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re: Basel 3 -
MAY 20, 2021
Will Basel 3 Boost Gold and Silver Prices? : https://www.numismaticnews.net/coin-market/will-basel-3-boost-gold-and-silver-prices
Excerpt:
Back to the Basel 3 accord. The most important change for precious metals is that banks would be required to hold reserves against their assets. Under the coming regulations, banks would count unallocated precious metals at 85 percent of their value on the bank’s books in making the determination of how much it needs to hold in reserves against these assets.
However, banks would no longer be able to consider any of the liability for unallocated precious metals as part of their required reserves.
Therefore, to comply with Basel 3 regulations, banks would have to either create a huge increase in their shareholders’ equity to provide the required reserves or they will be forced to sharply reduce or completely eliminate their trading in unallocated precious metals.
Will these banks take title and custody to many times the quantity of physical precious metals that they now hold? For all practical purposes that isn’t possible because there just aren’t enough physical metals available. Another obstacle is that these banks simply do not have the storage capacity to hold sufficient inventory to provide sufficient reserves for their precious metals assets.
The practical effect of this part of the new Basel 3 regulation would be to almost completely wipe out the trading of unallocated precious metals in the London and New York markets. About the only trade that would survive would be for allocated metals.
Banks in continental Europe will implement the changes in precious metals trading as of the end of June this year. British banks will be required to adopt the new standards by Jan. 1, 2022. At least, those are the current scheduled implementation dates.
With the elimination of most trading in unallocated storage, the U.S. government could lose its primary tactic of suppressing gold and silver prices.
Between the increased demand for physical precious metals and the elimination of the use of unallocated precious metals to suppress prices, gold and silver prices might undergo huge increases.
This impact of these forthcoming market changes is so enormous that on May 4, 2021, the London Bullion Market Association and the World Gold Council submitted a paper to the Prudential Regulation Authority, the United Kingdom’s regulator of banks and the financial sector, asking for the changes in Basel 3 standards in trading unallocated precious metals be eliminated. This paper claimed that implementing the new regulations would undermine the ability of banks to clear and settle precious metals trading, drain liquidity from this market, sharply increase financing costs of such trades and would limit central bank operations with precious metals.
The claim that the London Bullion Market Association may be almost forced to cease operations without this waiver also means that the COMEX trading of unallocated metals would also come to a virtual standstill.
How likely is it that the near-term implementation of the Basel 3 standards for trading unallocated precious metals will occur? Not enough to eventually matter, as the most likely difference would simply be another delay in the implementation date.
But, even if the implementation dates are once more postponed, that deferral might only apply to British banks.
Another possible change suggested in the LBMA and WGC paper is to instead adopt the Swiss interpretation which considers it applicable only to unbalanced positions on both sides of a bank’s balance sheet. That might not provide much leeway.
Still, time is running out to try to change the regulations before the first of these standards applies to continental European banks at the end of June this year.
Right now, the COMEX currently has about $24 billion in short sales of gold futures contracts and another $1.6 billion in short sales of silver futures. There will almost certainly be pressures for short sellers to cover these COMEX contracts as continental European banks scramble to cover their short positions.
However this eventually turns out, the ultimate result is almost certain that gold and silver prices will climb far higher, perhaps multiples of current levels, within the next six months to two years.
Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including twice in 2020), Professional Numismatists Guild, Industry Council for Tangible Assets and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com.
BY PATRICK A. HELLER
One other point : The national debt just keeps growing. Any kind of economic slowdown will expose a lot of bad debt.
And housing too. You don't have to look any further than RE to know that inflation is alive and moving higher. I wait for large pullbacks in the miners to add to positions. I think the drop in gold is overdone, but the market will let us know.
Senator Warren calls Bitcoin a 'scam', threatens more regulation; Alex Mashinsky says she's wrong : https://www.kitco.com/news/2021-06-15/Senator-Warren-calls-Bitcoin-a-scam-threatens-more-regulation-Alex-Mashinsky-says-she-s-wrong.html
Excerpt:
At a recent Senate Banking Committee hearing, Senator Elizabeth Warren (Dem., Massachusetts) said that "cryptocurrencies have created opportunities to scam investors, assist criminals, and worsen the climate crisis."
