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November 22 2017

moneymetals

November 21 2017

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Will the Tax Reform Debate Impact Precious Metals?

November 20, 2017 -- Precious metals got a boost last week as investors were reminded that stock prices move in two directions -- up and down. The S&P 500 and the Dow both finished the worst two weeks they have seen since August.

The selling certainly wasn’t dramatic (both indexes remain within about 1% of their all time highs), but it does represent the recent negative correlation between stocks and metals. Absent the return of an inflation trade, any sustained rally in metals will likely have to be fueled by investors fleeing the stock markets. We’ll see how the equity indexes fare this week. 

Taxes

Wall Street is focused on the debate over tax reform. Whether Congressional Republicans will muster the majority needed to pass a tax bill remains too close to call. We remain skeptical given the combined animosity of the Republican leadership and Democrats towards the president.

At least metals investors who would like some tax relief may get higher gold and silver prices as a bit of a silver lining. Should tax reform fail, it will likely hurt the stock markets and prompt some flight to safety. Trading figures to be lighter this week given the Thanksgiving holiday, but there is some significant economic data due out. We’ll see reports on existing home sales, durable goods, and the FOMC minutes from the Nov. 1st committee meeting. 

Source

November 13 2017

moneymetals

The Dangers of Zero

Inline image 1

Zero is an important number in the psychology driving demand for bullion. There are periods when investors find the argument that gold or silver prices “will never go to zero” compelling.

The 2008 financial crisis and the years immediately following it are the most recent example. The fear of conventional securities and even the fiat dollar becoming worthless was palpable for many in the metals markets. Bullion demand hit record levels.

Left behind

Investors have chased bull markets
for fear of being left behind.

While demand for gold ETFs and futures contracts has been strong in 2016 and 2017, some investors in the physical market for coins, bars, and rounds seem to have overlooked the modest gains of the past two years and are anxious instead to participate in bull markets elsewhere. If they are worried about anything, it is the possibility of missing out.

Gold and silver’s appeal as a safe haven is in temporary eclipse.

The metals markets are awaiting the moment when investors lose their conviction about ever higher stock prices and once again grapple with the idea that prices do fall.

Indeed, the value of some securities can, and does, fall all the way to zero. Companies miss expectations or fail outright. Bond issuers occasionally default and fiat currencies eventually die. Investors discount risk in the euphoria of a bull market.

Continue reading: (source)

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November 07 2017

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THE U.S. STOCK MARKET: Highly Inflated Bubble To Super-Charged Tulip Mania

Investors need to be concerned that the U.S. Stock Market is well beyond bubble territory as it has now entered into the final stage of a Super-Charged Tulip Mania. Not only are stock prices inflated well above anything we have ever seen before, but valuations are also reaching heights that are totally unsustainable. Unfortunately, these highly inflated share prices and insane valuations seem normal to investors who are suffering from brain damage as years of mainstream propaganda have turned the soft tissue in their skulls to mush.

Also, we are way beyond “Boiling Frogs” now. Yes, we passed that stage a while back. Today, the typical U.S. investor has been fried to death. Investors now resemble a super-crisp chicken-wing with very little meat on it but at least will offer, one hell of a crunch. Please realize I don’t mean to be harsh about my fellow investor. However, when I look around and see what 99% of the market is doing, it reminds me of a famous line from the movie Aliens. The star of the movie, after being found lost in deep space for many years, said the following in a meeting, “Did IQ’s drop sharply while I was away?”

We find out in the rest of the movie that the so-called Mainstream experts were totally wrong about their assessment of the situation. However, billions of dollars were still spent and many lives lost because high-level individuals infected with stupidity (in the Aliens Movie) still controlled the shots. No different than today.

Continue to the full article (source)

November 06 2017

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November 03 2017

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Bitcoin or Gold: Which One's a Bubble and How Much Energy Do They Really Consume

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If you are investing in either Bitcoin or Gold, it’s important to understand which asset is behaving more like a bubble than the other. While it’s impossible to understand how the market will value these two very different assets in the future, we can provide some logical analysis that might remove some of the mystery associated with the market price of Bitcoin vs Gold.

