Declining Population Could Reduce Global Economic Growth By 40%

14-Jan (Wall Street Journal) — Declining population growth that shrinks the pool of available labor over the next 50 years will reduce by 40% the rate of growth in global economic output for the world’s 20 largest economies compared to the past 50 years, according to a new study.

The report from the McKinsey Global Institute says that to compensate for the drop in the growth of the labor force, productivity needs to accelerate 80% from its historical rate to keep global growth in gross domestic product from slowing.

Over the past 50 years, global growth increased six-fold, and average per capita income nearly tripled. McKinsey researchers estimate that around half the increase stemmed from gains in productivity and half from the growing labor force.

Now, the workforce isn’t going to grow nearly as fast, and it could peak in most of the 20 countries analyzed in the report over the coming 50 years.

[source]

PG View: If this is even a somewhat accurate forecast, global central banks are pushing on a string. But push they will, with ever-easier policy…

Posted in Economy |

The Daily Market Report: Gold Corrects Amid Fed Optimism on U.S. Economy


29-Jan (USAGOLD) — Gold has come under additional pressure on the heels of the Fed’s optimistic outlook on the U.S. economy. The yellow metal has fallen to a two-week low of 1251.10.

The Fed declared on Wednesday that “economic activity has been expanding at a solid pace. Labor market conditions have improved further, with strong job gains and a lower unemployment rate.” That heartened investors that are expecting that first Fed rate hike in H1. Yet, despite the optimism, the FOMC is still prepared to be “patient”.

“Capitalism depends on hope –- rational hope that an investor gets his or her money back with an attractive return,” he wrote. “Without it, capitalism morphs and breaks down at the margin. The global economy in January of 2015 is at just that point with its zero percent interest rates.” — Janus’ Bill Gross

Seven-years of near-zero rates and I’m not entirely sure the optimism expressed is heartfelt. Certainly the rest of the world — as evidenced by ever-easier monetary policy — remains quite pessimistic.

In fact, the Danish central bank cut rates even deeper into negative territory today. It was the third cut in 10-days, as the Danske Bank continues to defend their currency’s ceiling against the euro.

The appearance of the phrase “currency war” has seen a marked increase in the financial press of late. If I’m posting something on this page having to do with central banks, naturally choose the ‘Central Banks’ tag, but as a matter of course these days I also choose the ‘Currency Wars’ tag. The goal of easier policy is to weaken one’s currency.

While the more hawkish Fed watchers got some fresh wind in their sails yesterday, the fundamentals are likely to make it very difficult for them to actually pull the trigger. Morgan Stanley’s chief U.S. economist, Ellen Zentner, doesn’t think the Fed will hike until March of 2016.

On BloombergTV this morning, Zentner said, “Core goods prices in the U.S. have collapsed in the last two-months. Absolutely collapsed.” She sees core PCE falling further through much of 2015, and not bottoming until October. How could they possibly hike rates in an environment where inflation moving further away from their own target?

The pullback in the price of gold may prove to be an opportunity for those investors that were surprised by the strong rise in the yellow metal seen earlier in the month. Sure some traders may be taking profits, but with the currency war clearly escalating, now may be the time for long-term, wealth preservation minded, physical buyers to be boosting their positions.

Posted in Daily Market Report, Gold News, Gold Views |

Gold falls 1% as Fed’s upbeat outlook boosts dollar

29-Jan (Reuters, via CNBC) — Gold prices dropped for the fourth session in five on Thursday, losing as much as 1 percent as the dollar firmed after the Federal Reserve signalled it was on track to lift interest rates this year.

In Wednesday’s policy statement, the Fed said the U.S. economy was expanding “at a solid pace”. It reiterated, however, that it would be “patient” in deciding when to increase benchmark borrowing costs from zero.

Gold had been boosted by increased central bank liquidity and low interest rates in the years after the 2008 credit crisis. The prospect of higher U.S. rates could encourage investors to withdraw money from the metal, a non-interest-bearing asset.