She further added that "the threats posed by crypto" cannot stay ignored by the government and suggested that more regulations be put in place.
One Bank Goes Apocalyptic: Inflation Is About To Explode "Leaving Global Economies Sitting On A Time Bomb" : https://www.zerohedge.com/markets/one-bank-goes-apocalyptic-inflation-about-explode-leaving-global-economies-sitting-time
Excerpts:
In short, we are witnessing the most important shift in global macro policy since the Reagan/Volcker axis 40 years ago. Fiscal injections are now “off the charts” at the same time as the Fed’s modus operandi has shifted to tolerate higher inflation. Never before have we seen such coordinated expansionary fiscal and monetary policy. This will continue as output moves above potential. This is why this time is different for inflation.
Even if some of the transitory inflation ebbs away, we believe price growth will regain significant momentum as the economy overheats in 2022. Yet we worry that in its new inflation averaging framework, the Fed will be too slow to damp the rising inflation pressures effectively. The consequence of delay will be greater disruption of economic and financial activity than would be otherwise be the case when the Fed does finally act. In turn, this could create a significant recession and set off a chain of financial distress around the world, particularly in emerging markets.
History is not on the side of the Fed. In recent memory, the central bank has not succeeded in achieving a soft landing when implementing a monetary tightening when inflation has been above 4%.
Policymakers are about to enter a far more difficult world than they have seen for several decades.
It ain't over till the fat lady sings. Let's see what the next month brings in terms of NRs from Condor. The Peruvian election is so close that neither candidate will be able to make much change in the status quo.
Economy is 'sitting on a time bomb': Deutsche Bank warns of 'devastating' effects of inflation : https://www.kitco.com/news/2021-06-08/Economy-is-sitting-on-a-time-bomb-Deutsche-Bank-warns-of-devastating-effects-of-inflation.html
Excerpts:
The world is leaving its previous low inflationary environment. This shift has been accelerated by the massive monetary response to the coronavirus pandemic.
"It may take a year longer until 2023, but inflation will re-emerge. And while it is admirable that this patience is due to the fact that the Fed's priorities are shifting towards social goals, neglecting inflation leaves global economies sitting on a time bomb," Folkerts-Landau said. "Sovereign debt has risen to levels unimaginable a decade ago with large industrial countries exceeding red-line levels of 100% of GDP."
This crisis has been a different beast altogether, primarily because of the amount of stimulus that has been introduced into the economy. Congress has passed more than $5 trillion in pandemic-related stimulus so far. On top of that, the Fed has nearly doubled its balance sheet to almost $8 trillion.
"Already, many sources of rising prices are filtering through into the U.S. economy. Even if they are transitory on paper, they may feed into expectations just as they did in the 1970s," the report said. "The risk then, is that even if they are only embedded for a few months, they may be difficult to contain, especially with stimulus so high."
In the meantime, U.S. Treasury Secretary Janet Yellen stated that President Joe Biden's $4 trillion spending plan should go ahead even if it sets off higher inflation that could last into next year and leads to higher interest rates.
"If we ended up with a slightly higher interest rate environment, it would actually be a plus for society's point of view and the Fed's point of view," Yellen told Bloomberg on Sunday
Unexpected valuable treasures found in barns and abandoned places
: https://www.msn.com/en-us/autos/classic-cars/unexpected-valuable-treasures-found-in-barns-and-abandoned-places/ss-AAKD5xU?ocid=msedgntp#image=1
Unexpected valuable treasures found in barns and abandoned places
: https://www.msn.com/en-us/autos/classic-cars/unexpected-valuable-treasures-found-in-barns-and-abandoned-places/ss-AAKD5xU?ocid=msedgntp#image=1
Central banks can't tighten monetary policies as global debt rises to 360% of GDP - Degussa : https://www.kitco.com/news/2021-06-03/Central-banks-can-t-tighten-monetary-policies-as-global-debt-rises-to-360-of-GDP-Degussa.html
Excerpt:
"The sky-high level of global debt has severely limited the degree of freedom of central banks"monetary policy. All the more so since in the course of an inflation policy, the benefits (preventing state and bank defaults, maintaining an illusory boom) come first, and the costs of an inflation policy appear later.
