You Buy the Fear in Gold

By Notes From the Rabbit Hole

This article does not speak to gold’s proper fundamentals, which are not yet very healthy (although some positive signs are finally gathering). For the proper counter-cyclical atmosphere to engage gold bulls would need have risk ‘on’ markets and assets crack. Yet, gold’s (and silver’s) price may well bottom before readily obvious fundamental improvement is apparent to a majority (as was the case in Q1 2016). 

Far too much analysis is put out there linking gold with inflation. It is true that gold often acts as an effective inflation hedge, but it all too often fails in that capacity.

Far too much analysis is put out there linking gold with war, terror, pestilence and other conditions of human suffering. The surest way to spot a gold promoter, if he is not pumping inflation, is his pitch for gold as a disaster hedge. Yes okay, and I have a little Unibomber shack in Montana to sell you too.

Continue reading You Buy the Fear in Gold

Mulvaney Tells Fox Trump Didn’t Say What Trump Said About The Fed

By Heisenberg Report

It’s been a rough week for Trump administration officials.

The problem for the President’s advisors, aides and apologists is that Trump insists on taking the most controversial position possible on every single issue that has the misfortune of landing on his plate.

From international relations to domestic issues to economic policy, he revels in controversy. He seemingly views everything as an opportunity to “prove” his “disruptor” credentials, even when it’s not necessary. Here’s how I described it earlier on Friday:

Continue reading Mulvaney Tells Fox Trump Didn’t Say What Trump Said About The Fed

Gold Has Barely Beaten Inflation, and That’s About Right

By Michael Ashton

Okay: I’ve checked my door locks, made sure my kids are safe, and braced myself for the inevitable incendiary incoming comments. So, I feel secure in pointing this out:

Gold’s real return for the last 10 years has been a blistering 1.07% per year. And worse, that’s higher than you ought to expect for the next 10 years.

Here’s the math. Gold on July 19, 2008 was at $955. Today it is at $1223, for a gain of 28.1%. But the overall price level (CPI) was at 218.815 in June 2008, and at 251.989 in June 2018 (we won’t get July figures for another month so this is the best we can do at the moment), for a 15.2% rise in the overall price level.

1.07% = [(1+28.1%) / (1 + 15.2%)] ^ 0.1 – 1

Continue reading Gold Has Barely Beaten Inflation, and That’s About Right

Anatomy of a Displacement-Projection Syndrome

By James Howard Kunstler

“For more than a decade, Russia has meddled in elections around the world, supported brutal dictators and invaded sovereign nations — all to the detriment of United States interests.”
The New York Times

The Resistance sure got a case of the vapors this week over Mr. Trump’s failure to throttle America’s arch-enemy, the murderous thug V. Putin of Russia, onstage in Helsinki, as any genuine Marvel Comix hero is expected to do when facing consummate evil. Instead, the Golden Golem of Greatness voiced some doubts about the veracity of our “intelligence community” — as the shape-shifting Moloch of black ops likes to call itself, as if it were a kindly service organization in Mr. Rogers neighborhood, collecting dimes for victims of childhood cancer.

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The Supposed Superiority of Common Only A-D Data

By Tom McClellan

Common Only Advance-Decline (A-D) Line

I get asked a lot about the supposed problems with the NYSE’s Advance-Decline data, which some analysts claim is “contaminated” by the inclusion of NYSE-listed issues that are not “real stocks”.  If one is going to look for meaning about the stock market, some analysts say that one should really only look at the Advance-Decline data for the real stocks, or so goes the thinking.  As with a lot of widely held beliefs, this is one that struggles when confronted with the actual data.

Continue reading The Supposed Superiority of Common Only A-D Data

Doctor Copper Prescribing Bull or Bear?


The title is just an excuse to reference an old market saying about copper as the metal with a Ph.D. in Economics. I think that is just so much noise now as is much of the macro market, with all of its man-made stimulants creating a toxic pool of assets sloshing around the globe; copper included. I’d say the actual Ph.D. is the stodgy old man, gold. He of the counter-cyclical indications.

Anyway, ref. CNBC’s Copper — a metal with a history of predicting economic trouble — hits 1-year low, nears bear market

For whatever reason copper is still watched closely by multitudes of casino patrons and here is the state of its daily chart. Utterly bombed out to an oversold situation right to the level of my excellent, genius and utterly “fantastic” call… that was unfortunately only made to one person (i.e. it was not a call, just an offhand remark to a pal).

July 3rd in response to an inquiry from IKN’s excellent mining funda guy, Mark.

Continue reading Doctor Copper Prescribing Bull or Bear?

Europe Credit Pessimism Grows Even Before ECB Halts Bond Buying

By Anthony B. Sanders

[biiwii comment: the startling pic at the end is of a hungry vulture]

All eyes are on European markets, once again.

(Bloomberg) — European credit may be nearing a tipping point as investors take notice of worsening risk indicators just as the region’s biggest bond buyer prepares to exit the market.

Volatility has swept back into the market as the European Central Bank readies to end a program that’s bought $190 billion of corporate bonds in little more than two years. Spreads have widened to levels not seen for more than a year and the supply of new corporate debt has been patchy. Political and economic risks have also triggered sell-offs as investors grow sensitive to the future health of the economy.

