Daily Digest

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Daily Digest 5/23 - Big Wind’s Trail Of Wings, Living Buildings For Tomorrow's Cities

Thursday, May 23, 2013, 10:22 AM

Economy

Gold ETFs Are Liquidating By The Ton (Dana T.)

"Central banks maybe aren't as concerned," he lists as one reason why gold is down. "I think the average investor, with stocks and bonds doing so well, I think they say, 'hey, I don't need to hedge, so that gold position I had, I'm going to put that into stocks for now.'"

Schizophrenic investors expect slump: bet on boom (locksmithuk)

Four fifths think equities will gallop on upwards over the next year. Complacency is rife. "It became very clear – and many investors were quite explicit about this – that markets are lulled by the lure of liquidity resulting from negative real interest rates and global QE," said Mr Fels.

This then is the bull market of May 2013. Remember the infamous words of Citi's Chuck Prince in July 2007. "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing."

Clients Denied Gold At Major Banks As Shortage Intensifies (pinecarr)

Another of our clients was told by a major Swiss bank that he can only take out 100,000 Swiss francs of physical gold every six months. They blamed money laundering and terrorist activity for this decision. Yet another client was again told by a major Swiss bank that his storage fees would be going up substantially. When he complained he was told that he should convert to paper gold.

Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever (Dana T.)

Finally, tying it all together, here is chart showing cash at US banks vs cash at foreign banks operating in the US. At $1.03 trillion in foreign cash, the Fed's policies have once again led to more cash being held by foreign banks than all cash held by domestic banks.

Gramm and McMillin: The Debt Problem Hasn't Vanished (Phil H.)

As the debt burden rises, so too does the cost of servicing the debt increase as a share of the growth the economy is capable of generating. When the debt on which interest is paid equals the GDP level of a nation, the economy must grow faster than the interest rate to avoid debt-servicing costs consuming all the benefit of economic growth. A nation then begins to lose its ability to grow its way out of a mounting debt crisis. Its options start to narrow down to forced austerity, inflation or default.

Want to Save the Environment? Build More Cities (guardia)

The place they live, their origin and their destination, are usually so close that they can walk, and, in fact, it’s very difficult to even have a car because of problems of parking. So all of these reduce energy per capita use, and I present, I give some maps in the book that show if you map energy use total, then you see, obviously, a big peak in the urban core. If you map energy use per capita, you see a big crater in the urban core, with higher and higher levels as you move outward from it.

Republic of Ireland calls for international tax action (westcoastjan)

Apple had been accused by the Senate Permanent Subcommittee on Investigations, which has been examining "methods employed by multinational corporations to shift profits offshore", of being "among America's largest tax avoiders".

US Treasury secretary says he has begun tapping federal retiree pension fund to avoid default (westcoastjan)

Lew has said the various bookkeeping measures he is allowed to employ should provide enough maneuvering room to keep the government from defaulting on its debt until after Labor Day. Other estimates say Lew may be able to forestall a default until as late as November.

Millions falling into poverty in recession-racked Italy: report (westcoastjan)

More than 50 percent were unable to afford one week of holiday away from home last year, ISTAT said, with the figure rising to 69 percent in the south.

About 14.9 million people, or a quarter of Italy's 61 million population, are living in families that meet three of more of ISTAT's poverty indicators.

Seven Ways Today's Economy Is Like The NHL Playoffs (westcoastjan)

Diversification is essential. Rooting for just one team is like investing all your money in one stock. It will almost certainly break your heart. I support the Canadian teams, except for the Ottawa Senators of course. (Clearly this playoff season has lost much of its appeal for me.)

PBS Killed Wisconsin Uprising Documentary "Citizen Koch" To Appease Koch Brothers (westcoastjan)

n November of last year, the New York PBS affiliate WNET aired a documentary by Oscar-winning filmmaker Alex Gibney, "Park Avenue," that explored growing income inequality by contrasting the lives of residents in a luxury apartment building in Manhattan with individuals living on the other end of Park Avenue, in the Bronx. The film focuses on one of the apartment's wealthiest residents, David Koch, and does not paint a particularly positive image of the billionaire industrialist and his brother, Charles.

Court upholds B.C. mining company’s use of temporary foreign workers from China (westcoastjan)

“I think this case was an extremely important one and was successful because it ultimately exposed some of major shortcomings in the labour market opinion process and forced the government to make changes.”

Big Wind’s trail of wings (Wendy SD)

Understandably, the American Bird Conservancy (ABC) is fed up with the selective prosecutions. In 2009, the U.S. Fish and Wildlife Service (FWS) started allowing companies to apply for five-year incidental bird take permits, which ABC supported. But now, at the behest of the wind industry, FWS may change the rule to allow 30-year take permits.

Living buildings for tomorrow’s cities (westcoastjan)

Modern cities are run and populated by machines to such an extent that we no longer really notice them. And while machines are useful, they consume fossil fuels and transform them into energy, carbon dioxide and industrial pollutants – which, on an industrial scale, produces a world which Rachel Carson, author of the seminal environmental book Silent Spring, noted is "not quite fatal". In recent years we’ve looked to renewables to avoid the need for using fossil fuels – but the percentage of our energy provided by these alternatives remains small compared with our overall consumption.

