Price of Gold Hits One-Year High on North Korea Fears – Here’s What’s Next

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
The price of gold closed out the month of August with a strong rally last week following North Korea’s most provocative missile test of the year. Gold climbed 4.3% last month and posted a weekly gain of 2.5% between the Friday, Aug. 25, close and the Friday, Sept. 1, close.
On Monday, Aug. 28, North Korea launched a missile that crossed directly over Japan before falling into the sea. This was the first North Korean missile test since 2009, and it was enough to push investors to buy safe-haven gold throughout the rest of the week.
Japanese Prime Minister Shinzo Abe called the missile test an ‘unprecedented, serious, and grave threat,’ causing gold prices to reach $1,330 by Friday, Sept. 1. The metal hadn’t crossed the $1,300 mark since Sept. 27, 2016.

This post was published at Wall Street Examiner by Peter Krauth ‘ September 5, 2017.

Miami Mayor: “Expect Evacuation Order On Wednesday Or Thursday”

With Hurricane Irma, now an ‘extremely dangerous’ category 5 storm bearing down on southeastern Florida, the Miami Heraldreports that Miami Mayor Carlos Gimenez has told reporters that an evacuation order was “probably coming late Wednesday or early Thursday.” According to the latest forecasts, the storm is expected to make landfall in the US this weekend, unless the jet stream pulls it in a more northerly direction.
As we reported earlier, the storm has shifted west more quickly than forecasters had anticipated. As of Tuesday, the storm was on track to slam Miami, though its eventual path may vary.
‘Over the past couple of days, the track of the storm has shifted ‘a lot further to the west’, and at this point it appears that Miami is the most likely to take the full force of the hurricane. But as we have seen, trying to forecast the behavior of hurricanes is not an exact science. Irma may never become a category 5 storm, and it may never hit the U. S. at all. Or it may zip past Florida to the south and end up making landfall in the Gulf of Mexico. The truth is that we just don’t know.’

This post was published at Zero Hedge on Sep 5, 2017.

Bank of Mexico: Bread Today, Hunger Tomorrow

In April 2017, the Bank of Mexico transferred an unprecedented figure to the federal government: 321,653 billion Mexican pesos from its operating surplus. How much is this figure? It is equivalent to 1.7% of Mexico’s GDP – 25% of Guatemala’s GDP – and to 22% of the total revenue budget of the Mexican government.
What is Banxico’s Operating Surplus?
Essentially all of Banxico’s profits are a result of the appreciation in the value of the bank’s foreign exchange reserves in pesos. At the beginning of 2016, the Bank of Mexico’s dollar reserve was of 176,736 billion dollars. By the end of 2016, the bank had almost the same amount in reserves. However, in January the peso was trading at 17.35 to the dollar, and in December at 20.62 a dollar.

This post was published at Ludwig von Mises Institute on Sept 5, 2017.

Markets Throw Hissy-Fit about US Default

With peculiar consequences.
Today the bond market had its second bout of nervousness about a US default. It showed up at a ‘dismal’ auction by the US Treasury Department of four-week bills. And the one-month yield shot up to 1.30% from 0.96% on Friday. That’s a huge one-day move. These bills mature on October 5 – after the official out-of-money date on September 29, that the Treasury department has announced to Congress.
September 29 is the official deadline for Congress to raise the debt ceiling so that the Treasury can borrow more so that it can spend the money that Congress ordered it to spend.
If Congress fails to raise the debt ceiling, and if the US Treasury runs out of ‘extraordinary means’ with which it has been scrounging up money from other internal sources, and if it then decides to default on its debt service, rather than on payment obligations such as Congressional salaries and the like, the Treasury would then not redeem those one-month bills or any other maturing debt on October 5, and investors would have to wait for their money until Congress gets it act together.

This post was published at Wolf Street by Wolf Richter ‘ Sep 5, 2017.

