel like a comfortable old shirt.
We’re brining debt back
The desire to take on debt is now filtering throughout the entire economy. Total household debt is now back up to $12.35 trillion. Student loan debt at least measured by the Fed is up to $1.3 trillion and auto debt, which is actually a really bad form of debt is up to $1.14 trillion:

This post was published at MyBudget360 on Dec 11, 2016.

Here’s Who’s in Charge of the Oil Deal Now (It’s Not OPEC)

Crude oil prices moved above $52 a barrel for WTI (West Texas Intermediate, the oil benchmark rate traded in New York) before the market even opened Monday, Dec. 5, while Brent (the equivalent rate set in London) was above $55. Of course, the price surge results from last week’s ‘Vienna Accord’ – the deal to cut oil production reached by OPEC during its regular meeting in the Austrian capital.
The point of the deal is to quicken the arrival of a balance between oil supply and demand. That, in turn, enables the medium-term objective: lowering expected price volatility, essential to maintaining a higher oil price.
But none of this is possible if the Vienna Accord itself doesn’t last.
On that front, things aren’t looking too good. Russia has to get formally on board, and individual OPEC members need to be assigned their quotas. But that’s just the beginning…
The real factors determining whether the oil deal will survive aren’t even in OPEC’s hands.
They’re much closer to home…

This post was published at Wall Street Examiner on December 9, 2016.

Speculation Grows Japan Will Tighten Next

First it was the Fed, then the ECB (which last week tapered when it reduced the monthly amount of bond purchases under its QE program). Now attention shifts to the Bank of Japan, because as the WSJ writes, one of central banking’s most aggressive easers – Kuroda’s Bank of Japan – may soon have to think about tightening for the first time since 2007.
While it has yet to permeate the markets (confirmation would send the Yen soaring), the latest buzz in Japanese monetary-policy circles is that the BOJ may have to lift the 10-year government-bond target from a recently set zero, in the process tightening financial conditions even more. Indeed, as the WSJ notes, such a changed view on BOJ policy is quite a turnaround.
Just a few months back investors and economists world-wide were discussing what would be the next easing steps in the bank’s 15-year fight to boost the economy and produce inflation. More certainly seems needed: Japan’s economy grew more slowly than expected in the latest quarter and prices are falling.
So why switch gears now? Blame Donald Trump, stupid, whose miraculously adverse impact on the Yen has been more profound than either of Japan’s recent QEs…. and that is before Trump is even inaugurated, or reveals any of the details behind his fiscal stimulus plans.

This post was published at Zero Hedge on Dec 11, 2016.

If Not Now, When?

A strange week for me being down while markets are ripping higher.
I just didn’t hit the right stocks and that’s all there is too it.
That will change.
The metals tried to move up with silver leading but that effort failed quickly so if they can’t get going during this seasonally strong time of year, when can they?
With an expected interest rate rise coming Wednesday, expect some wild action across the board and doubly so in the metals.
Gold lost 1.35%
Just not being able to move past the $1,180 resistance level isn’t great at all and now a break of $1,160 looks to be here.

This post was published at GoldSeek on 11 December 2016.

Saudi “Shock And Awe” Sparks Buying Panic In Crude – WTI At 17-Month Highs

Despite Saudi Arabia pumping record amounts of crude, the energy complex has spiked 6% higher tonight after two major headlines. First, Russia and other non-OPEC nations agreed to join the OPEC pledge to reduce production; and then, in what some are calling their “whatever it takes” moment, Saudi Arabia surprised the market by saying it will cut more than previously agreed.
Saudi Arabia will ‘cut substantially’ below the target agreed last month with OPEC members, Energy Minister Khalid Al-Falih says.
Al-Falih’s comments follow a deal by non-OPEC countries to join forces with the group and trim output by 558k b/d next year, the first pact between the rivals in 15 years.

This post was published at Zero Hedge on Dec 11, 2016.

The Shuttle Shuffle

NOT A LOT OF PEOPLE remember that Donald Trump once owned an airline.
Say what you want of the man – there’s plenty to say – but the Trump Shuttle, which flew hourly between Boston, New York-LaGuardia, and Washington-National, from 1989 until 1992, was a dependable product that I, for one, have fond memories of.
Trump had purchased the operation from the dying (or sabotaged; see Lorenzo, below) Eastern Air Lines, which had been running its own Shuttle on the busy BOS-LGA-DCA routes for nearly thirty years. Trump used Boeing 727s – a mix of -100 and -200 variants. The interiors were done up in his signature style, with lots of faux-wood veneer, gold fixtures, leather and chrome. His Vegas-Arabia aesthetic presaged the cabins used by Emirates many years later.
I flew the Trump Shuttle between Boston and LaGuardia approximately one zillion times between 1990 and 1992. Those garish interiors weren’t to my taste, but the planes were comfortable and on-time. The staff, including the flight crews, were always friendly.
My first-ever ride in a jetliner cockpit, on the morning of February 2, 1991 – an unseasonably warm Saturday, I remember – was on the flight deck jumpseat of a Trump 727. The airplane carried the registration N918TS, and you can see it in the photo below. The jet was originally built for Eastern in 1970. It was scrapped in 1997.