[source]

PG View: Gold continues to slip intraday, but read some of my earlier posts; there’s a pretty compelling argument building that the Fed is not going to hike this year.

Posted in Gold News, Gold Views |

The next shot in the currency war will be fired by…

29-Jan (CNBC) — The currency war is getting out of control.

A snapshot of the week so far in central banking:

The Monetary Authorty of Singapore surprised markets Tuesday night with a policy switch to pursue a slower pace of currency appreciation, its main policy tool.

Wednesday afternoon, New Zealand’s Reserve Bank kept policy unchanged, but significantly altered its language, saying it expects to see a “further significant depreciation” for the kiwi and that “the exchange rate remains unjustified in terms of current economic conditions.”

Hungary’s central bank struck a decidedly dovish note, hinting at easier policy ahead.

The moves follow surprise policy changes from Denmark, India Canada and Switzerland earlier this month. That includes the European Central Bank. Despite a great deal of anticipation, Mario Draghi managed to surprise and impress financial markets with the ECB’s trillion-euro bond purchase program.

[source]

PG View: And we’re to believe the Fed is hiking rates this year?

Posted in Central Banks, Currency Wars, Monetary Policy |

The end of Currency ‘Safe-havens’

by Julian D.W. Phillips

29-Jan (GoldSeek) — In the past [even the recent past] investors have often ‘parked’ their funds in a ‘safe-haven’ currency, when fears about the dollar or other currencies rose. The leading candidates have always been the Swiss Franc and the Yen, with gold, in the last three years usually being excluded, because of its declining trend against the dollar and the limited amount of stock relative to the availability of these currencies. While gold’s trend seems to have changed to the upside now, the developed world is still ‘out of gold’.

But gold has never forfeited its role as a ‘safe-haven’ for long. It is distinguished by the fact that there is no lasting link between gold and national governments and their national currencies. What gold has always had is the respect and the belief that it is money ‘in extremis’. For governments, through institutions to individuals, gold is always money, even between enemies.

In the last 40 years and more, the world led by the U.S., has sought to sideline gold as money, but inevitably it has proved its worth, most notably when currency crises appear.

[source]

Posted in Currency Wars, Gold News, Gold Views |

Denmark cuts deposit rate for third time in two weeks

29-Jan (MarketWatch) — The Danish National Bank on Thursday cut its deposit rate by 15 basis points to negative 0.5% in an effort to prevent the krone from strengthening too much against the euro. It’s the third time in less than two weeks the central bank has slashed its deposit rate, following persistent upward pressure on the krone’s peg to the euro. The krone has been strengthening after the European Central Bank launched a quantitative-easing program and the Swiss National Bank ditched its euro cap. The Danish central bank said Thursday’s rate cut came after making purchases in the foreign-exchange market. “By lowering the interest rate again, the central bank hopes investors will find it less attractive to hold Danish kroner,” Steen Bocian, chief economist at Danske Bank, said in a note. “The rate cut emphasizes once again that the fixed-exchange rate policy will be defended. This defense will go on as long as necessary,” he said.

[source]

PG View: Rhetoric about defending the peg for “as long as necessary” sounds exactly like what the SNB was saying before they stopped defending the Swiss franc peg.

Posted in Central Banks, Currency Wars, Monetary Policy |

Greece’s New Leaders Act Swiftly to Reverse Austerity

28-Jan (Wall Street Journal) — Greece’s new leaders moved swiftly to reverse the reform course imposed on the country by its creditors, dashing hopes in Europe that the leftist government would soften its approach and triggering a steep selloff in Greek stock and debt markets.

Within hours of taking office, government officials said they would stop the planned sale of the state’s majority stake in Greece’s largest port and dominant utility. They also pledged to rehire thousands of public-sector workers and reopen the country’s state broadcaster, which had been shut down by the previous government.

The moves scuttled the expectations of some European officials that Greece’s new leadership would retreat from its radical campaign platform after attaining power. Greek stocks plummeted more than 9%, with the country’s four main banks falling more than 25%. The yield on two-year debt rose by 2.63 percentage points—an enormous move by bond-market standards—to 16.5% as Greek bond prices tumbled.