Degussa analysts said consumers could start to feel the "cost" more acutely as inflation pressures rise due to declining purchasing power. They said that higher inflation is inevitable.
"Given current developments, it is very likely that soaring inflation will become a rather serious problem, especially for money holders,"the analysts said.
Degussa expects that gold will continue to attract investors looking for an inflation hedge and protect their purchasing power in the current environment. The European firm sees gold prices ending the year at around $2,448 an ounce.
Money is cheap, let's spend it -White House $6 trillion budget message : https://www.kitco.com/news/2021-05-28/Money-is-cheap-let-s-spend-it-White-House-6-trillion-budget-message.html
My Comment : What a joke. The Fed suppresses rates and they claim it shows that the debt is not burdening the economy.
Excerpt:
"The most important test of our fiscal health is real interest payments on the debt. That’s what tells us whether debt is burdening our economy and crowding out other investments."
Biden Unveils $6 Trillion Budget That Will Raise Federal Spending To Highest Post-WW2 Level : https://www.zerohedge.com/political/biden-unveils-6-trillion-budget-will-raise-federal-spending-highest-post-ww2-level
My Comment : $2Trillion deficits as far as the eye can see. We've got a lot more fiat where that came from...there is no limit. Note that these deficit projections do not include a recession.
Excerpt:
Under Mr. Biden’s proposal, the federal budget deficit would hit $1.8 trillion in 2022, even as the economy rebounds from the pandemic recession to grow at what the administration predicts would be its fastest annual pace since the early 1980s. It would recede slightly in the following years before growing again to nearly $1.6 trillion by 2031.
Total debt held by the public would more than exceed the annual value of economic output, rising to 117 percent of the size of the economy in 2031. By 2024, debt as a share of the economy would rise to its highest level in American history, eclipsing its World War II-era record.
Federal spending will swell to levels never seen before during peacetime, as Biden coughs up money for roads, water pipes, broadband internet, electric vehicle charging stations and advanced manufacturing research. The budget also envisions funding for affordable child care, universal prekindergarten, a national paid leave program and a host of other initiatives. Spending on national defense would also grow, though it would decline as a share of overall GDP.
Debt does matter -
As interest rates hit bottom, debt does matter, says Barclays : https://www.kitco.com/news/2021-05-25/As-interest-rates-hit-bottom-debt-does-matter-says-Barclays.html
Excerpts:
With global borrowing costs probably as low as they can go, high debt levels will start to matter more in coming years, a Barclays study found, highlighting Brazil as the country at greatest risk of a hit to growth and debt sustainability.
Barclays' annual Equity Gilt study, released on Tuesday, contradicts the debt-doesn't-matter thesis, championed by several high-profile economists, prescribing countries should spend big to lift economies from the COVID-19 funk -- a reversal of the long-held wisdom that high indebtedness is risky.
Ratings agency Fitch forecasts global government debt will reach $95 trillion by 2022, a record 40% increase in nominal terms compared with the pre-COVID-19 level of 2019.
Meanwhile, total global debt stood at $289 trillion at the end of the first quarter, the Institute of International Finance said in a report earlier in May.
The End Of Paper Gold & Silver Markets : https://www.zerohedge.com/commodities/end-paper-gold-silver-markets
The End Of Paper Gold & Silver Markets : https://www.zerohedge.com/commodities/end-paper-gold-silver-markets
Bitcoin price to hit $307k by October, then $12.5 million by 2031 - Robert Breedlove : https://www.kitco.com/news/2021-05-21/Bitcoin-price-to-hit-307k-by-October-then-12-5-million-by-2031-Robert-Breedlove.html
My Comment : If you believe this then I've got some land in Florida to sell you.
Excerpts;
Breedlove told Michelle Makori, editor-in-chief of Kitco News, that over the next 10 years, Bitcoin will climb to $12.5 million in nominal terms, which would be $1 million in inflation-adjusted, 2021 terms.
His forecast is based on the assumption that the money supply will continue to grow exponentially, with the nominal value of Bitcoin growing alongside it.
