‘True Safe Haven’ Gold Prices Firm vs. Rising Dollar as Trump Argues Trade War With China

Gold prices returned from the New Year 2017 holiday to track the rising Dollar on Tuesday, pushing higher against non-US currencies as Washington’s president-elect Donald Trump was rebuked by Beijing over his threat to start a trade war with the world’s second-largest economy.
Gold prices held tight around last week’s close of $1151 per ounce, rising to 1-month Euro highs above 1110 as world stock markets gained but government bond prices fell again, nudging interest rates upwards.
Gold prices in Shanghai held firm overnight versus China’s Yuan, offering importers a $24 per ounce premium above comparable London quotes – down sharply from the new 3-year highs hit amid tighter import licensing by Beijing before Western dealers shut for Christmas, but still 10 times the average incentive of the last 3 years.
Data released last week put China’s net gold bullion imports through the key conduit of Hong Kong at the lowest since last January in November.
On an annualized basis, however, Hong Kong’s net shipments to China – the world’s No.1 gold consumer, importer and mining producer – held 3.5% ahead of 2015.

This post was published at FinancialSense on 01/03/2017.

The Fed’s Troubled Road Ahead

In recent decades, the Fed has engaged in a series of policy interventions and market manipulations that have paradoxically left it more powerful even as those interventions left a trail of crashes, collapses and calamities.
Needless to say, for the past 20 years the Fed has gone beyond its dual mandate of price stability and full employment to engage in full-scale manipulation of markets and the macroeconomy.
On Dec. 5, 1996, Alan Greenspan, then Chairman of the Federal Reserve, gave a speech in which he mused about whether valuations in the stock market reflected a degree of ‘irrational exuberance.’ The irony was that stocks measured by the Dow Jones index doubled in value over the next three years before crashing over 40% from their peak on Dec. 31, 1999.
Greenspan’s restraint in 1996 was the beginning of a Fed theory that said the Fed should not lean against bubbles by raising interest rates, but should let bubbles burst and then ‘clean up the mess.’
A less charitable interpretation is that the Fed encourages bubbles by misguided interest rate policy and doesn’t care if everyday investors, like you, get crushed when the bubble bursts, as long as the banks are propped up.
In short, the Fed has become an all-purpose backstop for failing banks and falling markets.

This post was published at Wall Street Examiner on January 2, 2017.

Greece Unleashes ‘Soft’ Cash Ban

The spread of global cash bans continues with Greece unveiling their so-called ‘soft’ approach by which taxpayers will only be granted tax-allowances or deductions when payments are made via credit or debit cards. As KeepTalkingGreeece reports, the new guidelines refer to employees, pensioners, farmers, and also the unemployed.
Accepted expenditure will be:
purchases for food and supermarket products, electronic and electric devices, household equipment, footwear, clothing, fuel, furniture, cigarettes, drinks Restaurants, cafeterias, bars and hotels Services like by hairdressers and beauty parlors, gyms and dance schools, car repair, plumbers, electricians, painters, carpenters, lawyers and accountants. For doctors and pharmacy the same practice will be valid as in last year. The tax office will accept the expenditure only if payments are made per credit card or bank transfer. Expenditure for utility bills, landlines and mobile phones, heating, rent, loan repayments that in fact swallow the largest amount of monthly expenditure for private households will not be accepted. Also not accepted is expenditure for toll and transport tickets.

This post was published at Zero Hedge on Jan 3, 2017.

Gold and Silver Market Morning: Jan 3 2017 – Gold and Silver reflecting currency moves as 2017 starts!

Gold Today – New York closed at $1,151.70 on the 30th December after closing at $1,158.10 on the 29th December. London opened againat $1,153.20 today.
Overall the dollar is stronger against global currencies today. Before London’s opening:
– The $: was stronger at $1.0310: 1 from $1.0530: 1 Friday.
– The Dollar index was stronger at 103.09 from 102.39 Friday.
– The Yen was weaker at 117.92: $1 from Friday’s 116.84 against the dollar.
– The Yuan was weaker at 6.9566: $1, from 6.9340: $1, Friday.
– The Pound Sterling was slightly stronger at $1.2280: 1 fromFriday’s $1.2277: 1.
Yuan Gold Fix
We cannot understand why even the Chinese language website of the Shanghai Gold Exchange does not publish today’s Fixes but only the business day before’s prices and wait to see if this is simply part of the process of updating the site.
On Friday the New York price closed at $1,151.70 on the last business day of last year, after Shanghai had closed at $1,187.35 a difference of $31.65 allowing for the difference in the gold being priced. This price also reflected a weaker dollar seen on Friday. This distorts the gold price we see today, so until the SGE publishes the gold price on the day it is set, we will need to adjust our perspective with hindsight.

