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  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    Gold mining declined for the first time since 2008 one Q (Q4 2015) vs the previous Q (-3%).
    Moreover, supply of recycled gold hit an 8-year low in 2015 (-77T vs 2014).
    Moreover, 2015 mine production saw the lowest yoy growth since 2008 (1%).
    These elements indicate that a sub $1,300/oz price isn't sustainable for the average gold miner.
    As soon as mine production starts declining, which has been predicted for some time and which is the case now, prices are bound to go go up. The long awaited short squeeze stands around the corner, I refer to the latest WGC-report:
    http://bit.ly/1pIZLnC
    Feb 11, 2016. 08:04 AM | 1 Like Like |Link to Comment
  • Will The Gold Price Drop To $1,000?  [View article]
    Gold mining declined for the first time since 2008 one Q (Q4 2015) vs the previous Q (-3%).
    Moreover, supply of recycled gold hit an 8-year low in 2015 (-77T vs 2014).
    Moreover, 2015 mine production saw the lowest yoy growth since 2008 (1%).

    These elements indicate that a sub $1,300/oz price isn't sustainable for the average gold miner.

    As soon as mine production starts declining, which has been predicted for some time and which is almost the case now, prices should go up.

    Excellent article !
    Feb 11, 2016. 06:29 AM | 1 Like Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    CA,
    "It is beyond any institution's ability to prevent or control at this point."

    no, it was about:
    "I was just making the point that the the consensus building style at the Fed virtually guarantees that they will be reacting to a crisis rather than anticipating and heading it off."

    Let's call it a draw, CA, I'm getting tired of this endless conv. between us. It's been a pleasure debating and let's conclude that we agree on certain points and disagree on others.

    Fare well for now, brother in economics, I'll be off for a while. Need to go see the London based grandchildren.
    I wish you the very best trading and/or investing.
    Feb 1, 2016. 09:59 AM | 1 Like Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    CA,
    You must have misread my entry.
    One source was Stiglitz.
    The other source were released minutes of conversations between Reagan and Volcker.
    Your memory must have fainted. I vividly recall the newspapers' articles when Volcker wasn't too pleased when being fired by Reagan.
    Feb 1, 2016. 09:47 AM | Likes Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    gel,
    Indeed.. they (the Chinese) did...
    Feb 1, 2016. 09:14 AM | 2 Likes Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    CA,
    "that the the consensus building style at the Fed virtually guarantees that they will be reacting to a crisis rather than anticipating and heading it off."

    That's a very hard kind of accusation and it means that you have no faith in the skills of your own institutions whatsoever.
    Feb 1, 2016. 09:11 AM | Likes Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    CA,
    "And I don't know where you get your information,"

    From here: "Nobel laureate Joseph Stiglitz said about him in an interview:
    Paul Volcker, the previous Fed Chairman known for keeping inflation under control, was fired because the Reagan administration didn't believe he was an adequate de-regulator.[15"
    http://bit.ly/1nYOUM1

    and here:
    "Reagan and Volcker in Talks: “President Reagan and the chairman of the Federal Reserve Board, Paul A. Volcker, met Monday…. The meeting comes after recent tension between the Fed and the Administration, highlighted by the Administration’s contention that the Fed’s erratic management of the money supply was pushing up interest rates and Mr. Volcker’s response that it is the threat of large budget deficits that is affecting interest rates…. Senator Howard H. Baker Jr., the Senate majority leader, recently called for a meeting between Mr. Reagan and Mr. Volcker to coordinate economic policy…. Many economists outside the Government say that the Fed and the Administration are on a collision course on economic policy because the tight monetary policy promised by the Fed will not allow for the relatively strong economic growth the President has forecast…. Mr. Volcker in an interview Sunday said that he did not think the economy would come ‘roaring’ back, as Treasury Secretary Donald T. Regan predicted…. David R. Gergen, director of communications, even refused to confirm whether the meeting had taken place…”
    http://bit.ly/1nYOSUw