Food swapping: The movement taking off in the UK (westcoastjan)

Following the US format, swaps last for about two hours. Produce is displayed, tasted and discussed, then swapped in the last 30 minutes. Things can get quite "frenzied" when the bartering takes place, says Vicky Swift. She runs Apples for Eggs food swap and helps organise events in Altrincham, York and Ormskirk up to four times a year.

Gold & Silver

Click to read the Gold & Silver Digest: 5/21/13

Provided daily by the Peak Prosperity Gold & Silver Group

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

8 Comments

saxplayer00o1's picture
saxplayer00o1
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saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4167
Veteran fears 'beginning of the end' for Japan as bond market bu

Veteran fears 'beginning of the end' for Japan as bond market buckles

pinecarr's picture
pinecarr
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Posts: 2247
Good article, Saxplayer!

Good article on Veterans dearing the "beginning of the end" for Japan as bond market buckles, Saxplayer!

When I read stuff like this (from the above article), my internal "on alert" sensors go up another notch...

 

The contagion effect set off a retreat from stocks across the world, though Wall Street later pared losses. The iTraxx Crossover or “fear gauge” for corporate bonds jumped 25 points to 392.

The Bank of Japan (BoJ) intervened with $20bn (£13bn) to drive down yields again but the failure to ensure an orderly debt market has started to rattle investors. Banks, pension funds and insurers appear to be dumping JGBs for fear of being caught on the wrong side of a bond rout.

Richard Koo from Nomura, an expert on Japan’s Lost Decade, said the sell-off in recent days has shown that the BoJ may not be able to hold down yields “no matter how many bonds it buys”. This could lead to a “loss of faith in the Japanese government” and the “beginning of the end” for its economy, if handled badly.

 

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Jim Rickerts View.
  • Stock market returns are high because of buy-backs. The shares are retired, the company does not have to pay out dividends and the yield goes up.
  • We are in a liquidity trap. No-one is embracing stocks, they are choosing to save. 
  • Gold is not down. The dollar is up.

And more in this Keyser report with guest Jim Rickerts.

 

Liquidity Trap.

liquidity trap is a situation described in Keynesian economics in which injections of cash into the private banking system by a central bank fail to lower interest rates and hence fail tostimulate economic growth. A liquidity trap is caused when people hoard cash because theyexpect an adverse event such as deflation, insufficient aggregate demand, or war. Signature characteristics of a liquidity trap are short-term interest rates that are near zero and fluctuations in the monetary base that fail to translate into fluctuations in general price levels.[citation needed]

Wiki

Oliveoilguy's picture
Oliveoilguy
Status: Platinum Member (Offline)
Joined: Jun 29 2012
Posts: 578
Gold is not down. The dollar is up.
Arthur Robey wrote:

 

  • Gold is not down. The dollar is up.

This supports my plan to be 25% PM's, 25% cash, 25% real estate, and 25% equities as Dr. Marc Faber suggests. I just want to survive, not try to outgame the gamers. 

davefairtex's picture
davefairtex
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Posts: 5464
wait, gold isn't down?

So Jim Rickards is a smart guy, but he's just plain wrong.  If you look at gold priced in nine different currencies, it's down in each one of them except for Yen.  And in Yen, gold is only down a little bit.  And Yen has dropped 30% against the buck over the past 6 months.

I challenge you - look at the following charts, and then tell me "gold isn't down."

http://mdbriefing.com/world-gold.shtml

It astonishes me, the stories people tell themselves, when the facts are just so easy to see.  Again, I'm not anti-gold - I have gold-based assets - but I am distinctly allergic to believing stories in order to make myself feel better.  Only the truth will set you free, right?

Here's a number for you.  83.74.  That's the USDX, today.  On April 10, prior to the April 12 gold crash, USDX was trading at 82.50.  Simple math says: buck is up 1.5%.  Gold, on the other hand, is down 14%.

Yeah.  Its all about the buck.  Unless you happen to be numerically challenged.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2387
Dave

Clearly there is a relationship between currencies and Gold under normal conditions, where Gold does not have reasons to be acting on it's own...but why would Gold be acting 10x levered to the buck, i.e. Dollar up 1.5%, Gold down 14%?   

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5464
gold and currencies

Jim,

In my experience, often a 1% move up in the buck will cause a 1% drop in gold - and other commodities as well.  It isn't exactly linear, but it's relatively close to that.  Its definitely not 10:1.

As a student of the market, if asked, "was the 1.5% rise in the buck the proximate cause of gold dropping 14%" I'd say emphatically NO.

When someone says "gold isn't down, the buck is up", they are implying that sort of relationship.  And presumably they are implying that if the buck were to drop by that same amount, presumably gold would then rise back to its old level also.

Its a bunch of bollocks.  I'm hoping Rickards didn't actually say that, because if he did, it shows an appalling lack of market understanding.

When looking at price moves intraday, traders watch all sorts of things happening in parallel.  Moves in the dollar, oil, gold, silver, copper, other currencies, the e-minis, and the miners, all at once, in relation to each other.  Traders look for correlations.  So when a trader sees one price spike, and a bunch of other things tank, then relationships become apparent - and the relative ratios of their relationships become apparent as well.

And I've never seen a 1.5% move in the buck cause a 14% drop in gold. 

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