…Investors worry that the country’s leadership under Prime Minister Alexis Tsipras is steering Athens toward a dangerous confrontation with Germany and other European powers that could end with the country stumbling out of the euro.

[source]

Posted in European Debt Crisis |

Fed Must Change Rate Hike Rhetoric Soon: Ellen Zentner

29-Jan (Bloomberg) — Ellen Zentner, senior U.S. economist at Morgan Stanley, talks about why the Federal Reserve must delay hiking interest rates until early 2016 and looks at the impact of a strong U.S. dollar and the lack of wage growth in the United States.

“Core goods prices in the U.S. have collapsed in the last two-months. Absolutely collapsed.” — Ellen Zentner

[video]

Posted in Central Banks, Currency Wars, Monetary Policy |

Gold falls as Fed’s upbeat outlook boosts dollar

29-Jan (Reuters) – Gold prices dropped for a fourth session in five on Thursday, losing more than 1 percent as the dollar firmed after the Federal Reserve signalled it was still on track to lift U.S. interest rates this year.

In Wednesday’s policy statement, the Fed said the U.S. economy was expanding “at a solid pace”, but it reiterated it would be patient in deciding when to increase benchmark borrowing costs.

Gold had been boosted by increased central bank liquidity and low interest rates since the 2008 credit crisis. The prospect of higher U.S. rates could encourage investors to pull back from the metal, a non-interest-bearing asset.

[source]

Posted in Gold News, Gold Views |

The reason a strong dollar is hurting stocks right now

28-Jan (MarketWatch) — The U.S. dollar’s strong rise is getting a lot of the blame for the stock market’s recent weakness, but there’s more to it than a simple inverse relationship between the U.S. currency and equities.

…Lena Komileva, chief economist at G-plus Economics in London, argued in a note back on Jan. 16 that the dollar’s recent performance reflects growing global anxiety.

…“In this context, U.S. dollar strength reflects rising international systemic risk rather than cyclical normalization in global economic conditions,” Komileva said. “The dollar’s rise has become a symbol of the de-globalization of capital and rising credit market distress and financial volatility, rather than a sign of U.S.-led normalization in global yields.”

A stronger dollar is reinforcing “the market’s intense focus on global disinflation, demand shortages and financial default risk,” she said.

[source]

PG View: This goes a long way toward explaining the recent correlation between gold and the greenback.

Posted in Markets, U.S. Dollar |

US initial jobless claims -43k to 265k in the week ended 24-Jan, well below expectations of 300k, vs upward revised 308k in previous week.

Posted in Economic Data |

Gold lower at 1268.70 (-16.10). Silver 17.41 (-0.55). Dollar higher. Euro higher. Stocks called higher. US 10yr 1.73% (+2 bps).

Posted in Markets |

Silver Stackers 2015

stackers2015LG

Month after month and year after year, the world’s mints continue to report record off-take of modern silver bullion coins. Whenever the economy or financial system receives a jolt, that demand multiplies to the point that the mints simply cannot keep up and are forced to ration production. The public has taken a shine to silver ownership and in the process elevated the metal’s status to that of a highly sought-after safe haven asset. All in all, we believe the silver market at current prices offers an outstanding opportunity for long-term accumulators — or stackers as they are called in the popular parlance.

When we first introduced our Silver Stacker’s Special in September, 2014, it became an immediate success. By the end of the year, the firm had placed over 30,000 of the one ounce modern silver coins with investors asking for more after we had run out.

The World’s Top Five Silver Bullion Coins
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Details here • Please call the Order Desk to reserve your lots.

 

Posted in all posts |

Black swan causes and effects

blackswanGreek bank stocks, deposits taking a pounding

CNBC/Katy Barnato/1-28-2015

“Following the victory of anti-austerity Syriza in the polls at the weekend, traders are seriously considering the possibility of a default on Greece’s sovereign debt. It’s not the first time Greece has defaulted—the first one was around 450 BC and, more recently, private bond-holders were forced to take a haircut on their debt back in 2012. But Greece’s banks are ill-prepared for another one.”