    and here:
    "“The Reagan Administration and the Federal Reserve today sought to play down the President’s apparent breach of confidence Tuesday when he said that Paul A. Volcker, chairman of the Federal Reserve Board, had told him that interest rates would drop by three to four percentage points by summer…. Reagan said the Fed chairman had made the prediction during a private talk between the two. Senators at Tuesday’s meeting repeated the forecast afterward…. One Administration official said the President wanted to make clear that he had not intended to violate the confidence of a private meeting…. The White House apparently was also concerned because the President may not have quoted Mr. Volcker accurately or fully…”

    and here:
    "“As the economy went into its nose dive Secretary of the Treasury Donald T. Regan publicly questioned the wisdom of the Federal Reserve Board’s tight-money actions; perhaps Chairman Volcker had overdone things, he said. Yet it was an awkward position to take. From the start, Mr. Volcker had the President’s blessing for his tight-money policy, and the Fed chairman had frequently made clear his conviction that the Administration should do its part in combatting inflation by curbing the deficit. This the President had failed to do. Mr. Volcker told an associate that he found Secretary Regan’s criticism ‘astounding’…”

    and here:
    "In these stories, Paul Volcker is openly and publicly opposed to Ronald Reagan’s supply-side fiscal policies as creating a risk of forcing him to either abandon his fight against inflation or accept a permanent low-investment economy with slow growth. The Reagan administration as a whole is quietly and sotto voce via leaks blaming high interest rates and consequent high unemployment on “erratic management of the money supply” by Paul Volcker. The Reagan Treasury Department under its head Don Regan and the Republican Senate majority under its head Howard Baker are openly and publicly opposed to Paul Volcker’s tight-money fight-inflation-first policy. Ronald Reagan in his private meetings with Paul Volcker appears to be pressing him to promise that interest rates will come down–and come down soon."

    So, you're still convinced that presidents don't interfere with CB policy and that Volcker was given a lot of freedom to conduct policy as he saw fit ??
    Feb 1, 2016. 09:05 AM | Likes Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    lion,
    ST I would not invest a dime in SPX as long as the USD is so high.
    US industry/manufacturing are being hurt and frankly I don't see any reason why the deflationary tendency of the Yen/Renminbi/euro should improve the situation of US corporations with exporting ambitions except when they operate in the area of i-technology and if they have price-setting capacity. As to the corporations that are solely focused on the US domestic market, they might muddle through depending on the kind of business they're involved in.
    Mind you, cheap money will still promote M&A's, but as an investor that's a lucky shot no one can predict unless one is part of the incrowd.
    Jan 31, 2016. 08:01 PM | Likes Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    CA,
    Thanks for your clarification on your view on the Fed.
    I'm glad we seem to agree on the point of the latest rate hike.

    As to
    "So more about the institution and the culture at the Fed than a criticism of any Fed official."
    I believe you mean that the way the Fed is structured may be detrimental to their adequately responding to emergency situations.
    Possible, but is the total not the sum of the parts ? In other words, when you criticize the Fed's structure, don't you also ask questions about their members' responsibility for why they don't improve the structure ? I mean, it's their task to make sure that the country fares well. If due to a number of rules they can't operate adequately to achieve that task, well, what stops them to change the rules ?

    I don't think either that Sanders makes a chance at the general elections, but he might win from Hillary and he certainly is a sign of growing political polarization, a phenomenon that we in Europe know all the well. That could be a destabilizing factor.

    Reagan supported Volcker in the beginning, but when he realized that Volcker's high rates started asphyxiating his budget and seriously limiting the current account expenditures, he put pressure on him to quit the job.

    I don't deny that there will be turmoil on the markets -as there already is- and the CB's with their unexpected decisions will drive investors like a flock of sheeple from one side of the prairie to the other back and forth -hence large volatility- but I keep my faith in human ingenuity and in the CB's and I know that they will keep the ships of state in shallow water.