I’ve read some analysis on Bitcoin profitability and energy consumption that seemed unreliable, so I thought I would put my two cents in on the subject.

For example, many sites are using the Digiconomist’s work on Bitcoin energy consumption. However, I believe this analysis has overstated Bitcoin’s energy consumption by a large degree. According to the Digiconomist, Bitcoin’s annual electric use is approximately 24 TerraWatts per year (TWh/yr):

Digiconomist bitcoin energy consumption

In a recent article that was forwarded to me by one of my readers, How Many Barrels Of Oil Are Needed To Mine One Bitcoin, the author used the information in the chart above to calculate the energy cost to produce each Bitcoin. He stated that the average energy cost for each Bitcoin equals 20 barrels of oil equivalent. Unfortunately, that data is grossly overstated.

Read the full article: (source)

November 01 2017

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October 31 2017

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BREAKING: China – World’s Largest Gold Producer Mine Supply Plummets 10%

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The world’s top gold producer saw its mine supply plummet by 10% in the first half of 2017. According to the GFMS World Gold Survey newest update, China’s gold production in 1H 2017 fell the most in over a decade. The fall in Chinese gold production is quite significant as the country will have to increase its imports to make up the shortfall in its mine supply.

The data in the GFMS 2017 Q3 Gold Survey Update & Outlook reported that Chinese gold mine supply declined 23 metric tons to 207 metric tons in the 1H 2017 versus the 230 metric tons during the same period last year:

China gold mine production (1h 2016 vs 1h 2017)

The report stated the reason for the decline in Chinese gold production was due to the government’s increased efforts to curb pollution as well as heightened awareness of environmental protection. Furthermore, GFMS analysts forecast that Chinese gold production will continue to deteriorate for the remainder of the year as production is scaled down.

Read full article: (source)

October 30 2017

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moneymetals

Bad News Banksters Double Cross Their Customers

Crooked bankers are all over the headlines again.

The world’s largest metals hedge fund, Red Kite Management, Ltd., is suing Barclays for rigging copper prices. Federal prosecutors launched an investigation of Wells Fargo bankers working on its foreign exchange desk Friday. And on October 23rd, a jury in New York convicted an HSBC trader of fraud.

Bank fraud

The HSBC trader, Mark Johnson, said he “thought we got away with it” to his coworkers after cheating their client in a massive foreign exchange transaction. But he was wrong. The jury found him guilty for his involvement in a 2011 exchange in which the Cairn Energy Plc converted $3.5 billion dollars to British pounds.

Johnson had taken Cairn’s order and promptly turned around to provide the details of the upcoming transaction to other HSBC traders. They front ran the client’s order by buying pounds which they then resold to the client for approximately $8 million in profit. When Cairn complained about the high price at which their trade was executed, Johnson blamed the “Russians.”

The investigation of Wells Fargo also involves foreign exchange. Federal agents got involved shortly after news that Wells Fargo had fired four traders and re-assigned a senior executive. Sources said the bank took this action after completion of an internal investigation. Details as to which client was involved and how they were cheated are not yet public.

Few will be shocked if it turns out that Wells Fargo was swindling another customer. Over the past year, the bank admitted employees had created as many as 3.5 million phony accounts and charged related fees. We also know the bank has been overcharging clients for auto insurance and mortgage related products.

The allegations at Barclays Bank on behalf of Red Kite are a variation on the same theme: abuse the customer’s trust. The complaint indicates that bankers used knowledge of the firm’s open copper trades to profit at their client’s expense.

Continue to the full article (source).

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October 27 2017

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October 25 2017

moneymetals

Threats to Digital Wealth Point Up Need for Tangible Backup

Recent high-profile cyber security breaches at Equifax and other financial institutions highlight the perils of an all-digital economy. When wealth can be evaporated or expropriated at the stroke of a key, how secure can your finances really be?

Obviously, there is a big difference between wealth you can tangibly hold and wealth that exists only in electronic form.

One advantage of paper cash is that it can’t be hacked or stolen digitally. Paper money isn’t by any means hard money like gold and silver, but it does at least provide some of the privacy and convenience features that come with tangible assets. That’s why bankers and bureaucrats want to ultimately ban the use of paper Federal Reserve Notes and force all cash transactions to go online.

