Similar Threads
Whats your best money management method? 52 replies
How to flow with the order flow? 26 replies
Money Management / Risk Management 24 replies
Money management model for multiple strategy trading method 16 replies
Most popular money management method. 7 replies
- Post #10,941
- Quote
- Nov 17, 2022 6:41am Nov 17, 2022 6:41am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
- Post #10,942
- Quote
- Edited 7:16am Nov 17, 2022 6:43am | Edited 7:16am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
- Post #10,943
- Quote
- Nov 17, 2022 6:44am Nov 17, 2022 6:44am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
- Post #10,944
- Quote
- Nov 17, 2022 6:52am Nov 17, 2022 6:52am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
- Post #10,945
- Quote
- Edited 7:35am Nov 17, 2022 6:55am | Edited 7:35am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
https://www.forexfactory.com/thread/...6-201fc8cdb556
November 17, 2022
Continue reading the main story
SUPPORTED BY
https://www.forexfactory.com/thread/...f-774f18a874b9
https://www.forexfactory.com/thread/...0-6e25889f1f4a
By Erin Griffith
Good morning. The failure of the cryptocurrency exchange FTX put the entire industry under scrutiny.
https://www.forexfactory.com/thread/...4-c73633cb3cc0
FTX’s founder, Sam Bankman-Fried.
Erika P. Rodriguez for The New York Times
Buyer beware
How could a $32 billion company vaporize overnight? That’s what anyone watching the sudden collapse of FTX, a hot cryptocurrency start-up that plunged into bankruptcy last week, might be puzzling over.
It will take time — and multiple federal investigations — to fully understand what happened behind the scenes at FTX, a Bahamas-based crypto exchange. But the impact is already becoming clear. Lawmakers are calling for more oversight. Crypto die-hards are trying to distance themselves. Critics of this sector of finance are crowing. And for those of you who had, until now, managed to ignore the rise and rise and rise of crypto as a phenomenon? First of all, good for you. And second, you may want to watch this one play out. I’ll explain why shortly.
But first, here is the simplest explanation of what happened that I can manage: FTX let people and companies buy and sell digital currencies, holding billions of dollars’ worth of customer deposits. FTX’s founder, Sam Bankman-Fried, also created an investment fund that trades cryptocurrencies called Alameda Research.
The businesses were supposed to be separate, but this year, Alameda needed cash and apparently dipped into FTX’s customer deposits. Then, this month, FTX customers became worried about their deposits and rushed to withdraw them, setting off a bank run and pushing FTX into bankruptcy.
The apparent commingling of funds between Alameda and FTX is highly suspicious and could lead to criminal fraud charges and lawsuits. The Securities and Exchange Commission and Justice Department are investigating. I want to explain today why the disintegration of FTX matters — it’s more than simply one man’s financial catastrophe.
Three reasons
1. Crypto went mainstream in the pandemic. Regulation has yet to catch up.
Cryptocurrencies were part of overlapping investment manias — including meme stocks, trading cards, NFTs and sneakers — that got people chasing speculative investments over the past few years. But not everyone buying in understood the level of risk involved.
If a bank fails, the government might step in and bail it out. A hallmark of crypto is that it is largely unregulated — buyer beware. Hacks can’t be reversed, misplaced funds can’t be retrieved by calling customer service, and a failing crypto exchange is not likely to get a government bailout. Investors have few protections.
Risky bets at several crypto projects once deemed valuable have already led to “death spirals” this year, incinerating billions of dollars’ worth of investors’ money. But FTX and Bankman-Fried stand out. He appeared on magazine covers, schmoozed regulators, grew his profile in philanthropy and politics and even sponsored a sports arena in Miami. He made hundreds of investments in smaller crypto projects and aggressively bailed out failing ones.
Evangelists for cryptocurrencies and their underlying technology promote them as investment vehicles that eliminate the need for faith in people and institutions. But Bankman-Fried made a point of fostering trust: from investors, journalists, politicians and charities. Now he’s a pariah, and he brought all of the crypto industry under scrutiny.
2. FTX’s collapse is connected to the broader tech industry retreat.
Bankman-Fried is already drawing comparisons to Bernie Madoff. And just as Madoff’s Ponzi scheme fell apart during the 2008 financial crisis, FTX’s collapse arrives amid a broader pullback for the tech industry. Tech stocks have crashed. Venture capital funding is drying up. Nearly 800 tech companies have laid off more than 120,000 workers this year, with cuts hitting Meta, Amazon and Twitter.
The tough times in tech can be traced to interest rates for borrowing money. For more than a decade, rates were low, pushing investors to chase risk and pour money into high-growth tech companies. Now, rates are rising, just as the pandemic-fueled growth of the last two years fades. The rate increases have hurt tech company valuations and access to capital — including those focused on crypto.
3. There’s more to come.
FTX’s bankruptcy filings list more than one million creditors. In addition to people who used the platform to store their cryptocurrency investments and investors who backed the company directly, numerous funds and crypto start-ups had assets locked up there.
Investment managers that dabbled in crypto “should really be considering whether they should have relatively new, relatively unproven, relatively unregulated assets in their retirement plans,” said Marcia Wagner, founder of the Wagner Law Group, a firm focused on employee benefits. “There are certain types of assets that frankly don’t belong.”
https://www.reuters.com/technology/o...ct-2022-11-10/
Ontario Pension says any loss from FTX investment to have limited impact
By Divya Rajagopal
https://cloudfront-us-east-2.images....5XEICS2QBY.jpg
Representations of cryptocurrencies are seen in front of displayed FTX logo in this illustration taken November 10, 2022. REUTERS/Dado Ruvic/Illustration
TORONTO, Nov 10 (Reuters) - The Ontario Teachers Pension Plan (OTPP) said on Thursday it had invested a total of $95 million to the troubled cryptocurrency exchange FTX and any financial loss from the exposure will have limited impact on the pension plan.
OTPP, Canada's No. 3 pension fund, said it made the investments in FTX International and FTX U.S. exchange through its Teachers' Venture Growth fund, representing less than 0.05% of the pension fund's total net assets, it said.
FTX is scrambling to raise funds from investors and rivals as Chief Executive Sam Bankman-Fried urgently seeks to save the cryptocurrency exchange that has been buffeted by a rush of customer withdrawals. read more
OTPP is the second Canadian pension fund that has found itself caught up in the crypto turmoil.
In August, Canada's No. 2 pension fund Caisse de dépôt et placement du Québec wrote down about $150 million of its investments in crypto lending firm Celsius after it filed for bankruptcy protection earlier this year.
Latest Updates
November 17, 2022
Continue reading the main story
SUPPORTED BY
https://www.forexfactory.com/thread/...f-774f18a874b9
https://www.forexfactory.com/thread/...0-6e25889f1f4a
By Erin Griffith
Good morning. The failure of the cryptocurrency exchange FTX put the entire industry under scrutiny.
https://www.forexfactory.com/thread/...4-c73633cb3cc0
FTX’s founder, Sam Bankman-Fried.
Erika P. Rodriguez for The New York Times
Buyer beware
How could a $32 billion company vaporize overnight? That’s what anyone watching the sudden collapse of FTX, a hot cryptocurrency start-up that plunged into bankruptcy last week, might be puzzling over.
It will take time — and multiple federal investigations — to fully understand what happened behind the scenes at FTX, a Bahamas-based crypto exchange. But the impact is already becoming clear. Lawmakers are calling for more oversight. Crypto die-hards are trying to distance themselves. Critics of this sector of finance are crowing. And for those of you who had, until now, managed to ignore the rise and rise and rise of crypto as a phenomenon? First of all, good for you. And second, you may want to watch this one play out. I’ll explain why shortly.
But first, here is the simplest explanation of what happened that I can manage: FTX let people and companies buy and sell digital currencies, holding billions of dollars’ worth of customer deposits. FTX’s founder, Sam Bankman-Fried, also created an investment fund that trades cryptocurrencies called Alameda Research.
The businesses were supposed to be separate, but this year, Alameda needed cash and apparently dipped into FTX’s customer deposits. Then, this month, FTX customers became worried about their deposits and rushed to withdraw them, setting off a bank run and pushing FTX into bankruptcy.
The apparent commingling of funds between Alameda and FTX is highly suspicious and could lead to criminal fraud charges and lawsuits. The Securities and Exchange Commission and Justice Department are investigating. I want to explain today why the disintegration of FTX matters — it’s more than simply one man’s financial catastrophe.
Three reasons
1. Crypto went mainstream in the pandemic. Regulation has yet to catch up.
Cryptocurrencies were part of overlapping investment manias — including meme stocks, trading cards, NFTs and sneakers — that got people chasing speculative investments over the past few years. But not everyone buying in understood the level of risk involved.
If a bank fails, the government might step in and bail it out. A hallmark of crypto is that it is largely unregulated — buyer beware. Hacks can’t be reversed, misplaced funds can’t be retrieved by calling customer service, and a failing crypto exchange is not likely to get a government bailout. Investors have few protections.
Risky bets at several crypto projects once deemed valuable have already led to “death spirals” this year, incinerating billions of dollars’ worth of investors’ money. But FTX and Bankman-Fried stand out. He appeared on magazine covers, schmoozed regulators, grew his profile in philanthropy and politics and even sponsored a sports arena in Miami. He made hundreds of investments in smaller crypto projects and aggressively bailed out failing ones.
Evangelists for cryptocurrencies and their underlying technology promote them as investment vehicles that eliminate the need for faith in people and institutions. But Bankman-Fried made a point of fostering trust: from investors, journalists, politicians and charities. Now he’s a pariah, and he brought all of the crypto industry under scrutiny.
2. FTX’s collapse is connected to the broader tech industry retreat.
Bankman-Fried is already drawing comparisons to Bernie Madoff. And just as Madoff’s Ponzi scheme fell apart during the 2008 financial crisis, FTX’s collapse arrives amid a broader pullback for the tech industry. Tech stocks have crashed. Venture capital funding is drying up. Nearly 800 tech companies have laid off more than 120,000 workers this year, with cuts hitting Meta, Amazon and Twitter.
The tough times in tech can be traced to interest rates for borrowing money. For more than a decade, rates were low, pushing investors to chase risk and pour money into high-growth tech companies. Now, rates are rising, just as the pandemic-fueled growth of the last two years fades. The rate increases have hurt tech company valuations and access to capital — including those focused on crypto.
3. There’s more to come.
FTX’s bankruptcy filings list more than one million creditors. In addition to people who used the platform to store their cryptocurrency investments and investors who backed the company directly, numerous funds and crypto start-ups had assets locked up there.
Investment managers that dabbled in crypto “should really be considering whether they should have relatively new, relatively unproven, relatively unregulated assets in their retirement plans,” said Marcia Wagner, founder of the Wagner Law Group, a firm focused on employee benefits. “There are certain types of assets that frankly don’t belong.”
https://www.reuters.com/technology/o...ct-2022-11-10/
Ontario Pension says any loss from FTX investment to have limited impact
By Divya Rajagopal
https://cloudfront-us-east-2.images....5XEICS2QBY.jpg
Representations of cryptocurrencies are seen in front of displayed FTX logo in this illustration taken November 10, 2022. REUTERS/Dado Ruvic/Illustration
TORONTO, Nov 10 (Reuters) - The Ontario Teachers Pension Plan (OTPP) said on Thursday it had invested a total of $95 million to the troubled cryptocurrency exchange FTX and any financial loss from the exposure will have limited impact on the pension plan.
OTPP, Canada's No. 3 pension fund, said it made the investments in FTX International and FTX U.S. exchange through its Teachers' Venture Growth fund, representing less than 0.05% of the pension fund's total net assets, it said.
FTX is scrambling to raise funds from investors and rivals as Chief Executive Sam Bankman-Fried urgently seeks to save the cryptocurrency exchange that has been buffeted by a rush of customer withdrawals. read more
OTPP is the second Canadian pension fund that has found itself caught up in the crypto turmoil.
In August, Canada's No. 2 pension fund Caisse de dépôt et placement du Québec wrote down about $150 million of its investments in crypto lending firm Celsius after it filed for bankruptcy protection earlier this year.
Latest Updates
- Elon Musk says he will find a new leader for Twitter
- FTX fallout hits crypto lender Genesis; Bankman-Fried, celebs sued
- Chip giant Taiwan eyes bigger tax breaks for tech R&D to retain competitive edge
- Binance to relaunch bid to buy bankrupt Voyager Digital - Coindesk
- Bankman-Fried says filing for FTX bankruptcy was a mistake - Vox
In an interview with Reuters in September, OTPP had described its investment in FTX as the one having "lowest" risk profile in this space.
Teacher's Venture Growth invests in early stage start-ups.
"Naturally, not all of the investments in this early-stage asset class perform to expectations," the fund said.
The Ontario government, which is a joint sponsor of the pension fund, said that the Financial Services Regulatory Authority of Ontario, as the regulator of OTPP, engages with plans to ensure appropriate risk management processes are in place. FSRAO did not provide an immediate comment.
Most other Canadian pensions fund, who are prolific global investors, have stayed away from crypto investments. Canada's fifth-largest fund PSP said it wanted to be cautious despite being interested in the crypto space,
"You have to be careful as a pension fund and as a long term investor when you step into innovation and a new technology," said Herman Bril, head of Responsible Investment at Montreal-based Public Sector Pension Investment Board.
Reporting by Divya Rajagopal and Maiya Keidan in Toronto, editing by Deepa Babington
https://www.natlawreview.com/article...saga-continues
The FTX Bankruptcy and the Question of Prudent Retirement Plan Investments: the Saga Continues
Monday, November 14, 2022
Among those impacted by the U.S. bankruptcy filing of leading global cryptocurrency exchange FTX on November 11, 2022 is the Ontario Teachers’ Pension Plan. Last October, the Ontario Teachers' Pension Plan Board, via its Teachers' Innovation Platform, invested $75 million in FTX Trading Ltd.’s (the owner and operator of FTX.com) Series B-1 fundraise.
Early this year, the pension plan invested another $20 million in FTX. FTX was an attractive investment because the focus of the Teachers’ Innovation Platform is growth equity and venture capital investments in companies, such as FTX, that are using technology to shape future markets. Hopefully the pension’s financial losses in this investment will have limited impact since the pension’s board has reported that the fund’s FTX exposure is limited to 0.05% of its total assets as it manages more than $182 billion in net assets for Ontario school teachers. But, news of FTX’s bankruptcy filing has negatively impacted cryptocurrencies, crypto related stocks and blockchain-related firms across the board, and will continue to have a ripple effect.
For U.S. retirement plans, this year has seen much debate regarding the Department of Labor’s Compliance Assistance Release No. 2022-01 on 401(k) Plan Investments in “Cryptocurrencies” issued on March 10, 2022. The DOL has more recently explained that the Release does not make new law, but rather it was issued as an interpretive rule on the duty of prudence with respect to cryptocurrency investment options and reminds fiduciaries of their duties as expressed under ERISA and the Supreme Court’s decision in Hughes v. Northwestern University, which found that fiduciaries must ensure that each plan investment option offered is prudent.
Yet, investments in cryptocurrency are not limited to 401k plans. In fact, in the 2022 CFA Institute Investor Trust Study found that 94% of state/government pension plan sponsors and 62% of corporate defined benefit plan sponsors invest in crypto assets, as institutional investors find that a small allocation to digital assets can be beneficial to a diversified portfolio. And for fiduciaries of retirement plans governed by ERISA, if the Retirement Savings Modernization Act introduced by Senator Pat Toomey, Senator Tim Scott and U.S. Representative Peter Meijer on September 29, 2022 is passed, ERISA would be amended to clarify that ERISA plan fiduciaries do not breach their fiduciary duties solely by selecting or monitoring investment options that include a range of asset classes, including digital assets and infrastructures. Prudent decision-making, therefore remains key.
While the latest fallout from the FTX bankruptcy will surely provide more reasons to scrutinize plan participant access to cryptocurrency and related investments, the story of the future of retirement plan investing is still being written. As the old adage goes, nothing ventured, nothing gained.
"You have to be careful as a pension fund and as a long term investor when you step into innovation and a new technology," said Herman Bril, head of Responsible Investment at Montreal-based Public Sector Pension Investment Board.
https://www.reuters.com/technology/ontario-pension-says-any-loss-ftx-inv...
1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
Two large Canadian pension plans have found themselves enticed and then burned by crypto investments this year.
The Ontario Teachers’ Pension Plan Board revealed last week that it had made a US$95-million investment in FTX, while the Caisse de dépôt et placement du Québec said in August it had written off its US$150-million investment in Celsius Network LLC, which had entered court-supervised bankruptcy proceedings in the United States.
Caisse chief executive Charles Emond said at the time that his team had conducted extensive due diligence with outside experts and consultants. They were aware of management and regulatory issues at Celsius and underestimated the time it would take to resolve them, he said, adding the Caisse was keen on “seizing the potential of blockchain technology” and that perhaps the investment in Celsius had been made “too soon” in the company’s development.
• Email: [email protected] | Twitter: BatPost
- Post #10,946
- Quote
- Nov 17, 2022 7:19am Nov 17, 2022 7:19am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
https://www.zerohedge.com/markets/ge...ter-power-cuts
Germany Preparing For Emergency Cash Deliveries, Bank Runs And "Aggressive Discontent" Ahead Of Winter Power Cuts
https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg
by Tyler Durden
Thursday, Nov 17, 2022 - 05:44 AM
While Europe has been keeping a generally optimistic facade ahead of the coming cold winter, signaling that it has more than enough gas in storage to make up for loss of Russian supply even in a "coldest-case" scenario, behind the scenes Europe's largest economy is quietly preparing for a worst case scenario which include angry mobs and bank-runs should blackouts prevent the population from accessing cash.
As Reuters reports citing four sources, German authorities have stepped up preparations for emergency cash deliveries in case of a blackout (or rather blackouts) to keep the economy running, as the nation braces for possible power cuts arising from the war in Ukraine. The plans include the Bundesbank hoarding extra billions to cope with a surge in demand, as well as "possible limits on withdrawals", one of the people said. And if you think crypto investors are angry when they can't access their digital tokens in a bankrupt exchange, just wait until you see a German whose cash has just been locked out.