This post was published at Lew Rockwell on December 9, 2016.

Cover-up Admitted: Radioactive Fish Off U.S. West Coast With ‘Disturbing Fingerprint of Fukushima’

The entire Pacific Coast of the United States, Canada and Mexico has been contaminated with radioactive particles from Fukushima.
And finally, it is being officially acknowledged. This is really happening…
It is a stark reminder that the effects from Fukushima radiation continually spilling into the ocean have not been abated. The site continues to leak highly toxic radioactive material to this day. Nothing has stopped.
via the Associated Press / CBS News:
‘Radiation from Japan’s Fukushima nuclear disaster detected on Oregon shores’
Seaborne radiation from Japan’s Fukushima nuclear disaster has been detected on Oregon shores, researchers say.
Seawater samples from Tillamook Bay and Gold Beach indicate radiation from the nuclear disaster but at extremely low levels not harmful to humans or the environment.
Of course, they claim that it is ‘safe’ because the levels are low. USA Today emphasized the ridiculously minuscule dose of radiation that say, a swimmer would get at the beach – while admitted for the first time that those warning about the spreading radiation were, in fact, correct. exposure:
‘Should we be worried about Fukushima radiation?’

This post was published at shtfplan on December 9th, 2016.

FORGET HILLARY LOSING, HERE’S THE REAL REASON TO STOP PAYING TAXES

To restore democracy, TIME author Mark Weston recently argued, the 65 million Democrats who voted for Hillary Clinton must sign a pledge to stop paying their taxes should yet another Republican win the presidency without winning the popular vote.
Never mind the ‘193 million people [who] did not vote for Trump or Clinton’ in 2016. Apparently, what truly matters is electing a president who represents roughly 65 million individuals, a fraction of the population.
Weston explains that ‘[a]ppeals to fairness have not persuaded [Republicans] of the need to amend the Constitution to establish direct presidential elections.’ He asserts that ‘the real chance that a Democrat could win the presidency with fewer votes than a Republican’ does not alarm these callous Republicans into acting.
Instead of appealing to their emotions, Weston then concludes, we must first ‘pester Republicans where it hurts: the pocketbook.’
But the scope of his argument was limited. What he should have contended is that all Americans should pester their entire government’spocketbook by refusing to pay taxes at all.

This post was published at The Daily Sheeple on DECEMBER 9, 2016.

U.S. Yields Near 18-Month High as Traders Await Fed (10Y-2Y T-Curve Highest In A Year)

It was literally the most amazing week for US Treasuries. Except that 30 year mortgage rates will likely rise on Monday.
(Bloomberg) Treasuries declined, with benchmark yields approaching 2015/2016 highs, as stronger-than-forecast U. S. consumer sentiment bolstered bets that the Federal Reserve will raise interest rates next week.

This post was published at Wall Street Examiner on December 9, 2016.

New OPEC Production Limits Yield Winners – But Will They Last?

The Organization of Petroleum Exporting Countries (OPEC) has imposed production limits that will bring many states economic gains – but are they likely to last?
As the core international group of oil exporters, OPEC announced last Wednesday the first production limits since the 2008 financial crisis. Cuts had long been debated but unrealized given Saudi Arabia’s apprehension at losing global market share to alternative sources, particularly the growth of shale oil production in the United States.
While high production and export levels in recent years have slowed the growth of competition from the United States, it came at a significant cost to several member states who have realized economic turmoil and exploding debt levels as a consequence of a global oil glut and subsequent low prices. Leading advocates for the announcement to limit output were Nigeria and Venezuela who rely on higher prices per barrel for economic vitality. In the end, these production limits will bring about a clear set of economic winners.
The US Shale Oil Industry
Shale oil producers in the United States have struggled under globally depressed oil prices in recent years. US shale oil production has fallen from 9.6 million barrels per day (BPD) in April of 2015 to 8.58 million BPD in September. Rising oil prices will once again encourage additional rigs to break ground given improving economic viability.

This post was published at FinancialSense on 12/09/2016.

Maduro Stunner: Venezuela Eliminates Half Its Paper Money After Pulling Largest Bill From Circulation

Having observed the economic chaos to emerge as a result of India’s shocking Nov. 8 demonetization announcement, and perhaps confident it can do better, today president Nicolas Maduro of Venezuela, Latin America’s most distressed economy, mired in an economic crisis and facing hyperinflation, likewise shocked the nation when he announced on state TV that just like India, Venezuela would pull its highest denominated, 100-bolivar bill (which is worth about two U. S. cents on the black market), from circulation over the next 72 hours, ahead of the introduction of new, higher-value notes, as large as 20,000.
“I have decided to take out of circulation bills of 100 bolivars in the next 72 hours,” Maduro said. “We must keep beating the mafias.”
To this we would add “and cue economic chaos”, but since this is Venezuela, that’s a given.
The surprise move, announced by Maduro during an hours-long speech, is likely to worsen a cash crunch in Venezuela, and lead the largely-cash based economy to a state of paralysis. Maduro said the 100-bolivar bill will be taken out of circulation on Wednesday and Venezuelans will have 10 days after that to exchange those notes at the central bank.

