Treasuries have a higher risk premium than cash because they’re subject to duration and inflation risks. This higher risk premium is what compels investors to exchange dollars for treasuries. The same goes for corporate debt, high-yield, real estate, and equities. The larger the spread between assets, the more investors are compensated for assuming greater risk (ie, selling bonds to buy equities).
Shares of mining companies have well outpaced gains for gold prices. Year to date, the Philadelphia Gold and Silver Index XAU, +4.46% trades about 127% higher and the NYSE Arca Gold Bugs Index HUI, +4.68% has gained nearly 130%. The VanEck Vectors Gold Miners exchange-traded fund GDX, +4.56% has about doubled for the year so far.
M&A will “drive valuations higher,” the Sprott gold team said. “There is a scarcity value in gold that is increasing.”
Central banks still have several options for further monetary easing. For instance, they could cut rates deeper into negative territory. However, to create an environment in which banks could pass on negative rates to their customers’ savings accounts, cash would have to be abolished first, in order to avoid bank runs. We are already seeing signs of such intentions. But I cannot imagine these brutal measures being implemented, without stirring up even more unrest, in times when anti-establishment sentiment is already spreading. Moreover, negative interest rates have already been introduced in five currency areas with hardly any positive impacts on growth and inflation.
The industrial robots might also solve a growing problem: China’s dwindling supply of cheap, low-skilled labour. For three decades, that was the magic ingredient that pushed this economy to become the second biggest in the world. Millions of labourers left the countryside and flooded the industrial cities, lifting themselves out of poverty and their children into the middle class.
But now, there aren’t enough of those children. The population is aging. The so-called demographic dividend is fading.
Deutsche has been trying to reassure investors it can boost its capital levels and pay coupons on some debt securities. However, the bank failed to sell a stake in China’s Huaxia Bank in the second quarter, a crucial deal in its sale of assets.
The bank intends to complete the sale in the second half of the year, adding about 40 basis points to the capital ratio, the company statement said.
The other day, Julian Assange sat down with Democracy Now to discuss Wikileaks’ recent release of the DNC leak emails. It’s a very interesting and worthwhile 15 minute interview.
Negative Rates: We’re Going To Need A Bigger Vault (Tiffany D.)
Thanks to Japan’s radical Abenomics stimulus efforts, Japan’s central bank buys up most of the government-issued debt anyway. In 2013, the central bank owned less than 15% of Japan’s government bonds. Today, it’s more than 30% … and rising.
And with interest rates (and bond yields) in negative territory, who in their right mind (besides those deluded central bankers) would want to buy Japanese government debt anyway? For financial institutions like Bank of Tokyo-Mitsubishi, why bother with staffing a bond desk to begin with?
Will Hillary Clinton win in November and ensure the Deep State stays in control?
I recently sat down with Casey Research founder Doug Casey to discuss this. Doug is a former classmate of Bill Clinton and has met him several times, including once at the White House.
“This could have severe consequences for colony fitness, as well as reduce overall genetic variation within honeybee populations,” the scientists concluded.
The female bees, however, didn’t demonstrate any changes in fertility, the study added.
More toxic chemicals allowed in Florida waterways (Michael W.)
But the proposal, based on a one-of-a-kind scientific method developed by the Florida Department of Environmental Protection and nicknamed “Monte Carlo,” is being vigorously criticized by environmental groups. They warn that the new standard would allow polluters to dump dangerous amounts of chemicals in high concentrations into Florida waters before they trigger the limits of the new rule, and let Florida adhere to standards that are weaker than federal guidelines.
“Most VRE are confined to hospitals, but detecting them in waters of the Tampa Bay community is quite concerning,” study co-author Valerie Harwood, PhD, a professor in the department of integrative biology at USF, said in a news release. “People need to be aware of what may be entering the water after heavy rains, accidental spills, or after intentional sewage releases.”
The researchers found that high levels of VRE and vanA genes lasted in the environment for about two weeks after the spill, then diminished steadily.
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