Officials and banks are looking not only at origination (i.e., money-printing) but also at distribution, discussing for example priority fuel access for cash transporters, according to other sources commenting on preparations that accelerated in recent weeks after Russia throttled gas supplies.
The planning discussions involve the central bank, its financial market regulator BaFin, and multiple financial industry associations, said the Reuters sources most of whom spoke on condition of anonymity about plans that are private and in flux.
Although German authorities have publicly played down the likelihood of a blackout and bank runs - for obvious reasons - the discussions show both how seriously they take the threat and how they struggle to prepare for potential crippling power outages caused by soaring energy costs or even sabotage.
They also underscore the widening ramifications of the Ukraine war for Germany, which has for decades relied on affordable Russian energy and now faces double-digit inflation and a threat of disruption from fuel and energy shortages.
As everyone familiar with the recent history ofthe Wimar Republic Germany knows, access to cash is of special concern for Germans, who value the security and anonymity it offers, and who tend to use it more than other Europeans, with some still hoarding Deutschmarks replaced by euros more than two decades ago.
According to a recent Bundesbank study, roughly 60% of everyday German purchases are paid in cash, and Germans, on average, withdrew more than 6,600 euros annually chiefly from cash machines.
And here is the punchline: a parliamentary report a decade ago warned of "discontent" and "aggressive altercations" in case citizens were unable to get their hands on cash in a blackout. Translation: in case of cash withdrawal halts, German society may very well tear itself apart.
Indeed, there was a rush for cash at the beginning of the pandemic in March 2020, when Germans withdrew 20 billion more euros than they deposited.
That was a record, and it worked generally without a hitch. But a potential blackout raises new questions about possible scenarios, and officials are intensively revisiting the issue as the energy crisis in Europe's largest economy deepens and winter nears.
https://assets.zerohedge.com/s3fs-pu...?itok=LeUoTZZg
If a blackout struck, one option for policymakers could be to limit the amount of cash individuals withdraw, said one of the people. Needless to say, that would be a very bad option for Germany, and for fiat in general (after all, if the FTX bankruptcy is a black eye for crypto, what can one say about fiat if one of the world's most advanced economies limits access to cash). The Bundesbank processes cash moving through Germany's shops and economy, removing fakes and keeping circulation orderly. Its massive stocks make it ready for any spike in demand, that person said.
One weakness that planning exposed involves security firms that transport money from the central bank to ATMs and banks. The industry, which includes Brinks and Loomis is not fully covered by law guiding priority access to fuel and telecommunications during a blackout, according to the industry organization BDGW.
"There are big loopholes," said Andreas Paulick, BDGW director. Armoured vehicles would have to line up at petrol stations like everyone else, he said. The organization hosted a meeting last week with central bank officials and lawmakers to press its case.
"We must preventively tackle the realistic scenario of a blackout," Paulick said. "It would be totally naive to not talk about this at a time like now."
How bad could it get? Well, more than 40% of Germans fear a blackout in the next six months, according to a survey last week published by Funke Mediengruppe. And since at least one blackout is virtually assured in the coming months, that means a stampede for the nearest ATM, something the local financial infrastructure will unlikely be able to handle.
As a result, Germany's disaster office said it recommended people keep cash at home for such emergencies (surely this will inspire confidence).
Meanwhile, another Reuters source notes that German financial regulators worry that banks are not fully prepared for major power outages and view it as a new, previously unforeseen risk. Banks consider a full-scale blackout "improbable", according to Deutsche Kreditwirtschaft, the financial sector's umbrella organization. But banks nevertheless are "in contact with the relevant ministries and authorities" to plan for such a scenario, especially since anything banks say is "improbable" tends to happen rather regularly. It said finance should be considered as critical infrastructure if energy is rationed.
At times politics can get in the way of blackout planning. In Frankfurt, Germany's banking capital, one city council member proposed requiring it to present a blackout plan by Nov. 17. The politician, Markus Fuchs of the right-wing AfD party, told the council it would be irresponsible not to plan for one. But the other parties rejected the proposal, accusing Fuchs and his party of inciting panic.
Fuchs later said in a phone interview: "If we found a solution for world peace, it would be rejected." The issue also underscores the dependence of commerce on technology, with transactions increasingly electronic, and where most cash machines have no emergency power source.
Cash would be the only official payment method that would still work, said Thomas Leitert, chief of KomRe, a company that advises cities on planning for blackouts and other catastrophes.
"How else will the ravioli cans and candles be paid for?" Leitert said. Well, there is that whole crypto thing, but the 2nd biggest Democratic donor did a bang up job there...
Germany Preparing For Emergency Cash Deliveries, Bank Runs And "Aggressive Discontent" Ahead Of Winter Power Cuts
https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg
by Tyler Durden
Thursday, Nov 17, 2022 - 05:44 AM
While Europe has been keeping a generally optimistic facade ahead of the coming cold winter, signaling that it has more than enough gas in storage to make up for loss of Russian supply even in a "coldest-case" scenario, behind the scenes Europe's largest economy is quietly preparing for a worst case scenario which include angry mobs and bank-runs should blackouts prevent the population from accessing cash.
As Reuters reports citing four sources, German authorities have stepped up preparations for emergency cash deliveries in case of a blackout (or rather blackouts) to keep the economy running, as the nation braces for possible power cuts arising from the war in Ukraine. The plans include the Bundesbank hoarding extra billions to cope with a surge in demand, as well as "possible limits on withdrawals", one of the people said. And if you think crypto investors are angry when they can't access their digital tokens in a bankrupt exchange, just wait until you see a German whose cash has just been locked out.
Officials and banks are looking not only at origination (i.e., money-printing) but also at distribution, discussing for example priority fuel access for cash transporters, according to other sources commenting on preparations that accelerated in recent weeks after Russia throttled gas supplies.
The planning discussions involve the central bank, its financial market regulator BaFin, and multiple financial industry associations, said the Reuters sources most of whom spoke on condition of anonymity about plans that are private and in flux.
Although German authorities have publicly played down the likelihood of a blackout and bank runs - for obvious reasons - the discussions show both how seriously they take the threat and how they struggle to prepare for potential crippling power outages caused by soaring energy costs or even sabotage.
They also underscore the widening ramifications of the Ukraine war for Germany, which has for decades relied on affordable Russian energy and now faces double-digit inflation and a threat of disruption from fuel and energy shortages.
As everyone familiar with the recent history of
According to a recent Bundesbank study, roughly 60% of everyday German purchases are paid in cash, and Germans, on average, withdrew more than 6,600 euros annually chiefly from cash machines.
And here is the punchline: a parliamentary report a decade ago warned of "discontent" and "aggressive altercations" in case citizens were unable to get their hands on cash in a blackout. Translation: in case of cash withdrawal halts, German society may very well tear itself apart.
Indeed, there was a rush for cash at the beginning of the pandemic in March 2020, when Germans withdrew 20 billion more euros than they deposited.
That was a record, and it worked generally without a hitch. But a potential blackout raises new questions about possible scenarios, and officials are intensively revisiting the issue as the energy crisis in Europe's largest economy deepens and winter nears.
https://assets.zerohedge.com/s3fs-pu...?itok=LeUoTZZg
If a blackout struck, one option for policymakers could be to limit the amount of cash individuals withdraw, said one of the people. Needless to say, that would be a very bad option for Germany, and for fiat in general (after all, if the FTX bankruptcy is a black eye for crypto, what can one say about fiat if one of the world's most advanced economies limits access to cash). The Bundesbank processes cash moving through Germany's shops and economy, removing fakes and keeping circulation orderly. Its massive stocks make it ready for any spike in demand, that person said.
One weakness that planning exposed involves security firms that transport money from the central bank to ATMs and banks. The industry, which includes Brinks and Loomis is not fully covered by law guiding priority access to fuel and telecommunications during a blackout, according to the industry organization BDGW.
"There are big loopholes," said Andreas Paulick, BDGW director. Armoured vehicles would have to line up at petrol stations like everyone else, he said. The organization hosted a meeting last week with central bank officials and lawmakers to press its case.
"We must preventively tackle the realistic scenario of a blackout," Paulick said. "It would be totally naive to not talk about this at a time like now."
How bad could it get? Well, more than 40% of Germans fear a blackout in the next six months, according to a survey last week published by Funke Mediengruppe. And since at least one blackout is virtually assured in the coming months, that means a stampede for the nearest ATM, something the local financial infrastructure will unlikely be able to handle.
As a result, Germany's disaster office said it recommended people keep cash at home for such emergencies (surely this will inspire confidence).
Meanwhile, another Reuters source notes that German financial regulators worry that banks are not fully prepared for major power outages and view it as a new, previously unforeseen risk. Banks consider a full-scale blackout "improbable", according to Deutsche Kreditwirtschaft, the financial sector's umbrella organization. But banks nevertheless are "in contact with the relevant ministries and authorities" to plan for such a scenario, especially since anything banks say is "improbable" tends to happen rather regularly. It said finance should be considered as critical infrastructure if energy is rationed.
At times politics can get in the way of blackout planning. In Frankfurt, Germany's banking capital, one city council member proposed requiring it to present a blackout plan by Nov. 17. The politician, Markus Fuchs of the right-wing AfD party, told the council it would be irresponsible not to plan for one. But the other parties rejected the proposal, accusing Fuchs and his party of inciting panic.
Fuchs later said in a phone interview: "If we found a solution for world peace, it would be rejected." The issue also underscores the dependence of commerce on technology, with transactions increasingly electronic, and where most cash machines have no emergency power source.
Cash would be the only official payment method that would still work, said Thomas Leitert, chief of KomRe, a company that advises cities on planning for blackouts and other catastrophes.
"How else will the ravioli cans and candles be paid for?" Leitert said. Well, there is that whole crypto thing, but the 2nd biggest Democratic donor did a bang up job there...
- Post #10,947
- Quote
- Edited 7:55am Nov 17, 2022 7:40am | Edited 7:55am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
https://www.zerohedge.com/political/...tural-problems
Credit Suisse's Sale Of Securitized Products Will Not Correct Deeper, 'Cultural' Problems Reminiscent Of 2008 Meltdown: Experts
https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg
by Tyler Durden
Thursday, Nov 17, 2022 - 06:30 AM
Authored by Michael Washburn via The Epoch Times (emphasis ours),
The announcement on Tuesday that troubled bank Credit Suisse plans to sell off a bulk of its securitized assets to Apollo Global Management next year is expected to usher in a new phase of the bank’s reorganization and help shift its focus from high-risk to more traditional areas. But in the absence of changes to its internal culture, Credit Suisse may yet go down the path of failed financial institutions and trigger massive regulatory intervention not unlike what happened in 2008 with the fall of Lehman Brothers, banking experts and analysts have told The Epoch Times.
Recent and ongoing legal and financial problems at Credit Suisse, and the reputational problems that have driven consumers away, reportedly prompted the decision to sell off the assets, slashing its portfolio of securitized products from roughly $75 billion to $20 billion in value.
Credit Suisse’s stock price has plummeted 53.48 percent over the course of the year amid widespread concern over large-scale blow-ups, such as the insolvency of Archegos Capital Management, which Credit Suisse had given $30 billion to invest in ViacomCBS, whose own stock value subsequently tumbled, and a scandal over accounts implicated in tax evasion. On Oct. 24, the bank agreed to pay the government of France $234 million as compensation for revenues that France allegedly lost because of a pattern of fraud and money laundering from 2005 to 2012.
The bank has reported drastically diminished earnings for the third quarter of 2022, with total net revenues of $1.14 billion, a 58 percent decline from the year-ago quarter.
Dodging the Problem
During an earnings call, Credit Suisse CEO Ulrich Körner told investors and reporters, “Overall, our results for the third quarter of 2022 were significantly impacted by the continued challenging market and macroeconomic conditions.”
Though he briefly mentioned “a proactive approach to reducing our litigation docket,” Körner’s statement blamed adverse external forces for the bank’s woes and did not acknowledge the degree to which investors, consumers, and other players in the banking sector may have recoiled from a bank that seems to have learned so little from what experts call the lessons of Lehman Brothers and the global financial meltdown of 2008–09.
But the ongoing woes have badly shaken the market’s confidence in the bank and opened the door to disquieting possibilities reminiscent of those of 2008, experts have told The Epoch Times. Selling off securitized products is a cosmetic and partial solution that will not curb the excesses of an internal culture maximizing profits at the expense of fiscal probity.
“With all these big financial institutions that are spread all over the world, they’re going to have a few leaks in the boat from time to time, because it’s hard to monitor everything from headquarters. But when you see it consistently popping up, as you do with Credit Suisse, when something keeps happening over and over again, I just think that’s an internal issue, a weakness in the corporate culture,” Jeffrey Hooke, a former vice president of investment banking at Lehman Brothers who now teaches at the John Hopkins Carey School of Business, told The Epoch Times.
“It’s taxes, and then there’s a hidden account somewhere that money managers are using for money laundering, and then you have this huge blow-up in the investment department,” Hooke said, alluding to investment strategies that have led to Credit Suisse losing billions with the insolvencies of such firms as Archegos Capital Management and British lender Greensill.
In Hooke’s view, the recurrence of such legal and financial woes typically reflects an internal culture that does not emphasize probity and putting the interests of clients before that of the bank’s own traders and executives.
“When you work at a company, there’s a culture attached to it. I’ve worked at a couple of large investment banks, I worked at Lehman Brothers and at Schroder Wertheim, and have usually seen that if employees think they can get away with something without much penalty to themselves, then they’re going to get away with it,” he said.
This observation applies to large players in the banking realm generally, Hooke said, referring to other recent blow-ups such as Goldman Sachs’s role in a scandal wherein the financial institution was found guilty of bribing officials in Malaysia and Abu Dhabi to the tune of more than $1 billion in return for business opportunities, including the underwriting of $6.5 billion worth of bonds for a Malaysian developer.
“It’s not just relevant to Credit Suisse, it’s kind of relevant to all these big institutions. Citibank and Morgan Stanley have had repeated run-ins with the authorities where they pay big fines. It just seems that with Credit Suisse, it’s a little more persistent,” Hooke said.
The Limits of Civil Action
While the Securities and Exchange Commission (SEC) in the United States, and regulators in Switzerland where Credit Suisse is based, may move aggressively against some instances of fraud, it is unrealistic to expect them to stem all malfeasance without an internal culture dedicated to thwarting such behavior, Hooke believes. Even though the SEC can refer cases of extreme wrongdoing to the U.S. Department of Justice for a potential prosecution, the regulators may simply not have the capacity to nip all mischief in the bud, he contended.
“I just think that it’s very tough for the regulators to catch all perpetrators who are intent on fooling them. You’ve got to rely a little bit on the company’s culture itself to repress that bad acting,” said Hooke.
“You can fine these companies billions of dollars, but the employees say, ‘What do I care?’ Even if they get caught, they usually just get fired. I don’t think they usually go to jail,” he added.
This is partly the result of the failure to take appropriate actions in the face of patterns of reckless conduct that led to a fiasco with worldwide repercussions in 2008–09.
“I’m sure that people on Wall Street look at what happened in 2009, when there were huge instances of questionable behavior by the big investment banks. When the dust cleared and the bailouts had taken place, no one really went to jail. That has to be at the back of the mind of people who act improperly. The bank itself and the stockholders will get slammed, but these are big institutions,” Hooke continued.
For those concerned about the health of the U.S. economy and the global financial system, the failure to improve an internal culture where such malfeasance goes on chronically presents a couple of unappealing possibilities. A systemically important bank may end up going bankrupt as the unending scandals, prosecutions, and fines drive customers and investors away, or the government may have to step in and apply massive bailouts and other heavy-handed measures inimical to the smooth functioning of the free-market system.
“You can’t let Credit Suisse go bankrupt. That would amount to promoting a financial panic almost like we had in 2009. Back then, the U.S. government let Lehman Brothers go bankrupt, and this helped cause a big recession and terrible things for the average guy in the street. Letting Credit Suisse go under would penalize the creditors and stockholders. In theory, that’s a good thing and will correct bad practices—but in real life, that would cause a shock to the system,” Hooke said.
“You can let a small bank go under. But Credit Suisse is a huge player, and they must have a government backstop,” he continued.
Such an eventuality would be reminiscent of what happened during the darkest days of the global recession, Hooke cautioned.
“Just look at the example of 2009. The government had to prop up all the other banks and provide huge loans, subsidized loans, and unilateral guarantees,” he said.
The Failure of TARP
In agreement with Hooke about the myriad structural and operational differences between small banks and global ones is Elinda Kiss, a professor at the Robert H. Smith School of Business at the University of Maryland.
“Any large international bank operating in many countries, and having to deal with regulators in many countries, is going to have problems that smaller banks working in just one country are not,” Kiss told The Epoch Times.
The history of the 2008–09 meltdown illustrates that it is all the more urgent for such banks to maintain robust cultures of compliance and avoid irresponsible conduct that may make them end up in need of a bailout, Kiss believes.
The Troubled Asset Relief Program (TARP) originally came into being in 2009 to provide the Treasury Department with up to $700 billion to buy up toxic assets and remove them from insolvent banks’ balance sheets. But things did not play out according to plan, Kiss noted.
Read more here...
The Failure of TARP
“TARP money was originally to buy the troubled assets. The problem was that they had no idea how to price them. They also used TARP money to bail out Chrysler and General Motors, and the big insurance firm AIG. The government was constantly bailing out troubled institutions, and they had the attitude that ‘We can do whatever we want, the government will bail us out.’ But you just don’t want to see the government always as the bailer-outer,” she continued.
Banks must avoid ending up in such situations through a culture of probity that involves paying minute, rigorous attention to their assets and capital ratios, Kiss argued. Federal programs are not a panacea and can breed as many or even more problems than they alleviate.
