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Tao Jaxx  

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  • Gold Rally Underway, But First Test Dead Ahead [View article]
    Added here, really?
    Mar 10, 2015. 08:39 AM | Likes Like |Link to Comment
  • Gold Rally Underway, But First Test Dead Ahead [View article]
    "Happy to stick with my call"
    Mar 6, 2015. 01:14 PM | Likes Like |Link to Comment
  • Gold Rally Underway, But First Test Dead Ahead [View article]
    "Gold Rally Underway"?
    Mar 6, 2015. 01:50 AM | Likes Like |Link to Comment
  • Annaly Capital And Chimera Investment Corp.: The Problem Facing Mortgage REITs [View article]
    So your strategy on mREITs is to have the price risk and no dividend? Plus the tax consequences (wash sales galore on Schedule D...)
    Feb 22, 2015. 07:56 AM | Likes Like |Link to Comment
  • The FOMC And Liftoff Levers [View article]
    Dear author
    You seem to focus exclusively on banks deposit rates (liability side). But interest paid by the Fed on reserves is the ultimate risk free rate (ASSET side for the commercial banks). As such, its rise will be transmitted to all bank LENDING rates, which will be the transmission channel for the Fed hike: if a bank gets 50bp from a zero risk asset (its reserve account at the Fed) rather than 25bp, it has no reason to keep its risky lending rates to borrowers unchanged. That's the main tool and it does not rely on any "goodwill" or "cooperative spirit" from the banks, just their profit maximizing goal.
    The ON RPP is a technical tool allowing non-banks to reap the "benefit" of higher rates, but certainly not the main transmission mechanism, just a complementary one.
    Feb 21, 2015. 11:25 PM | Likes Like |Link to Comment
  • GLD - Getting On The Record With The Gold ETF [View article]
    Thank you all for responding.
    Last year 10y yields went pretty smoothly from 3% Jan 1st to 2.17 Dec 31. So pretty favorable to gold except twice in the year yields backed up and that had gold tank:
    Aug 28th 10Y 2.39 Gold $1286, Sep 12th 10Y 2.62, gold $1231.
    Then Oct 15th 10Y 2.15 gold $1237, Nov 6th 10Y 2.39 Gold $1145.


    No I don't believe strongly in my thesis, that's why I'm here to learn from others. Sure, dollar correlation is far from 100%, but it's "reasonably reliable" as I said. It sure works...until it doesn't. Thats why I ask. I focus on US 10Y Yields by the way, not on spot dollar.
    You rightly mention that "gold has been in an uptrend since Nov", Yup, 10y yields went from 2.36 Nov 1st to 1.68 Feb 2nd.
    Then you say "gold has slid in Feb". Fully agree, 10Y yield went from 1.68 to 2.13 yesterday.
    -China sells Treasuries because they have capital outflows. So they sell dollars to stem currency depreciation (who would've thunk they'd get to this some day lol?). Somebody else buys the Treasuries with the dollars PBOC sells.
    -There's some but not much money flowing from US to euro stocks; most of it is going to come from the ECB trillion euro printing, they don't need anybody's help to inflate the bubble…
    So I don't know if I'm right either. Just my $.02. Trying to spot where I may be wrong. I'll change my mind on a dime if need be. As I did early February when I was all gung ho on gold.
    Feb 21, 2015. 10:39 PM | 1 Like Like |Link to Comment
  • GLD - Getting On The Record With The Gold ETF [View article]
    Fair enough as an investment thesis. That was mine until early February.
    Since then, things have changed markedly due to rising $ interest rates. So two questions for the author (and anybody who cares to listen):

    Why would the dollar weaken while the interest rate differential with both euro and yen increases?

