Market Report: Unchanged on the week

Gold and silver prices steadied this week, with gold up only $3 at $1218 in early European trade this morning (Friday), and silver unchanged at $15.68. As our headline chart shows, silver is now marginally lower on the year, and gold’s rise has been pared to 5.75%. All this has happened against a background of a weaker dollar, so in terms of performance, gold’s rise against the dollar is as good as it gets. Our next chart shows gold’s performance indexed to the start of the year against the four major currencies.
Priced in euros, gold is now down on the year, by 2%. The point is worth making to refute those who buy and sell gold on charts alone: they are ignoring the value gold offers most of the world’s population priced in other currencies. For example, there has been a rebound in Indian demand, with the official figures for May rising to 124 tonnes for the month. Given the smuggling trade, this is bound to understate the true figure. Silver demand also jumped sharply. Chinese public demand for gold in June rose to 155.5 tonnes, which for the first six months now stands at 1,021 tonnes. China and India between them are absorbing gold at an annualised rate of 3,160 tonnes, not far off total global mine supply. For this demand to be satisfied, the rest of the world, including members of the public, central banks and other government institutions such as sovereign wealth funds must draw down on existing above-ground stocks to satisfy their demand. This tells us that serious supply problems must be developing in the physical market, which is confirmed by backwardations for future deliveries.

This post was published at GoldMoney on July 14, 2017.

How High Can the Euro Go on this Reaction – 116 or 125-128?

This upcoming seminar in Frankfurt Germany will deal with both the short-term and long-term. This has been the Year from Political Hell, and it will not end until after the German elections. With the ECB finally throwing in the towel admitting (but certainly not publicly) that nearly 10 years of low to negative interest rates has utterly failed to reverse the deflation. Now with the expectation of higher interest rates, the optimism is returning on schedule in Europe as virtually 99% are touting that deflation is over and let the good times roll.
Of course, the greatest error with currency is the general public view it as a share price. They assume that the higher the Euro the stronger the economy becomes. Yet historically, the exact opposite is always true because currency is the medium of exchange which sits on the opposite side of the scale with tangible assets. Deflation is when assets decline because the currency rises in purchasing power.

This post was published at Armstrong Economics on Jul 16, 2017.

Global Stocks Soared $1.5 Trillion This Week – Now 102% Of World GDP

Thanks, it seems, to a few short words from Janet Yellen, the world’s stock markets added over $1.5 trillion to wealthy people’s net worth this week, sending global market cap to record highs.
The value of global equity markets reached a record high $76.28 trillion yesterday, up a shocking 18.6% since President Trump was elected. This is the same surge in global stocks that was seen as the market front-ran QE2 and QE3.
This was the biggest spike in global equity markets since 2016.

This post was published at Zero Hedge on Jul 15, 2017.

Is California Bailing Out Tesla through the Backdoor?

Tesla will lose federal subsidies; so something big needs to be done. The California state Assembly passed a $3-billion subsidy program for electric vehicles, dwarfing the existing program. The bill is now in the state Senate. If passed, it will head to Governor Jerry Brown, who has not yet indicated if he’d sign what is ostensibly an effort to put EV sales into high gear, but below the surface appears to be a Tesla bailout.
Tesla will soon hit the limit of the federal tax rebates, which are good for the first 200,000 EVs sold in the US per manufacturer beginning in December 2009 (IRS explanation). In the second quarter after the manufacturer hits the limit, the subsidy gets cut in half, from $7,500 to $3,750; two quarters later, it gets cut to $1,875. Two quarters later, it goes to zero.
Given Tesla’s ambitious US sales forecast for its Model 3, it will hit the 200,000 vehicle limit in 2018, after which the phase-out begins. A year later, the subsidies are gone. Losing a $7,500 subsidy on a $35,000 car is a huge deal. No other EV manufacturer is anywhere near their 200,000 limit. Their customers are going to benefit from the subsidy; Tesla buyers won’t.

This post was published at Wolf Street on Jul 16, 2017.

French Riots Erupt in 20 cities

The riots is France has been forming for the last two weeks and have now erupted violently with protesters carrying banners that read ‘Break Destroy Ravage’ that is similar to the destructive forces unleashed in Hamburg. The police report that the mob is composed of the youth. It is hard to see how these people can practice restraint when unemployment among the youth is so high because of taxes and regulation prevent small businesses from forming.

This post was published at Armstrong Economics on Jul 16, 2017.

Canada’s Multi-Million-Dollar Pay-Out To A ‘Foreign Terrorist Fighter’

“Has any soldier who fought FOR Canada ever received as generous a reward as this soldier who fought against us?” – Canadian Senator Linda Frum. In 2003, Khadr confessed to throwing the grenade that killed U. S. Special Forces Sgt. 1st Class Christopher Speer and caused Sgt. 1st Class Layne Morris to lose an eye. Years later, he retracted his confession, claiming it had been extracted under duress. In fact, it was part of a plea deal that enabled him to be extradited to Canada to serve the rest of his sentence there. “There was a Canadian flag flying along with the American flag at our base there, so it’s quite a thing that now Canada is giving millions to a guy who would attack a compound where Canadians were serving. I don’t see this as anything but treason. As far as I am concerned, Prime Minister Trudeau should be charged.” – Sgt. 1st Class Layne Morris, who lost an eye from the grenade thrown by Omar Khadr. The government of Canada recently issued an official apology — and acknowledged awarding an “undisclosed” sum of money — to Toronto-born Islamist terrorist Omar Khadr for his “ordeal” at the U. S. military base in Guantanamo Bay, Cuba, and “any resulting harm” he was caused by the “torture” (specifically, sleep deprivation, solitary confinement and threats) that led to his confession.
On July 7, Canadian Foreign Minister Chrystia Freeland and Minister of Public Safety and Emergency Preparedness Ralph Goodale released a statement announcing the “hope that this expression, and the negotiated settlement reached with the Government, will assist him in his efforts to begin a new and hopeful chapter in his life with his fellow Canadians.”

This post was published at Zero Hedge on Jul 15, 2017.