Bold Gold Rolled

By Tim Knight

In spite of the President’s declaration on Saturday that the dollar was “too strong”, King Dollar is holding its own and, in turn, gold continues to get battered. It has tumbled hard pretty much every day since February 20th. I wanted to mention, however, that it could be finding a reasonable area of strength soon.

Miners, too, should be watched closely for support a little north of $21.

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Gold’s Fellow Travelers Refute its Higher High

By Tom McClellan

Gold prices versus Japanese yen

Gold prices recently swooped up to a rather spiky looking top, and on Feb. 21 a big drop started the work of unwinding that blowoff.  It was a good looking spike upward as far as gold itself was concerned.  But it did not come with confirmation from other prices which tend to move in sympathy with gold.

This week’s chart compares gold futures prices to the Japanese yen.  Most of the time the two of them move together.  But occasionally they disagree, and that is when things get interesting.

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The Japanese Government is Still Pegging the Gold Price

By Steve Saville

About five months ago I posted an article in response to stories that the Chinese government had pegged either the SDR-denominated gold price or the Yuan-denominated gold price. These stories were based on gold’s narrow trading range relative to the currency in question over the preceding two years, as if government manipulation were the only or the most plausible explanation for a narrow trading range in a global market. To illustrate the silliness of these stories I came up with my own story — that it was actually the Japanese government that was pegging the gold price. My story had, and still has, the advantage of being a better fit with the price data.

Just to recap, my story was that the Japanese government took control of the gold market in early-2014 and subsequently kept the Yen-denominated gold price at 137,000 +/- 5%. They lost control in early-2015 and again in early-2018, but in both cases they quickly brought the market back into line.

The following chart shows that they remain in control.

gold_Yenpeg_080119

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Japanese Tightening is a Pipe Dream

By Kevin Muir

Here we go again. Yet another mini-scare that the Bank of Japan will take their foot off the accelerator. From Bloomberg:

A dramatic day for Japan’s debt market saw yields surge on media reports of possible changes to the nation’s ultra-loose monetary policy, spurring the central bank to offer to buy an unlimited amount of bonds.

The yield on 10-year government securities soared as much as six basis points to 0.09 percent, its biggest increase in almost two years, pulling the yen higher and weighing on stocks. While the yield came down after the purchase offer by the Bank of Japan, it then bounced back to just one basis point below the day’s high.

Any change to BOJ’s stimulus would be the first since 2016 when it introduced control of the yield curve in a bid to manage the impact of its bond purchases and negative interest rates.

I understand all the reasons why traders might think the BOJ would be eager to let their yield-curve-control policy expire. The flat yield curve is making it tough on Japanese banks. It hampers any price discovery for the long end of the JGB market. In fact, the policy makes a mockery of Japanese bond markets.

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BOJ Policy Change Speculation Roils Markets as Yen, Yields Jump (Inflation Near Zero)

By Anthony B. Sanders

(Bloomberg) — A dramatic day for Japan’s debt market saw yields surge on media reports of possible changes to the nation’s ultra-loose monetary policy, spurring the central bank to offer to buy an unlimited amount of bonds.

japan10yy.png

The yield on 10-year government securities soared as much as six basis points to 0.09 percent, its biggest increase in almost two years, pulling the yen higher and weighing on stocks. While the yield came down after the purchase offer by the Bank of Japan, it then bounced back to just one basis point below the day’s high.

Continue reading BOJ Policy Change Speculation Roils Markets as Yen, Yields Jump (Inflation Near Zero)

Japanese Yen Disagrees With Gold

By Tom McClellan

Japanese yen versus gold prices
June 29, 2018

The price of gold carries on an interesting relationship with the exchange rate of the Japanese yen versus the dollar.  Most of the time, the two move together, but they occasionally disagree.  When that happens, it is usually the chart plot of the yen which ends up being “right” about where both are headed.

That is relevant at the moment because the dollar price of gold is making lower highs and lower lows, but the yen is showing a bullish divergence.  The yen is not yet making higher highs, but it is making at least a higher low, and that is different from what the price of gold is doing.

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Is the Yen a Reliable Safe Haven?

By Charlie Bilello

After a perfect year in 2017 (S&P 500 up every single month), equity markets are struggling.

The S&P 500 just finished down 2 months in a row (February, March) for the first time since early 2016. Meanwhile, the Japanese Yen is rising, leading all major currencies against the Dollar in 2018. Are these facts related? Can investors count on the Yen acting as a safe haven during times of equity market stress? Let’s take a look…

Data Source for all charts/tables herein: Stockcharts.com (Philadelphia Yen Index, S&P 500 Price Returns)

With data on the Japanese Yen going back to 1977 (Philadelphia Yen Index):

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Dollar Strength Is Hiding In Plain Sight

By Heisenberg

And One Strategist Says It’s Here To Stay

Overnight, the yen rose against all its G10 peers because Donald Trump has lost his mind completely and is now firing everyone in sight.

On Thursday evening, the Washington Post reported that a “very stable genius” called “Dennison” is now planning on ridding himself of national security adviser H.R. McMaster who, according to some accounts, once called Trump an “idiot” with “the intelligence of a kindergartner” at a dinner with Oracle CEO Safra Catz.

This kind of thing usually gets reflected in risk appetite one way or another and right now USDJPY is even more of a natural expression than it would be anyway thanks to a variety of factors not the least of which is that the ongoing land scandal has everyone on edge about Aso and ultimately Abe, which in turn raises questions about the future of Abenomics. Here’s USDJPY overnight:

USDJPY

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