    "But at least for the next few years, the focus will be on the CB's doing whatever they can to resurrect the global economy."
    Indeed, that's why I keep investing in equities (REIT's): every dip is a buying opportunity like the move up we had last Friday has proved. The more the spreads between REIT's and T-bonds grow, the less interesting it gets to invest in T-bonds.

    In a well functioning democracy a president (or government) should never interfere with the CB. But sometimes the pressure gets so high that resisting from the part of the CB becomes almost unbearable. I think that Alan Greenspan was under tremendous pressure of the Bush-administration.
    Jan 31, 2016. 07:33 PM | Likes Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    CA,
    "I think it is laughable that so many macro tourists are so critical of people like Bernanke and Yellen when they don't really understand the basics of macroeconomic theory."

    Look who's talking!
    You are the one who criticizes the Fed for still being convinced that more normalized interest rates are going to bring the solution:
    "And the Fed is still in a mindset of no more QE and a move to more normalized interest rates, meaning rate hikes."

    And that's a really fundamental, devastating kind of criticism since it goes to the core of the issue. In fact by saying so, you imply that the Fed's mindset is stubborn and not aware of the real problematic situation.

    I on the contrary was the one who wrote that CB governors nowadays have their fingers at the trigger and are ready to do whatever is needed. By saying so I explicitly indicate that I have a high esteem of CB-governors although I find the US Dec rate hike not suitable and again, I'm not the only one. The FOMC data indicate that it was a close call, so there must be FOMC-members who are of my opinion. But sure these members must lack the "economics knowledge, training and understanding" too.

    "Sanders is a real long shot. His economics would sink him in the general election."
    His "economics" seem to make him popular though. Does the general US public have a sound idea about economics ?

    "Trump would be hands off."
    Not so sure. They said that of Reagan too, until he dismissed Paul Volcker because he didn't like his way of fighting inflation. When governments (presidents) are in need of money, they do weird things...
    Jan 31, 2016. 05:44 AM | Likes Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    CA,
    "than any of the people at Davos you sighted."
    I should have added Soros.

    It is not my goal to cite (not "sight", you should mend your auto correct) a comprehensive list of all the variables and crosscurrents that Central Bankers have to take into account. At the risk of looking simplistic I only give you my general thoughts. There (not "their", again, please mend your Auto Correct robot) are of course a lot more things to mention than what a short survey at this forum enables me.

    Maybe you should attend John Mauldin's Strategic Investment Conference in Dallas to get a less gloomy view. It's titled "The Decade of Disruption".
    In his letter John writes: "My good friend David Rosenberg, Chief Economist at Gluskin Sheff, has long been one of the biggest draws at my annual Strategic Investment Conference. I had always taken him for a “permabear.” Then three years ago, Dave shocked us by announcing in no uncertain terms – in his usual fire-hose delivery of hard data and brilliant analysis – that he had turned decidedly bullish."
    http://tinyurl.com/zhd...

    "If central bankers reacted the way investors do, the economy would be far more of a disaster."
    Beware, soon you'll have a new president (Trump, Sanders) who may even not let your Central Banker decide the way he wants to.
    That could even be a bigger disaster.
    Jan 30, 2016. 03:05 PM | Likes Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    CA,
    "You clearly want to have this all happen in some easy linear fashion"
    Oh no, I'm perfectly aware that they will operate in a jerky way, like they are already doing now, but "a bit" stronger, hence the great market volatility.
    All I'm saying is that they have the tools, they have the mindset, they have the conviction that deflation is the enemy to be fought. All they need are the figures. Yellen calls them "data".
    Didn't you hear what the talks at Davos' meeting were all about ?
    1. Where is the global economy now (Lagarde was rather gloomish) ?
    2. How far are we from US deflation ? (not far according to Ray Dalio and Nouriel Roubini)
    3. Will there be a China led deflationary avalanche hitting the world (all agreed yes! with minor differences whether it'll be a soft or a hard landing)

    A 2015 US GDP growth of 2.4% is not bad but if you take a look at the details it appears a large part is the result of higher taxes:
    http://tinyurl.com/hrw...