House To Vote On Harvey Aid Bill Wednesday, Senate To Combine With Debt Limit Extension

Appending to an earlier announcement by House Majority Leader Kevin McCarthy, according to whom the House would not add Harvey disaster funds to any debt ceiling bill, Dow Jones reports that Republican lawmakers are set to vote on the Harvey aid bill on Wednesday, and instead of raising the debt ceiling, they – or rather the Senate – will suspend it, likely kicking the can until some time in December when the whole farce would repeat itself again, although the exact length of the extension remains under discussion.
According to Bloomberg, the House still plans to pass a Harvey aid bill without debt language, leaving Senate to add it in. Keeping the House’s hands clean, Senate Majority Whip (R. Tex) John Cornyn told reporters that debt limit raise, or rather extension, will likely to be tied to Harvey aid and approved by the Senate.
“It’s imperative that we get that supplemental passed. And the leader has made the decision to attach the debt limit to that, and I support that,” Cornyn, whose state was hit hard by the hurricane, told reporters.
The reason to simply extend, instead of raise the debt limit, is because the former is considered a politically less difficult vote than raising it by a specific dollar figure, which would likely be well over $1 trillion; Such a move would also provide more predictability on the timing of next action and would come as House conservatives have warned against attaching the two issues.
To be sure, with the Treasury rapidly running out of cash, and down to just $32 billion as of today’s close, some sort of Federal debt extension would need to be taken to unlock the funding needed for the Texas recovery efforts.

This post was published at Zero Hedge on Sep 5, 2017.

The Forking Paradise – Precious Metals Supply and Demand Report

Forking Incentives
A month ago, we wrote about the bitcoin fork. We described the fork:
Picture a bank, the old-fashioned kind. Call it Acme (sorry, we watched too much Coyote and Road Runner growing up). A group of disgruntled employees leave. They take a copy of the book of accounts. They set up a new bank across the street, Wile E Bank. To win customers, they say if you had an account at Acme Bank, you now have an account at Wile, with the same balance!

This post was published at Acting-Man on September 5, 2017.

SEPTEMBER 5/CHINA TO START A PETRO-YUAN BACKED BY GOLD/NORTH KOREA FIRES A HYDROGEN BOMB TEST/GOLD RISES TO $1339.65 FOR A GAIN OF $13.45 AND SILVER GAINS 14 CENTS UP TO $17.87/HURRICANE IRMA WIL…

GOLD: $1339.05 UP $13.45
Silver: $17.87 UP 14 CENT(S)
Closing access prices:
Gold $1339.90
silver: $17.90
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1339.89 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1336.42
PREMIUM FIRST FIX: $3.47

This post was published at Harvey Organ Blog on September 5, 2017.

What Share Of Bond Markets Do Central Banks Own: Deutsche Bank Answers

With the latest ECB statement due out in just two days, traders are curious to see how Mario Draghi will escape from the trap in which the European central bank has found itself: on one hand, seeking to temper the recent dramatic rise in the Euro, on the other running out of QE eligible private-sector debt to monetize, especially in its largest captive market, Germany. While we don’t know how Draghi will succeed (or fail) in this endeavor, overnight Deutsche Bank has released a useful analysis breaking down what share of bond markets the biggest central banks currently own.
In the analysis, DB puts the ECB CSPP holdings in the context of global QE by comparing what part of relevant markets is owned by major central banks. Then it provides a more granular update on the latest CSPP purchases, including the geographic breakdown of the current CSPP universe. Further, it focuses on the CSPP vs. PSPP dynamics, noting the conflicting signal between Q2 and the summer months. Finally, it addresses the question whether in selected jurisdictions CSPP purchases could be used to partly replace PSPP purchases if for one reason or the other the ECB cannot exit QE any time soon and scarcity becomes a hard, binding constraint in some government bond markets.
The answers are shown in the table below, which compares central bank QE holdings across asset classes with Deutsche Bank’s estimates of the size of the corresponding markets. Using those estimates, the German lender calculates the fraction of each relevant universe in central bank ownership.

This post was published at Zero Hedge on Sep 5, 2017.

The Hysteria Curve: US Treasury 10Y-2Y Curve Slope Declines To 78.6 BPs As 10 Year Soveriegn Yields Decline In Americas and Europe

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
Choose your hysteria to explain the Treasury market: 1) debt ceiling crisis, 2) hurricane (Global Warming) crisis, 3) North Korean nuclear attack crisis, 4) Trump’s Russian collusion investigation crisis, 5) the DACA (‘Dreamer’) crisis, 6) Brexit crisis, 7) NAFTA crisis or 8) fill-in-the-blank crisis dejure. Please tune to CNN or MSNBC (and even Bloomberg) for the latest in hysteria.
Which ever portfolio of crises you select, we watching the US Treasury 10Y-2Y curve slope fall below 80 to the lowest slope since September 2016.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ September 5, 2017.