MK comment:  Do you get the feeling that Draghi’s QE program might have been in anticipation of things to come? This article sets Greece’s sovereign debt total at 320 billion euros. To give you a sense of the sovereign debt problem in Europe, consider that Greece – a very small country on the international stage – carries a national debt that would consume fully one-third of the ECB’s quantitative easing program.  Then there’s Spain, Portugal, Italy and France – all with similar problems should a Greek default give others ideas.  Though all eyes are focused on the Fed today, the situation in Greece lurks ominously in the shadows – not simply for what it means to Greece’s financial system but for all of Europe.  CNBC reports Greek banks “hemorrhaging deposits” since December.  Long after the Fed’s soothsaying has blended into the background, Greece’s problems will occupy center stage. Here is an interesting study titled Black Swans - A chronology of panics, mania, crashes and collapses from 400 BC to present.  

“You say: ‘I did not think it would happen.’ Do you think there is anything that will not happen, when you know that it is possible to happen, when you see that it has already happened?” – Seneca, 62 AD at the time of Emperor Nero’s debasement of Roman coinage

 

Posted in all posts |

Draghi’s Dangerous Bet: The Perils of a Weak Euro

28-Jan (Der Spiegel) — The recent decision by the European Central Bank to open the monetary floodgates has weakened the euro and is boosting the German economy. But the move increases the threat of turbulence on the financial markets and could trigger a currency war.

The concern could be felt everywhere at this year’s World Economic Forum in Davis, the annual meeting of the rich and powerful. Would the major central banks in the United States, Europe and Asia succeed in stabilizing the wobbling global economy? Or have the central bankers long since become risk factors themselves? The question was everywhere at the forum, being addressed by experts at the lecturns and by participants in the hallways.

Central banks, said Harvard University economics professor Kenneth Rogoff, are surely the greatest source of uncertainty in the eyes of the financial markets, a statement that was not disputed by others on the panel. The fact that monetary policies at central banks in the US, Europe, Japan and elsewhere are drifting apart poses a major risk for the stability of financial markets, he said.

It’s important for the international community to work together to avoid currency wars which no one can win,” Min Zhu, deputy managing director of the IMF, told the conference.

[source]

Posted in Central Banks, Currency Wars, Monetary Policy, QE |

Fed remains patient in January, no rate hike

28-Jan (Financial Times) — Steady as it goes.

The Federal Reserve reiterated it was in no rush to lift interest rates as inflation pressures cool, despite economic data that is expected to show a brisk pace of activity alongside sustained jobs growth, according to a statement from the US central bank on Wednesday.

The statement follows the Federal Open Market Committee’s change in language in December, when it said it would be “patient” as it readied to lift its benchmark interest rate later this year. The Fed will continue to evaluate incoming data before making the move, it said.

[source]

Posted in Central Banks, Monetary Policy |

The Daily Market Report: Gold Slips Ahead of Fed Policy Statement


28-Jan (USAGOLD) — Gold has edged lower in relatively quiet trading ahead of the Fed policy statement at 2:00ET. The yellow metal remains in close proximity to the 5-month high established last week at 1307.59.

Pervasive growth risks and deflationary pressures have resulted in further policy easings from a number of central banks in recent weeks. The Fed is widely expected to indicate that they will remain “patient” with respect to their first rate hike, but if the aforementioned risks persist, a rate hike this year may well be off the table already.

While the FOMC is unlikely to admit to this, investors will be eying the language very closely for clues to that effect. American business, and therefore the Fed, are assuredly becoming increasingly troubled by the recent dollar strength. At some point, the Fed is likely to say something to temper the greenback’s rally.

On the other hand, the Fed may realize the the greatest economic threat right now is Europe. The EU may need a weak euro more than the Fed needs a weaker dollar, so they may have made a calculated decision to bide their time until the European situation stabilizes.

