Bundesbank Hauls its Gold back from New York & Paris Faster than Planned

A ‘trust-building’ measure after an enormous hullabaloo.
‘In 2016, we brought back again substantially more gold to Germany than initially planned; by now, nearly half of the gold reserves are in Germany,’ Bundesbank President Jens Weidmann told the German tabloid Bild in what has become an annual Christmas interview about gold – to soothe the nerves of his compatriots.
Because they’d been frazzled, apparently, by this whole saga.
The German Bundesbank, which is in charge of managing Germany’s gold hoard of 3,381 tons, the second largest in the world behind the US, got into hot water in 2012 when rumors were circulating that some or much of its 2,000 tons of gold stored in New York, London, and Paris might not be there anymore, that it might have been melted down, leased, or sold.
The ensuing hullabaloo left some folks at the Bundesbank red-faced. Then the Rechnungshof (the federal government’s independent office of financial control) told the Bundesbank to rethink its overseas gold hoard. So the Bundesbank got to work. And in January 2013, it promised that by 2020 it would bring back all 374 tons of its gold that it kept at the Banque de France in Paris and 300 tons of its gold at the New York Fed.

This post was published at Wolf Street by Wolf Richter ‘ Dec 25, 2016.

Market Talk – December 23rd, 2016

An extremely quiet day, as you would expect in this holiday shortened trading session. With Japan on a public holiday due to Emperors Day it was left to the Shanghai and Hang Seng to set the mood for European trading. Both closed lower as energy continued to weigh on sentiment but was probably the fact that, yet again, we saw the DOW reject the psychological 20k level backing away into the close. The JPY behaved itself in the country’s absence making its way back towards the 117 level despite the DXY’s strength. China’s Xi Jinping that he is open to growth slipping below the 6.5% objective as the economy moves towards domestic consumption and away from export led direction.

This post was published at Armstrong Economics on Dec 23, 2016.

Bitcoin Surpasses The Fiat Currency Totals In 124 Countries

With bitcoin attaining new highs and a market capitalization of over $14 billion it is interesting to consider how it compares to all the government, central bank backed fiat currencies in the world.
The worldwide terror network, the CIA, of course monitors money very closely and has a comprehensive list of each currency’s total money stock available.
With bitcoin currently having a total money supply worth more than $14 billion US it now has a larger value than the money of 124 countries.
Countries including Malta, Estonia, Croatia, Guatemala and the Dominican Republic and over a hundred more.

This post was published at Dollar Vigilante on December 24, 2016.

A New Crisis Is Brewing in Spain

The government raided the state pension fund. And now what?
By Don Quijones, Spain & Mexico, editor at WOLF STREET. When the Rajoy administration took the reins of power at the end of 2011, at the height of Spain’s debt crisis, the country’s Social Security fund had a surplus of over 65 billion, the result of a gradual accumulation of funds since the end of the 1990s. That money was supposed to serve as a nationwide nest egg to help cover the growing needs of Spain’s burgeoning ranks of pensioners. Instead, it has been used by the government to fill some of its own massive fiscal gaps, with the result that now, five years later, the total surplus has shrunk by 75%, to 15 billion.
Things have gotten so bad that in October the Spanish government was forced to admit to the European Commission that by the end of next year the surplus will have become a deficit, of around 2.6 billion. In other words, a fund that took 16 years to build up will have been plundered dry in less than half that time, at an average rate of around 11 billion a year.
The outflow reached torrential proportions this year. To date the government has removed over 19 billion from the fund – more than remains in its coffers. The biggest ever one-off withdrawal took place at the beginning of December when Spain’s new coalition government, with Mariano Rajoy still at the helm, plucked 9.5 billion out in one fell swoop. Part of the money will be used to cover the extra pay check Spanish civil servants receive at Christmas.

This post was published at Wolf Street by Don Quijones ‘ Dec 24, 2016.

China’s Gold Market Opens Up To Boost RMB Internationalization

China’s Gold Market Opens Up To Boost RMB Internationalization
Last week the Shanghai Gold Exchange (SGE) launched a new English website to offer international customers more information and tools on trading gold in renminbi through its subsidiary in the Shanghai Free Trade Zone the Shanghai International Gold Exchange (SGEI). BullionStar took the opportunity to translate a speech by a Teng Wei, Deputy General Manager of the SGEI, named ‘How China’s Gold Market Can Help The RMB Achieve International Status’ that was held at the Renminbi World summit in Beijing on the 29th and 30th of November 2016. In the speech Teng Wei outlined his vision for the SGEI going forward regarding renmibi (RMB) internationalization, connecting the onshore and offshore renminbi market and increasing gold market share.
My comment before you read the translation:
1) In the financial blogosphere the general perception is that the SGEI has been a failure since it was launched in September 2014. This analysis is based on the assumption that the trading volume of the most popular SGEI contract (1 Kg 9999 – iAu99.99) has been tepid for two years now. But this analysis neglects two important elements.
First, iA99.99 can be traded competitively ‘on Exchange’, but also in the OTC market. The OTC possibility is hardly known by commentators in the English world, though the related volumes are significant. Have a look at the next chart in which I’ve plotted iAu99.99’s weekly trading volume ‘on Exchange’ and in the OTC market. Clearly iAu99.999 is traded mainly in the OTC market.