Hard money assets

A recent story in the Wall Street Journal suggested, “reducing the supply of cash in the U.S. could help lower crime and make the Fed’s job easier.” Limiting our access to cash... to help monetary central planners do their job – somehow it didn’t occur to the Founders to enshrine that principle into the Constitution!

Kenneth Rogoff, former chief economist at the International Monetary Fund, says eliminating $50 and $100 bills is necessary to reduce tax evasion and black-market transactions.

According to Rogoff, “Another advantage of eliminating large bills would be the effect on monetary policy. The Federal Reserve should be able to implement negative nominal interest rates vastly more effectively in the absence of large bills, which could prove quite important as a stimulative tool in the next financial crisis.”

A negative interest rate policy is effectively a tax on holding cash in a bank. But the policy doesn’t work so well when people can hold paper cash and thus escape the negative rate exaction.

The war on cash is proceeding in small steps, with lots of nudging from corporate America. Visa has launched a “Cashless Challenge” to incentivize small businesses to stop accepting paper currency. “Visa is helping lead the cashless movement by working to reshape how people pay and get paid,” the credit card giant boasts.

Continue reading: (source)

October 24 2017

moneymetals
moneymetals

Trump May Reappoint Yellen as Fed Chair after All

Candidate Donald Trump was none too kind to current Federal Reserve Chair Janet Yellen during his 2016 campaign. However, the President’s tone with regards to Yellen and Fed policy has been softening since his election.

Trump met one on one with Yellen and other top contenders last week and now appears quite open to the idea of reappointing her to another four-year term.

Janet yellen

Trump may reappoint UC Berkeley
Janet Yellen

Trump told CNBC in September of last year that Yellen should be “ashamed” for acting partisan. He accused the Fed of maintaining extraordinarily low interest rates at the request of former President Barack Obama and Democrats who wanted stimulus and credit for economic growth. Given an opportunity, he suggested he would find someone new as Fed Chair.

Now that has been thrown into question. Following his recent interviews with the candidates, Trump told Fox Business, “Most people are saying it’s down to two: Mr. (John) Taylor, Mr. (Jerome) Powell. I also met with Janet Yellen, who I like a lot. I really like her a lot. So, I have three people that I’m looking at, and there are a couple of others.”

Trump now favors Yellen’s low interest rate policy. He said in July of Yellen, “I’d like to see rates stay low. She’s historically been a low-interest-rate person."

Continue to the full article (source

October 23 2017

moneymetals

Greg Weldon: Debt-Driven Consumer Economy Breaking Down


Greg weldon

Mike Gleason: It is my privilege now to welcome in Greg Weldon, CEO and President of Weldon Financial. Greg has over three decades of market research and trading experience, specializing in metals and commodity markets and even authored a book in 2006 titled Gold Trading Bootcamp, where he accurately predicted the implosion of the U.S. credit market and urged people to buy gold when it was only $550 an ounce.

He is a highly sought-aftera presenter at financial conferences throughout the country, and is a regular guest on financial shows throughout the world, and it's good to have him back here on the Money Metals Podcast.

Greg, thanks for joining us today. And it's nice to talk to you again. How are you?

Greg Weldon: I'm great, thanks. My pleasure, Micheal.

Mike Gleason: Well, when we had you on back in mid-August you were optimistic about gold at the time. We had a pretty good move higher, shortly thereafter that ended up with gold hitting a one year high. But it stalled out around $1,350 in early September and we're currently back below $1,300 as we're talking here on Wednesday afternoon. Gold hit resistance at about the same level in the summer of last year, so give us your update as to your current outlook. What drivers, if any, do you see that can push gold through that $1,350 resistance level in the months ahead, Greg?

Greg Weldon: Yeah, well, exactly as you said. You had the move that we were anticipating when we last spoke and it kind of had already started from the 1205-ish level. All of this fitting into the kind of bigger picture, technical structure that still leads to a bullish resolution. But as you accurately mentioned, you got up to what have been close to, not quite even towards last summer's highs around $1,375, $1,377. In this case, around $1,360 and ran out of steam.