Breedlove expects the M2 money supply to double again in the next four years, and then double again after that until the U.S. money supply grows to about 40% of the world's money supply in 10 years' time.
DeFi Defunct? Crypto Lender Cock-Up Mistakenly Credits Users With Millions In Bitcoin : https://www.zerohedge.com/crypto/defi-defunct-crypto-lender-cock-mistakenly-credits-users-millions-bitcoin
My Comment : I avoid all cryptocurrencies like the plague. It's a very dangerous game to play. A handful of people can move the market up or down and I think it will lead to the demise of cryptos. Watch what governments do, not what people like Musk do.
Excerpts:
BlockFi Inc., a crypto-lending startup, mistakenly sent some users millions of dollars in Bitcoin as part of a promotion and is now rapidly working on reversing it.
Just under 100 BlockFi users are reported to be affected, with some allegedly receiving as many as 700 Bitcoin due to the mishandled promotional offer.
One user has reportedly posted a photograph of an email allegedly from BlockFi notifying them that “failure to return the erroneously received assets by 5.00 PM EDT today (May 18th, 2021) may constitute a crime and will result in BlockFi taking legal action.”
Gold, silver ready to explode : https://www.kitco.com/commentaries/2021-05-18/Gold-silver-ready-to-explode.html
My Comment : This guy is right more often than not. The weak US$ is helping gold.
Excerpt:
Gold and silver have broken out of their consolidation patterns and are running higher. This could be just the birth of the next big move up. The price action has been bullish; Monday’s big move up, especially in silver, indicates there is room to run higher.
Both metals are seeing some follow-through this morning, moving higher towards our next target. We are looking for $1,900 June gold and $29.00 July silver. We expect much higher but will only quote one level at a time. There is no point in making a ridiculous call higher because these markets move one level at a time.
If you look at the chart of gold or silver, they are walking up the stairs, which is the most bullish pattern you can ask for. The only question left to answer is how many stories there are in this building? This move could turn into a skyscraper; we never know how far a move will go.
The US Government Is On Track To Top Last Year's Record-Breaking Deficits : https://www.zerohedge.com/political/us-government-track-top-last-years-record-breaking-deficits
My Comment : The ever increasing debt is the primary reason I am heavily invested in the PM mining shares. I'm expecting the national debt to be $40Trillion by 2025.
Excerpts:
With five months left to go in the fiscal year, and with the deficit already approaching 2 trillion, it won’t take more than Biden’s $2 trillion infrastructure bill to ensure that 2021’s deficit soars to new record-breaking levels. That is, the US on course to beat last year’s full-year deficit by the time this fiscal year comes to an end.
In the second graph, we see that the full-year deficit for the 2020 fiscal year was a record-breaking 3.1 trillion.
The total national debt is now approaching $30 trillion, and was $27.7 trillion at the end of the fourth quarter of 2020. Taken as a percentage of GDP, the debt is now exceeding even the extraordinary levels reached during the Second World War, making the current fiscal crisis the largest one, proportionally, to have ever occurred during peace time. In terms of annual deficits, only three years in American history exceeded 2020’s deficit as a percentage of GDP: 1943, 1944, and 1945
There's no easy solution, and this is why those old-fashioned, fuddy-duddy economists have been warning against runaway spending for years. Eventually the taxpayers have to pay for it, either through a ruined currency, or by slashing government spending in other areas. Or through tax increases. But for now, politicians will keep kicking that can down the road, and hope they can blame someone else when the reality becomes undeniable.
The US Government Is On Track To Top Last Year's Record-Breaking Deficits : https://www.zerohedge.com/political/us-government-track-top-last-years-record-breaking-deficits
My Comment : The ever increasing debt is the primary reason I am heavily invested in the PM mining shares. I'm expecting the national debt to be $40Trillion by 2025.
Excerpts:
With five months left to go in the fiscal year, and with the deficit already approaching 2 trillion, it won’t take more than Biden’s $2 trillion infrastructure bill to ensure that 2021’s deficit soars to new record-breaking levels. That is, the US on course to beat last year’s full-year deficit by the time this fiscal year comes to an end.
