Friday, June 10, 2016

Monumental Deleveraging Has Begun
"I believe a monumental de-risking/de-leveraging cycle has commenced. This fledgling 'risk off' backdrop helps to explain why BOJ and ECB QE measures have of late had such muted impact on global risk markets. At the same time, ongoing liquidity operations continue to bolster market sentiment in the face of a disconcerting fundamental global backdrop. Clearly, relative stability in China in concert with BOJ and ECB policy measures has been key to containing 'risk off' over recent months. China, commodities and EM have been the global markets’ weak links. The view has been that dollar weakness helps to ameliorate these fragilities. At the same time, there is the issue of how much speculative finance flowed into the U.S. in pursuit of king dollar returns. One more Crowded Trade to unravel? And there’s another issue worth pondering: confidence in QE has waned considerably over recent months. There’s increasing talk of 'helicopter money' and central bank forgiveness of government debt obligations. Both would create serious issues in terms of the true underlying value of central bank Credit. And who holds the vast majority of central bank Credit? The major global commercial banks have accumulated Trillions of central bank obligations, as assets backing deposit liabilities. Perhaps waning confidence in central banking helps explain why the big global bank stocks trade as if something very serious is unfolding. It would also explain the seemingly insatiable appetite for safe haven assets."
- Doug Noland
LINK HERE to the commentary

1 comment:

Anonymous said...

THE MATTERHORN INTERVIEW – June 2016: Grant Williams
“Oil Market: Peak Demand, Gold Market: Peak Supply”

LS: What’s your comment on Deutsche Bank’s recent agreement in New York City to settle gold and silver rigging claims? In particular, I would be interested in your comment on the fact that the Western financial mainstream press does not comment on this.

GW: Well, the stories of rigging in the gold and silver markets are legendary. There are so many of them. Some of them are wackier than others, but if the last three or four years has taught us anything, it’s that all financial markets are rigged and I truly believe they are. I’ve been involved in financial markets for 30 years, and so if you want to tell me that they can rig Libor, one of the key rates in the entire world, but no one wants to rig the gold and silver market, I think you’re out of your mind. I’m absolutely certain that the gold and silver markets are rigged in some way, shape or form. How deep that rigging goes and the actual mechanics of it, I don’t know. But you can see all kinds of strange behaviour in the wee small hours overnight. You can see trades being done which are clearly not done by any kind of full profit organization. So I think there is definitely manipulation of the gold and silver claims. I think the Deutsche Bank agreement is just the tip of the iceberg. Part of that agreement was that they were going to share information a) about how the markets were rigged and b) who else was involved, so I fully suspect to see a lot more news on that coming out.
Now, whether it makes the mainstream media or not, I don’t know. I’m continually confused as to why they don’t report these stories because they are so interesting, but unlike the rigging of Libor or foreign exchange markets or the treasury market or any of the other rigged markets, when people rig the gold market, they are rigging a claim on a physical asset that’s been money for 6,000 years. It’s not a paper contract, and so if this becomes mainstream, if people understand what’s going on in the gold markets and they believe that some gold they believe they’ve bought is subject to rigging, again, people are going to want to get their own gold, they’re going to want it allocated, they’re going to want it in their own safety deposit box outside the system, and it really just takes a few people; the numbers are extraordinarily small for people to say, “Okay, I’m going to take my gold out of the banking system and I’m going to put it in a safety deposit box”. You don’t need too many people doing that to really let the tide go out, and as Warren Buffet is famed for saying, “We will then see who’s swimming naked”, and I suspect there’ll be quite a few people in that predicament.