Kiss’s own career offers a still further example of the dangers of breaching the divide between state and private entities, she said, pointing to her experience working at First Pennsylvania Bank in Philadelphia in the early 1980s.
“First Pennsylvania Bank was deemed, at that point, to be ‘too big to fail.’ But it failed, primarily because its president decided to make a big bet buying 30-year Treasury bonds,” she said.
The Epoch Times has reached out to Credit Suisse for comment.
Michael Washburn
Reporter
Michael Washburn is a New York-based reporter who covers U.S. and China-related topics. He has a background in legal and financial journalism, and also writes about arts and culture. Additionally, he is the host of the weekly podcast Reading the Globe. His books include “The Uprooted and Other Stories,” “When We're Grownups,” and “Stranger, Stranger.”
Credit Suisse's Sale Of Securitized Products Will Not Correct Deeper, 'Cultural' Problems Reminiscent Of 2008 Meltdown: Experts
https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg
by Tyler Durden
Thursday, Nov 17, 2022 - 06:30 AM
Authored by Michael Washburn via The Epoch Times (emphasis ours),
The announcement on Tuesday that troubled bank Credit Suisse plans to sell off a bulk of its securitized assets to Apollo Global Management next year is expected to usher in a new phase of the bank’s reorganization and help shift its focus from high-risk to more traditional areas. But in the absence of changes to its internal culture, Credit Suisse may yet go down the path of failed financial institutions and trigger massive regulatory intervention not unlike what happened in 2008 with the fall of Lehman Brothers, banking experts and analysts have told The Epoch Times.
Recent and ongoing legal and financial problems at Credit Suisse, and the reputational problems that have driven consumers away, reportedly prompted the decision to sell off the assets, slashing its portfolio of securitized products from roughly $75 billion to $20 billion in value.
Credit Suisse’s stock price has plummeted 53.48 percent over the course of the year amid widespread concern over large-scale blow-ups, such as the insolvency of Archegos Capital Management, which Credit Suisse had given $30 billion to invest in ViacomCBS, whose own stock value subsequently tumbled, and a scandal over accounts implicated in tax evasion. On Oct. 24, the bank agreed to pay the government of France $234 million as compensation for revenues that France allegedly lost because of a pattern of fraud and money laundering from 2005 to 2012.
The bank has reported drastically diminished earnings for the third quarter of 2022, with total net revenues of $1.14 billion, a 58 percent decline from the year-ago quarter.
Dodging the Problem
During an earnings call, Credit Suisse CEO Ulrich Körner told investors and reporters, “Overall, our results for the third quarter of 2022 were significantly impacted by the continued challenging market and macroeconomic conditions.”
Though he briefly mentioned “a proactive approach to reducing our litigation docket,” Körner’s statement blamed adverse external forces for the bank’s woes and did not acknowledge the degree to which investors, consumers, and other players in the banking sector may have recoiled from a bank that seems to have learned so little from what experts call the lessons of Lehman Brothers and the global financial meltdown of 2008–09.
But the ongoing woes have badly shaken the market’s confidence in the bank and opened the door to disquieting possibilities reminiscent of those of 2008, experts have told The Epoch Times. Selling off securitized products is a cosmetic and partial solution that will not curb the excesses of an internal culture maximizing profits at the expense of fiscal probity.
“With all these big financial institutions that are spread all over the world, they’re going to have a few leaks in the boat from time to time, because it’s hard to monitor everything from headquarters. But when you see it consistently popping up, as you do with Credit Suisse, when something keeps happening over and over again, I just think that’s an internal issue, a weakness in the corporate culture,” Jeffrey Hooke, a former vice president of investment banking at Lehman Brothers who now teaches at the John Hopkins Carey School of Business, told The Epoch Times.
“It’s taxes, and then there’s a hidden account somewhere that money managers are using for money laundering, and then you have this huge blow-up in the investment department,” Hooke said, alluding to investment strategies that have led to Credit Suisse losing billions with the insolvencies of such firms as Archegos Capital Management and British lender Greensill.
In Hooke’s view, the recurrence of such legal and financial woes typically reflects an internal culture that does not emphasize probity and putting the interests of clients before that of the bank’s own traders and executives.
“When you work at a company, there’s a culture attached to it. I’ve worked at a couple of large investment banks, I worked at Lehman Brothers and at Schroder Wertheim, and have usually seen that if employees think they can get away with something without much penalty to themselves, then they’re going to get away with it,” he said.
This observation applies to large players in the banking realm generally, Hooke said, referring to other recent blow-ups such as Goldman Sachs’s role in a scandal wherein the financial institution was found guilty of bribing officials in Malaysia and Abu Dhabi to the tune of more than $1 billion in return for business opportunities, including the underwriting of $6.5 billion worth of bonds for a Malaysian developer.
“It’s not just relevant to Credit Suisse, it’s kind of relevant to all these big institutions. Citibank and Morgan Stanley have had repeated run-ins with the authorities where they pay big fines. It just seems that with Credit Suisse, it’s a little more persistent,” Hooke said.
The Limits of Civil Action
While the Securities and Exchange Commission (SEC) in the United States, and regulators in Switzerland where Credit Suisse is based, may move aggressively against some instances of fraud, it is unrealistic to expect them to stem all malfeasance without an internal culture dedicated to thwarting such behavior, Hooke believes. Even though the SEC can refer cases of extreme wrongdoing to the U.S. Department of Justice for a potential prosecution, the regulators may simply not have the capacity to nip all mischief in the bud, he contended.
“I just think that it’s very tough for the regulators to catch all perpetrators who are intent on fooling them. You’ve got to rely a little bit on the company’s culture itself to repress that bad acting,” said Hooke.
“You can fine these companies billions of dollars, but the employees say, ‘What do I care?’ Even if they get caught, they usually just get fired. I don’t think they usually go to jail,” he added.
This is partly the result of the failure to take appropriate actions in the face of patterns of reckless conduct that led to a fiasco with worldwide repercussions in 2008–09.
“I’m sure that people on Wall Street look at what happened in 2009, when there were huge instances of questionable behavior by the big investment banks. When the dust cleared and the bailouts had taken place, no one really went to jail. That has to be at the back of the mind of people who act improperly. The bank itself and the stockholders will get slammed, but these are big institutions,” Hooke continued.
For those concerned about the health of the U.S. economy and the global financial system, the failure to improve an internal culture where such malfeasance goes on chronically presents a couple of unappealing possibilities. A systemically important bank may end up going bankrupt as the unending scandals, prosecutions, and fines drive customers and investors away, or the government may have to step in and apply massive bailouts and other heavy-handed measures inimical to the smooth functioning of the free-market system.
“You can’t let Credit Suisse go bankrupt. That would amount to promoting a financial panic almost like we had in 2009. Back then, the U.S. government let Lehman Brothers go bankrupt, and this helped cause a big recession and terrible things for the average guy in the street. Letting Credit Suisse go under would penalize the creditors and stockholders. In theory, that’s a good thing and will correct bad practices—but in real life, that would cause a shock to the system,” Hooke said.
“You can let a small bank go under. But Credit Suisse is a huge player, and they must have a government backstop,” he continued.
Such an eventuality would be reminiscent of what happened during the darkest days of the global recession, Hooke cautioned.
“Just look at the example of 2009. The government had to prop up all the other banks and provide huge loans, subsidized loans, and unilateral guarantees,” he said.
The Failure of TARP
In agreement with Hooke about the myriad structural and operational differences between small banks and global ones is Elinda Kiss, a professor at the Robert H. Smith School of Business at the University of Maryland.
“Any large international bank operating in many countries, and having to deal with regulators in many countries, is going to have problems that smaller banks working in just one country are not,” Kiss told The Epoch Times.
The history of the 2008–09 meltdown illustrates that it is all the more urgent for such banks to maintain robust cultures of compliance and avoid irresponsible conduct that may make them end up in need of a bailout, Kiss believes.
The Troubled Asset Relief Program (TARP) originally came into being in 2009 to provide the Treasury Department with up to $700 billion to buy up toxic assets and remove them from insolvent banks’ balance sheets. But things did not play out according to plan, Kiss noted.
Read more here...
The Failure of TARP
“TARP money was originally to buy the troubled assets. The problem was that they had no idea how to price them. They also used TARP money to bail out Chrysler and General Motors, and the big insurance firm AIG. The government was constantly bailing out troubled institutions, and they had the attitude that ‘We can do whatever we want, the government will bail us out.’ But you just don’t want to see the government always as the bailer-outer,” she continued.
Banks must avoid ending up in such situations through a culture of probity that involves paying minute, rigorous attention to their assets and capital ratios, Kiss argued. Federal programs are not a panacea and can breed as many or even more problems than they alleviate.
Kiss’s own career offers a still further example of the dangers of breaching the divide between state and private entities, she said, pointing to her experience working at First Pennsylvania Bank in Philadelphia in the early 1980s.
“First Pennsylvania Bank was deemed, at that point, to be ‘too big to fail.’ But it failed, primarily because its president decided to make a big bet buying 30-year Treasury bonds,” she said.
The Epoch Times has reached out to Credit Suisse for comment.
Michael Washburn
Reporter
Michael Washburn is a New York-based reporter who covers U.S. and China-related topics. He has a background in legal and financial journalism, and also writes about arts and culture. Additionally, he is the host of the weekly podcast Reading the Globe. His books include “The Uprooted and Other Stories,” “When We're Grownups,” and “Stranger, Stranger.”
- Post #10,948
- Quote
- Nov 17, 2022 8:03am Nov 17, 2022 8:03am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
- Post #10,949
- Quote
- Nov 17, 2022 8:06am Nov 17, 2022 8:06am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
- Post #10,950
- Quote
- Nov 17, 2022 8:40am Nov 17, 2022 8:40am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
- Post #10,951
- Quote
- Nov 17, 2022 8:43am Nov 17, 2022 8:43am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
- Post #10,952
- Quote
- Edited 9:12pm Nov 17, 2022 8:38pm | Edited 9:12pm
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
https://www.goldmoney.com/research/t...gmrefcode=gata
The upside-down world of currency
Nov 17, 2022·Alasdair Macleod
The gap between fiat currency values and that of legal money, which is gold, has widened so that dollars retain only 2% of their pre-1970s value, and for sterling it is as little as 1%. Yet it is commonly averred that currency is money, and gold is irrelevant.
As the product of statist propaganda, this is incorrect. Originally established in Roman law, legally gold is still money and the states’ debauched currencies are not — only a form of credit. As I demonstrate in this article, the major western central banks will be forced to embark on a new round of currency debasement, likely to put an end to the matter.
Central to my thesis is that commercial bank credit will contract sharply in response to rising interest rates and bond yields. This retrenchment is already ending the everything bubble in financial asset values, is beginning to undermine GDP, and given record levels of balance sheet leverage makes a major banking crisis virtually impossible to avoid. Central banks which are already in a parlous state of their own will be tasked with underwriting the entire credit system.
In discharging their responsibilities to the status quo, central banks will end up destroying their own currencies.
So, why do we persist in pricing everything in failing currencies, when that will almost certainly change? When the difference between legal money and declining currencies is finally realized, the public will discard currencies entirely reverting to legal money. That time is being brought forward rapidly by current events.
Why do we impart value to currency and not money?
A question that is not satisfactorily answered today is why is it that an UN-backed fiat currency has value as a medium of exchange. Some say that it reflects faith in and the credit standing of the issuer. Others say that by requiring a nation’s subjects to pay taxes and to account for them guarantees its demand. But these replies ignore the consequences of its massive expansion while the state pretends it to be real money. Sometimes, the consequences can seem benign and at others catastrophic. As explanations for the public’s tolerance of repeated failures of currencies, these answers are insufficient.
Let us do a thought experiment to highlight the depth of the problem. We know that over millennia, metallic metals, particularly gold, silver, and copper came to be used as media of exchange. And we also know that the use of their value was broadened through credit in the form of banknotes and bank deposits. The relationships between legal money, that is gold, silver, or copper and credit in its various forms were defined in Roman law in the sixth century. And we also know that this system of money and credit with the value of credit tied to that of money, despite some ups and downs, has served humanity well ever since.
Now let us assume that in the absence of metallic money, in the dawn of economic time a ruler instructed his subjects to use a new currency which he and only he will issue for the public’s use. This would surely be seen as a benefit to everyone, compared with the pre-existing condition of barter. But the question in our minds must be about the durability of the ruler’s new currency. With no precedent, how is the currency to be valued in the context of the ratios between goods and services bought and sold? And how certain can one be about tomorrow’s value in that context? And what happens if the king loses his power, or dies?
Clearly, without a reference to something else, the king’s new currency is a highly risky proposition and sooner or later will simply fail. And even when a new currency has been introduced and linked to an existing form of money, if the tie is then cut the currency will struggle to survive. Without going into the good reasons why this is so, the empirical evidence confirms it. Chinese merchants no longer use Kubla Khan’s paper made out of mulberry leaves, and German citizens no longer use the paper marks of the early 1920s. But they still refer to metallic money.
Yet today, we impart values to paper currencies issued by our governments in defiance of these outcomes. An explanation was provided by the great Austrian economist, Ludwig Von Mises in his regression theorem. He reasonably argued that we refer the value of a medium of exchange today to its value to us yesterday. In other words, we know as producers what we will receive today for our product, based on our experience in the immediate past, and in the same way we refer to our currency values as consumers. Similarly, at a previous time, we referred our experience of currency values to our prior experience. In other words, the credibility and value of currencies are based on a regression into the past.
Mises’s regression theory was broadly confirmed by an earlier writer, Jean-Baptiste Say, who in his Treatise on Political Economy observed:
“Custom, therefore, and not the mandate of authority, designates the specific product that shall pass exclusively as money, whether crown pieces or any other commodity whatever.”[i]
Custom is why we still think of currencies as money, even though for the last fifty-one years their link with money was abandoned. The day after President Nixon cut the umbilical cord between gold and the dollar, we all continued using dollars and all the other currencies as if nothing had happened. But this was the last step in a long process of freeing the paper dollar from being backed by gold. The habit of the public in valuing currency by regression had served the US Government well and has continued to do so.
The role of a medium of exchange
Being backed by no more than government fiat, to properly understand the role that currencies have assumed for themselves, we need to make some comments about why a medium of exchange is needed and its characteristics. The basis was laid out by Jean-Baptiste Say, who described the division of labor and the role of a medium of exchange.
Say observed that human productivity depended on nonspecialist, with producers obtaining their broader consumption through the medium of exchange. The role of money (and associated credit) is to act as a commodity valued on the basis of its use in exchange. Therefore, money is simply the right, or title, to acquire some consumer satisfaction from someone else. Following on from Say’s law, when any economic quantity is exchanged for any other economic quantity, each is termed the value of the other. But when one of the quantities is money, the other quantities are given a price. Price, therefore, is always value expressed in money. For this reason, money has no price, which is confined entirely to the goods and services in an exchange.
So long as currency and associated forms of credit are firmly attached to money such that there are minimal differences between their values, there should be no price for them either, other than a value difference arising from counter-party risk. A further distinction between money and currencies can arise if their users suspect that the link might break down. It was the breakdown in this relationship between gold and the dollar that led to the failure of the Bretton Woods agreement in 1971.
Therefore, in all logic it is legal money that has no price. But does that mean that when its value differs from that of money, does currency have a price? Not necessarily. So long as currency operates as a medium of exchange, it has a value and not a price. We can say that a dollar is valued at 0.0005682 ounces of gold, or gold is valued at 1760 dollars. As a legacy of the dollar’s regression from the days when it was on a gold standard, we still attribute no price to the dollar, but now we attribute a price to gold. To do so is technically incorrect.
Perhaps an argument for this state of affairs is that gold is subject to Gresham’s law, being hoarded rather than spent. It is the medium of exchange of last resort so rarely circulates. Nevertheless, fiat currencies have consistently lost value relative to legal money, which is gold, so much so that the dollar has lost 98% since the suspension of Bretton Woods, and sterling has lost 99%. Over fifty-one years, the process has been so gradual that users of unanchored currencies as their media of exchange have failed to notice it.
This gradual loss of purchasing power relative to gold can continue indefinitely, so long as the conditions that have permitted it to happen remain without causing undue alarm. Furthermore, for lack of a replacement it is highly inconvenient for currency users to consider that their currency might be valueless. They will hang on to the myth of its use value until its debasement can no longer be ignored.
What is the purpose of interest rates?
Despite the accumulating evidence that central bank management of interest rates fails to achieve their desired outcomes, monetary policy committees persist in using interest rates as their primary means of economic intervention. It was the central bankers’ economic guru himself who pointed out that interest rates correlated with the general level of prices and not the rate of price inflation. And Keynes even named it Gibson’s paradox after Arthur Gibson, who wrote about it in Banker’s Magazine in 1923 (it had actually been noted by Thomas Tooke a century before). But because he couldn’t understand why these correlations were the opposite of what he expected, Keynes ignored it and so have his epigonic central bankers ever since.
As was often the case, Keynes was looking through the wrong end of the telescope. The reason interest rates rose and fell with the general price level was that price levels were not driven by interest rates, but interest rates reacted to changes in the general level of prices. Interest rates reflect the loss of purchasing power for money when the quantity of credit increases. With their interests firmly attached to time preference, savers required compensation for the debasement of credit, while borrowers — mainly businesses in production — needed to bid up for credit to pay for higher input costs. Essentially, interest rates changed as a lagging indicator, not a leading one as Keynes and his acolytes to this day still assume.
In a nutshell, that is why Gibson’s paradox is not a paradox but a natural consequence of fluctuations in credit and the foreign exchanges and the public’s valuation of it relative to goods. And the way to smooth out the cyclical consequences for prices is to stop discouraging savers from saving and make them personally responsible for their future security. As demonstrated today by Japan’s relatively low CPI inflation rate, a savings driven economy sees credit stimulation fueling savings rather than consumption, providing capital for manufacturing improvements instead of raising consumer prices. Keynes’s savings paradox — another fatal error — actually points towards the opposite of economic and price stability.