However, I have maintained that a rate hike this year would result in monetary policy that is too divergent. Doubleline’s Jeffrey Gundlach said yesterday that a rate hike in June would be “disastrous”. I think as hawkish as the Fed gets in 2015 is to hold steady on policy.

Posted in Daily Market Report, Gold News, Gold Views |

Gold eases on steadier dollar; focus on timing of Fed rate move


28-Jan (Reuters) – Gold eased on Wednesday as the dollar steadied on expectations the Federal Reserve is unlikely to deliver significant changes to its policy outlook, though concerns about the global economy might push back the timing of a rate rise.

The Federal Open Market Committee (FOMC) is scheduled to release a statement at the end of a two-day meeting later on Wednesday, and policymakers are likely to restate their “patient” approach to raising rates. A dovish bias could support gold, a non-interest-bearing asset.

The central bank is however also expected to voice faith that the economy will continue to pick up.

“I don’t think we can expect a big change in the Fed’s policy stance,” Citi analyst David Wilson said.

[source]

Posted in Gold News, Gold Views |

Central bank gold buying expected to continue in 2015: Macquarie

28-Jan (Platts) — Global central banks are forecast to continue to be net buyers of gold in 2015, following the pattern seen over the past few years, investment bank Macquarie said Wednesday.

Analyst at the Australian bank Matthew Turner said in a research note that, according to latest International Monetary Fund data, Russia dominated the list of buyers, “though we believe its pace of purchases might slow in 2015.”

Turner added that, as a slight concern, no mainstream central banks added to their reserves in 2014.

“On the plus side, no one seems to want to sell, however, and 2015 is likely to see another year of net central bank gold purchases,” he said.

According to Macquarie’s data, central banks added a (net) 267 mt of gold to total reserves in 2014.

“This is substantially higher than seen in 2013, almost as high as seen in 2012, and not far off the record year of 2011,” said Turner.

Macquarie said that, from looking at IMF data, 2011 purchases amounted to 303 mt with 185 mt bought in in 2013 and 276 mt in 2012.

[source]

Posted in Gold News, Gold Views |

Russia, Kazakhstan Acquire More Gold; Netherlands Also a Buyer, Says IMF

26-Jan (Wall Street Journal) — The central banks of Russia, Kazakhstan and Belarus topped up their official gold reserves last month, while countries including Tajikistan and Mozambique cashed in some of their holdings as gold prices rose, data from the International Monetary Fund show.

Emerging markets again dominated gold-market activity among central banks in December, continuing a trend that emerged in recent years as expanding economies sought to diversify their assets amid turbulence in global markets.

Russia, which has one of the world’s largest holdings of the metal, added around 666,500 troy ounces to its 38.8-million ounce stockpile last month, according to the IMF data Tuesday. Kazakhstan meanwhile lifted its reserves 2.2% to 6.2 million ounces, and Belarus 3.3% to 1.4 million.

The Netherlands also increased its official reserves by 309,000 ounces, or 1.6%, to 20 million ounces—the first change to its holdings since 2008, according to the IMF data. The Dutch central bank, which in November announced it would repatriate some of its gold reserves from the U.S. in an effort to spread its gold stock in “a more balanced way,” wasn’t immediately available for comment.

[source]

Posted in all posts, Gold News, Gold Views |

KOF slashes Swiss growth forecasts, sees 2015 recession

28-Jan (Reuters) – Switzerland’s economy will contract this year as the uncapped Swiss franc’s surge makes the country’s exports more expensive and lower crude prices hit oil trading activity, the KOF Swiss Economic Institute said on Wednesday.

It slashed its growth forecast for 2015 to -0.5 percent from the 1.9 percent it had predicted in December and said it expects no growth next year, having previously forecast a 2.1 percent expansion.

The Swiss National Bank upended financial markets by scrapping the franc’s three-year-old cap against the euro earlier this month, sending the currency soaring and stoking fears for Switzerland’s export-driven economy.

