Friday, July 29, 2016

Martin Armstrong:
Negative Rates Could Push 
The Dow Up To 40,000
"In Europe, what you have is some people buying the dollar; the other side of the coin is that there is this popular belief that if they buy the German bund, when the euro crashes, they are going to get deutsche marks. So, it's just been a very prevalent view in Europe and if you look at the various debt yields throughout the Eurozone you'll see that capital is concentrating into Germany .. The net effect at least initially is to push up the dollar, and the dollar is the only place to go right now for world capital. You have to look at this from the perspective of major institutions—pension funds, insurance companies, and the like. If they want to say, 'I'm concerned here; I want to move a billion dollars.' Where can you move it to? You can't go to China; you can't go to Russia; and economies like Australia, Canada, and even the UK—they're too small. So although the U.S. has a big national debt in the $19 trillions, it's big enough that world capital can concentrate into the dollar going up will probably spark the next round of world monetary reform and we're expecting that as early as 2018 but certainly no later than 2020 .. Pension funds need 8% to break even. You're talking about interest rates being negative! There is no more opportunity, effectively, to buy bonds. We have some clients that are major institutions like pension funds and they've had no choice but to follow what we've been saying. They're shifting out of government debt, selling it off and buying corporate—they need some yield. You can't be negative… so, the traditional idea of the stock market going up and looking at the P/E ratio, a company's income, etc.—no, at this stage in the game it moves to 'I just want to park my money.'”
- Martin Armstrong
link here to the reference

1 comment:

Anonymous said...

Execs flee GLD – The revolving door at the SPDR Gold Trust Sponsor

A remarkable but little noticed development has occurred behind the scenes of the SPDR Gold Trust (GLD) over the last 3 years. This development concerns the very high level of executive staff turnover at World Gold Trust Services, the New York based ‘Sponsor’ of the mammoth gold GLD gold-backed Exchange Traded Fund that is listed on the NYSE.

For within the space of less than 3 years, World Gold Trust Services has gone through 4 Chief Executive Officers (CEOs) and 3 Chief Financial Officers (CFOs). By any standard this is a huge amount of senior executives moving through the roles, and would normally ring alarm bells in the corporate governance departments of major institutional investors. Perhaps it has caused concern among institutional investors of the SPDR Gold Trust (GLD), but if it has, it has gone unreported.

New York based World Gold Trust Services (WGTS) LLC is a fully owned subsidiary of the London-based World Gold Council. WGTS is a Delaware registered limited liability company (for-profit) established in 2003 by the World Gold Council and run out of offices at 685 Third Avenue, in midtown Manhattan, New York. The World Gold Council (WGC) itself is a non-profit association registered in Geneva under Swiss Civil Code Article 60. So the structure of the relationship is a non-profit organization, the World Gold Council, owning 100% of a for-profit company, World Gold Trust Services.

The WGC 2015 accounts also show (on page 34) that WGTS paid out the following fees in 2015 to the Marketing Agent, Trustee and Custodian, and some ancillary expenses:

Marketing Agent fees: $16.6 million
Custodian fees $4.1 million
Trustee fees $0.92 million
Other GLD Expenses: $4.9 million
Total of the above for 2015: $ 26.574 million

Given that the World Gold Council took in $66.9 million as Sponsor Fees from GLD for 2015, that’s a cool $ 40.3 million that the WGC kept out of the total Sponsor fee inflows. Now you can see why they were so eager to push through the consent solicitation campaign in 2014 and early 2015. Furthermore, GLD shareholders are essentially bank-rolling the entire operations of the World Gold Council. I wonder how many GLD shareholders are aware of this?