It is over interest rate management that central banks prove their worthlessness. Even if they had a Damascene conversion, bureaucrats in a government department can never impose decisions that can only be efficiently determined by market forces. It is the same fault exhibited in communist regimes, where the state tries to manage the supply of goods— and we know, unless we have forgotten, the futility of state direction of production. It is exactly the same with monetary policy. Just as the conditions that led the communists to build an iron curtain to prevent their reluctant subjects escaping from authoritarianism, there should be no monetary policy.
Instead, when things don’t go their way, like the communists, bureaucrats double down on their misguided policies suppressing the evidence of their failures.
It is something of a miracle that the economic consequences have not been worse. It is testament to the robustness of human action that when officialdom places mountainous hurdles in its path ordinary folk manage to find a way to get on with their lives despite the intervention.
Eventually, the piper must be paid. Misguided interest rate policies led to their suppression to the zero bound, and for the euro, Japanese yen, and Swiss franc, even unnaturally negative deposit rates. Predictably, the distortions of these policies together with central bank credit inflation through quantitative easing are leading to pay-back time.
Rapidly rising commodity, producer and consumer prices, the consequences of these policy mistakes, are in turn leading to higher time preference discounts.
Finally, markets have wrested currency and credit valuations out of central banks’ control, as it slowly dawns on market participants that the whole interest rate game has been an economic fallacy. Foreign creditors are no longer prepared to sit there and accept deposit rates and bond yields which do not compensate them for loss of purchasing power. Time preference is now mauling central bankers and their cherished delusions. They have lost their suppressive control over markets and now we must all face the consequences. Like the fate of the Berlin Wall that had kept Germany’s Ossies penned in, monetary policy control is being demolished.
With purchasing powers for the major currencies now sinking at a more rapid rate than current levels of interest rate and bond yield compensation, the underlying trend for interest rates is now rising and has further to go. Official forecasts that inflation at the CPU level will return to the targeted 2% in a year or two are pie in the sky.
While Nero-like, central bankers fiddle commercial banks are being burned. A consequence of zero and negative rates has been that commercial bank balance sheet leverage increased stratospheric-ally to compensate for suppressed lending margins. Commercial bankers now have an overriding imperative to claw back their credit expansion in the knowledge that in a rising interest rate environment, their unfettered involvement in non-banking financial activities comes at a cost. Losses on financial collateral are mounting, and the provision of liquidity into mainline non-financial sectors faces losses as well. And when you have a balance sheet leverage ratio of assets to equity of over twenty times (as is the case for the large Japanese and Eurozone banks), balance sheet equity is almost certain to be wiped out.
The imperative for action is immediate. Any banker who does not act with the utmost urgency faces the prospect of being overwhelmed by the new interest rate trend. The chart below shows that the broadest measure of US money supply, which is substantially the counter-party of bank credit is already contracting, having declined by $236bn since March.
https://gm-media-library.s3.eu-west-...4860564e15.png
Contracting bank credit forces up interest rates due to lower credit supply. This is a trend that cannot be bucked, a factor that has little directly to do with prices. By way of confirmation of the new trend, the following quotation is extracted from the Fed’s monthly Senior Loan Officers’ Opinion Survey for October:
“Over the third quarter, significant net shares of banks reported having tightened standards on C&I [commercial and industrial] loans to firms of all sizes. Banks also reported having tightened most queried terms on C&I loans to firms of all sizes over the third quarter. Tightening was most widely reported for premiums charged on riskier loans, costs of credit lines, and spreads of loan rates over the cost of funds. In addition, significant net shares of banks reported having tightened loan covenants to large and middle-market firms, while moderate net shares of banks reported having tightened covenants to small firms. Similarly, a moderate net share of foreign banks reported having tightened standards for C&I loans.
“Major net shares of banks that reported having tightened standards or terms cited a less favorable or more uncertain economic outlook, a reduced tolerance for risk, and the worsening of industry-specific problems as important reasons for doing so. Significant net shares of banks also cited decreased liquidity in the secondary market for C&I loans and less aggressive competition from other banks or non-bank lenders as important reasons for tightening lending standards and terms.”
Similarly, credit is being withdrawn from financial activities. The following chart reflects collapsing credit levels being provided to speculators.
https://gm-media-library.s3.eu-west-...9b2cde1c65.png
In the same way that the withdrawal of bank credit undermines nominal GDP (because nearly all GDP transactions are settled in bank credit) the withdrawal of bank credit also undermines financial asset values. And just as it is a mistake to think that a contraction of GDP is driven by a decline in economic activity rather than the availability of bank credit, it is a mistake to ignore the role of bank credit in driving financial market valuations.
The statistics are yet to reflect credit contraction in the Eurozone and Japan, which are the most highly leveraged of the major banking systems. This may be partly due to the rapidity with which credit conditions are deteriorating. And we should note that the advanced socialization of credit in these two regions probably makes senior managements more beholden to their banking authorities, and less entrepreneurial in their big-picture awareness than their American counterparts. Furthermore, the principal reason for continued monetary expansion reflects both the euro-system and the Bank of Japan’s continuing balance sheet expansion, which feed directly into the commercial banking network bolstering their balance sheets. It is likely to be state-demanded credit which overwhelms the Eurozone and Japan’s statistics, masking deteriorating changes in credit supply for commercial demand.
The ECB and BOJ’s monetary policies have been to compromise their respective currencies by their continuing credit expansion, which is why their currencies have lost significant ground against the dollar while US interest rates have been rising. Adding to the tension, the US’s Fed has been jawing up its attack on price inflation, but the recent fall in the dollar on the foreign exchanges strongly suggests a pivot in this policy is in sight.
The dilemma facing central banks is one their own making. Having suppressed interest rates to the zero bound and below, the reversal of this trend is now out of their control. Commercial banks will surely react in the face of this new interest rate trend and seek to contract their balance sheets as rapidly as possible.
Students of Austrian business cycle theory will not be surprised at the suddenness of this development. But all GDP transactions, with very limited minor cash exceptions at the retail end of gross output are settled in bank credit. Inevitably the withdrawal of credit will cause nominal GDP to contract significantly, a collapse made more severe in real terms when the decline in a currency’s purchasing power is taken into consideration.
The choice now facing bureaucratic officialdom is simple: does it prioritize rescuing financial markets and the non-financial economy from deflation, or does it ignore the economic consequences of protecting the currency instead? The ECB, BOJ and the Bank of England have decided their duty lies with supporting the economy and financial markets. Perhaps driven in part by central banking consensus, the Fed now appears to be choosing to protect the US economy and its financial markets as well.
The principal policy in the new pivot will be the same: suppress interest rates below their time preference. It is the policy mistake that the bureaucrats always make, and they will double down on their earlier failures. The extent to which they suppress interest rates will be reflected in the loss of purchasing power of their currencies, not in terms of their values against each other, but in their values with respect to energy, commodities, raw materials, foodstuffs, and precious metals. In other words, a new round of higher producer and consumer prices and therefore irresistible pressure for yet higher interest rates will emerge.
The collapse of the everything bubble
The flip side of interest rate trends is the value imparted to assets, both financial and non-financial. It is no accident that the biggest and most widespread global bull market in history has coincided with interest rate suppression to zero and even lower over the last four decades. Equally, a trend of rising interest rates will have the opposite effect.
Unlike bull markets, bear markets are often sudden and shocking, especially where undue speculation has been previously involved. There is no better example than that of the cryptocurrency phenomenon, which has already seen bitcoin fall from a high of $68,000 to $16,000 in twelve months. And in recent days, the collapse of one of the largest crypto-exchanges, FTX, has exposed both hubris and alleged fraud, handmaidens to extreme public speculation, on an unimaginable scale. For any student of the madness of crowds, it would be surprising if the phenomenon of cryptocurrencies actually survives.
Driving this volt-face into bear markets is the decline in bond values. On 20 March 2020, when the Fed reduced its fund rate to zero, the 30-year US Treasury bond yielded 1.18%. Earlier this week the yield stood at 4.06%. That’s a fall in price of over 50%. And time preference suggests that short-term rates, for example over one year, should currently discount a loss of currency’s purchasing power at double current rates, or even more.
For the planners who meddle with interest rates, increases in rates and bond yields on that scale are unimaginable. Monetary policy committees, being government agencies, will think primarily about the effect on government finances. In their nightmares they can envisage tax revenues collapsing, welfare commitments soaring, and borrowing costs mounting. The increased deficit, additional to current shortfalls, would require central banks to accelerate quantitative easing without limitation. To the policy planners, the reasons to bring interest rates both lower and back firmly under control are compelling.
Furthermore, officials believe that a rising stock market is necessary to maintain economic confidence. That also requires the enforcement of a new declining interest rate trend. The argument in favor of a new round of interest rate suppression becomes undeniable. But the effect on fiat currencies will accelerate their loss of purchasing power, undermining confidence in them and leading to yet higher interest rates in the future.
Either way, officialdom loses. And the public will pay the price for meekly going along with these errors.
Managing counter-party risk
Any recovery in financial asset values, such as that currently in play, is bound to be little more than a rally in an ongoing bear market. We must not forget that commercial bankers have to reduce their balance sheets ruthlessly if they are to protect their shareholders. Consequently, as over-leveraged international banks are at a heightened risk of failing in the new interest rate environment, their counter-parties face systemic risks increasing sharply. To reduce exposure to these risks, all bankers are duty bound to their shareholders to shrink their obligations to other banks, which means that the estimated $600 trillion of notional over the counter (OTC) derivatives and on the back of it the additional $50 trillion regulated futures exchange derivatives will enter their own secular bear markets. OTC and regulated derivatives are the children of falling interest rates, and with a new trend of rising interest rates their parentage is bound to be tested.
We can now see a further reason why central banks will wish to suppress interest rates and support financial markets. Unless they do so, the risk of widespread market failures between derivative counter-parties will threaten to collapse the entire global banking network. And that is in addition to existential risks from customer loan defaults and collapsing collateral values. Central banks will have to stand ready to rescue failing banks and underwrite the entire commercial system.
To avert this risk, they will wish to stabilize markets and prevent further increases in interest rates. And all central banks which have indulged in QE already have mark-to-market losses that have wiped out their own balance sheet equity. We now face the prospect of central banks that by any commercial measure are themselves financially broken, tasked with saving entire commercial banking networks.
When the trend for interest rates was for them to fall under the influence of increasing supplies of credit, the deployment of that credit was substantially directed into financial assets and increasing speculation. For this reason, markets soared while the increase in the general level of producer and consumer prices was considerably less than the expansion of credit suggested should be the case. That is no longer so, with manufacturers facing substantial increases in their input costs. And now, when they need it most, bank credit is being withdrawn.
It is not generally realized yet, but the financial world is in transition between economies being driven by asset inflation and suppressed commodity prices, and a new environment of asset deflation while commodity prices increase. And it is in the valuations of unanchored fiat currencies where this transition will be reflected most.
Physical commodities are set replace paper equivalents
The expansion of derivatives when credit was expanding served to soak up demand for commodities which would otherwise have gone into physical metals and energy. In the case of precious metals, this is admitted by those involved in the expansion of London’s bullion market from the 1980s on-wards to have been a deliberate policy to suppress gold as a rival to the dollar.
According to the Bank for International Settlements, at the end of last year gold OTC outstanding swaps and forwards (essentially, the London Bullion Market) stood at the equivalent of 8,968 tonnes of bullion, to which must be added the 1,594 tonnes of paper futures on Comex giving an identified 10,662 tonnes.
This is considerably more than the official reserves of the US Treasury, and even its partial replacement with physical bullion will have a major impact on gold values. Silver, which is an extremely tight market, is most of the BIS’s other precious metal statistics content and faces bullion replacement of OTC paper in the order of three billion ounces, to which we must add Comex futures equivalent to a further 700 million ounces.
On the winding down of derivative markets alone, the impact on precious metal values is bound to be substantial. Furthermore, the common mistake made by almost all derivative traders is to not understand that legal money is physical gold and silver — despite what their regulating governments force them to believe. What they call prices for gold and silver are not prices, but values imparted to legal money from depreciating currencies and associated credit.
While it may be hard to grasp this seemingly upside-down concept, it is vital to understand that so-called rising prices for gold and silver are in fact falling values for currencies. Some central banks, predominantly in Asia are taking advantage of this ignorance, which is predominantly displayed in western, Keynesian-driven derivative markets.
Perhaps after a currency hiatus and when market misconceptions are ironed out, we can expect legal money values to behave as they should. If a development which is clearly inflationary emerges, it should drive currency values lower relative to gold. But instead, in today’s markets we see them rise because speculators take the view that currencies relative to gold will benefit from higher interest rates. A pause for thought should expose the fallacy of this approach, where the true relationship between money and currencies is assumed away.
In the wake of the suspension of the Bretton Woods agreement and when the purchasing power of currencies subsequently declined, interest rates and the value of gold rose together. In February 1972, gold was valued at $85, while the Fed funds rate was 3.3%. On 21 January 1980 gold was fixed that morning at $850, and the Fed funds rate was 13.82%. When gold increased nine-fold, the Fed’s fund rate had more than quadrupled. And it required Paul Volcker to raise the funds rate to over 19% twice subsequently to slay the inflation dragon.
In the seventies, the excessive credit-driven speculation that we now witness was absent, along with the accompanying debt leverage in the financial sectors of western economies and in their banking systems. A Volcker-style rise in interest rates today would cause widespread bankruptcies and without doubt crash the entire global banking system. While markets might take us there anyway, as a deliberate act of official policy it can be safely ruled out.
We must therefore conclude that there is another round of currency destruction in the offing. Potentially, it will be far more extensive than anything seen to date. Not only will central-bank currency and QE expansion fund government deficits and attempt to compensate for the contraction of bank credit while supporting financial markets by firmly suppressing interest rates and bond yields, but insolvent central banks will be tasked with underwriting insolvent commercial banks.
At some stage, the inversion of monetary reality, where legal money is priced in fiat, will change. Instead of legal money being priced in fiat, fiat currencies will be priced in legal money. But that will be the death of the fiat swindle.
[i] See Chapter XXI, Section 1: On the material of money
The views and opinions expressed in this article are those of the author(s) and do not reflect those of Goldmoney, unless expressly stated. The article is for general information purposes only and does not constitute either Goldmoney or the author(s) providing you with legal, financial, tax, investment, or accounting advice. You should not act or rely on any information contained in the article without first seeking independent professional advice. Care has been taken to ensure that the information in the article is reliable; however, Goldmoney does not represent that it is accurate, complete, up-to-date and/or to be taken as an indication of future results and it should not be relied upon as such. Goldmoney will not be held responsible for any claim, loss, damage, or inconvenience caused as a result of any information or opinion contained in this article and any action taken as a result of the opinions and information contained in this article is at your own risk.
Copyright 2022 Goldmoney Inc. All rights reserved.
The upside-down world of currency
Nov 17, 2022·Alasdair Macleod
The gap between fiat currency values and that of legal money, which is gold, has widened so that dollars retain only 2% of their pre-1970s value, and for sterling it is as little as 1%. Yet it is commonly averred that currency is money, and gold is irrelevant.
As the product of statist propaganda, this is incorrect. Originally established in Roman law, legally gold is still money and the states’ debauched currencies are not — only a form of credit. As I demonstrate in this article, the major western central banks will be forced to embark on a new round of currency debasement, likely to put an end to the matter.
Central to my thesis is that commercial bank credit will contract sharply in response to rising interest rates and bond yields. This retrenchment is already ending the everything bubble in financial asset values, is beginning to undermine GDP, and given record levels of balance sheet leverage makes a major banking crisis virtually impossible to avoid. Central banks which are already in a parlous state of their own will be tasked with underwriting the entire credit system.
In discharging their responsibilities to the status quo, central banks will end up destroying their own currencies.
So, why do we persist in pricing everything in failing currencies, when that will almost certainly change? When the difference between legal money and declining currencies is finally realized, the public will discard currencies entirely reverting to legal money. That time is being brought forward rapidly by current events.
Why do we impart value to currency and not money?
A question that is not satisfactorily answered today is why is it that an UN-backed fiat currency has value as a medium of exchange. Some say that it reflects faith in and the credit standing of the issuer. Others say that by requiring a nation’s subjects to pay taxes and to account for them guarantees its demand. But these replies ignore the consequences of its massive expansion while the state pretends it to be real money. Sometimes, the consequences can seem benign and at others catastrophic. As explanations for the public’s tolerance of repeated failures of currencies, these answers are insufficient.
Let us do a thought experiment to highlight the depth of the problem. We know that over millennia, metallic metals, particularly gold, silver, and copper came to be used as media of exchange. And we also know that the use of their value was broadened through credit in the form of banknotes and bank deposits. The relationships between legal money, that is gold, silver, or copper and credit in its various forms were defined in Roman law in the sixth century. And we also know that this system of money and credit with the value of credit tied to that of money, despite some ups and downs, has served humanity well ever since.
Now let us assume that in the absence of metallic money, in the dawn of economic time a ruler instructed his subjects to use a new currency which he and only he will issue for the public’s use. This would surely be seen as a benefit to everyone, compared with the pre-existing condition of barter. But the question in our minds must be about the durability of the ruler’s new currency. With no precedent, how is the currency to be valued in the context of the ratios between goods and services bought and sold? And how certain can one be about tomorrow’s value in that context? And what happens if the king loses his power, or dies?
Clearly, without a reference to something else, the king’s new currency is a highly risky proposition and sooner or later will simply fail. And even when a new currency has been introduced and linked to an existing form of money, if the tie is then cut the currency will struggle to survive. Without going into the good reasons why this is so, the empirical evidence confirms it. Chinese merchants no longer use Kubla Khan’s paper made out of mulberry leaves, and German citizens no longer use the paper marks of the early 1920s. But they still refer to metallic money.