This post was published at GoldSeek on 3 January 2017.

Chinese Interbank Lending Freezes; Government Bond Trading Halted After Massive PBOC Liquidity Drain

Earlier today, we were surprised to note that having aggressively drained liquidity from the interbank funding market, on the first trading day of 2017, the PBOC not only fixed the Yuan well lower (sy 6.9498 vs 6.9370 on the last day of 2016, even if this was well stronger than the Offshore Yuan), but the People’s Bank of China withdrew even more liquidity. It did that by injecting CNY20 billion via 7-day reverse repos and another CNY20 billion via 14-day reverse repos in its open-market operations Tuesday, according to traders, while continuing to skip 28-day reverse repos.
The move resulted in a net drain of CNY155 billion for the day, and followed a substantial drain of a net CNY245 billion last week – the first removal of liquidity in three weeks. We promptly followed up with a warning:
-day reverse repos.
The move resulted in a net drain of CNY155 billion for the day, and followed a substantial drain of a net CNY245 billion last week – the first removal of liquidity in three weeks. We promptly followed up with a warning:
PBOC drains a net CNY155 billion for the day. Keep an eye on overnight SHIBOR/ HIBOR/ Repo
– zerohedge (@zerohedge) January 3, 2017

This post was published at Zero Hedge on Jan 2, 2017.

The Endgame, Trump and Gold

Donald Trump is an accelerant in a burning house of cards
In the bankers’ endgame, slowing economic growth and excessive central bank liquidity forces investor capital into financial markets; driving up the price of stocks, bonds and commodities and creating financial bubbles whose collapse pose a systemic threat in overly-indebted capitalist economies.
***
DEREGULATION AND THE ENDGAME
Fundamental and pragmatic banking regulations, which arose from the devastating financial collapses of the Great Depression, for decades strengthened U. S. banks andcapital markets, making them the twin engines of American growth and the envy of the world… The systematic dismantling of those same regulations by greedy bankers began in earnest in 1980, peaked in 1999 [with the repeal of Glass-Steagall], and finally climaxed with an insane Securities and Exchange Commission ruling in April 2004, a final decision that paved the way for the implosion of everything regulation was designed to protect.
Shah Gilani, How Deregulation Fueled the Financial Crisis, January 2009
After investigating the causes of the Great Depression, Congress passed the Glass-Steagall Act in 1933 to prevent banks from again betting America’s savings in Wall Street casinos. Beginning in the 1960s, Wall Street banks tried 25 times to repeal Glass-Steagall, finally succeeding in 1999 after spending $300 million lobbying, i.e. buying, politicians’ votes.

This post was published at GoldSeek on Tuesday, 3 January 2017.

2017 Silver Outlook and Stocks to Watch

Wolf here: This is a sponsored post about silver and a silver mining company founded four months ago. Silver has gotten crushed and hated in recent years but was up 12% in 2016 and demand is growing, and this silver miner could benefit. For once, this article – unlike many of my own articles – is positive in tone. Think of it as an antidote.
By James Burgess, Oilprice.com Precious metals are an important component of every investor’s portfolio, and while gold often gets all the hype, another precious metal will be a much better bet in 2017: Silver.
The market for silver continues to tighten as supply has failed to keep up with demand for much of the past decade. Silver is used in all facets of modern life, including electronics, medical devices, engines, batteries, solar panels, LED lighting, semiconductors, touch screens, dentistry, and nuclear reactors. The list goes on.
Demand for silver is up by more than 35 percent since 2009, while supply only grew by a little more than 10 percent. In 2015 alone, global demand for silver exceeded supply by roughly 129 million ounces, or about 11 percent of overall demand. With silver consumption set to expand indefinitely, the supply deficit will continue to put upward pressure on prices in the years ahead.

This post was published at Wolf Street on Jan 3, 2017.