Goldman Issues Two Different Price Targets On Gold In The Same Day

In a day when gold is surging to the highest level since the Trump election, what better way to hedge what happens next than to issue two separate price targets. We bring this up, because that’s precisely what Goldman Sachs did today.
First, in a note discussing the relative merits of gold as a “currency as a last resort”, and which eyed the suitability of the yellow metal as a hedge to an escalating North Korean crisis (discussed earlier), Goldman’s chief currency strategist, Jeffrey Currie issue the following trade recommendation:
In coming months, the unfortunate aftermath of hurricane Harvey suggests that Washington is going to have to overcome their differences, pass spending bills, try harder to avoid a government shutdown and pursue infrastructure projects sooner than later. Our economists believe the probability of a government shutdown has declined further from their prior assessment of 35% and now put it at around 15%. As a result, we are maintaining our end-of-year gold price forecast of $1250/toz barring a substantial escalation in North Korea. So on one hand Goldman is expecting a drop of nearly $100 in the coming three months. Fair enough, Goldman’s bearish bias on gold has been duly noted on these pages in the past.
What, however, makes Goldman’s stance confusing is that just a few hours after the Currie report was released, Goldman’s chief technician issued an analysis which concluded something completely different.
In her daily “Today’s Top Tech” report focusing on precious and base metals, Goldman’s Sheba Jafari writes that “Gold, Silver and Copper are all three showing potential to continue higher” and adds that “Gold and Silver have targets in the area of 1,375-1,380 and 18.97.” And some more details:

This post was published at Zero Hedge on Sep 5, 2017.

Trump Wants Tariffs! That Could Be Good for Gold

Trump wants tariffs.
That could be good for gold.
According to a report on Axios last week, President Trump demanded tariffs during a recent White House meeting that included new chief of staff Gen. John Kelly.
John, you haven’t been in a trade discussion before, so I want to share with you my views. For the last six months, this same group of geniuses comes in here all the time and I tell them, ‘Tariffs. I want tariffs.’ And what do they do? They bring me IP. I can’t put a tariff on IP.’
Trump reportedly went on to assert ‘China is laughing at us.’
Of course, Trump campaigned on a more protectionist trade policy. It’s starting to look like the president is more aggressively pursuing that goal. The administration has threatened to pull out of a trade deal with South Korea, and NAFTA negotiations appear to be going nowhere.

This post was published at Schiffgold on SEPTEMBER 5, 2017.

Precious Metals Bid As Turmoil Returns To Markets Amid Nukes, Tweets, & Debt Ceiling Anxiety

It appears nuclear armageddon, Russian tensions, Trump tweets, debt ceiling anxiety, and ongoing weakness in macro-economic data have finally hit home as Washington gets back to work…
Gold continues to lead as North Korean tensions surge…
Dollar is dumping back to North Korea missiles over Japan lows…

This post was published at Zero Hedge on Sep 5, 2017.

What will Self-Driving Cars Do to the Housing Market?

The winners and losers.
This week, the US House of Representatives is scheduled to vote on legislation governing self-driving vehicles. The law would allow up to 25,000 autonomous vehicles – true AVs, without a human behind the wheel who can take control if needed – to ply the streets during the first year of the bill.
Up to 100,000 vehicles each year could be added to the total for the next three years. Companies that work on AV technology, such as Alphabet, and automakers would still have to get permits for their AVs and provide safety assessment reports to regulators.
At the state level, 22 states and Washington D. C. have passed legislation and governors of four states have issued executive orders related to autonomous vehicles. Other states are working on similar legislation.
Ford expects to have a fully autonomous vehicle without steering wheel and pedals on the market by 2021, to be used by rideshare services. Initially, the number will be small in the overall scheme of things. Other automakers have similar plans. Alphabet will not build cars, but it’s trying to develop the system that runs AVs, and it’s putting a lot of money into it in order to be the leader and control the industry.

This post was published at Wolf Street on Sep 5, 2017.

Where Did All the Bears Go?