Yet today, we impart values to paper currencies issued by our governments in defiance of these outcomes. An explanation was provided by the great Austrian economist, Ludwig Von Mises in his regression theorem. He reasonably argued that we refer the value of a medium of exchange today to its value to us yesterday. In other words, we know as producers what we will receive today for our product, based on our experience in the immediate past, and in the same way we refer to our currency values as consumers. Similarly, at a previous time, we referred our experience of currency values to our prior experience. In other words, the credibility and value of currencies are based on a regression into the past.
Mises’s regression theory was broadly confirmed by an earlier writer, Jean-Baptiste Say, who in his Treatise on Political Economy observed:
“Custom, therefore, and not the mandate of authority, designates the specific product that shall pass exclusively as money, whether crown pieces or any other commodity whatever.”[i]
Custom is why we still think of currencies as money, even though for the last fifty-one years their link with money was abandoned. The day after President Nixon cut the umbilical cord between gold and the dollar, we all continued using dollars and all the other currencies as if nothing had happened. But this was the last step in a long process of freeing the paper dollar from being backed by gold. The habit of the public in valuing currency by regression had served the US Government well and has continued to do so.
The role of a medium of exchange
Being backed by no more than government fiat, to properly understand the role that currencies have assumed for themselves, we need to make some comments about why a medium of exchange is needed and its characteristics. The basis was laid out by Jean-Baptiste Say, who described the division of labor and the role of a medium of exchange.
Say observed that human productivity depended on nonspecialist, with producers obtaining their broader consumption through the medium of exchange. The role of money (and associated credit) is to act as a commodity valued on the basis of its use in exchange. Therefore, money is simply the right, or title, to acquire some consumer satisfaction from someone else. Following on from Say’s law, when any economic quantity is exchanged for any other economic quantity, each is termed the value of the other. But when one of the quantities is money, the other quantities are given a price. Price, therefore, is always value expressed in money. For this reason, money has no price, which is confined entirely to the goods and services in an exchange.
So long as currency and associated forms of credit are firmly attached to money such that there are minimal differences between their values, there should be no price for them either, other than a value difference arising from counter-party risk. A further distinction between money and currencies can arise if their users suspect that the link might break down. It was the breakdown in this relationship between gold and the dollar that led to the failure of the Bretton Woods agreement in 1971.
Therefore, in all logic it is legal money that has no price. But does that mean that when its value differs from that of money, does currency have a price? Not necessarily. So long as currency operates as a medium of exchange, it has a value and not a price. We can say that a dollar is valued at 0.0005682 ounces of gold, or gold is valued at 1760 dollars. As a legacy of the dollar’s regression from the days when it was on a gold standard, we still attribute no price to the dollar, but now we attribute a price to gold. To do so is technically incorrect.
Perhaps an argument for this state of affairs is that gold is subject to Gresham’s law, being hoarded rather than spent. It is the medium of exchange of last resort so rarely circulates. Nevertheless, fiat currencies have consistently lost value relative to legal money, which is gold, so much so that the dollar has lost 98% since the suspension of Bretton Woods, and sterling has lost 99%. Over fifty-one years, the process has been so gradual that users of unanchored currencies as their media of exchange have failed to notice it.
This gradual loss of purchasing power relative to gold can continue indefinitely, so long as the conditions that have permitted it to happen remain without causing undue alarm. Furthermore, for lack of a replacement it is highly inconvenient for currency users to consider that their currency might be valueless. They will hang on to the myth of its use value until its debasement can no longer be ignored.
What is the purpose of interest rates?
Despite the accumulating evidence that central bank management of interest rates fails to achieve their desired outcomes, monetary policy committees persist in using interest rates as their primary means of economic intervention. It was the central bankers’ economic guru himself who pointed out that interest rates correlated with the general level of prices and not the rate of price inflation. And Keynes even named it Gibson’s paradox after Arthur Gibson, who wrote about it in Banker’s Magazine in 1923 (it had actually been noted by Thomas Tooke a century before). But because he couldn’t understand why these correlations were the opposite of what he expected, Keynes ignored it and so have his epigonic central bankers ever since.
As was often the case, Keynes was looking through the wrong end of the telescope. The reason interest rates rose and fell with the general price level was that price levels were not driven by interest rates, but interest rates reacted to changes in the general level of prices. Interest rates reflect the loss of purchasing power for money when the quantity of credit increases. With their interests firmly attached to time preference, savers required compensation for the debasement of credit, while borrowers — mainly businesses in production — needed to bid up for credit to pay for higher input costs. Essentially, interest rates changed as a lagging indicator, not a leading one as Keynes and his acolytes to this day still assume.
In a nutshell, that is why Gibson’s paradox is not a paradox but a natural consequence of fluctuations in credit and the foreign exchanges and the public’s valuation of it relative to goods. And the way to smooth out the cyclical consequences for prices is to stop discouraging savers from saving and make them personally responsible for their future security. As demonstrated today by Japan’s relatively low CPI inflation rate, a savings driven economy sees credit stimulation fueling savings rather than consumption, providing capital for manufacturing improvements instead of raising consumer prices. Keynes’s savings paradox — another fatal error — actually points towards the opposite of economic and price stability.
It is over interest rate management that central banks prove their worthlessness. Even if they had a Damascene conversion, bureaucrats in a government department can never impose decisions that can only be efficiently determined by market forces. It is the same fault exhibited in communist regimes, where the state tries to manage the supply of goods— and we know, unless we have forgotten, the futility of state direction of production. It is exactly the same with monetary policy. Just as the conditions that led the communists to build an iron curtain to prevent their reluctant subjects escaping from authoritarianism, there should be no monetary policy.
Instead, when things don’t go their way, like the communists, bureaucrats double down on their misguided policies suppressing the evidence of their failures.
It is something of a miracle that the economic consequences have not been worse. It is testament to the robustness of human action that when officialdom places mountainous hurdles in its path ordinary folk manage to find a way to get on with their lives despite the intervention.
Eventually, the piper must be paid. Misguided interest rate policies led to their suppression to the zero bound, and for the euro, Japanese yen, and Swiss franc, even unnaturally negative deposit rates. Predictably, the distortions of these policies together with central bank credit inflation through quantitative easing are leading to pay-back time.
Rapidly rising commodity, producer and consumer prices, the consequences of these policy mistakes, are in turn leading to higher time preference discounts.
Finally, markets have wrested currency and credit valuations out of central banks’ control, as it slowly dawns on market participants that the whole interest rate game has been an economic fallacy. Foreign creditors are no longer prepared to sit there and accept deposit rates and bond yields which do not compensate them for loss of purchasing power. Time preference is now mauling central bankers and their cherished delusions. They have lost their suppressive control over markets and now we must all face the consequences. Like the fate of the Berlin Wall that had kept Germany’s Ossies penned in, monetary policy control is being demolished.
With purchasing powers for the major currencies now sinking at a more rapid rate than current levels of interest rate and bond yield compensation, the underlying trend for interest rates is now rising and has further to go. Official forecasts that inflation at the CPU level will return to the targeted 2% in a year or two are pie in the sky.
While Nero-like, central bankers fiddle commercial banks are being burned. A consequence of zero and negative rates has been that commercial bank balance sheet leverage increased stratospheric-ally to compensate for suppressed lending margins. Commercial bankers now have an overriding imperative to claw back their credit expansion in the knowledge that in a rising interest rate environment, their unfettered involvement in non-banking financial activities comes at a cost. Losses on financial collateral are mounting, and the provision of liquidity into mainline non-financial sectors faces losses as well. And when you have a balance sheet leverage ratio of assets to equity of over twenty times (as is the case for the large Japanese and Eurozone banks), balance sheet equity is almost certain to be wiped out.
The imperative for action is immediate. Any banker who does not act with the utmost urgency faces the prospect of being overwhelmed by the new interest rate trend. The chart below shows that the broadest measure of US money supply, which is substantially the counter-party of bank credit is already contracting, having declined by $236bn since March.
https://gm-media-library.s3.eu-west-...4860564e15.png
Contracting bank credit forces up interest rates due to lower credit supply. This is a trend that cannot be bucked, a factor that has little directly to do with prices. By way of confirmation of the new trend, the following quotation is extracted from the Fed’s monthly Senior Loan Officers’ Opinion Survey for October:
“Over the third quarter, significant net shares of banks reported having tightened standards on C&I [commercial and industrial] loans to firms of all sizes. Banks also reported having tightened most queried terms on C&I loans to firms of all sizes over the third quarter. Tightening was most widely reported for premiums charged on riskier loans, costs of credit lines, and spreads of loan rates over the cost of funds. In addition, significant net shares of banks reported having tightened loan covenants to large and middle-market firms, while moderate net shares of banks reported having tightened covenants to small firms. Similarly, a moderate net share of foreign banks reported having tightened standards for C&I loans.
“Major net shares of banks that reported having tightened standards or terms cited a less favorable or more uncertain economic outlook, a reduced tolerance for risk, and the worsening of industry-specific problems as important reasons for doing so. Significant net shares of banks also cited decreased liquidity in the secondary market for C&I loans and less aggressive competition from other banks or non-bank lenders as important reasons for tightening lending standards and terms.”
Similarly, credit is being withdrawn from financial activities. The following chart reflects collapsing credit levels being provided to speculators.
https://gm-media-library.s3.eu-west-...9b2cde1c65.png
In the same way that the withdrawal of bank credit undermines nominal GDP (because nearly all GDP transactions are settled in bank credit) the withdrawal of bank credit also undermines financial asset values. And just as it is a mistake to think that a contraction of GDP is driven by a decline in economic activity rather than the availability of bank credit, it is a mistake to ignore the role of bank credit in driving financial market valuations.
The statistics are yet to reflect credit contraction in the Eurozone and Japan, which are the most highly leveraged of the major banking systems. This may be partly due to the rapidity with which credit conditions are deteriorating. And we should note that the advanced socialization of credit in these two regions probably makes senior managements more beholden to their banking authorities, and less entrepreneurial in their big-picture awareness than their American counterparts. Furthermore, the principal reason for continued monetary expansion reflects both the euro-system and the Bank of Japan’s continuing balance sheet expansion, which feed directly into the commercial banking network bolstering their balance sheets. It is likely to be state-demanded credit which overwhelms the Eurozone and Japan’s statistics, masking deteriorating changes in credit supply for commercial demand.
The ECB and BOJ’s monetary policies have been to compromise their respective currencies by their continuing credit expansion, which is why their currencies have lost significant ground against the dollar while US interest rates have been rising. Adding to the tension, the US’s Fed has been jawing up its attack on price inflation, but the recent fall in the dollar on the foreign exchanges strongly suggests a pivot in this policy is in sight.
The dilemma facing central banks is one their own making. Having suppressed interest rates to the zero bound and below, the reversal of this trend is now out of their control. Commercial banks will surely react in the face of this new interest rate trend and seek to contract their balance sheets as rapidly as possible.
Students of Austrian business cycle theory will not be surprised at the suddenness of this development. But all GDP transactions, with very limited minor cash exceptions at the retail end of gross output are settled in bank credit. Inevitably the withdrawal of credit will cause nominal GDP to contract significantly, a collapse made more severe in real terms when the decline in a currency’s purchasing power is taken into consideration.
The choice now facing bureaucratic officialdom is simple: does it prioritize rescuing financial markets and the non-financial economy from deflation, or does it ignore the economic consequences of protecting the currency instead? The ECB, BOJ and the Bank of England have decided their duty lies with supporting the economy and financial markets. Perhaps driven in part by central banking consensus, the Fed now appears to be choosing to protect the US economy and its financial markets as well.
The principal policy in the new pivot will be the same: suppress interest rates below their time preference. It is the policy mistake that the bureaucrats always make, and they will double down on their earlier failures. The extent to which they suppress interest rates will be reflected in the loss of purchasing power of their currencies, not in terms of their values against each other, but in their values with respect to energy, commodities, raw materials, foodstuffs, and precious metals. In other words, a new round of higher producer and consumer prices and therefore irresistible pressure for yet higher interest rates will emerge.
The collapse of the everything bubble
The flip side of interest rate trends is the value imparted to assets, both financial and non-financial. It is no accident that the biggest and most widespread global bull market in history has coincided with interest rate suppression to zero and even lower over the last four decades. Equally, a trend of rising interest rates will have the opposite effect.
Unlike bull markets, bear markets are often sudden and shocking, especially where undue speculation has been previously involved. There is no better example than that of the cryptocurrency phenomenon, which has already seen bitcoin fall from a high of $68,000 to $16,000 in twelve months. And in recent days, the collapse of one of the largest crypto-exchanges, FTX, has exposed both hubris and alleged fraud, handmaidens to extreme public speculation, on an unimaginable scale. For any student of the madness of crowds, it would be surprising if the phenomenon of cryptocurrencies actually survives.
Driving this volt-face into bear markets is the decline in bond values. On 20 March 2020, when the Fed reduced its fund rate to zero, the 30-year US Treasury bond yielded 1.18%. Earlier this week the yield stood at 4.06%. That’s a fall in price of over 50%. And time preference suggests that short-term rates, for example over one year, should currently discount a loss of currency’s purchasing power at double current rates, or even more.
For the planners who meddle with interest rates, increases in rates and bond yields on that scale are unimaginable. Monetary policy committees, being government agencies, will think primarily about the effect on government finances. In their nightmares they can envisage tax revenues collapsing, welfare commitments soaring, and borrowing costs mounting. The increased deficit, additional to current shortfalls, would require central banks to accelerate quantitative easing without limitation. To the policy planners, the reasons to bring interest rates both lower and back firmly under control are compelling.
Furthermore, officials believe that a rising stock market is necessary to maintain economic confidence. That also requires the enforcement of a new declining interest rate trend. The argument in favor of a new round of interest rate suppression becomes undeniable. But the effect on fiat currencies will accelerate their loss of purchasing power, undermining confidence in them and leading to yet higher interest rates in the future.
Either way, officialdom loses. And the public will pay the price for meekly going along with these errors.
Managing counter-party risk
Any recovery in financial asset values, such as that currently in play, is bound to be little more than a rally in an ongoing bear market. We must not forget that commercial bankers have to reduce their balance sheets ruthlessly if they are to protect their shareholders. Consequently, as over-leveraged international banks are at a heightened risk of failing in the new interest rate environment, their counter-parties face systemic risks increasing sharply. To reduce exposure to these risks, all bankers are duty bound to their shareholders to shrink their obligations to other banks, which means that the estimated $600 trillion of notional over the counter (OTC) derivatives and on the back of it the additional $50 trillion regulated futures exchange derivatives will enter their own secular bear markets. OTC and regulated derivatives are the children of falling interest rates, and with a new trend of rising interest rates their parentage is bound to be tested.
We can now see a further reason why central banks will wish to suppress interest rates and support financial markets. Unless they do so, the risk of widespread market failures between derivative counter-parties will threaten to collapse the entire global banking network. And that is in addition to existential risks from customer loan defaults and collapsing collateral values. Central banks will have to stand ready to rescue failing banks and underwrite the entire commercial system.
To avert this risk, they will wish to stabilize markets and prevent further increases in interest rates. And all central banks which have indulged in QE already have mark-to-market losses that have wiped out their own balance sheet equity. We now face the prospect of central banks that by any commercial measure are themselves financially broken, tasked with saving entire commercial banking networks.
When the trend for interest rates was for them to fall under the influence of increasing supplies of credit, the deployment of that credit was substantially directed into financial assets and increasing speculation. For this reason, markets soared while the increase in the general level of producer and consumer prices was considerably less than the expansion of credit suggested should be the case. That is no longer so, with manufacturers facing substantial increases in their input costs. And now, when they need it most, bank credit is being withdrawn.
It is not generally realized yet, but the financial world is in transition between economies being driven by asset inflation and suppressed commodity prices, and a new environment of asset deflation while commodity prices increase. And it is in the valuations of unanchored fiat currencies where this transition will be reflected most.
Physical commodities are set replace paper equivalents
The expansion of derivatives when credit was expanding served to soak up demand for commodities which would otherwise have gone into physical metals and energy. In the case of precious metals, this is admitted by those involved in the expansion of London’s bullion market from the 1980s on-wards to have been a deliberate policy to suppress gold as a rival to the dollar.
According to the Bank for International Settlements, at the end of last year gold OTC outstanding swaps and forwards (essentially, the London Bullion Market) stood at the equivalent of 8,968 tonnes of bullion, to which must be added the 1,594 tonnes of paper futures on Comex giving an identified 10,662 tonnes.
This is considerably more than the official reserves of the US Treasury, and even its partial replacement with physical bullion will have a major impact on gold values. Silver, which is an extremely tight market, is most of the BIS’s other precious metal statistics content and faces bullion replacement of OTC paper in the order of three billion ounces, to which we must add Comex futures equivalent to a further 700 million ounces.
On the winding down of derivative markets alone, the impact on precious metal values is bound to be substantial. Furthermore, the common mistake made by almost all derivative traders is to not understand that legal money is physical gold and silver — despite what their regulating governments force them to believe. What they call prices for gold and silver are not prices, but values imparted to legal money from depreciating currencies and associated credit.
While it may be hard to grasp this seemingly upside-down concept, it is vital to understand that so-called rising prices for gold and silver are in fact falling values for currencies. Some central banks, predominantly in Asia are taking advantage of this ignorance, which is predominantly displayed in western, Keynesian-driven derivative markets.
Perhaps after a currency hiatus and when market misconceptions are ironed out, we can expect legal money values to behave as they should. If a development which is clearly inflationary emerges, it should drive currency values lower relative to gold. But instead, in today’s markets we see them rise because speculators take the view that currencies relative to gold will benefit from higher interest rates. A pause for thought should expose the fallacy of this approach, where the true relationship between money and currencies is assumed away.
In the wake of the suspension of the Bretton Woods agreement and when the purchasing power of currencies subsequently declined, interest rates and the value of gold rose together. In February 1972, gold was valued at $85, while the Fed funds rate was 3.3%. On 21 January 1980 gold was fixed that morning at $850, and the Fed funds rate was 13.82%. When gold increased nine-fold, the Fed’s fund rate had more than quadrupled. And it required Paul Volcker to raise the funds rate to over 19% twice subsequently to slay the inflation dragon.