In the second graph, we see that the full-year deficit for the 2020 fiscal year was a record-breaking 3.1 trillion.
The total national debt is now approaching $30 trillion, and was $27.7 trillion at the end of the fourth quarter of 2020. Taken as a percentage of GDP, the debt is now exceeding even the extraordinary levels reached during the Second World War, making the current fiscal crisis the largest one, proportionally, to have ever occurred during peace time. In terms of annual deficits, only three years in American history exceeded 2020’s deficit as a percentage of GDP: 1943, 1944, and 1945
There's no easy solution, and this is why those old-fashioned, fuddy-duddy economists have been warning against runaway spending for years. Eventually the taxpayers have to pay for it, either through a ruined currency, or by slashing government spending in other areas. Or through tax increases. But for now, politicians will keep kicking that can down the road, and hope they can blame someone else when the reality becomes undeniable.
https://www.kitco.com/commentaries/2021-05-14/Is-today-the-day-that-gold-and-silver-take-off.html : https://www.kitco.com/commentaries/2021-05-14/Is-today-the-day-that-gold-and-silver-take-off.html
Todd 'Bubba' Horwitz
Friday May 14, 2021 08:31
My Comment : locked and loaded
Excerpt:
The setup for gold, silver and platinum looks like a launching pad with the rockets ready for blastoff. There is no guaranty that today will be the day; however, they are up nicely this morning. We expect a huge move, but patience is the key.
Many cases are being made for gold to go lower, higher interest rates among them. We warn traders all the time that correlations are often already priced into the market and they don’t have to react at the same time. The simple facts are: the trend is up, they are breaking out above congestion and the FED interventions makes gold, silver and platinum stronger.
Since the bottom a few weeks ago, gold, silver and platinum have been trying to build momentum. Based on the recent price action, it appears we are seeing that type of move developing.
Roubini: There's tech bubble, crypto bubble, Robinhood bubble, 'I would be slightly overweight gold' right now : https://www.kitco.com/news/2021-05-12/Roubini-There-s-tech-bubble-crypto-bubble-Robinhood-bubble-I-would-be-slightly-overweight-gold-right-now.html
Excerpts:
How safe is the stock market rally, and what would a serious correction look like? With many bubbles popping up in the financial markets, gold is one of the investments it's good to be overweight in right now, said Nouriel Roubini, CEO of Roubini Macro Associates and professor at the NYU Stern School of Business.
"There was a corporate debt explosion before this crisis, and now there is even a greater buildup of corporate debt of very poor quality. We have the tech bubble, we have the crypto bubble, we have the Robinhood and day-trading and the GameStop bubble," Roubini told Michelle Makori, Kitco's editor-in-chief. "All of this suggests the markets are frothy if not an outright bubble and therefore the risk of a correction is rising over time because valuations are stretched."
"Calling bitcoin a currency is a misnomer because it is not a unit of account, it is not scalable means of payment, it is not a stable store of value," he said.
Bitcoin does not look like an asset either. "Stocks give you a dividend, bonds give you coupon, loans give you interest, real estate gives you rent or housing services. Gold doesn't have income, but it has uses in industry. It has utility because it has been used as jewelry for thousands of years. It has been a stable store of value whenever there is inflation, deflation, financial crisis, geopolitical problems," he noted.
But bitcoin does not have any income, it does not have any uses, it is not a stable store value, and it does not have utility, Roubini added.
"The idea that bitcoin is a digital gold does not make sense. Whenever there is a risk-off episode, bitcoin falls more than other risky assets. When we had the shock of February-March of last year when COVID started, U.S. equities were down 35%, bitcoin was down 50%, and other top ten cryptocurrencies were down 60%. So they are not even a hedge against risk-off episodes," he said.
Roubini: There's tech bubble, crypto bubble, Robinhood bubble, 'I would be slightly overweight gold' right now : https://www.kitco.com/news/2021-05-12/Roubini-There-s-tech-bubble-crypto-bubble-Robinhood-bubble-I-would-be-slightly-overweight-gold-right-now.html
Excerpts:
How safe is the stock market rally, and what would a serious correction look like? With many bubbles popping up in the financial markets, gold is one of the investments it's good to be overweight in right now, said Nouriel Roubini, CEO of Roubini Macro Associates and professor at the NYU Stern School of Business.