[source]

Posted in all posts, Economy |

Greeks rebuff EU call for more Russia sanctions

28-Jan (Financial Times) — Greece’s new radical leftwing-dominated government signalled on Tuesday that friction with its European partners might extend from economic to foreign policy when it distanced itself from an EU call to consider broader sanctions against Russia.

A spokesman for the ruling coalition of Alexis Tsipras, prime minister, said Greece had not approved a statement from EU heads of government that asked their foreign ministers to review further sanctions in response to the latest flare-up of violence in eastern Ukraine, blamed by the US and most European nations on Russian-backed separatists.

[source]

Posted in Politics |

Tsipras talks tough over bailout terms

28-Jan (Financial Times) — Greece’s new prime minister, Alexis Tsipras, said his government would refuse to give in to international pressure over its €240bn bailout but sought to reassure markets by telling his first cabinet meeting that the country would not seek a “mutually destructive clash” with creditors.

In a message to supporters who backed his Syriza party’s anti-austerity platform, Mr Tsipras told ministers that they “must not disappoint the voters who gave us a mandate”.

“We are coming in to radically change the way that policies and administration are conducted in this country,” he said.

[source]

Posted in European Debt Crisis, Politics |

Gold easier at 1290.21 (-3.22). Silver 18.03 (-0.022). Dollar consolidates. Euro lower. Stocks called higher. US 10yr 1.82% (unch).

Posted in Markets |

Tokyo Eases Inflation Pressure on BOJ

27-Jan (Wall Street Journal) — Prime Minister Shinzo Abe ’s administration is dialing down its pressure on the Bank of Japan to do whatever it takes to generate stable inflation quickly.

The shift in the government’s position reflects the growing realization that more time will be needed to overcome deflation when plunging oil prices are putting downward pressure on inflation around the world.

The more tempered view also indicates growing concern within the government that another round of easing could further weaken the yen ahead of local elections. Voter resentment over the adverse effects of the softer currency on smaller regional businesses and economies could be a factor that spoils Mr. Abe’s successful run of election landslides.

[source]

Posted in Central Banks, Currency Wars, Monetary Policy, QE |

A Midsummer Disinflation Nightmare for the Fed?

27-Jan (Wall Street Journal) — How transitory is the inflation impact of plunging oil prices?

The answer to that question could hold the key to whether the Federal Reserve raises interest rates in midyear, as many economists still expect, or waits until September or later, just to make sure inflation is rising toward the central bank’s 2% goal.

Persistently low inflation is seen as a sign of weak economic demand, and U.S. consumer price growth has been undershooting the Fed’s target for over 2 1/2 years.

[source]

Posted in Central Banks, Deflation, Monetary Policy |

Meet The New Bubble: The U.S. Dollar

Forbes Magazine (January 27) — The U.S. dollar is the single most powerful herd dynamic in global financial markets today. And financial markets are unlikely to let a good bubble go to waste, emerging market asset manager the Ashmore Group said in a report on Monday.
Between now and the return of inflation in 2016, investors are likely to continue to pour into dollar assets — from securities to real estate. Meet the new bubble: the American greenback.

“The current strength of the dollar is evidently a bubble,” says Jan Dehn, an economist with the Ashmore Group, a fixed income manager with around $70 billion under management. The dollar obeys short-term flow dynamics, while ignoring fundamental arguments. ”If you doubt that the dollar is a bubble, ask yourself this question: when was the last time you met someone who was not bullish the dollar?”

[Source]

JK Comment: The one constant between all bubbles is that they eventually pop. Will the US Dollar buck the trend? Doubt it. And where do you want your assets to be when it happens? Euros? Yen? HA! I for one would choose the only currency that can’t be printed or debased by a central bank: GOLD

I think it is also worth noting that even as this bubble has been forming in the dollar, gold has been rising right along with it – a concept apparently still lost on main stream financial analysts. Look no further than last week’s explanation on gold’s pull back from just over $1300 via reuters, “Gold slips from 5-month high as dollar climbs on ECB move.” Hmmmmmm. Hate to break it to ya, but it appears that in the current context, gold is shrugging off its traditional inverse correlation with the dollar, responding instead, it would seem, to the competitive devaluation and associated loss of confidence in fiat money in general. Maybe that’s why gold is on the doorstep of an all time high in Yen, and up over 200 Euros in under 2 months. Wait… gold trades in other currencies? Yes, dollar gold does not occur in a vacuum Reuters, but thank you for that stellar coverage.