In the seventies, the excessive credit-driven speculation that we now witness was absent, along with the accompanying debt leverage in the financial sectors of western economies and in their banking systems. A Volcker-style rise in interest rates today would cause widespread bankruptcies and without doubt crash the entire global banking system. While markets might take us there anyway, as a deliberate act of official policy it can be safely ruled out.
We must therefore conclude that there is another round of currency destruction in the offing. Potentially, it will be far more extensive than anything seen to date. Not only will central-bank currency and QE expansion fund government deficits and attempt to compensate for the contraction of bank credit while supporting financial markets by firmly suppressing interest rates and bond yields, but insolvent central banks will be tasked with underwriting insolvent commercial banks.
At some stage, the inversion of monetary reality, where legal money is priced in fiat, will change. Instead of legal money being priced in fiat, fiat currencies will be priced in legal money. But that will be the death of the fiat swindle.
[i] See Chapter XXI, Section 1: On the material of money
The views and opinions expressed in this article are those of the author(s) and do not reflect those of Goldmoney, unless expressly stated. The article is for general information purposes only and does not constitute either Goldmoney or the author(s) providing you with legal, financial, tax, investment, or accounting advice. You should not act or rely on any information contained in the article without first seeking independent professional advice. Care has been taken to ensure that the information in the article is reliable; however, Goldmoney does not represent that it is accurate, complete, up-to-date and/or to be taken as an indication of future results and it should not be relied upon as such. Goldmoney will not be held responsible for any claim, loss, damage, or inconvenience caused as a result of any information or opinion contained in this article and any action taken as a result of the opinions and information contained in this article is at your own risk.
Copyright 2022 Goldmoney Inc. All rights reserved.
- Post #10,953
- Quote
- Nov 27, 2022 7:48am Nov 27, 2022 7:48am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
Good morning Philippe
We meet at Cora at 9 AM.
It is located at 1240 Drummond, H3G 1V7
We meet at Cora at 9 AM.
It is located at 1240 Drummond, H3G 1V7
- Post #10,954
- Quote
- Nov 30, 2022 7:39pm Nov 30, 2022 7:39pm
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
https://www.usagold.com/nv1048ndec2022/
Depuis que le World Gold Council a annoncé qu'il n'était pas en mesure d'identifier la source de 300 tonnes de la demande d'or du secteur officiel début novembre, les spéculations vont bon train sur l'identité de la baleine. Selon un récent rapport de Nikkei Asia, l'opinion converge désormais autour de la Chine en tant qu'acheteur en question . " La Chine a probablement acheté une quantité substantielle d'or à la Russie", a déclaré l'analyste Itsuo Toshima à Nikkei. Il existe des preuves à l'appui de l'allégation. Les autorités douanières chinoises, selon le même rapport, ont annoncé une augmentation "décuplée" de l'or acheté à la Russie en juillet. En outre, le rapport cite la Chine vendant 121,2 milliards de dollars de bons du Trésor américain cette année, "l'équivalent d'environ 2200 tonnes d'or".
Comparant l'achat d'or par la banque centrale à un éléphant sautant dans une piscine déjà pleine, Moe Zulfiqar de Lombardi Letter dit qu'il "ne peut s'empêcher d'être optimiste" sur les perspectives futures de l'or sur la base de la présence durable de la demande de la banque centrale. « Quelque chose d'incroyable se passe sur le marché de l'or », dit-il dans un avis publié à la mi-novembre, « mais cela passe largement inaperçu : les banques centrales achètent de l'or à un rythme record. Cela pourrait être un grand catalyseur qui ferait grimper les prix de l'or vers 3 000 $ l'once beaucoup plus tôt que prévu.… »
"L'un des secrets les moins bien gardés de la banque centrale mondiale est la mesure dans laquelle les responsables chinois échangent des dollars contre de l'or", écrit l'analyste William Pesek dans un article d' Asia Times . Bien qu'il soit impossible d'obtenir une idée de l'implication de la Chine sur le marché de l'or sans l'admission de la Banque populaire de Chine, l'article de Pesek fait un bon travail en passant au crible certaines des inférences. Il garde son commentaire le plus intrigant pour la fin : « [L]a trajectoire à plus long terme des marchés mondiaux des devises reste négative pour le dollar alors que la Chine et d'autres grandes puissances détentrices de bons du Trésor se transforment en un atout que John Maynard Keynes a autrefois qualifié de "relique barbare". ' Cette relique clignote maintenant en alerte rouge pour les haussiers du dollar.
Les six clés d'une possession d'or réussie
Cette introduction approfondie et révélatrice à la propriété de métaux précieux vous aidera à éviter bon nombre des pièges auxquels sont confrontés les nouveaux investisseurs. Découvrez qui investit dans l'or, quel rôle l'or joue dans les portefeuilles des investisseurs sérieux et quand , où , pourquoi et comment ajouter des métaux précieux à vos avoirs. Pour bien finir, il est essentiel que vous commenciez bien, et les six clés d'une possession d'or réussie vous orienteront dans la bonne direction.
Libre accès
DANS UN ESSAI DE BLOOMBERG, L'HISTORIQUE DE STANFORD NIALL FERGUSON nous explique l'anatomie de l'escroquerie FTX et comment elle s'inscrit dans la longue histoire de telles mésaventures ...... Ferguson n'a pas de bonnes choses à dire sur Bankman-Fried, mais ce qui s'est passé avec FTX est rien de nouveau sur les marchés financiers. "Maintes et maintes fois", écrit-il dans un long essai intitulé FTX a gardé votre crypto dans une crypte, pas dans un coffre-fort , "les cours des actions ont grimpé à des sommets insoutenables pour s'effondrer à nouveau. Maintes et maintes fois, ce processus s'est accompagné de magouilles, car des initiés sans scrupules ont cherché à tirer profit aux dépens de néophytes naïfs. Et la crypto, ne l'oublions pas, a été promue avec beaucoup d'enthousiasme (et de dédain pour ceux qui la remettaient en question) comme une alternative New Age à l'or.
[NOUS SOMMES DES FANS DE LONGUE DATE DE L'INVESTISSEMENT DANS L'OR », déclare le magazine Money Week . « Nous pensons que c'est un excellent moyen de fournir une assurance contre toute future crise financière. Ou l'inflation. Si vous voulez un portefeuille vraiment diversifié, investissez une partie de vos actifs dans l'or.… La monnaie d'or classique européenne et mondiale est un secteur souvent négligé, mais extrêmement important sur le marché de l'or d'aujourd'hui. Ces pièces sont rares, ce qui signifie qu'elles ont plus de potentiel d'appréciation du prix, mais elles peuvent souvent être achetées au prix du lingot. Il poursuit en spécifiant les souverains britanniques comme un élément qui bénéficie "d'une excellente liquidité dans la plupart des pays du monde". Chez USAGOLD, nous avons placé un grand nombre de cet article auprès d'investisseurs au fil des ans. Elle reste notre pièce d'or classique la plus populaire, suivie de près par le 20 francs suisses.
"AUJOURD'HUI, NOUS VIVONS LES PIRES ÉLÉMENTS des années 1970 et 2008. … Tout le monde devrait se préparer à ce que l'on peut retenir comme la grande crise de la dette stagflationniste", écrit Nouriel Roubini dans une évaluation apocalyptique qu'il appelle The Age of Megathreats (Project Syndicate) . Le Dr Doom se surpasse dans ce long essai dans lequel il conclut : « Éviter un scénario dystopique ne sera pas facile. Il réitère ses conseils d'investissement évoqués précédemment dans cette lettre, à savoir la nécessité de couvrir les risques que l'on vient d'énumérer dans un environnement stagflationniste. Il recommande "des obligations d'État à court terme et des obligations indexées sur l'inflation, de l'or et d'autres métaux précieux, et des biens immobiliers résistants aux dommages environnementaux".
ELLIOT MANAGEMENT, LE HEDGE FUND TRÈS INFLUENT géré par Paul Singer, a averti récemment que le monde est sur la voie de «l'hyperinflation» et de la pire crise financière depuis la Seconde Guerre mondiale. Selon un récent rapport du Financial Times , le fonds a blâmé les décideurs de la banque centrale pour la "crise imminente", affirmant qu'ils avaient été malhonnêtes quant à la cause du problème d'inflation, qui, selon lui, est le résultat d'une politique monétaire ultra-accommodante, pas les goulots d'étranglement de la chaîne d'approvisionnement. Malgré la régularité des chocs financiers depuis les années 1970, "les investisseurs ne doivent pas présumer qu'ils ont tout vu", précise la firme. Elliot prévient que l'hyperinflation pourrait conduire à un "effondrement sociétal mondial et à des conflits civils ou internationaux". Singer est un défenseur de longue dated'or comme couverture contre le type d'incertitudes couvertes par le dernier avis de sa société.
WISDOM TREE, LA FIRME D'INVESTISSEMENT BASÉE À DUBLIN , affirme que les États-Unis sont déjà en récession technique et y voient un avantage pour l'or. "L'or se distingue comme un actif qui fonctionne bien dans les scénarios de récession", indique-t-il dans un rapport détaillé publié début novembre .. "Alors que les risques de récession augmentent, nous nous attendons à ce que l'or surperforme la plupart des autres classes d'actifs. L'or est confronté aux vents contraires d'un dollar américain fort et d'une liquidation d'obligations. Malgré cela, il tient mieux que prévu. L'or est actuellement plus élevé que là où les rendements obligataires réels indiqueraient qu'ils devraient l'être.… [L]e rendement obligataire américain s'est inversé, ce qui est cohérent avec une récession à venir. Les inversions
d'aplatissement de l'ours ont été bonnes pour l'or dans le passé... Aujourd'hui, nous sommes dans l'une des inversions d'aplatissement de l'ours les plus fortes que nous ayons vues depuis 1981. Cela indique une source de force pour l'or que nous n'avons pas vue depuis des décennies.
INVESTING HAVEN A PUBLIÉ UNE MISE À JOUR de ses prévisions d'argent pour 2023 du jour au lendemain, citant le déficit d'approvisionnement annualisé de 194 millions d'onces récemment signalé par The Silver Institute comme une "divergence aux proportions épiques et historiques". Même avant la révélation de TSI sur l'écart entre l'offre et la demande, Investing Haven avait une perspective très haussière sur le métal blanc. "L'argent augmentera en 2023 car nous nous attendons à ce qu'un sommet soit établi pour le dollar américain", indique-t-il dans ses prévisions complètespublié le mois dernier. "De plus, les indicateurs avancés comme les anticipations d'inflation et certainement les positions CoT sur le marché de l'argent sont fortement haussiers pour 2023. C'est pourquoi nos prévisions de prix de l'argent pour 2023 sont de 34,70 USD. Notez qu'il s'agit de notre premier objectif haussier, également un objectif de longue date que nous nous attendions à atteindre en 2022. Une fois que l'argent se négociera près de 36 USD, ce ne sera qu'une question de temps avant qu'il n'attaque l'ATH. Dans nos prévisions sur l'or pour 2023, nous avons mentionné que notre préférence va aux investissements dans l'argent en 2023 et au-delà. Nous avons également indiqué que l'argent était le métal précieux à acheter pour 2023. »
Note de l'éditeur : TSI fait également état d'un déficit annualisé record entre l'offre et la demande – 194 millions d'onces.
"Lorsque vous cherchez dans le monde entier une grande valeur refuge liquide et mondialement acceptée, il n'y en a qu'une seule, et c'est l'or, qui continue de réaffirmer son statut d'actif de dernier recours. Avant 1970, à l'époque de l'étalon-or, l'or jouait officiellement ce rôle. Aujourd'hui, après une pause de 50 ans, le marché libre remet l'or sur le piédestal auquel il appartient. – Charlie Morris, Atlas Pulse Gold Report
« La semaine dernière a été un énorme tournant sur les marchés financiers mondiaux. Je ne parle pas du marché boursier américain même si c'est ce dont parlent tous les médias financiers aux États-Unis. … Ce dont je parle, ce sont les marchés mondiaux des devises. La semaine dernière, l'indice du dollar américain a connu sa plus forte baisse sur deux jours en treize ans. La volatilité des devises était extrême sur une base historique pour eux.… Si vous voulez battre les marchés, vous voulez être dans ce qui profite de la chute du dollar américain maintenant et ce qui surpasse le S&P 500 ! Un dollar en baisse aide l'or et les métaux précieux, mais il aide également les marchés en dehors des États-Unis à mieux performer que le S&P 500. » – Michael Swanson, fenêtre de Wall Street
"Les investisseurs se diversifient avec l'or et l'argent depuis des décennies pour limiter leur exposition à des politiques monétaires et fiscales mal exécutées. Comme je l'ai partagé avec vous le mois dernier, les investisseurs ont acheté plus de pièces d'or American Eagle et American Buffalo entre janvier et septembre de cette année que pendant toute autre période de ce type remontant à 1999. Je pense que cela reflète en grande partie l'opinion aigrie des Américains sur le l'état de l'économie et le déséquilibre qu'ils constatent dans les politiques monétaires et fiscales. – Frank Holmes, Investisseurs mondiaux américains
« La grande expérience d'assouplissement quantitatif a été une erreur. Il est temps que les banques centrales reconnaissent son échec et le retirent de leur arsenal politique dès qu'elles le pourront. –Allison Schrager, Bloomberg
"Tous les marchés haussiers et baissiers finissent par se terminer et celui-ci dans le Dollar Index finira également par se terminer. Quand cela se finira-t-il? Lorsque la Fed arrêtera enfin son régime de hausse des taux, bien sûr. Cependant, vous devez garder à l'esprit que la plupart des « marchés » sont généralement tournés vers l'avenir et proactifs, et non passifs et réactifs. Dans cet esprit, nous pouvons peut-être nous tourner vers l'indice du dollar pour trouver des indices avant que la Fed ne fasse une pause et ne fasse marche arrière. Peut-être devrions-nous nous attendre à ce que le Dollar Index dépasse et se renouvelle avant ce changement de politique éventuel et non en réponse au changement lui-même. – Craig Hemke, Sprott Asset Management
L'augmentation des taux, en soi, n'est pas nécessairement belliciste (ou volckerienne, d'ailleurs). Les banques centrales d'Argentine, du Venezuela et du Zimbabwe augmentent leurs taux depuis des années, mais leurs taux d'inflation sont maintenant de 70 %, 167 % et 257 %, respectivement, et ils augmentent. Personne ne serait assez fou pour qualifier leurs banques centrales de bellicistes (ou canalisant Paul Volcker). Comme nous l'avons dit dans le passé, la Fed n'a pas besoin de pivoter pour être dovish. Il lui suffit de s'assurer que le taux de prêt reste inférieur au taux d'inflation. Dans le même temps, nous voyons des signes que l'interprétation de la politique de la Fed pourrait changer sur ce point, la flambée des prix des métaux précieux en novembre servant peut-être de première preuve. L'or est en hausse de 7,4 % sur la période ; l'argent est en hausse de 11,6 %. (25/11/2022)
Si vous appréciez NEWS & VIEWS, vous pouvez également prendre
un intérêt pour notre page Daily Top Gold News and Opinion .
–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––
NEWS & VIEWS inscrivez-vous. Clients potentiels bienvenus.
ABONNEMENT GRATUIT !
–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––
Avis de non-responsabilité - Les opinions exprimées sur le site Web USAGOLD.com ne constituent pas une offre d'achat ou de vente ou la sollicitation d'une offre d'achat ou de vente de tout produit en métaux précieux, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such, USAGOLD does not warrant or guarantee the accuracy, timeliness, or completeness of the information found here. The views and opinions expressed at USAGOLD are those of the authors and do not necessarily reflect the official policy or position of USAGOLD. Any content provided by our bloggers or authors is solely their opinion and is not intended to malign any religion, ethnic group, club, organization, company, individual, or anyone or anything.
NOUVELLES & VUES
Prévisions, commentaires et analyses sur l'économie et les métaux précieux
Célébrons notre 49e année dans le secteur de l'or
DÉCEMBRE 2022
"... [D]ollars, yens et euros ne brilleront pas toujours dans une tempête, et ils ne seront jamais confondus avec de l'or."
Sir Peter Tapsel
–––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––
La Chine est-elle la baleine mystérieuse du marché de l'or ?
"La relique barbare lance maintenant une alerte rouge pour les haussiers du dollar"
https://www.usagold.com/wp-content/u...e-1024x594.png
Depuis que le World Gold Council a annoncé qu'il n'était pas en mesure d'identifier la source de 300 tonnes de la demande d'or du secteur officiel début novembre, les spéculations vont bon train sur l'identité de la baleine. Selon un récent rapport de Nikkei Asia, l'opinion converge désormais autour de la Chine en tant qu'acheteur en question . " La Chine a probablement acheté une quantité substantielle d'or à la Russie", a déclaré l'analyste Itsuo Toshima à Nikkei. Il existe des preuves à l'appui de l'allégation. Les autorités douanières chinoises, selon le même rapport, ont annoncé une augmentation "décuplée" de l'or acheté à la Russie en juillet. En outre, le rapport cite la Chine vendant 121,2 milliards de dollars de bons du Trésor américain cette année, "l'équivalent d'environ 2200 tonnes d'or".