2017 Starts Off With A Bang: US Futures, Oil Jump On Upbeat China Data; Europe Enters Bull Market

Rumors of the Trumpflation rally’s death have been greatly exagerated, and not only is the Dow 20,000 back on the radar, following a 124 point surge in Dow futures, bringing the “key psychological level” back within 100 points, but European stocks rose for a third day and entered a bull market, rising 20% from theor lows set last February, following strong Chinese manufacturing and services PMI data, both of which ended 2016 on robust notes well inside expansion territory.

This post was published at Zero Hedge on Jan 3, 2017.

Oil Hits 18 Month High On Reports Kuwait, Oman Cut Crude Output

Oil prices hit 18-month highs on the first full trading day of 2017, following reports by Al-Ansa newspaper that OPEC member Kuwait has cut output by 130,000 barrels a day to about 2.75 million a day, according to Kuwait Oil Co. Chief Executive Officer Jamal Jaafer. Meanwhile, Oman was sait to cut 45,000 barrels a day from 1.01 million, the Oil Ministry’s Director of Marketing Ali Al-Riyami said on Oman TV.

And so, the surge which made oil the best performing asset class of 2016, driven by expectations of an OPEC production cut, continued following reports that this production cut was being implemented, if only for the time being by nations close to Saudi Arabia, and this unlikely to challenge the Vienna deal: the real question is whether the more “rogue” OPEC members will comply with their part of the bargain and certainly how the non-OPEC members will react.

This post was published at Zero Hedge on Jan 3, 2017.

Trump’s Year of Living Locally

Happy New Year. Against all odds, we made it through 2016.
I think future historians will call last year the Year of Shattered Concepts. Obvious truths proved false, and unstoppable trends stopped.
Globalization is a prime example.
The idea that free trade and technology would merge the planet into one Giant Happy Global Economy is mortally wounded. The incoming Trump administration may well deliver the coup de grce.
On that front, President-elect Trump said something profound last month. Yes, I know, you rarely see ‘Trump’ and ‘profound’ in the same sentence, but this time it fits.
‘Local, Folks, Local’
Anyone who reads my Twitter feed knows I am not a big Trump fan. But I give him credit when I think he’s right.
The above-mentioned profundity occurred at his December 15 appearance in Hershey, Pennsylvania.
From the Financial Times:
‘For years, the jobs and wealth have been ripped out of your state and ripped out of our country like we’re a bunch of babies,’ Mr Trump told the crowd at a stadium where the Hershey Bears ice hockey team plays. ‘People talk about how we’re living in a globalized world, but the relationships people value most are local – family, city, state and country. Local, folks, local.’
That one sentence I bolded deftly describes the fault line that is splitting entire nations and continents right now.

This post was published at Mauldin Economics on JANUARY 3, 2017.

SWOT Analysis: Will Gold Bullion Be Positive in 2017?

Strengths
The best performing precious metal for the week was palladium with a gain of 3.32 percent. HSBC noted they expect the rise of palladium prices to continue into 2017 with limited supply growth and steady auto demand. According to a Bloomberg survey late this week, gold traders and analysts are bullish on gold for the first time in three weeks. The change in sentiment was reflected in holdings in gold-backed ETFs, which rose 0.5 metric tons to 1,778.3 as of Thursday. This rise broke the 33-day drop in gold assets held in ETFs, which was the longest-running drop since 2004. Precious metals are enjoying a year-end rally, with gold rising above $1,150 per ounce earlier in week and finishing above that level by Friday, snapping a three year losing streak with an 8.56 percent gain. As shown in the chart above, gold prices track very closely with real interest rates. What turned out to be a test of wills a couple days after the Fed interest rate hike in December, real rates jumped to 71 basis points, yet gold held on at $1,130 support, and real rates finally backed off below 50 basis points by year end. At the start of the year, 71 basis points of positive yield had gold pinned down almost $90 lower.

This post was published at GoldSeek on Tuesday, 3 January 2017.

Trump Picks China Critic Robert Lighthizer As US Trade Representative

The Trump transition team announced that President-elect Donald Trump has named Robert Lighthizer as his U. S. Trade Representative. Lighthizer served as the deputy USTR under former President Ronald Reagan, playing a major role in developing trade policy and negotiating two dozen bilateral international agreements on topics from steel to grain, the transition team said in its statement.
‘He has extensive experience striking agreements that protect some of the most important sectors of our economy, and has repeatedly fought in the private sector to prevent bad deals from hurting Americans,’ Trump said in an e-mailed statement. ‘He will do an amazing job helping turn around the failed trade policies which have robbed so many Americans of prosperity.’
The appointment is a further sign the incoming administration will take a tougher line on China, according to Bloomberg. Lighthizer has previously accused China of unfair trade practices, in line with views held by Peter Navarro, a China critic who Trump last month named to head a newly formed White House National Trade Council. In a 2011 article published in the Washington Times, Lighthizer said that using tariffs to promote American industry was a Republican tenet harking back to pro-business politicians who established the party.