"There was a corporate debt explosion before this crisis, and now there is even a greater buildup of corporate debt of very poor quality. We have the tech bubble, we have the crypto bubble, we have the Robinhood and day-trading and the GameStop bubble," Roubini told Michelle Makori, Kitco's editor-in-chief. "All of this suggests the markets are frothy if not an outright bubble and therefore the risk of a correction is rising over time because valuations are stretched."
"Calling bitcoin a currency is a misnomer because it is not a unit of account, it is not scalable means of payment, it is not a stable store of value," he said.
Bitcoin does not look like an asset either. "Stocks give you a dividend, bonds give you coupon, loans give you interest, real estate gives you rent or housing services. Gold doesn't have income, but it has uses in industry. It has utility because it has been used as jewelry for thousands of years. It has been a stable store of value whenever there is inflation, deflation, financial crisis, geopolitical problems," he noted.
But bitcoin does not have any income, it does not have any uses, it is not a stable store value, and it does not have utility, Roubini added.
"The idea that bitcoin is a digital gold does not make sense. Whenever there is a risk-off episode, bitcoin falls more than other risky assets. When we had the shock of February-March of last year when COVID started, U.S. equities were down 35%, bitcoin was down 50%, and other top ten cryptocurrencies were down 60%. So they are not even a hedge against risk-off episodes," he said.
Here's another steel/iron ore company that's been moving :
VanadiumOne (VDMRF / V.VONE)
Disclosure: I own shares of VDMRF
Here's another steel/iron ore company that's been moving :
VanadiumOne (VDMRF / V.VONE)
Disclosure: I own shares of VDMRF
Here's another steel/iron ore company that's been moving :
VanadiumOne (VDMRF / V.VONE)
Disclosure: I own shares of VDMRF
Central banks moving away from Treasuries into gold - Roubini : https://www.kitco.com/news/video/show/Market-Analysis/3377/2021-05-10/Central-banks-moving-away-from-Treasuries-into-gold---Roubini#_48_INSTANCE_puYLh9Vd66QY_=https%3A%2F%2Fwww.kitco.com%2Fnews%2Fvideo%2Flatest%3Fshow%3DMarket-Analysis
Excerpt:
Valuations in risk assets continue to climb, which only strengthens the argument for rotating capital into defensive assets, such as gold, ahead of a potential market correction, said economist Nouriel Roubini, CEO of Roubini Macro Associate and professor at the NYU Stern School of Business.
Roubini cited several potential triggers for such a market correction.
“One thing that could happen is rising inflation is persistent. Second one is a taper tantrum if inflation is higher, and the Fed decides to really start tightening monetary policy. Another one that could happen is that growth could surprise on the downside, maybe not in the United States, but we’re already seeing a double dip recession in the Eurozone,” Roubini told Michelle Makori, editor-in-chief of Kitco News.
I expect the Fed will respond as they always do with massive liquidity but that will only worsen the inflation.
The next crisis is inevitable -
My Comment : Good article
From the article:
Chief among the many causes is a very basic one that's easy to understand: America has consumed more than it has produced for decades, and filled the gap with imports purchased with borrowed money and currency created out of thin air.
What's left are the fatal synergies of soaring debt and leverage, diminishing returns on stimulus, the substitution of credit for savings and the coming deflationary tsunami (53 min) that pops all the speculative bubbles, setting up the destabilization and cliff-dive of the entire decayed, flimsy structure--The Next Great Financial Crisis that cannot be papered over with more central bank legerdemain.
What will stop the Fed's QE ?
I think inflation could do it. If the Fed tries to prop up the stock market with QE and it causes more inflation which would be negative for stocks, then QE becomes counter productive. But inflation is only temporary ..right ?
Consumer Credit Explodes Higher As Americans Rediscover Their Love For Credit Cards : https://www.zerohedge.com/markets/consumer-credit-explodes-higher-americans-rediscover-their-love-credit-cards
My Comment : Debt, debt, and more debt
Excerpt:
in March aggregate consumer credit surged by $25.8BN, smashing expectations for the 2nd month in a row (as a reminder February was the biggest beat on record) and barely slowing down from last month's massive $26.1BN increase.
