vrijdag 8 juli 2016

Help Wanted Online Ads (HWOL) Vs. Unemployment Rate

The Conference Board reports numbers on Help Wanted Online Ads each month.

As you can see, the HWOL is inversely correlated to unemployment rate. So the recent drop in HWOL in June 2016 should be a bearish indicator for the unemployment rate in the U.S.

Monitoring the HWOL is important to predict job numbers.


For more info, see this article.

woensdag 6 juli 2016

ECB: Deposit Inflows in Euro Area Continue in May 2016: Cracks in Italy

The new numbers from May 2016 are out from the ECB and we see that there are no deposit flights yet, except for Italy and Austria. Italy seems very curious, as we have a banking crisis there, so maybe we are seeing some cracks there. Austria had a banking crisis with Hypo bank.


Record GLD Inflows

We saw record GLD inflows yesterday.

Someone bought 30 tonnes of physical gold in 1 day, the highest since 2009.

As I said, gold is going much higher.

And we are not even in delivery month September yet.

maandag 4 juli 2016

Monetizing gold

As a reminder, on April 21st PIMCO's Harley Bassman suggested "The Fed should monetize gold"...

In "Rumpelstiltskin at the Fed", Bassman goes down the well-trodden path of proposing Fed asset purchases as the last ditch panacea for the US economy, however instead of buying bonds, or stocks, or crude oil, Bassman has a truly original idea: "the Fed should unleash a massive Fed gold purchase program that could echo a Depression-era effort that effectively boosted the U.S. economy."

He is of course, referring to FDR's 1933 Executive Order 6102, which made it illegal for a citizen to own gold bullion or coins. Americans promptly sold their gold to the government at the official price of $20.67, with the resulting hoard of gold was then placed in Fort Knox.

The Gold Reserve Act of 1934 raised the official price of gold to $35.00, a near 70% increase. It also resulted in an implicit devaluation of the US dollar. As Bassman points out, over the three years from January 1934 to December 1936, GDP increased by 48%, the Dow Jones stock index rose by nearly 80%, and most salient to our topic, inflation averaged a positive 2% annually, despite a national unemployment rate hovering around 18%.

In short, a brief economic nirvana which was unleashed by the devaluation of the dollar confiscation of gold. In fact, we have frequently hinted in the past that another Executive Order 6102 is inevitable for precisely these reasons. However this is the first time when we see a "respected economist" openly recommend this idea as a matter of monetary policy.

Bassman says that the Fed should "emulate a past success by making a public offer to purchase a significantly large quantity of gold bullion at a substantially greater price than today’s free-market level, perhaps $5,000 an ounce? It would be operationally simple as holders could transact directly at regional Federal offices or via authorized precious metal assayers."

A massive Fed gold purchase program would differ from past efforts at monetary expansion. Via QE, the transmission mechanism was wholly contained within the financial system; fiat currency was used to buy fiat assets which then settled on bank balance sheets. Since QE is arcane to most people outside of Wall Street, and NIRP seems just bizarre to most non-academics, these policies have had little impact on inflationary expectations. Global consumers are more familiar with gold than the banking system, thus this avenue of monetary expansion might finally lift the anchor on inflationary expectations and their associated spending habits.

The USD may initially weaken versus fiat currencies, but other central banks could soon buy gold as well, similar to the paths of QE and NIRP. The impactful twist of a gold purchase program is that it increases the price of a widely recognized “store of value,” a view little diminished despite the fact the U.S. relinquished the gold standard in 1971. This is a vivid contrast to the relatively invisible inflation of financial assets with its perverse side effect of widening the income gap.

Gold/Silver: West Vs. Shanghai

Brother John has shown an interesting site to observe premiums on gold/silver between West and East: http://didthesystemcollapse.com/

Interesting to see this: