"While the big institutions are driven by momentum into gold, they also relied on fears related to inflation and economic uncertainty. However, many have now abandoned these concerns. In reaching its bearish conclusion on gold, Goldman Sachs cited low global inflation, and surging equity markets in the U.S. and Japan as reasons to believe that the bull run in gold had come and gone. However, their conclusions are hasty." Continue reading →
"'Exit from unconventional monetary policy, when needed, may be difficult to manage and less smooth than desirable, possibly leading to sharp rises in bond yields and serious negative consequences for growth in a number of advanced and emerging economies,' Pier Carlo Padoan, OECD’s deputy secretary-general and chief economist, said in the report. 'A leap in U.S. government bond yields would result in capital losses for investors, and prices on other assets would most likely follow suit, with mortgage-backed securities and corporate bonds most strongly affected. [..] In comparison with 1994, this could be more disruptive given current higher leverage." Continue reading →
"Several companies have recently asked us for an analysis of the Federal Reserve tapering its quantitative easing programs. One factor that is not widely analyzed is the Fed’s own balance sheet, which could be a constraint on how far and how fast the Fed permits interest rates to rise in the US. We calculate that a 143bp parallel rise in the yield curve would cause a drop in the market value of the Fed’s assets that exceeds the Fed’s own equity capital (as of May 15). The Fed balance sheet’s capacity to absorb higher interest rates has deterioriated quickly, as the 143bp capacity is down from 185bp as of last October." Continue reading →
"Mt. Gox has recently been informed by OKPay, one of our longtime partners, that they are planning to stop performing wire transfers to and from all Bitcoin exchanges, including Mt. Gox[...] We will soon stop accepting deposits via OKPay. This may take up to a couple of weeks, but it will happen eventually. Withdrawals to OKPay accounts will not be cut immediately, but will only be allowed up to the amount that OKPay users have deposited into Mt. Gox via OKPay. Beyond that amount there are other methods of withdrawal available." Continue reading →
"Jim Rogers tells Lew Rockwell about his Adventures on the Road and in the Markets." Continue reading →
"In this episode, we discuss: Freedom & how to live it in an unfree world; Perpetual Travel (PT) and what that means; How to anonymize yourself with a New Mexico LLC; Bitcoin & what it can do for entrepreneurs; Staying positive in an uncertain world. 'The Perpetual Traveler' Steve Michaels joins me in an in-depth discussion on the philosophy of freedom, and how to leverage this knowledge into more financial freedom and keeping what you earn." Continue reading →
"Banks and brokers face a clampdown on using assets they hold for clients as collateral for their own trades as part of European Union moves to bolster market stability and rein in shadow banking. The handing over of collateral is an integral part of repurchase agreements, or repos -- one of the activities under review by global regulators as part of their efforts to regulate shadow banking. The reuse of clients’ assets poses a potential threat to financial stability should one of a chain of firms that handled the securities go bankrupt, according to the document prepared by commission officials and dated May 15." Continue reading →
"Last night's panic in Tokyo, where the Nikkei dropped a stomach churning 7 per cent, demonstrates just how difficult it's going to be for the world's central banks to exit their loose money policies. It's not even as if Ben Bernanke, chairman of the Fed, said he was planning to exit; in fact, initially he said the reverse in testimony to Congress. What the subsequent violent gyrations in markets indicate is that any hint of applying the brakes risks generating a fresh financial crisis, which in turn would render the economic recovery still born. Both financial markets and the real economy have become addicted to 'quantitative easing', such that they can't do without it." Continue reading →
"Kudos to Kyle Bass at Hayman Advisers for warning that the Bank of Japan would lose control of its ¥70 trillion bond buying blitz. The spike in the 10-year yield to 1pc on Thursday was certainly shocking to behold. His point is that the BoJ faces a 'rational investor paradox'. The authorities are trying to drive up the inflation to 2pc and therefore to devalue Japanese government bonds (JGBs), so why on earth would you want to own them? He says the scramble to sell has 'overwhelmed' buying by the BoJ. Governor Kuroda will now have double down with a huge increase in the scale of QE." Continue reading →
"The Texas Senate on Wednesday night passed H.B. 78, a bill that eliminates the sales tax on precious metal coins and bullion. It now goes to Governor Rick Perry’s desk for his signature into law. Existing Texas statute applies the 6.25% sales tax to purchases of gold and silver under $1,000. 'This sends a powerful message to other states that taxing gold makes no sense because gold is money,' said Rich Danker. 'What is particularly right about this bill is that it removes a tax that affected middle and lower income people who wanted to acquire gold. These are the people losing the most from the long-term erosion in the dollar’s value and need this sound money option.'" Continue reading →