The dollar kind of changed some of the picture and the thought process linked to the Fed changed some of the picture. So, you embarked on a downside correction. $1,260 was the low, you have a nice little correction from that level. That was the level that equated to 200-day exponential moving average. It's a level that was just below the 38% Fibonnaci retracement of the move up from $1,205. Actually, the move up from $1,123 back at the end of 2016. So you had real, critical support there. So, to me, everything's kind of mapped out the way you might expect it to, structurally, in this market.

From here, one of two things happens, I think. Well, one of three things, anyway. You could be cut if you have a bit of low rally backed up to $1,300. You back below it a little bit to dollars; still looks kind of strong. It's an interest rate differential dynamic as a more hawkish view for the Fed is priced into the Fed funds; that gets transferred into the two-year and five-year treasury notes. The two-year treasury notes at a record high-yield relative to the German two-year schatzi. So, that lifting the dollar ... it's kind of gravitational pull to the upside. And that is some of the downside risk here; that the rally we just saw is kind of you b-wave and maybe you have a c-wave down towards $1,240. That's kind of an ultimate low. Whether or not it plays out that way, longer term we still like it.

Mike Gleason: Precious metals have had a pretty respectable year all in all. Gold is up about 11% year to date. Silver is up about half as much. There isn't exactly a lot of excitement. It seems like it's always two steps forward, one step back. Sentiment in the physical bullion markets, where we operate, is muted. There are multiple factors to consider as to why metals markets are stuck in a bit of a rut. It seems to us that one of the big ones is the equities market stock prices just keep marching relentlessly higher. Either investors have become totally desensitized to risk or maybe there just isn't as much risk as well think there is. In any event, barring some sort of spike in inflation expectations, which pushes metals and stocks both higher, we don't see gold and silver breaking out unless investors start getting nervous about stock market valuations and thinking about safe havens. So what are your thoughts about equity markets and how they relate to precious metals, Greg? And where do you see stock prices headed in the near term?

Read/Listen to the full podcast here: (source

moneymetals

October 20 2017

moneymetals

Gold/Silver vs. Bitcoin Comparisons: A No-Brainer... or Brainless?

For most of the year, as Bitcoin soared, crashed, and soared again, cryptocurrency vs. physical gold-silver talking heads engaged each other in heated rhetoric about which of these venues is here to stay.

Some of the biggest names in finance, government, and the newsletter analyst space have made comments that – to be charitable – appear less-than-fully informed. Comments like "Even though bitcoin could rise to $100,000, it's still going to zero!" don't offer much insight. Some other questionable assumptions:

2017 percent price change comparisons: Relating this year's gold and silver's price range to that of bitcoin misses an important point. Yes, bitcoin (BTC) has risen by a much greater percent, but it's also fallen more. I don't recall gold dropping 40% this year, which bitcoin has... on a couple of occasions.

Bitcoins

Please note: Bitcoin has no tangible, physical form.

Trash-talking gold and silver as "antiquated": Bitcoin is now considered legal tender in Japan, but at this time, its primary function is for use in the purchase and sale of the 900+ "alt coins" currently available.

Most of these exchange entries in the crypto-space are not really "currencies" at all and will never trade as such.

Rather they are "coins" or "tokens" digitally created and circulated to raise seed money, via initial coin offerings (ICOs) in order to solve some business application in a blockchain-connected manner. Many have no trading volume – possibly because the market is skeptical of their business plan – and have become more or less "dead" coins.

At present, a relative few have an actively trading market. Investors have dropped literally millions of dollars into scores, if not hundreds of entrants which have appeared on the scene like dragon's teeth, in many cases only to see volume dry up soon thereafter.

At present, digital apparitions can be created and marketed by just about anyone. The following example demonstrates how easy it is (for now), and how gullible some people really are...

Article Source


October 19 2017

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Palladium and Rhodium on Fire, Is Platinum Next?

Platinum was once the most precious of metals. For decades, it traded at a premium to gold. The other platinum group metals – palladium and rhodium – barely registered on investors’ radar screens.

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