This post was published at Bullion Star on 24 Dec 2016.

Gold and Silver Market Morning: Dec 23 2016 – Gold and Silver consolidating higher ahead of the holidays

Gold Today -New York closed at $1,128.80 yesterday after closing at $1,131.60 on the 20th December. London opened again at $1,132.00 today after yesterday’s $1,131.80.
Overall the dollar is stronger against global currencies today. Before London’s opening:
– The $: was almost unchanged at $1.0444: 1 from $1.0446: 1 yesterday.
– The Dollar index was stronger at 103.04 from 102.95 yesterday.
– The Yen was stronger at 117.37: $1 from yesterday’s 117.67 against the dollar.
– The Yuan was weaker at 6.9488: $1, from 6.9323: $1, yesterday.
– The Pound Sterling was weaker at $1.2256: 1 from yesterday’s $1.2350: 1.

This post was published at GoldSeek on 23 December 2016.

Your 2017 Oil Price Forecast

Almost four months ago, you saw my predictions for where oil would be at the end of the year.
Well, both main oil price benchmarks have now reached the levels I predicted. In fact, they’ve been ‘in the zone’ for more than a week now.
My estimates published at various times since September called for West Texas Intermediate (or WTI), the benchmark set daily in New York, to trade in the $52 to $54 a barrel range by the end of 2016. Meanwhile Brent, the equivalent set in London, has been trading in the expected $54 to $56 a barrel range over the same period.
The cause has been the ‘Vienna Accord’ to cut oil production reached by OPEC and announced on Nov. 30, and the subsequent agreements with non-OPEC oil producers, notably Russia, made last week.
Of course, the crucial point in these apparent ‘breakthroughs’ remains whether they will last…
And how high oil prices will be in 2017…

This post was published at Wall Street Examiner by Dr. Kent Moors ‘ December 23, 2016.

Guess Which Country’s Credit Risk Has Improved The Most Since Trump’s Election

Since Donald Trump’s election, the credit risk of two of the world’s most important nations has diverged dramatically…

Aside from Chile, China’s credit risk has worsened quite notably in the last 7 weeks since Donald Trump was elected.
But, as Bloomberg notes below, Russian credit risk has collapsed. In fact, it’s turning out to be the best December for Russia’s credit risk since at least 2004. The premium paid for protection against a debt default by the government has fallen 21 percent so far this month, the best showing in the world.

This post was published at Zero Hedge on Dec 23, 2016.

In His Latest Letter, Odey Refuses To Throw In The Towel

With his fund down ~50% YTD, one wonders if Crispin Odey should be thinking about quietly exiting stage left after along and mostly illustrious career. However, as his latest letter suggests, Odey is just getting his second, or maybe third, wind and is confident that he will ultimately win the war against central bankers, although as he himself points out, the risk is not so much his own fund blowing up as much as LPs saying enough to active investing altogether, and cautioned that “skilled investors are being driven out by mindless (passive) investing.”
Putting it mildly (especially for his own fund), Odey said that ‘this has been a difficult year for active managers,’ and added that ‘passive investing has taken money which typically would have been in the bond market and deposited it in the equity market.’
While it remains to be seen if active management is on the endangered list, Odey has bigger troubles with his own LPs in the coming weeks, although his fortune may change in 2017 when as he warns, ‘central bankers will have to respond to what their governments are doing fiscally, rather than bolstering asset prices with low interest rates. There could be trouble ahead.’
There could, indeed, which simply means the cycle starts from scratch and central banks LBO even more of the global capital markets, until the 0.01% own all the assets while the rest “own” the debt.
His full November letter below:

This post was published at Zero Hedge on Dec 23, 2016.

The New ‘Big Short’ – This Is THE Crisis of 2017

Subprime auto loans are the new ‘Big Short.’
Of course you remember the first ‘Big Short’ – subprime housing loans. Michael Lewis wrote a book about it.
In the wake of the subprime housing crisis, millions of Americans lost their homes and jobs. The global financial system nearly collapsed.
Thankfully, in the years that followed, the banks found religion. Lenders found their morals.
Consumers found responsibility. And Congress beefed up industry oversight.
OK, back to reality!
Years of ultralow interest rates led to ‘free money’ deals where anyone who could fog a mirror could get a car.
Even ‘better,’ if those buyers couldn’t pay their car off in the standard 48 months, they could extend their loan terms to 72 or even 84 months.
Well, those chickens are coming home to roost.

This post was published at Wall Street Examiner by Amanda Stiltner ‘ December 23, 2016.

Forget Monte Paschi, Italy May Have A Far Bigger Problem

While the metaphorical ‘earthquake’ of a systemic banking crisis is coming to a head, it appears Italy may have a far more existential problem on its hands. As The Independent reports, one of the world’s most dangerous supervolcanoes is showing signs of reawakening under the Italian city of Naples.
The Campi Flegrei may be nearing a critical pressure point necessary to drive an eruption for the first time in 500 years, according to scientists.
Researchers say the volcano is moving towards a threshold beyond which rising magma could spark the release of fluids and gases at 10 times the normal rate.