This post was published at Zero Hedge on Jan 3, 2017.

In 7th Year Of Austerity, Greek Hospitals Have Become “Danger Zones”

It is not a secret and it is not new that public hospitals in Greece collapsed. As Keep TalkingGreece.com notes, the first budget cuts imposed with the first bailout agreement affected the public health. Seven years later, the situation goes from bad to worse in fast speed. The austerity freezing of hiring (1:7) ended up in severe shortages in medical and paramedical personnel. The sharp expenditure cuts deprive hospitals of spare parts and essential material. KTG reported many times in the past about the situation in Greece’s hospitals, the deficiencies in personnel and material, incl bed sheets, the never ending bureaucracy.
***
Now doctors and workers at the public hospitals mention a new phenomenon: the increasing risk of death due to inner-hospital infections.

This post was published at Zero Hedge on Jan 3, 2017.

Money Creation and the Boom-Bust Cycle

In his various writings, Murray Rothbard argued that in a free market economy that operates on a gold standard the creation of credit that is not fully backed up by gold (fractional-reserve banking) sets in motion the menace of the boom-bust cycle. In his The Case for 100 Percent Gold Dollar Rothbard wrote,
I therefore advocate as the soundest monetary system and the only one fully compatible with the free market and with the absence of force or fraud from any source a 100 percent gold standard. This is the only system compatible with the fullest preservation of the rights of property. It is the only system that assures the end of inflation and, with it, of the business cycle.1
Some economists such as George Selgin and Lawrence White have contested this view. In his article in The Independent Review George Selgin argued that it is not true that fractional-reserve banking must always set in motion the menace of the boom-bust cycle.

This post was published at Ludwig von Mises Institute on January 3, 2016.

These Five Steps Can Fix America’s Markets for Everyone in 2017

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
Every new year is ripe with promise, and 2017 seems to hold more promise than most – at least for some people.
But I’ve got a few simple ideas that could make it a great year – many great years – for all of us.
And I mean one of the best, most prosperous years in American history…
We Won’t Get Anywhere with the Same-Old, Same-Old
If it seems like most of America has been, well, down in the dumps psychologically (and financially) since the 2008 credit crisis and Great Recession, there’s a good reason.
For lots of people, not much seems to have changed for the better.
Sure, if you’re a One-Percenter, your wealth has significantly increased because you not only had money in the market and stayed in it after the crash, but you also probably bought more stocks as the market kept going up.

This post was published at Wall Street Examiner by Shah Gilani ‘ January 3, 2017.

Currency & The Collapse Of The Roman Empire

At its peak, the Roman Empire held up to 130 million people over a span of 1.5 million square miles. Rome had conquered much of the known world. The Empire built 50,000 miles of roads, as well as many aqueducts, amphitheatres, and other works that are still in use today. Our alphabet, calendar, languages, literature, and architecture borrow much from the Romans. Even concepts of Roman justice still stand tall, such as being ‘innocent until proven guilty’. And so, as Visual Capitalist’s Jeff Desjardins asks (and answers): How could such a powerful empire collapse?
***
The Roman Economy
Trade was vital to Rome. It was trade that allowed a wide variety of goods to be imported into its borders: beef, grains, glassware, iron, lead, leather, marble, olive oil, perfumes, purple dye, silk, silver, spices, timber, tin and wine.

This post was published at Zero Hedge on Jan 3, 2017.

Currency Shows Turkey’s Death Spiral into Dictatorship

Turkey has really turned into a dictatorship and the claimed ‘elected’ head of state acts like anyone other than a democratically elected representative. He has acted more like Stalin, and has been gathering anyone who disagrees and demanding other government return people who have fled from him so he can execute them. The Turkish author Asl Erdoan was jailed in August and accused of links to terrorists as well as being a member of the terrorist organization the government labelled PKK. Last week began the trial against this journalist in Istanbul and outside are demonstrators gathered to protest.

This post was published at Armstrong Economics on Jan 3, 2017.