    Gold has a reasonably reliable inverse correlation with US 10Y yields. These have moved from 1.68% end January to 2.13% yesterday. What would help gold beat that headwind?
    Feb 21, 2015. 06:59 PM | 1 Like Like |Link to Comment
  • Initial Mining Earnings Essentially Confirm Peak Gold [View article]
    Gold yearly production is about 2000 tons. Gold has unique characteristics: it does not get consumed. Never. Gold above ground inventory (so accumulated production since humans roam the planet) is roughly 175,000 tons. Of which about 60 to 70% is held as investment and therefore available for sale anytime real interest rates turn positive. That's an over 110,000 tons hangover.
    Given these facts, how can a "peak gold" theory impact prices?
    (Not to even mention how credible "peak oil" turned out to be…).
    Stick to 5% of your holdings in gold and forget about it. Zero income but great diversifier.
    Feb 21, 2015. 10:27 AM | Likes Like |Link to Comment
  • FOMC Cautious, But Still Set To Hike Before The UK's MPC [View article]
    We had the doubters go first on "QE to infinity!". Then they downgraded to "The Fed will not taper". So then they came up with "there will be QE4". Then they downshifted to "The Fed will never hike". Then, "not this year". Now we have "25 bp at most".
    So yes. QE is over, job growth returned, Wall Mart hiked wages, the Fed will hike. This year. By 25 basis point. In June. Or September.
    Mr.Market finally woke up on that one. Time to fade the deflation trade. Look at the yield curve moves this month: 2y/10y from 120bp to 146bp. 2Y note from .47% to .67%
    Feb 21, 2015. 10:14 AM | Likes Like |Link to Comment
  • Talking Points On 'America's Imminent Budget Crisis': Focus [View article]
    Nicely drafted response. I am surprised though that in this debate no mention is ever made of what the debt would finance.
    The discussion revolves around the absolute level of debt, which is a short sighted "single entry accounting" view. The real issue is what is that debt used for?
    Debt is neither bad nor good in itself. It is a tool that can be used smartly, financing productive infrastructure an other high yielding assets, or that can be abused, financing useless wars and welfare benefits for unskilled illegals.
    That's the real debate we should have, not the hollow one-liner catchy soundbites.
    Feb 21, 2015. 09:59 AM | 5 Likes Like |Link to Comment
  • Annaly Capital And Chimera Investment Corp.: The Problem Facing Mortgage REITs [View article]
    Clear article. Only thing I would add is that the worse environment for REITs is flattening curve as rates increase: flattening hurts them as described by the author, and rising rates hurt their book value (value of securities they already hold).
    That's the traditional environment during Fed tightening. The REITs' management (and their SA fanboys') narrative is "short rates may go up but so do long rates so the spread will remain" and "besides, we're hedged for the existing exposure, so book value will be OK".
    That ignores two things: the flattening, so long rates rise less than short rates; and the cost of hedging, as it protects book value but erodes the spread.
    On both accounts, the invoice for the apparent free lunch enjoyed by dividend investors is in the mail. So, yup, better stay away from these. Carry trade turning red.
    Feb 20, 2015. 08:22 PM | 2 Likes Like |Link to Comment
  • Long Term Still Bullish On Gold [View article]
    Price effect.
    Large holders keep their inventory unchanged. When prices move up, the numeraire ($) value of the share of gold increases, what you're seeing is the reverse effect as prices moved down.
    Feb 20, 2015. 09:51 AM | Likes Like |Link to Comment
  • Long Term Still Bullish On Gold [View article]
    Meanwhile, back at the ranch, gold is dropping like a stone….
    Feb 17, 2015. 11:22 PM | Likes Like |Link to Comment
  • Jordan Roy-Byrne: As Yields Have Gone Negative, Gold Has Become A High Yielding Asset [View article]
    Yup, gold is a high yielding asset in a negative interest rate environment. Problem is, so far the US dollar is a higher yielding one...
    Feb 17, 2015. 09:00 PM | 1 Like Like |Link to Comment
  • FOMC voters getting itchy trigger fingers [View news story]

    Nothing wrong with correcting facts, I don't take it personally.
    Except in this case I stand by my words, that's 1931. The hike was in fact a reaction to foreign developments: to alleviate pressure on the British pound, in July 1931, the Bank of England raised its base rate by 200 basis points to a level of 4.50%. This did not stop the run on the pound. On September 21, 1931, the Bank of England abandoned the gold standard but, in an attempt to forestall further raids on the pound, raised its base rate another 150 basis points that month to a level of 6.00%. That's when that unfortunate Fed move took place: October 8th and October 16th 1931.
    The "Mistake of 1937", which indeed triggered a relapse of the recession, was in fact not linked to interest rate moves but to communication blunders (excessive focus on inflation risks), rise in reserve requirements and fiscal tightening. From late 1932 onwards the short-term interest rate remained close to zero. In the spring of 1937 it rose only slightly and then fell again.
    Should you be analytically inclined, you can find a good account of the 1937 episode here:
    Feb 15, 2015. 01:23 PM | 1 Like Like |Link to Comment