A bill recently signed into law in Texas that will set up a state gold depository represents a power shift away from the federal government to the state, and it provides a blueprint that could ultimately end the Fed. Gov. Greg Abbot signed the law creating the state gold bullion and precious metal depository last…
"Michael Milken, the creator of junk bonds, once remarked: 'Liquidity is an illusion.....It’s always there when you don’t need it, and rarely there when you do'. The problems with liquidity underscore the distorting effects of central bank intervention in financial markets. Official policies in the aftermath of the financial crisis have forced excessive risk taking in search of returns. Yet regulatory changes have contributed to a reduction in trading liquidity. Over time, investors can become increasingly exposed to ever more risky financial assets that in a crisis would be difficult to trade — triggering a major collapse in prices." Continue reading →
"Recent actions and rhetoric from Commonwealth Prime Ministers, and their respective policy makers, have put their commodity sensitive currencies under pressure. In Australasia, the kiwi ($0.6592) and Aussie dollar ($0.7370) both linger within striking distance of their six-year lows. In North America, the loonie has fared no better, straddling its own six-year low, while under attack from last week’s Bank of Canada (BoC) rate cut to +0.5%. For now, dealers and investors are willing to trade as if they do not expect any short-term market reprieve for any of these commodity and interest sensitive currencies." Continue reading →
"What made the Canadian recession easy to spot was the Canadian yield curve inverted out to three years following a surprise rate cut by the Bank of Canada on January 21. It remains to be seen if the US follows. The US contracted in the first quarter, but the second quarter rebound was a bit stronger than I expected. I awarded Canada the 'Blue Ribbon' for the first yield curve inversion of any major country following the great financial crisis. I smell an 'Operation Twist' type move by the Canadian central bank to rectify this horrific 'recession-signaling' condition. If so, the sweet spot for banks and hedge funds to front-run the trade appears to be 5Y or 7Y notes. Some banks may already be in on it." Continue reading →
"The dollar reached its highest in nearly three months against a basket of currencies on Monday on a rise in U.S. bond yields as traders built bets the Federal Reserve would raise interest rates later this year. A plummet in gold prices to five-year lows under $1,100 an ounce also increased the appeal of the greenback, the world's reserve currency. Last week, U.S. Fed Chair Janet Yellen testified before Congress, reiterating U.S. interest rates will go up later this year if the economy continues to expand. St. Louis Fed chief James Bullard told Fox Business network on Monday there was a higher than 50 percent chance the U.S. central bank will raise rates in September." Continue reading →
"The rout in commodities deepened with prices touching the lowest since 2002 as the prospect of higher U.S. interest rates sent gold tumbling. Raw materials are losing favor with investors as the dollar gains amid signals from Federal Reserve Chair Janet Yellen that the central bank may raise rates this year on the back of an improving U.S. economy. Higher borrowing costs curb the attractiveness of commodities such as gold, which doesn’t pay interest or give returns like assets including bonds and equities. Gold futures sank to the weakest in more than five years while industrial metals, grains, Brent crude and U.S. natural gas also slid as a measure of the dollar climbed to the highest since April 13." Continue reading →
"European car-sales growth accelerated to the fastest pace in 5 1/2 years in June. The jump was the biggest since a 16 percent surge in December 2009, when governments in the region offered incentives on trade-ins of older cars to help the industry recover from the global recession. The economy of the 19 countries using the euro is in its longest stretch of growth since the 2008 worldwide credit crunch, while unemployment in the U.K. is at close to a seven-year low. The European Central Bank’s monetary stimulus measures have helped economic revival in most euro-zone countries, partly offsetting the effects of the Greek sovereign-debt crisis." Continue reading →
"The cash-strapped nation got a short-term loan from European creditors to pay more than 6 billion euros ($6.5 billion) owed to the International Monetary Fund and the European Central Bank. But for most Greeks, already buffeted by six years of recession, Monday was all about rising prices as tax hikes demanded by creditors took effect. There are few parts of the Greek economy left untouched by the steep increase in the sales tax from 13 to 23 percent. strict controls on cash flows, including a ban on check-cashing and payments abroad as well as limits on cash withdrawals, remained in effect. New rules permit the withdrawal of up to 420 euros a week." Continue reading →
"In June 2014, the government seized Ken Quran's entire bank account—more than $150,000. This was money that Ken worked for years to earn, and that he was counting on for his retirement. Ken had no prior warning before the government seized the account. The government told him they were taking the money because he withdrew cash from the bank in amounts under $10,000." Continue reading →
"The gold price has fallen to its lowest level in more than five years as talk of a US interest rate rise has led investors to sell the precious metal. Gold closed 2.5% lower at $1,104.60 an ounce in London, having earlier fallen below $1,100 an ounce for the first time since March 2010. The gold price is now more than 40% below its August 2011 peak. The stronger US economy has led investors to expect the Federal Reserve to raise interest rates this year. The expectations have led investors to gradually sell gold - a perceived safe haven investment in times of crisis - to invest elsewhere. Other commodities have also fallen, with the price of platinum down 5% - its weakest level since the crisis." Continue reading →