So if gold is holding up this well in the midst of a bubble in the dollar, what happens when that bubble pops?

That’s a rhetorical question…anyone reading this post already knows the answer to that one.

Posted in all posts |

The Daily Market Report: Gold Rebounds as Stocks Tank on Greece, Weak U.S. Durable Goods Orders


27-Jan (USAGOLD) — Gold rebounded amid safe-haven demand as global shares tumbled on concerns about Greece and weak U.S. durable goods data. The yellow metal is presently attempting to regain the $1300 level.

Greek yields surged again today, as the first meeting between the Eurogroup and the new Greek PM and finance minister is slated for Friday. Good news that they’re going to talk, but troika members seem to be taking a hardline on debt write-downs.

While U.S. data were mixed this morning, the huge durable goods miss overshadowed the beats. Durable goods orders plunged 3.4% in December, well below expectations of +0.4%. November saw a huge negative revision in November from -0.7% to -2.1%.

The durable goods disaster may have a significant negative influence on Q1 GDP. There are some who probably hoped they’d have the latest “storm of the century” to blame, but that seems to have fizzled. By shutting everything down on the East Coast, they may have done more harm than good.

If nothing else, this all pushes Fed rate hike expectations further into the future. Doubleline’s Jeffrey Gundlach said that in the current environment, a June rate hike would be “disastrous”. I think the Fed knows that, and with monetary policy already diverging with the Fed holding steady, I just don’t see why they would seek to accelerate the divergence and the rally in the dollar.

The U.S. 10-year yield has tumbled back below 1.80%, and the 30-year yield appears poised for another record low close. Again, this is not a bond market that appears to be anticipating rate hikes this year.

Of course the U.S. is not the only country with ridiculously low rates, un-reflective of the market realities of risk. Citing the Swiss yield of -0.30%, Gundlach notes that gold is actually a relatively “high yielding” safe haven at zero percent. “Gold does act as a safe haven, and it seems like gold is predicting trouble correctly,” he said on CNBC this morning. “I’m bullish on gold,” he added.

Posted in Daily Market Report, Gold News, Gold Views |

Greek market spirals as clash with creditors looms

27-Jan (Reuters) – Greek markets endured a second day of turmoil on Tuesday, after weekend elections resulted in an anti-bailout government that looks set on a collision course with the country’s creditors.

Three-year borrowing costs spiked above 14 percent, giving up over 4 percentage points since Sunday’s vote, while a collapse in bank stocks hauled down Athens’ main bourse. .ATG

Greece’s malaise also weighed on other low-rated bonds, although the blow was cushioned by the prospect of the European Central Bank’s new bond-buying scheme due to begin in March.

“There is a general anxiety about the situation in Greece and how it is all going to play out,” said Jakob Christensen, senior economist at distressed debt brokerage Exotix.

[source]

Posted in Markets, Politics |

Gold Futures Climb After U.S. Durable-Goods Orders Decline

27-Jan (Bloomberg) — Gold futures climbed as a slump in orders for U.S. durable goods signaled that weaker foreign economies are weighing on American expansion, boosting demand for haven assets.

Demand for all durable goods — items meant to last at least three years — declined 3.4 percent, the worst performance since August, the Commerce Department said Tuesday. Slowing expansion may prompt the Federal Reserve to hold off on raising interest rates. Policy makers will meet this week.

“That durable goods number was notably weak with lower revisions, so at the margin it pushes the first Fed rate hike further out in time,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp., said in a telephone interview. “Pushing the rate hike back tends to be bullish for other assets including gold, which is dollar denominated.”

The metal is up more than 8 percent this year as stagnating economies challenge policy makers to generate new ways to buoy growth.

[source]

Posted in Gold News, Gold Views |