And while non-revolving credit - i.e., student and auto loans - continued its relentless ramp higher, increasing by $19.4BN in March, the most since June of 2020...
Yellen says U.S. debt ceiling could pinch in summer : https://www.kitco.com/news/2021-05-07/Yellen-says-U-S-debt-ceiling-could-pinch-in-summer.html
My Comment : No problem. We can just keep raising the debt ceiling indefinitely.
Excerpt:
U.S. Treasury Secretary Janet Yellen said on Friday the nation could exhaust its ability to borrow this summer even if Treasury takes "extraordinary actions" to buy more time when the nation's debt ceiling comes back into effect at the end of July.
Yellen told reporters at the White House that while the Treasury could extend its ability to borrow by employing special measures if Congress did not act to raise the debt ceiling, those steps might buy only a "very limited" amount of time.
Roubini: Fed is 'cornered'; will either lose control of inflation or crash markets : https://www.kitco.com/news/2021-05-07/Roubini-Fed-is-cornered-will-either-lose-control-of-inflation-or-crash-markets.html
My Comment : No problem. If the Fed has to chose between rising inflation or a stock market correction, they will let inflation run.
Excerpt:
"So either way is risky. Either you're behind the curve, you're going to cause inflation, or if you don't want to be any more behind the curve, and then you signal, 'I'm going to tighten', then you could have a bond market and a credit market crash that could really weaken the economy, if not stall it. It's damned if you do, damned if you don't," he said.
Yes, I saw that about a month ago and that $35K in sales is for TWO years of sales
Fed Warns "Asset Prices Are Vulnerable" If Risk Appetite Declines : https://www.zerohedge.com/markets/fed-warns-asset-prices-are-vulnerable-if-risk-appetite-declines
My Comment : Not to worry. When stocks start to correct, the Fed will step in to prevent it.
Excerpt:
Vulnerabilities associated with elevated risk appetite are rising. Valuations across a range of asset classes have continued to rise from levels that were already elevated late last year. Equity indices are setting new highs, equity prices relative to forecasts of earnings are near the top of their historical distribution, and the appetite for risk has increased broadly, as the "meme stock" episode demonstrated. Corporate bond markets are also seeing elevated risk appetite, and the spreads of lower quality speculative-grade bonds relative to Treasury yields are among the tightest we have seen historically. The combination of stretched valuations with very high levels of corporate indebtedness bear watching because of the potential to amplify the effects of a re-pricing event.
Fed Warns "Asset Prices Are Vulnerable" If Risk Appetite Declines : https://www.zerohedge.com/markets/fed-warns-asset-prices-are-vulnerable-if-risk-appetite-declines
My Comment : Not to worry. When stocks start to correct, the Fed will step in to prevent it.
Excerpt:
Vulnerabilities associated with elevated risk appetite are rising. Valuations across a range of asset classes have continued to rise from levels that were already elevated late last year. Equity indices are setting new highs, equity prices relative to forecasts of earnings are near the top of their historical distribution, and the appetite for risk has increased broadly, as the "meme stock" episode demonstrated. Corporate bond markets are also seeing elevated risk appetite, and the spreads of lower quality speculative-grade bonds relative to Treasury yields are among the tightest we have seen historically. The combination of stretched valuations with very high levels of corporate indebtedness bear watching because of the potential to amplify the effects of a re-pricing event.
Silver to $300 : https://www.kitco.com/commentaries/2021-05-06/Silver-to-300.html
My Comment : I don't put much credence in this type of projection, but I do think silver should be higher for the reasons given in this article.
Excerpt:
Most developed and many developing nations have been in multi-year or even multi-decade deficit scenarios. This now looks to have become a permanent state, at least until we reach some sort of global financial reset.
The Institute of International Finance explains how the COVID-19 pandemic response added $24 trillion to the global debt mountain last year, to reach a new all-time record high of $281 trillion.