Comparant l'achat d'or par la banque centrale à un éléphant sautant dans une piscine déjà pleine, Moe Zulfiqar de Lombardi Letter dit qu'il "ne peut s'empêcher d'être optimiste" sur les perspectives futures de l'or sur la base de la présence durable de la demande de la banque centrale. « Quelque chose d'incroyable se passe sur le marché de l'or », dit-il dans un avis publié à la mi-novembre, « mais cela passe largement inaperçu : les banques centrales achètent de l'or à un rythme record. Cela pourrait être un grand catalyseur qui ferait grimper les prix de l'or vers 3 000 $ l'once beaucoup plus tôt que prévu.… »
"L'un des secrets les moins bien gardés de la banque centrale mondiale est la mesure dans laquelle les responsables chinois échangent des dollars contre de l'or", écrit l'analyste William Pesek dans un article d' Asia Times . Bien qu'il soit impossible d'obtenir une idée de l'implication de la Chine sur le marché de l'or sans l'admission de la Banque populaire de Chine, l'article de Pesek fait un bon travail en passant au crible certaines des inférences. Il garde son commentaire le plus intrigant pour la fin : « [L]a trajectoire à plus long terme des marchés mondiaux des devises reste négative pour le dollar alors que la Chine et d'autres grandes puissances détentrices de bons du Trésor se transforment en un atout que John Maynard Keynes a autrefois qualifié de "relique barbare". ' Cette relique clignote maintenant en alerte rouge pour les haussiers du dollar.
Ventes et achats d'or de la Banque centrale
2002-2022 (T3) (net ; tonnes métriques)
https://www.usagold.com/wp-content/u...2-1024x490.png
Graphique par USAGOLD [Tous droits réservés] • • • Source des données : World Gold Council
–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––––––––
Les six clés d'une possession d'or réussie
Cette introduction approfondie et révélatrice à la propriété de métaux précieux vous aidera à éviter bon nombre des pièges auxquels sont confrontés les nouveaux investisseurs. Découvrez qui investit dans l'or, quel rôle l'or joue dans les portefeuilles des investisseurs sérieux et quand , où , pourquoi et comment ajouter des métaux précieux à vos avoirs. Pour bien finir, il est essentiel que vous commenciez bien, et les six clés d'une possession d'or réussie vous orienteront dans la bonne direction.
Libre accès
–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––––––––
Court et doux
"POUR LA PLUPART DES ANALYSTES, LES PROBLÈMES DE LIQUIDITÉ sur le marché du Trésor ne sont pas seulement liés à l'évolution rapide des prix, ils sont également le reflet d'une pénurie d'acheteurs ou d'une incapacité ou d'une réticence des acheteurs sur le marché à éponger toute l'offre", rapporte Financial Times.Cette absence d'acheteurs est le résultat, pour l'essentiel, du retrait de la Fed et de la Banque du Japon du marché des bons du Trésor en tant qu'acheteurs. En bref, ces fissures pourraient rapidement devenir des fractures majeures à moins que des acheteurs ne soient trouvés ailleurs. Comme le souligne FT, en cas de nouvelle crise, la Fed arrêterait probablement le resserrement quantitatif ou même reviendrait à l'assouplissement quantitatif, comme l'a fait la Banque d'Angleterre dans des circonstances similaires il y a quelques mois. Un tel retrait de la politique déclarée, cependant, ne communiquerait pas "le type de stabilité et de sécurité dont dépendent les investisseurs du monde entier", déclare FT.DANS UN ESSAI DE BLOOMBERG, L'HISTORIQUE DE STANFORD NIALL FERGUSON nous explique l'anatomie de l'escroquerie FTX et comment elle s'inscrit dans la longue histoire de telles mésaventures ...... Ferguson n'a pas de bonnes choses à dire sur Bankman-Fried, mais ce qui s'est passé avec FTX est rien de nouveau sur les marchés financiers. "Maintes et maintes fois", écrit-il dans un long essai intitulé FTX a gardé votre crypto dans une crypte, pas dans un coffre-fort , "les cours des actions ont grimpé à des sommets insoutenables pour s'effondrer à nouveau. Maintes et maintes fois, ce processus s'est accompagné de magouilles, car des initiés sans scrupules ont cherché à tirer profit aux dépens de néophytes naïfs. Et la crypto, ne l'oublions pas, a été promue avec beaucoup d'enthousiasme (et de dédain pour ceux qui la remettaient en question) comme une alternative New Age à l'or.
https://www.usagold.com/wp-content/uploads/ramirezFTXscandal2-1024x697.jpeg Dessin animé avec l'aimable autorisation de MichaelPRamirez.com
[NOUS SOMMES DES FANS DE LONGUE DATE DE L'INVESTISSEMENT DANS L'OR », déclare le magazine Money Week . « Nous pensons que c'est un excellent moyen de fournir une assurance contre toute future crise financière. Ou l'inflation. Si vous voulez un portefeuille vraiment diversifié, investissez une partie de vos actifs dans l'or.… La monnaie d'or classique européenne et mondiale est un secteur souvent négligé, mais extrêmement important sur le marché de l'or d'aujourd'hui. Ces pièces sont rares, ce qui signifie qu'elles ont plus de potentiel d'appréciation du prix, mais elles peuvent souvent être achetées au prix du lingot. Il poursuit en spécifiant les souverains britanniques comme un élément qui bénéficie "d'une excellente liquidité dans la plupart des pays du monde". Chez USAGOLD, nous avons placé un grand nombre de cet article auprès d'investisseurs au fil des ans. Elle reste notre pièce d'or classique la plus populaire, suivie de près par le 20 francs suisses.
"AUJOURD'HUI, NOUS VIVONS LES PIRES ÉLÉMENTS des années 1970 et 2008. … Tout le monde devrait se préparer à ce que l'on peut retenir comme la grande crise de la dette stagflationniste", écrit Nouriel Roubini dans une évaluation apocalyptique qu'il appelle The Age of Megathreats (Project Syndicate) . Le Dr Doom se surpasse dans ce long essai dans lequel il conclut : « Éviter un scénario dystopique ne sera pas facile. Il réitère ses conseils d'investissement évoqués précédemment dans cette lettre, à savoir la nécessité de couvrir les risques que l'on vient d'énumérer dans un environnement stagflationniste. Il recommande "des obligations d'État à court terme et des obligations indexées sur l'inflation, de l'or et d'autres métaux précieux, et des biens immobiliers résistants aux dommages environnementaux".
ELLIOT MANAGEMENT, LE HEDGE FUND TRÈS INFLUENT géré par Paul Singer, a averti récemment que le monde est sur la voie de «l'hyperinflation» et de la pire crise financière depuis la Seconde Guerre mondiale. Selon un récent rapport du Financial Times , le fonds a blâmé les décideurs de la banque centrale pour la "crise imminente", affirmant qu'ils avaient été malhonnêtes quant à la cause du problème d'inflation, qui, selon lui, est le résultat d'une politique monétaire ultra-accommodante, pas les goulots d'étranglement de la chaîne d'approvisionnement. Malgré la régularité des chocs financiers depuis les années 1970, "les investisseurs ne doivent pas présumer qu'ils ont tout vu", précise la firme. Elliot prévient que l'hyperinflation pourrait conduire à un "effondrement sociétal mondial et à des conflits civils ou internationaux". Singer est un défenseur de longue dated'or comme couverture contre le type d'incertitudes couvertes par le dernier avis de sa société.
WISDOM TREE, LA FIRME D'INVESTISSEMENT BASÉE À DUBLIN , affirme que les États-Unis sont déjà en récession technique et y voient un avantage pour l'or. "L'or se distingue comme un actif qui fonctionne bien dans les scénarios de récession", indique-t-il dans un rapport détaillé publié début novembre .. "Alors que les risques de récession augmentent, nous nous attendons à ce que l'or surperforme la plupart des autres classes d'actifs. L'or est confronté aux vents contraires d'un dollar américain fort et d'une liquidation d'obligations. Malgré cela, il tient mieux que prévu. L'or est actuellement plus élevé que là où les rendements obligataires réels indiqueraient qu'ils devraient l'être.… [L]e rendement obligataire américain s'est inversé, ce qui est cohérent avec une récession à venir. Les inversions
d'aplatissement de l'ours ont été bonnes pour l'or dans le passé... Aujourd'hui, nous sommes dans l'une des inversions d'aplatissement de l'ours les plus fortes que nous ayons vues depuis 1981. Cela indique une source de force pour l'or que nous n'avons pas vue depuis des décennies.
INVESTING HAVEN A PUBLIÉ UNE MISE À JOUR de ses prévisions d'argent pour 2023 du jour au lendemain, citant le déficit d'approvisionnement annualisé de 194 millions d'onces récemment signalé par The Silver Institute comme une "divergence aux proportions épiques et historiques". Même avant la révélation de TSI sur l'écart entre l'offre et la demande, Investing Haven avait une perspective très haussière sur le métal blanc. "L'argent augmentera en 2023 car nous nous attendons à ce qu'un sommet soit établi pour le dollar américain", indique-t-il dans ses prévisions complètespublié le mois dernier. "De plus, les indicateurs avancés comme les anticipations d'inflation et certainement les positions CoT sur le marché de l'argent sont fortement haussiers pour 2023. C'est pourquoi nos prévisions de prix de l'argent pour 2023 sont de 34,70 USD. Notez qu'il s'agit de notre premier objectif haussier, également un objectif de longue date que nous nous attendions à atteindre en 2022. Une fois que l'argent se négociera près de 36 USD, ce ne sera qu'une question de temps avant qu'il n'attaque l'ATH. Dans nos prévisions sur l'or pour 2023, nous avons mentionné que notre préférence va aux investissements dans l'argent en 2023 et au-delà. Nous avons également indiqué que l'argent était le métal précieux à acheter pour 2023. »
Citation notable
"L'investissement physique en 2022 est en passe de bondir de 18% à 329 millions d'onces, ce qui serait également un nouveau record. Le soutien est venu des craintes des investisseurs face à une inflation élevée, de la guerre russo-ukrainienne, des craintes de récession, de la méfiance à l'égard du gouvernement et des achats en cas de baisse des prix. La hausse a été encore stimulée par un (quasi-doublement) de la demande indienne, une reprise après le marasme de l'année dernière, les investisseurs profitant souvent de la baisse des prix de la roupie. – The Silver Institute, Revue intermédiaire du marché de l'argentNote de l'éditeur : TSI fait également état d'un déficit annualisé record entre l'offre et la demande – 194 millions d'onces.
Excédent ou déficit d'argent
(Millions d'onces troy)
https://www.usagold.com/wp-content/u...V-1024x718.png
Graphique par USAGOLD [Tous droits réservés] • • • Source des données : The Silver Institute
«Après 14 ans, [crypto] est toujours une solution à la recherche d'un problème. Il ne s'agit pas de construire un nouveau système financier. Il ne s'agit pas de construire un nouvel Internet. Ce n'est pas un actif décorrélé du marché. Ce n'est pas une couverture contre l'inflation. C'est un véhicule de spéculation pure et nue, détachée de tout ce qui touche à l'économie. C'est un casino enveloppé dans tous ces mensonges. Lorsque vous déchirez ces mensonges, ce qui reste ressemble à un net négatif pour le monde. – Philip Diehl, Financial Times"Lorsque vous cherchez dans le monde entier une grande valeur refuge liquide et mondialement acceptée, il n'y en a qu'une seule, et c'est l'or, qui continue de réaffirmer son statut d'actif de dernier recours. Avant 1970, à l'époque de l'étalon-or, l'or jouait officiellement ce rôle. Aujourd'hui, après une pause de 50 ans, le marché libre remet l'or sur le piédestal auquel il appartient. – Charlie Morris, Atlas Pulse Gold Report
« La semaine dernière a été un énorme tournant sur les marchés financiers mondiaux. Je ne parle pas du marché boursier américain même si c'est ce dont parlent tous les médias financiers aux États-Unis. … Ce dont je parle, ce sont les marchés mondiaux des devises. La semaine dernière, l'indice du dollar américain a connu sa plus forte baisse sur deux jours en treize ans. La volatilité des devises était extrême sur une base historique pour eux.… Si vous voulez battre les marchés, vous voulez être dans ce qui profite de la chute du dollar américain maintenant et ce qui surpasse le S&P 500 ! Un dollar en baisse aide l'or et les métaux précieux, mais il aide également les marchés en dehors des États-Unis à mieux performer que le S&P 500. » – Michael Swanson, fenêtre de Wall Street
"Les investisseurs se diversifient avec l'or et l'argent depuis des décennies pour limiter leur exposition à des politiques monétaires et fiscales mal exécutées. Comme je l'ai partagé avec vous le mois dernier, les investisseurs ont acheté plus de pièces d'or American Eagle et American Buffalo entre janvier et septembre de cette année que pendant toute autre période de ce type remontant à 1999. Je pense que cela reflète en grande partie l'opinion aigrie des Américains sur le l'état de l'économie et le déséquilibre qu'ils constatent dans les politiques monétaires et fiscales. – Frank Holmes, Investisseurs mondiaux américains
« La grande expérience d'assouplissement quantitatif a été une erreur. Il est temps que les banques centrales reconnaissent son échec et le retirent de leur arsenal politique dès qu'elles le pourront. –Allison Schrager, Bloomberg
"Tous les marchés haussiers et baissiers finissent par se terminer et celui-ci dans le Dollar Index finira également par se terminer. Quand cela se finira-t-il? Lorsque la Fed arrêtera enfin son régime de hausse des taux, bien sûr. Cependant, vous devez garder à l'esprit que la plupart des « marchés » sont généralement tournés vers l'avenir et proactifs, et non passifs et réactifs. Dans cet esprit, nous pouvons peut-être nous tourner vers l'indice du dollar pour trouver des indices avant que la Fed ne fasse une pause et ne fasse marche arrière. Peut-être devrions-nous nous attendre à ce que le Dollar Index dépasse et se renouvelle avant ce changement de politique éventuel et non en réponse au changement lui-même. – Craig Hemke, Sprott Asset Management
Pensée finale
La politique de la Fed est-elle vraiment aussi hawkish qu'elle voudrait le faire croire aux marchés ?
Certains applaudissent le président actuel de la Fed comme s'inspirant de l'inflation qui a vaincu Paul Volcker. D'autres voient en lui une politique plus proche de celle d'Arthur Burns dans les années 1970. L'un des observateurs les plus célèbres de la Fed à Wall Street, Henry Kaufman, a déclaré : « J'attends toujours qu'il agisse avec audace. Aujourd'hui, le taux d'inflation est supérieur aux taux d'intérêt. À l'époque, les taux d'intérêt étaient supérieurs aux taux d'inflation. C'est toute une juxtaposition. Nous avons un long chemin à parcourir. L'inflation doit baisser ou les taux d'intérêt augmenteront.L'augmentation des taux, en soi, n'est pas nécessairement belliciste (ou volckerienne, d'ailleurs). Les banques centrales d'Argentine, du Venezuela et du Zimbabwe augmentent leurs taux depuis des années, mais leurs taux d'inflation sont maintenant de 70 %, 167 % et 257 %, respectivement, et ils augmentent. Personne ne serait assez fou pour qualifier leurs banques centrales de bellicistes (ou canalisant Paul Volcker). Comme nous l'avons dit dans le passé, la Fed n'a pas besoin de pivoter pour être dovish. Il lui suffit de s'assurer que le taux de prêt reste inférieur au taux d'inflation. Dans le même temps, nous voyons des signes que l'interprétation de la politique de la Fed pourrait changer sur ce point, la flambée des prix des métaux précieux en novembre servant peut-être de première preuve. L'or est en hausse de 7,4 % sur la période ; l'argent est en hausse de 11,6 %. (25/11/2022)
Taux d'inflation et taux d'intérêt en Argentine
(%, 2008-2022)
https://www.usagold.com/wp-content/u...V-1024x615.png
Graphique avec l'aimable autorisation de TradingView.com • • • Taux d'inflation rouge, taux d'intérêt noir • • • Cliquez pour agrandir
__________________________________________________________________________________
https://www.usagold.com/wp-content/u...insV4trans.pngInquiet de la suite de la Grande Crise Financière ?
DÉCOUVREZ LA DIFFÉRENCE USAGOLD
BUREAU DE COMMANDE :
1-800-869-5115 x100 • • •[email protected]• • •COMMANDEZ DE L'OR ET DE L'ARGENT EN LIGNE 24-7
https://www.usagold.com/wp-content/u...ogo2021NV3.png
–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––Si vous appréciez NEWS & VIEWS, vous pouvez également prendre
un intérêt pour notre page Daily Top Gold News and Opinion .
–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––
NEWS & VIEWS inscrivez-vous. Clients potentiels bienvenus.
ABONNEMENT GRATUIT !
–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––
Avis de non-responsabilité - Les opinions exprimées sur le site Web USAGOLD.com ne constituent pas une offre d'achat ou de vente ou la sollicitation d'une offre d'achat ou de vente de tout produit en métaux précieux, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such, USAGOLD does not warrant or guarantee the accuracy, timeliness, or completeness of the information found here. The views and opinions expressed at USAGOLD are those of the authors and do not necessarily reflect the official policy or position of USAGOLD. Any content provided by our bloggers or authors is solely their opinion and is not intended to malign any religion, ethnic group, club, organization, company, individual, or anyone or anything.
–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––
https://www.usagold.com/wp-content/u...marginNV-2.png Michael J. Kosares est le fondateur d'USAGOLD, auteur de The ABCs of Gold Investing - How To Protect and Build Your Wealth With Gold [Three Editions], et l'éditeur des publications du cabinet.- Post #10,955
- Quote
- Nov 30, 2022 7:48pm Nov 30, 2022 7:48pm
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
NEWS &VIEWS
Forecasts, Commentary & Analysis on the Economy and Precious Metals
Celebrating our 49th year in the gold business
DECEMBER 2022
“… [D]ollars, yen, and euros will not always glitter in a storm, and they will never be mistaken for gold.”
Sir Peter Tapsell
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Is China the mystery whale in the gold market?
‘The barbarous relic now flashing a red alert for dollar bulls’
https://www.usagold.com/wp-content/u...e-1024x594.png
Since the World Gold Council reported that it could not identify the source for 300 tonnes in official sector gold demand in early November, speculation has been rife about who the whale might be. Opinion is now coalescing around China as the buyer in question, according to a recent Nikkei Asia report. “China likely bought a substantial amount of gold from Russia,” analyst Itsuo Toshima told Nikkei. There is some evidence to support the claim. Chinese customs authorities, according to the same report, announced an “eightfold” surge in gold purchased from Russia in July. In addition, the report cites China selling $121.2 billion in U.S. Treasuries this year, “the equivalent of roughly 2200 tonnes of gold.”