This post was published at Zero Hedge on Dec 11, 2016.

The #1 Mistake You Can Make in This Trump Rally

I met with a savvy, well-known investment adviser in San Diego yesterday.
And what he told me made me sit straight up in my chair…
It was like going back in time.
In this case, back to 1999.
You see, his phone is ringing off the hook with clients wanting to know why he’s not fully long equities in their accounts right now.
They’re panicking that they’re not fully in on the Trump rally.
With the Dow Jones up more than 1,350 points in the month since Election Day, everyone wants to be part of ‘The Donald’ fiesta.
Investor optimism is off the charts. You can feel something resembling the giddy dot-com days for the first time in almost 20 years.
And that’s why it’s critically important that you pay attention to what I’m about to tell you…
Have You Caught ‘FOMO’?
Market rallies like the one we’re in are the most exciting time to be an investor.
But they’re also the most dangerous…
Making a mistake at a time like this can have a devastating impact on your portfolio… one that could take a generation to recover from.
You see, what we’re seeing from investors right now is described in the Covel medical literature as ‘FOMO’ disease. Regular readers know the drill.

This post was published at Wall Street Examiner on December 9, 2016.

Most Hedge Funds Missed The Trump Rally: JPMorgan Explains Why

While the overall market reaction to the Trump victory has been swift and powerful, with the both the Dow Jones and S&P hitting almost daily record highs, as stocks – especially banks, financials, “value” and those without duration exposure – have soared, the benefits from these surges have not been captured by all market participants. In fact, according to the latest JPM analysis, most hedge funds investors have been unable to capture the upside from the recent market spike, while not a single investor class has been able to outperform the S&P500’s 3.8% gain in the period from November 7 to December 7.
Here are some more observations from JPMorgan, which two weeks ago argued in its weekly “Flows & Liquidity” publication, that “investors appeared in general too reluctant or too slow to embrace the Trump trade post the US election.”
That conclusion was based on the performance of various investor types since the election, at least the ones that report their performance on a daily basis. These performances had shown that only a few types of investors had managed to benefit from the big market moves since Trump was elected. This is shown in Figure 4 which updates the performance of daily reporting hedge funds and mutual funds since Nov 7th. The message is similar to that of two weeks ago: with perhaps the exception of currency hedge funds, investors did not have enough beta to the Trump trade.

This post was published at Zero Hedge on Dec 11, 2016.

The Art of the Probe

I’ve written a lot about The Common Knowledge Game – here, here, and here – because it’s the game of markets, i.e., it’s the central contribution of game theory to understanding how markets work. I’ve also written a lot about new technologies and new perspectives – here, here, and here – that help us see The Common Knowledge Game in action. Today I want to take a different cut at this topic: how can you be a better gameplayer? What are some specific strategies one can adopt to play the game of markets more effectively?
There’s a concept in poker that’s a useful introduction to what I want to talk about. It goes by lots of different names, but I’ll call it The Probing Bet. The idea is that you make a raise or otherwise take the initiative in a signaling interaction because, as you’ll hear time after time if you talk to good poker players, you need to find out ‘where you stand’ in that particular hand. The betting behavior of the other poker players sitting around the table from you is like the betting behavior of the other investors sitting around the market from you: it’s over-determined, which is a $10 word that means there are far more possible explanations of what actual cards might be driving that betting behavior than are required to explain the behavior fully (see ‘The Unbearable Over-Determination of Oil’ for an investment example).
In other words, there might be six different basic card combination categories that an opponent might hold, each of which – if you were playing that hand – has some percentage likelihood of prompting you to duplicate that opponent’s betting behavior. But if you add up those percentage likelihoods across the six different categories, you get a number way higher than 100%. As a result, if you’re trying to reverse engineer in your mind what cards your opponent might be holding, it’s really difficult to come up with anything interesting or informative. It’s difficult and not terribly fun, so most poker players don’t even try. Most poker players only play their own hand. Period. They know their own hand’s strength in an absolute or non-strategic sense, and they know what cards need to show up for them to have a really killer hand. But that’s all they really know, so their betting behavior is directly connected to the non-strategic strength of their hand, coupled with some loose sense of whether they want to play ‘tight’ (bet per the book odds of hitting that killer hand) or ‘loose’ (bet more than the cards justify in an absolute sense in order to set up a bluff or maybe just get lucky).

This post was published at FinancialSense on 12/09/2016.

Descend Into The World’s Deepest Gold Mine

Humans will do almost anything for gold.
In fact, as Visual Capitalist’s Jeff Desjardins notes, they will even suspend themselves 2.5 miles into the Earth – braving extreme temperatures, armed thieves, and constant seismic activity – just to mine a 30-inch gold reef.
Welcome to another day at Mponeng, the world’s deepest gold mine.

This post was published at Zero Hedge on Dec 11, 2016.