And interest rates being maintained at 5,000-year lows will only encourage more debt. Couple that with many countries borrowing to meet interest payments, and central banks soaking up much of that new sovereign debt, and inflation havens like precious metals gain strong appeal.
Silver in particular has the added benefit of 50% of its demand being industrial. With unprecedented economic stimulus programs, many favoring green energy, silver is uniquely positioned to profit.
Janet Yellen's Flip-Flop And What She's Really Telling Us : https://www.zerohedge.com/economics/janet-yellens-flip-flop-and-what-shes-really-telling-us
My Comment : Rising rates would risk bursting the bubbles.
Excerpt:
The US government can’t afford rising rates. And it certainly can’t have the Fed tapering its bond purchases. In fact, I would argue Uncle Sam is going to need the Fed to step up its quantitative easing in order to monetize the additional borrowing that’s looming in the future. Biden and his fellow Democrats in Congress can pretend that all of this proposed spending will be paid for by tax hikes, but they are living in fantasy land. The government will pay for Biden’s infrastructure plan and the “American Families Plan” the same way it paid for all of the coronavirus stimulus spending.
It will sell bonds.
That means the Fed will have to keep buying bonds with money printed out of thin air in order to keep the bond market from completely imploding.
Earlier this week, the Treasury Department upped the amount of money it plans to borrow in the second quarter. And not just by a little bit. In February, the Treasury projected borrowing in Q2 would come in at a relatively modest $95 billion. The new estimate for second-quarter borrowing is $463 billion. Then, in Q3, Uncle Same will nearly double that, with estimated borrowing of $821 billion.
And I guarantee you there will be more borrowing after that. That’s the only way the government can feed these ballooning deficits.
The borrowing and spending tell you all you need to know about the trajectory of interest rates. They’re staying right where they are – inflation be damned. In fact, both Powell and Yellen have cited low interest rates as the reason the government can make all of these “investments” in the economy.
The Fed is boxed into a corner. Powell knows it. Yellen knows it. But give them props – they are putting on quite a show trying to assure us everything is fine to keep the markets calm. It reminds me a little bit of the orchestra playing as the Titanic sinks.
Sam Zell Buys Gold To Hedge Against Surging Inflation, "Debasement" Of The Dollar : https://www.zerohedge.com/markets/sam-zell-buys-gold-hedge-against-surging-inflation-debasement-dollar
Excerpt:
Many are questioning whether gold (which has been out of favor seemingly since the financial crisis) has become obsolete in the age of crypto, and Zell acknowledged that even he has mocked investors for believing in the yellow pet rock.
"Obviously one of the natural reactions is to buy gold...It feels very funny because I’ve spent my career talking about why would you want to own gold? It has no income, it costs to store. And yet, when you see the debasement of the currency, you say, what am I going to hold on to?"
Continuing on this theme, the 79-year-old Zell says he's also concerned about the dollar, and other currencies as well as countries print money like the US. He also questioned whether inflation will be transitory, as Powell and others - though not Treasury Secretary Janet Yellen - have insisted.
Thailand, Laos Report Surging COVID Cases As India's Outbreaks Spreads Across Asia : https://www.zerohedge.com/covid-19/thailand-laos-report-surging-covid-cases-indias-outbreaks-spreads-across-asia
My Comment : This is not good. Could it spread to China ?
Excerpt:
Just as the WHO feared, India's brutal second wave has spilled over its borders, sending COVID-19 cases rising across the region, as cases climb in neighboring Bhutan and Nepal and as far away as Laos and Thailand.
According to Bloomberg, the acceleration in the region is mainly due to more contagious mutant strains, like the B.1617 variant first identified in India, which has been now been traced beyond its borders. The WHO has released a list of 10 mutant strains that it is keeping a close eye on.
Like in India, the surging case numbers are overwhelming health-care systems in Laos and elsewhere. Laos health minister last week sought medical equipment and supplies as cases jumped 200x in a month. Nepal is seeing hospitals quickly filling up and, like India, it's running out of oxygen supplies. Health facilities are under pressure in Thailand, where 98% of new cases are from a more infectious mutant strain, while some island nations in the Pacific Ocean are facing their first waves of COVID.