This post was published at Zero Hedge on Dec 23, 2016.

India Said to Consider Lowering Gold Import Tax to 6% From 10%

India, the world’s second-biggest consumer of gold, is said to be considering cutting the import tax on the precious metal in order to curb its smuggling, according to people familiar with the matter.
The government is planning to reduce the duty to 6 percent from 10 percent now, said the people, who asked not to be named as they are not authorized to speak to the media.
Gold shipments to India, which accounted for a quarter of global demand in 2015, have fallen due to higher prices in the first half of this year, a crackdown on undisclosed income and the government’s decision to withdraw old high-value bank notes. The government had raised the import tax three times in 2013 to curb inbound shipments, narrow a record current-account deficit and stop a slump in the rupee.
‘Smuggled gold is cheaper while those who import have to pay high cost.’ said Praveen Shankar Pandya, chairman of Gem & Jewellery Export Promotion Council. ‘Duty structure should be such that it doesn’t encourage smuggling and brings in transparency.’

This post was published at bloomberg

PBOC’s Shadow Banking Curbs Risk Deepening Junk Bond Rout

A lifeline for China’s local junk bonds is about to get cut, threatening financing for weaker companies already grappling with mounting defaults.
The People’s Bank of China will include wealth management products that are held off bank balance sheets in its framework for gauging risk to the financial system starting in the first quarter, a newspaper controlled by the central bank said Monday. The monitoring may drag on growth of WMPs that banks authorize third-party asset managers to oversee so they can purchase riskier debt with leverage, according to money manager Shanghai Silver Leaf Investment Co.
Chinese lenders, the nation’s biggest bond investors, often rely on such arrangements to circumvent risk-control rules. Regulators must walk a fine line in reining in investments made on borrowed money amid a broader rout in Chinese debt, after local note failures jumped four-fold this year. That’s heightened concern that any overreach could lead to panic selling, after steps to trim leverage in equities in 2015 contributed to a $5 trillion stock drop.
‘The yield gap between top-rated and lower-rated bonds may widen in the coming two quarters,’ said Shanghai Silver Leaf’s Shanghai-based chief strategist Chen Qi, who had previously been head of China fixed income research at UBS Group AG. ‘Those weak companies or industries will have more difficulty in financing.’

This post was published at bloomberg

China tries to talk down the dollar, saying market ‘too optimistic’ about Trump

After making little headway in talking up the yuan, Beijing has changed tack to talk down the U.S. dollar.
Ma Jun, chief economist at a central bank research bureau, said on Thursday the market was ‘too optimistic’ about U.S. president-elect Donald Trump and his policies.
He said the greenback’s rise since Trump won the presidential election ‘does not have much fundamental support’ and was mainly due to ‘changes in market expectations’.
‘Trump’s presidential victory raised speculation of fiscal expansion and fuelled inflationary expectations … These factors have driven up interest rates in the U.S. and naturally led to capital inflows and a stronger dollar,’ Ma said. ‘In my view … these expectations are perhaps too optimistic.’
Ma said a stronger dollar could hurt U.S. exports, and a jump in US Treasury yields might have greater ‘tightening effects’ on the U.S. economy than the recent two interest rate hikes by the U.S. Federal Reserve.

This post was published at South China Morning Post

James Rickards says Donald Trump can’t stop the next financial crisis

Jim Rickards sees threats in many places. In his latest book, ‘The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis,’ he paints a picture of how that crisis will unfold. He argues that rather than pumping the financial system with liquidity, as happened in 2008, ‘elites’ will freeze the financial plumbing until the crisis has passed.
That means banks will close, as will exchanges. Money-market funds will be inaccessible. Forget trying to get your hands on money.
Rickards, who was the principal negotiator of the 1998 bailout of Long-Term Capital Management as the hedge fund’s general counsel, calls this new world ‘ice-nine,’ after a fictitious substance in Kurt Vonnegut’s ‘Cat’s Cradle.’ Freezing customer funds in bank accounts is what happened in Cyprus is 2012 and Greece in 2015, he says. In the U.S., the Securities and Exchange Commission adopted a rule in 2014 that lets money-market funds suspend redemptions.
Prefer stockpiling cash? Governments are eliminating high-denomination bills, and Kenneth Rogoff, a former IMF chief economist, has written a book that Rickards describes as ‘an elite step-by-step plan to eliminate cash entirely.’
Then, Rickards says, there are rules on banks and other institutions. Capital controls could be imposed to keep money from fleeing across borders. And the U.S. is still under the state of emergency declared by President George W. Bush days after the Sept. 11, 2001, terrorist attacks and renewed annually since then. Rickards argues that such measures can be applied in any emergency, ‘including money riots in the event of a financial system breakdown and ice-nine asset freeze.’

This post was published at Market Watch