The FOMC continues to test out its exit strategies in a determined effort to try to gain a somewhat hard and durable floor under interbank rates. To this point, there hasn’t been any sign of any effect whatsoever. That would include the apparently semi-permanent state in which US$ repo persists under heavy fails. This negative condition is supposed to be [...]
It is amazing how much “we” forget in the entire short space of “cycles.” That may be a function of an overload of information coming in from all sides, but I doubt it. I have always thought that more was better in that regard. Instead, I prefer to think of it as another monetary corruption. I am speaking about the [...]
There is a growing bid for safety in almost every corner of the globe at this moment, save for a few outliers. Even the 10-year JGP sits at 50 bps today despite the spike in consumer inflation engineered by the Bank of Japan’s QQE. Of course, with BoJ buying up almost everything in sight, that may not be a relevant [...]
Despite now two doses of QE taper and much more confirmation that the FOMC will be committed to that course, gold prices have not collapsed. Conventional wisdom has been uniform in believing QE as inflationary, and thus a positive for gold prices (despite the trajectory since 2011). Removal of QE should have been, if this thinking is correct, a negative [...]
We spend a lot of time and effort decrying the state of conventional wisdom around here, but for good reason. For gold, convention posits a store of value that is demanded greatly in times of inflation, and as such is a reliable alternate measure of it. In terms of exchange, that would mean investors increase their preference for “moneylike” assets [...]
As gold established price behavior based on forward rate movements in 2013, it is clear that the ebb of each successive wave of collateral selling was met with less intensity on the price upswing. There are a number of reasons for that, including the price volatility on the downside and central banks conspiring to convince markets that “tail risks” are [...]
As per usual, gold prices followed forward rate movements. GOFO is again negative out to 2-months and is hinting negative for the 3-month rate. The 6-month forward rate is moving uite a bit lower, and even out to 1-year there has been a few bp drop in the rate. Bottom line: collateral issues abate; physical shortage reappears. In truth, the [...]
Gold prices seem to have settled in around the $1,400 range recently. Whether or not that price is a psychological attractor for both buyers and sellers, there does seem to be some degree of market stability around that level currently. While it is impossible to say how long this illusion of stability will last, there seems to be a confluence [...]
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