    Moreover if you take a look at the cumulative fund flows, it appears that equities' and bonds' are shrinking while money-markets are booming (with a reason):
    http://tinyurl.com/h89...

    Together with (un)employment (or rather Labor Participation Rate), these are the kind of data that the FOMC will be faced with and they are not pretty.

    However since these kinds of decisions rely more on psychology than on hard facts, you certainly may have a point that FOMC don't really understand what is at stake until "the ship wrecks".
    We shall see...
    Jan 30, 2016. 12:28 PM | 1 Like Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    james,
    ""monetary relevance of gold in the determination of price" is now much greater than ever before in history,"
    Indeed, it is.

    "the BoJ clearly stated their intent is to thereby achieve their 2% Inflation Target sooner rather than later"
    Indeed, they did, and that means that there is going to be a lot more NIRP and/or a lot more QE to be implemented before achieving that goal. To achieve 2% inflation in Japan is an Herculean (or Samurai) task these days.

    "China's Central Bank continues to purchase increased amounts of Gold backing"
    Indeed, and so does Russia but in both cases I don't know how much is domestically mined and how much purchased at the market. As to private demand, China stopped releasing it's weekly SGE withdrawals, a pity, cause they were interesting read.

    "will invite a reaction from China and also South Korea to similarly debase"
    A vivid round of competitive currency devaluations would certainly have that effect. Up till now China has been playing the game fairly well: they devalued the Yuan a bit, but I have the impression that most was caused by capital outflows. Anyway they did their best to stop a too heavy Yuan devaluation by selling huge quantities of their Treasuries' reserves and that's a fair attitude, we must admit. Remains to be seen where their limits lie.
    As to all the other geopolitical tensions you mention, yes, there are a few, but there have always been geopolitical tensions as far as I can see. As long as they stay manageable, no need to panic.
    And since Trump will become the next president of the USA and since he's befriended with Putin, the largest geopolitical tension will soon be removed by a cordial handshake.
    Jan 30, 2016. 11:49 AM | Likes Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    Thanks, black, my pleasure.
    Jan 30, 2016. 11:18 AM | 1 Like Like |Link to Comment
  • Gold Rallies But Remains Weak And Is Primed For New Lows Into Spring  [View article]
    black,
    Thanks!
    Whether the BoJ surprised other CB's will probably remain a well kept secret. I have the impression that they operate in mutual agreement, but I have no proof of this.
    However, what I am convinced of is that there are signs of increasing economic protectionism. It can't be a coincidence that both the US and the EZ recently increased their tariffs on Chinese steel after the Chinese tried to dump their surplus.
    And neither can it be a coincidence that the US and the EU put heavy fines on each other's corporations (BNPP, UBS, VW, Google, Starbucks...) because they violated sanctions, rules or fiscal laws.

    Like market manipulation, currency wars are hard to prove. Some measures CB's take aim at improving their domestic economies, but often as a consequence harm others' economies.
    In a leveraging environment these things don't frustrate, because everybody is happy anyhow, but in a deleveraging environment they can be cause of lots of indignation and even popular hatred because they cause unemployment...
    I don't think the Fed will respond in a direct way. The Fed knows perfectly well that the strong USD benefits to the US consumption AND world dominance. The ST vanishing industry/manufacturing is the price they're willing to pay. You can't have the best of two worlds. Besides, they also know that Japan is too important geo-politically to be annoyed.
    I think the Fed considers this as a Japanese domestic issue.

    But to me it shows all the CB's nowadays have their fingers on the trigger and are capable of anything.
    Remember 2008 when all hell broke loose ? The world leaders still had to come together and to agree on the strategy to adopt to fight the looming collapse. It took them a whole year before they found common ground. Today, these strategies lay in the drawers, ready to be used. They won't waste time.
    What the Fed did last December was keeping up appearances. Former ECB govnr Trichet did the same: he lifted rates in 2008 I think it was and afterwards he retired and his successor Draghi had to lower them again.
    Jan 30, 2016. 11:14 AM | 1 Like Like |Link to Comment
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