The Fed started hacking interest rates in 2007 and QE3 ended in October 2014. This 7-year period of extraordinary ease and the nearly 3-year upswing since has been a difficult time for many market contrarians and so called ‘bears’. To wit, Cornerstone has been missing since 2015, Contrary Investor hasn’t released anything publicly since 2013, and Cross Currents, Beartopia, Financial Armageddon, iTulip, Nystrom, Iacono, and numerous others have gone into deep hibernation. As for Prudent Bear, Tice sold his fund as the crisis began and now the site is trying to look prim and proper (I preferred it when a visit to Prudent Bear meant reading the ‘Bear’s Lair’ and seeing another Tice warning about the coming collapse in the stock market (which, of course, Mr. Tice is still warning of)).
As if to throw salt on a wound, in a recent post from the ‘Wall Street Bear’, which is still trying to growl, there is the talk of ‘new paradigm’ and speculation of the sacrilege:
‘Starting to seem like there will never be another bear market.’

This post was published at FinancialSense on 09/05/2017.

PETITION TO DECLARE GEORGE SOROS A TERRORIST GETS ENOUGH SIGNATURES FOR WH RESPONSE

A petition to declare socialist billionaire George Soros a terrorist has garnered enough signatures to get an official response from the White House. The petition, which needed only 100,000 signatures by September 19, had almost 137,000 signatures as of Tuesday morning.
The White House.gov petition created by ‘E. B.’ states that Soros assets should be seized by the government as per RICO and NDAA laws.
Whereas George Soros has willfully and on an ongoing basis attempted to destabilize and otherwise commit acts of sedition against the United States and its citizens, has created and funded dozens (and probably hundreds) of discrete organizations whose sole purpose is to apply Alinsky model terrorist tactics to facilitate the collapse of the systems and Constitutional government of the United State, and has developed unhealthy and undue influence over the entire Democrat Party and a large portion of the US Federal government, the DOJ should immediately declare George Soros and all of his organizations and staff members to be domestic terrorists, and have all of his personal an organizational wealth and assets seized under Civil Asset Forfeiture law. -WhiteHouse.gov petition
Soros donated millions of dollars to Hillary Clinton’s failed presidential campaign and he’s been known to be the main financier behind violent uprisings of leftist groups in the recent past. And this isn’t the first petition created by citizens asking for Soros to be punished by the government for his continued financial support of the government.

This post was published at The Daily Sheeple on SEPTEMBER 5, 2017.

ECB Tightens Noose Around Bank Accounts

Locking up the money of unsuspecting depositors to prop up collapsing banks. The European Central Bank (ECB), arguably the European Union’s most powerful and least accountable institution, apparently needs more power, according to Daniele Nouy, the ECB’s top supervisor. Chief among the fresh powers it seeks is the power to temporarily prevent people from withdrawing their money from their accounts at banks that are in distress, including by electronic fund transfers.
‘In my view… the introduction of adequate moratorium power for authorities is needed in order to react with the needed flexibility, if the situation of a bank deteriorates rapidly,’ Nouy told a member of the European Parliament in a letter. ‘Given the potentially swift evolution of liquidity crises, a moratorium tool could be necessary to ensure there is adequate time for ensuring a credible solution,’ Nouy said, adding that the ECB will soon publish an opinion on this issue.
The recent collapse and resolution of Spain’s Banco Popular and Italy’s Monte dei Paschi di Siena lent more impetus to this new regulatory push that has been quietly in the works for a while.

This post was published at Wolf Street on Sep 5, 2017.

BofA: Even The Bubbles Are Becoming More “Bubbly” Thanks To Central Banks

Back in June, Citi’s credit strategist Hans Lorenzen pointed out that while QE had failed to spark inflation across the broader economy, it had achieved something else: “the principal transmission channel to the real economy has been… lifting asset prices.” That however has required continuous CB balance sheet growth, and with the Fed, ECB and BOJ all poised to “renormalize” over the next year, the global monetary impulse is set to turn negative in the coming year. Meanwhile, as financial markets scramble to maximize every last ounce of what central bank impulse remains, we get such bubbles as London real estate, bitcoin and vintage cars, or as Citi puts it: “the wealth effect is stretching farther and farther afield.”
***
Three months later, the latest to tackle the issue of central bank bubble creation, is BofA’s Barnaby Martin, who in a note released overnight asks rhetorically “are bubbles becoming more ‘bubbly’?

This post was published at Zero Hedge on Sep 5, 2017.