“Most people’s general view on credit has shifted from bullish to bearish,” said Juan Valencia, a credit strategist at Societe Generale SA. “The big issue for European credit investors is risk-reward — there is too little upside and lots of downside.”

Pessimistic investors can point to economic warning signs, such as the biggest drop in German exports since 2012 and declines for the euro area manufacturing purchasing managers’ index. The ECB will also cease stimulus measures at the end of this year, and potentially think about raising rates late in 2019, stoking concerns about how much longer the euro zone’s five-year-long economic growth stretch can run.

“We are in a late phase of the cycle,” said Gilles Pradere, a portfolio manager at Geneva-based RAM Active Investments, which oversees about $5 billion. He’s favoring bonds that can withstand a downturn and trading credit-default swap indexes to maintain liquidity.


Continue reading Europe Credit Pessimism Grows Even Before ECB Halts Bond Buying

Gold Bugs vs. Stock Market Bulls

By Charlie Bilello

Which is the better investment: Gold or Stocks?

It’s a battle as old as markets.

Gold Bugs and Stock Market Bulls are equally fervent about their investment of choice, often with complete disdain for the other side.

The story (since the gold standard was completely abandoned in 1971) goes something like this…


Gold Return: +1256%

S&P 500 Return: +97%

Narrative: Gold is the best investment in the world, and will continue to be so forever. There is hyperinflation in the U.S. and a secular stagnation in real growth. The only way to protect yourself is with Gold. And by the way: no one should own stocks.


Data sources for all charts/tables herein:, Bloomberg.

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‘It’s Got A Green Light To Weaken’: Yuan Dive Continues As PBoC Looks On

By Heisenberg Report

The yuan rout is deepening.

On Thursday, the offshore yuan weakened past 6.80 for the first time since July of last year, as the easing bias inherent in recent pronouncements from officials and other reports portends a widening policy divergence with the Fed, further undercutting the bull case and tipping a growing sense of consternation in Beijing about the prospect of trade frictions hitting the domestic economy.

Here’s a chart with notable policy actions/turns annotated for reference:


You’ll note that over there on the right side, 6.85-6.90 is flagged as a possible zone for intervention. That’s around levels where the PBoC adopted the counter-cyclical adjustment factor last summer on the way to engineering a historic rally in the currency against the dollar. It’s possible they could resort to leaning on the CCAF again to stanch the bleeding.

Continue reading ‘It’s Got A Green Light To Weaken’: Yuan Dive Continues As PBoC Looks On

TIC Confirms Pretty Much Everything

By Jeffrey Snider

The Russian ruble has fared far and away much better than its EM peers. Compared to something like the Brazilian real, there is no comparison. The ruble has been relatively steady following an initial drop in April with the imposition of sanctions. April 19 came and went, and while that date is displayed prominently across all the key currencies it meant nothing for Russia.

It may be that oil’s continued rise in the face of eurodollar tightening is offering RUB some amount of protection. The Russian economy isn’t much more than its energy sector. It already experienced the wave of deflationary devastation with the advent of 2014’s “rising dollar” – which decimated oil prices. So far this time around, this prospective Eurodollar Event #4, it is different in that regard.

While oil could offer a plausible premium in the ruble unavailable to other struggling currencies, I have to believe there is more to it. It smacks of intervention, particularly the narrow range RUB has traded within despite some crucial potential interruptions (May 29, for one).

The Treasury Department’s TIC figures offer some tantalizing confirmation along those lines. According to the report for May 2018, released today, the Russians have nearly run out of UST’s. Well, they haven’t run out so much as the balance has been run down to less than $30 billion and therefore no longer qualifies to be disaggregated as an individual line. They are now part of “All Other.”

However many UST’s the Russians have left, it is interesting, and telling, that the level has collapsed during these specific months of April and May. Russian officials, almost certainly with the experience of the “rising dollar” burned into them, are possibly being hyper-proactive about the ruble, meaning the eurodollar’s tightening grip.

Continue reading TIC Confirms Pretty Much Everything

Still Easy After All These Years

By Kevin Muir

The other day I was listening to some hedge fund manager or market strategist making the bearish argument for risk assets. He went through his points and then finished with what he deemed as the final knife to the heart of the bulls – “to top it all off, you are now getting paid 2% in cash. We haven’t seen that level in years.”

Continue reading Still Easy After All These Years

Developed Country Demographics are Inflationary, not Deflationary

By Michael Ashton

I’m a relatively simple guy. I like simple models. I get suspicious with models that seem overly complicated. In my experience, the more components you add to a model the more likely it is that one of them ceases having explanatory power and messes up your model’s value. In this it is like (since tonight is Major League Baseball’s All-Star Game I thought I’d use a baseball analogy) bringing in relievers to a game. Every reliever you bring in has some chance that he just doesn’t have it tonight, so therefore you ought to bring in as few relievers as you can.

Baseball managers don’t seem to believe this, so they bring in as many relievers as they can. Similarly, economists don’t seem to believe the rule of parsimony. The more complexity in the model, the better (at least, for the economist’s job security).

Let’s talk about demographics and inflation.

Continue reading Developed Country Demographics are Inflationary, not Deflationary