Likening central bank gold buying to an elephant jumping into an already full swimming pool, Lombardi Letter’s Moe Zulfiqar says he “can’t help but be bullish” on gold’s future prospects based on the enduring presence of central bank demand. “Something amazing is happening in the gold market,” he says in an advisory released in mid-November, “but it’s largely going unnoticed: central banks are buying gold at a record pace. This could be a big catalyst that sends gold prices toward $3,000 per ounce much sooner than previously expected.…”
“One of the worst-kept secrets in global central banking is the extent to which Chinese officials are swapping dollars for gold,” writes analyst William Pesek in an Asia Times piece. Though it is impossible to get a fix on China’s involvement in the gold market without an admission from the Peoples Bank of China, Pesek’s article does a good job of sifting through some of the inferences. He saves his most intriguing comment for last: “[T]he longer-term trajectory for global currency markets remains dollar-negative as China and other top Treasuries-holding powers switch into an asset John Maynard Keynes once dismissed as a ‘barbaric relic.’ That relic is now flashing red alert for dollar bulls.”
Central Bank Gold Sales and Purchases
2002-2022 (Q3) (net; metric tonnes)
https://www.usagold.com/wp-content/u...2-1024x490.png
Chart by USAGOLD [All rights reserved] • • • Data Source: World Gold Council
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
The six keys to successful gold ownershipThis eye-opening, in-depth introduction to precious metals ownership will help you avoid many of the pitfalls that befall first-time investors. Find out who invests in gold, what role gold plays in serious investors’ portfolios, and the when, where, why, and how of adding precious metals to your holdings. To end right, it is critical that you start right, and the six keys to successful gold ownership will point you in the right direction.
Open Access
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Short & Sweet
“FOR MOST ANALYSTS, THE LIQUIDITY PROBLEMS in the Treasury market are not just about rapidly changing prices, they are also a reflection of a dearth of buyers or an inability or unwillingness of the buyers in the market to mop up all the supply,” reports Financial Times. That absence of buyers is the result, for the most part, of both the Fed and the Bank of Japan withdrawing from the Treasuries market as buyers. Those cracks, in short, could quickly become major fractures unless buyers are found elsewhere. As FT points out, in the event of another crisis, the Fed would likely halt quantitative tightening or even return to quantitative easing, as did the Bank of England under similar circumstances a few months ago. Such a retreat from stated policy, though, would not communicate “the kind of stability and security that investors around the world depend on,” says FT.IN A BLOOMBERG ESSAY, STANFORD HISTORIAN NIALL FERGUSON walks us through the anatomy of the FTX scam and how it fits into the long history of such misadventures……Ferguson does not have nice things to say about Bankman-Fried, but what happened with FTX is nothing new in financial markets. “Time and again,” he writes in an extended essay titled FTX kept your crypto in a crypt, not a vault, “share prices have soared to unsustainable heights only to crash downwards again. Time and again, this process has been accompanied by skullduggery, as unscrupulous insiders have sought to profit at the expense of naive neophytes.” And crypto, let us not forget, was promoted with great enthusiasm (and disdain for those who questioned it) as a New Age alternative to gold.
https://www.usagold.com/wp-content/u...-1024x697.jpegCartoon courtesy of MichaelPRamirez.com
[WE’RE LONG-STANDING FANS OF INVESTING IN GOLD,” says Money Week magazine. “We think it’s a great way to provide insurance against any future financial crisis. Or inflation. If you want a truly diversified portfolio, invest some of your assets in gold.… Classic European and world gold coinage is an often overlooked, but extremely important sector in today’s gold market. These coins are rare which means they have more potential to appreciate in price yet, they can often be bought at bullion prices.” It goes on to specify British sovereigns as an item that enjoys “excellent liquidity in most countries in the world.” At USAGOLD, we have placed large numbers of this item with investors over the years. It remains our most popular classic gold coin with the Swiss 20 franc a close second.
“TODAY WE ARE EXPERIENCING THE WORST ELEMENTS of both the 1970s and 2008. … Everyone should be preparing for what may be remembered as the Great Stagflationary Debt Crisis,” Nouriel Roubini writes in an apocalyptic assessment he calls The Age of Megathreats (Project Syndicate). Dr. Doom outdoes himself in this extended essay in which he concludes: “Avoiding a dystopian scenario will not be easy.” He reiterates his investment advice covered in this letter previously, i.e., the need to hedge the risks just listed in a stagflationary environment. He recommends “short-term government bonds and inflation-indexed bonds, gold and other precious metals, and real estate that is resilient to environmental damage.”
ELLIOT MANAGEMENT, THE HIGHLY INFLUENTIAL HEDGE FUND managed by Paul Singer, warned recently that the world is on the road to “hyperinflation” and the worst financial crisis since World War II. According to a recent Financial Times report, the fund blamed central bank policymakers for the “looming crisis,” saying they have been dishonest about the cause of the inflation problem, which, in its view, is the result of ultra-loose monetary policy, not supply chain bottlenecks. Despite the regularity of financial shocks since the 1970s, “investors should not assume they have seen everything,” says the firm. Elliot warns that hyperinflation could lead to a “global societal collapse and civil or international strife.” Singer is a long-time advocate of gold as a hedge against the kind of uncertainties covered in his firm’s latest advisory.
WISDOM TREE, THE DUBLIN-BASED INVESTMENT FIRM, says the United States is already in a technical recession and sees that as a positive for gold. “Gold stands out as an asset that performs well in recessionary scenarios,” it says in a detailed report released in early November. “As recessionary risks rise, we expect gold to outperform most other asset classes. Gold is facing headwinds from a strong US dollar and a bond sell-off. Despite that, it is holding value better than expected. Gold is currently higher than where real bond yields would indicate they should be.… [T]he US bond yield has inverted, which is consistent with an upcoming recession. Bear flattening inversions have been good for gold in the past.… Today, we are in one of the strongest bear-flattening inversions we have seen since 1981. That points to a source of strength for gold we have not seen in decades.”
INVESTING HAVEN POSTED AN UPDATE to its 2023 silver forecast overnight, citing the annualized 194 million ounce supply shortfall recently reported by The Silver Institute as a “divergence of epic and historic proportions.” Even before TSI’s revelation on the supply-demand gap, Investing Haven had a very bullish outlook on the white metal. “Silver will move higher in 2023 because we expect a top to be set in the US Dollar,” it says in its full forecast published last month. “Moreover, leading indicators like inflation expectations and certainly the CoT positions in the silver market are strongly bullish for 2023. That’s why our silver price forecast for 2023 is 34.70 USD. Note that this is our first bullish target, also a longstanding target that we expected to be hit in 2022. Once silver trades near 36 USD it will be a matter of time until it will attack ATH. In our gold forecast 2023 we mentioned that our preference goes to silver investments in 2023 and beyond. We also tipped silver as the precious metal to buy for 2023.”
Notable Quotable
“Physical investment in 2022 is on track to jump by 18% to 329 million ounces, which would also be a new record. Support has come from investor fears of high inflation, the Russia-Ukraine war, recessionary concerns, mistrust in government, and buying on price dips. The rise was boosted further by a (near-doubling) of Indian demand, a recovery from a slump last year, with investors often taking advantage of lower rupee prices.” – The Silver Institute, Interim Silver Market ReviewEditor’s note: TSI also reports a record annualized deficit between supply and demand – 194 million ounces.
Silver surplus or deficit
(Millions of troy ounces)
https://www.usagold.com/wp-content/u...V-1024x718.png
Chart by USAGOLD [All rights reserved] • • • Data source: The Silver Institute
“After 14 years, [crypto] is still a solution in search of a problem. It’s not building a new financial system. It’s not building a new internet. It’s not an asset uncorrelated with the market. It’s not a hedge against inflation. It is a vehicle for pure, naked speculation detached from anything in the economy. It’s a casino that’s wrapped in all of these lies. When you tear back those lies, what’s left looks like a net negative for the world.” – Phillip Diehl, Financial Times“When you look around the world for a big, liquid, globally accepted safe haven, there is only one, and that is gold, which continues to reassert its status as the asset of last resort. Pre-1970, in the days of the gold standard, gold formally enjoyed this role. Today, after a 50-year break, the free market is putting gold back onto the pedestal where it belongs.” – Charlie Morris, Atlas Pulse Gold Report
“Last week was a huge turning point in the global financial markets. I’m not talking about the US stock market even though that is what all the financial media in the United States ever talks about. …What I’m talking about are the global currency markets. Last week the US dollar index had its biggest two-day decline in thirteen years. The volatility with currencies was extreme on a historical basis for them.… If you want to beat the markets you want to be in what benefits from a falling US dollar now and what is outperforming the S&P 500! A falling dollar helps gold and precious metals, but it also helps markets outside the United States perform better than the S&P 500.” – Michael Swanson, Wall Street Window
“Investors have been diversifying with gold and silver for decades to limit their exposure to poorly executed monetary and fiscal policies. As I shared with you last month, investors bought more American Eagle and American Buffalo gold coins between January and September of this year than in any other such period going back to 1999. I believe this is largely a reflection of Americans’ souring opinion of the state of the economy and the imbalance they see in monetary and fiscal policies.” – Frank Holmes, US Global Investors
“The great quantitative easing experiment was a mistake. It’s time central banks acknowledge it for the failure it was and retire it from their policy arsenal as soon as they’re able.” – Allison Schrager, Bloomberg
“All bull and bear markets eventually come to an end and this one in the Dollar Index will end eventually too. When will it end? When the Fed finally halts their rate hike regime, of course. However, you must keep in mind that most’ markets’ are generally forward-looking and proactive, not passive and reactive. With this in mind, perhaps we can look to the Dollar Index for clues before the Fed pauses and reverses. Maybe we should expect the Dollar Index to top and roll over in advance of this eventual policy shift and not as a response to the shift itself.” – Craig Hemke, Sprott Asset Management
Final Thought
Is Fed policy really as hawkish as it would like markets to believe?
Some applaud the current Fed chairman as drawing inspiration from the inflation vanquishing Paul Volcker. Others see him as charting a policy closer to that of Arthur Burns during the 1970s. One of Wall Street’s most famous Fed watchers, Henry Kaufman, says, “I am still waiting for him to act boldly. Today, the inflation rate is higher than interest rates. Back then, interest rates were higher than inflation rates. It’s quite a juxtaposition. We have a long way to go. Inflation has to come down or interest rates will go higher.”Raising rates, in and of itself, is not necessarily hawkish (or Volckerian, for that matter). The central banks of Argentina, Venezuela, and Zimbabwe have been raising rates for years, yet their inflation rates are now 70%, 167%, and 257%, respectively, and climbing. No one would be so foolish as to characterize their central banks as hawkish (or channeling Paul Volcker). As we have said in the past, the Fed does not need to pivot to be dovish. It just needs to ensure the lending rate stays below the inflation rate. At the same time, we see signs that the interpretation of Fed policy might be shifting on that score, with the November surge in precious metals prices perhaps serving as early evidence. Gold is up 7.4% over the period; silver is up 11.6%. (11/25/2022)
Argentina inflation rate and interest rate
(%, 2008-2022)
https://www.usagold.com/wp-content/u...V-1024x615.png
Chart courtesy of TradingView.com • • • Inflation rate red, interest rate black • • • Click to enlarge
__________________________________________________________________________________
https://www.usagold.com/wp-content/u...insV4trans.pngWorried about the sequel to the Great Financial Crisis?
DISCOVER THE USAGOLD DIFFERENCE
ORDER DESK:
1-800-869-5115 x100 • • • [email protected] • • • ORDER GOLD & SILVER ONLINE 24-7
https://www.usagold.com/wp-content/u...ogo2021NV3.png
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––If you appreciate NEWS & VIEWS, you might also take
an interest in our Daily Top Gold News and Opinion page.
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
NEWS & VIEWS inscrivez-vous. Clients potentiels bienvenus.
ABONNEMENT GRATUIT !
–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––
Avis de non-responsabilité - Les opinions exprimées sur le site Web USAGOLD.com ne constituent pas une offre d'achat ou de vente ou la sollicitation d'une offre d'achat ou de vente de tout produit en métaux précieux, ils ne doivent en aucun cas être considérés comme des conseils d'investissement ou des conseils d'achat, de vente ou de conservation. USAGOLD, Inc. recommande l'achat de métaux précieux physiques à des fins de préservation des actifs, et non de spéculation. L'utilisation de ces opinions à des fins spéculatives n'est ni suggérée ni conseillée. Les commentaires sont strictement à des fins éducatives et, en tant que tels, USAGOLD ne garantit pas l'exactitude, l'actualité ou l'exhaustivité des informations trouvées ici. Les points de vue et opinions exprimés sur USAGOLD sont ceux des auteurs et ne reflètent pas nécessairement la politique ou la position officielle d'USAGOLD. Tout contenu fourni par nos blogueurs ou auteurs n'est que leur opinion et n'est pas destiné à calomnier une religion, un groupe ethnique, un club, une organisation, une entreprise, un individu ou quiconque ou quoi que ce soit.
–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––
https://www.usagold.com/wp-content/u...marginNV-2.pngMichael J. Kosares est le fondateur d'USAGOLD, auteur de The ABCs of Gold Investing - How To Protect and Build Your Wealth With Gold [Three Editions], et l'éditeur des publications de l'entreprise.
- Post #10,956
- Quote
- Nov 30, 2022 8:11pm Nov 30, 2022 8:11pm
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
Inserted Video
- Post #10,957
- Quote
- Edited 7:35am Dec 1, 2022 6:57am | Edited 7:35am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
Good morning
Davide Levy
Aviel Forex Learning Edge Corporation
We probably will have Risk Off today however will wait until North American data is released at 8:30 AM to decide that.
I will only be shorting 100 units of Dow 30 and 50 units of SP500. That's my trade plan for today with my profit target for today of $1000.00 Us dollars.
I put on a Forex trade (CFD) and shorted 100 units of Dow 30 at 7:11 AM at 34,510.90 on the Dow.
The used Margin is $8250.00 US dollars. The usable maintenance Margin is $12,475.83 because with Friedberg they used $33,000.00 as additional maintenance margin.
What are the comparable margins with Ava Trade ?
Davide Levy
Aviel Forex Learning Edge Corporation
We probably will have Risk Off today however will wait until North American data is released at 8:30 AM to decide that.
I will only be shorting 100 units of Dow 30 and 50 units of SP500. That's my trade plan for today with my profit target for today of $1000.00 Us dollars.
I put on a Forex trade (CFD) and shorted 100 units of Dow 30 at 7:11 AM at 34,510.90 on the Dow.
The used Margin is $8250.00 US dollars. The usable maintenance Margin is $12,475.83 because with Friedberg they used $33,000.00 as additional maintenance margin.
What are the comparable margins with Ava Trade ?
- Post #10,958
- Quote
- Dec 2, 2022 3:22am Dec 2, 2022 3:22am
- | Joined Sep 2011 | Status: Member | 66 Posts
Hi BenjaminIS,
Kindly could you please explain your Money Flow Trading Method with Risk Management in detail?
Every day where do you go first to see and decide whether RISK OFF OR not ?? and at what time ??
Thanks
Kindly could you please explain your Money Flow Trading Method with Risk Management in detail?
Every day where do you go first to see and decide whether RISK OFF OR not ?? and at what time ??
Thanks
- Post #10,959
- Quote
- Dec 2, 2022 6:46am Dec 2, 2022 6:46am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts
DislikedHi BenjaminIS, Kindly could you please explain your Money Flow Trading Method with Risk Management in detail? Every day where do you go first to see and decide whether RISK OFF OR not ?? and at what time ?? ThanksIgnored
Let us start off by saying today is a unique day since Non Farm Payroll numbers are released at 8:30 AM Eastern Standard Time.
So since this number whatever it turns out to be can change PERCEPTION to REALITY.
Let me explain PERCEPTION which is the views that the majority of Forex traders have both retail and all others including the automated robots that calculate all data released TRUE or NOT.
The consensus is for US nonfarm payrolls to drop to 200,000. The FED holds its next policy meeting on December 14, 2022 so a strong job number will have the FED keep raising interest rates which is bad for the equity and largest market of all, The Bond Markets.
So today we must wait until the number is released at 8:30 AM to know if we have a Risk On day or a Risk Off day.
Here is where I can explain PERCEPTION VS REALITY as a very bad number under 100,000 new jobs created will have the PERCEPTION change from a strong job market to more likely a weak one which means "RECESSION"
That will SHOCK the markets and then actually we will have Risk On as the stock markets still open in Europe and North America opening at 9:30 AM Eastern Standard Time will love this number as the new REALITY is RECESSION.
So market will most likely go up not down.
As an added note this is why the old way of trading using Technical Indicators does not work as it used to work. Why ?
My unique method of Money Flow Trading using Risk Management is the best way to trade. I follow the Money Flow as it moves from stocks to bonds to various currencies and commodities using my unique trade plans set and reviewed every 90 days.
I offer a 90 day trading course for $250.00 Canadian dollars. I set up a $50,000 US dollars Forex trading demo account with FXCM UK or Friedberg in Canada.
That way I can teach you 24/7 by having you learn without fear of loss or greed and I can see if you have the DISCIPLINE to become a successful Forex trader.
You can send me email to [email protected] to sign up. At the end of 90 days based on your results and my teaching you by your posting on this thread your questions and comments we can work together to bring you to a profitable manner of Forex trading.
I have a corporate website "Aviel Forex Learning Edge" that will be activated on January 1, 2023 at a monthly cost of $75.00 Canadian dollars monthly where I can give you 24/7 service with your own thread and access to me by phone and email with replies coming promptly.
I hope I have anwered your excellent questions and follow this thread during the day and after to see in live time what is going on in the world and of course "THE FOREX WORLD"
- Post #10,960
- Quote
- Dec 2, 2022 7:03am Dec 2, 2022 7:03am
- | Commercial Member | Joined Dec 2014 | 11,681 Posts