woensdag 21 februari 2018

maandag 19 februari 2018

Uranium Miners: Wait 2 Years

Uranium seems to be the latest thing in investment land. I can agree with that, but it's much too soon. I would wait 2 years.


donderdag 15 februari 2018

The Central Banker's Bubble

On February 14th, 2018, the consumer price index (CPI) came in higher than expected. It posted 2.1% instead of 1.9%. 10 year bond yields surged to 3% on this news and the U.S. dollar fell. It will be interesting to see how the Federal Reserve will react to this news in March's FOMC meeting. Will it increase interest rates on this higher inflation data, or will it hold rates? I believe the Federal Reserve is not able to raise rates much more and I will tell you why.

Read further here.



woensdag 14 februari 2018

The Holy Grail for Bitcoin Trading

Correlations are very important and in bitcoin, this is essential.

People don't like transaction fees. When transaction fees go to $50/transaction, people will stop using bitcoin. Transactions will go down and the bitcoin price will go down.


So what do you do then? You buy bitcoin when transaction fees are low and you sell bitcoin when transaction fees are high. It's that simple. I would only buy bitcoin when transaction fees are in the $10/transaction. A sane person wouldn't want to pay more than $10/transaction.



zondag 11 februari 2018

Central Bank Solvency

This page is created to monitor the Federal Reserve Bank's solvency.

Very nice article on the Federal Reserve and its interest payments to the banks.

http://www.businessinsider.com/fed-paid-banks-30-billion-on-excess-reserves-for-2017-2018-1?international=true&r=US&IR=T

One wonders what will happen when yields go up and the FRB unwinds its balance sheet in this environment. Will it have enough revenue to pay these interests on excess reserves, especially with higher fed funds rates. Will it have enough money left to remit to the treasury? We already see these remittances to the treasury going down since 2015. More debt will be issued once the treasury is empty again.


Remittances can be found here too:
https://research.stlouisfed.org/datatrends/usfd/page9.php


The Fed started to pay interest on reserve balances at the Fed since 2008, to address conditions in credit markets.

https://www.frbsf.org/education/publications/doctor-econ/2013/march/federal-reserve-interest-balances-reserves/ 

Interbank loans dropped because there was no need to lend money to each other. The Fed gave free money.


Once the Fed becomes insolvent (because interest rates rise), it will have to monetize and create even more money. It won't be able to execute remittances anymore to the treasury. It won't be able to pay interest on excess reserves to the banks. This paper explains it perfectly.

https://minneapolisfed.org/research/wp/wp747.pdf

The capital buffer can be found here and is at $45 billion (2018).
https://www.federalreserve.gov/releases/h41/current/

More info on central bank solvency: https://www.zerohedge.com/article/federal-reserve-insolvent

Excess reserves are shown below.



And by the way, the central bank is on its way to becoming insolvent as unrealized losses are growing.


https://www.federalreserve.gov/releases/h8/current/

You can see here that when bond yields go up, the unrealized losses will go up.


And each time, these losses worsened, the Federal Reserve started another round of QE.


One of my favourite tools to see if the Fed is in deep trouble is the cash balance at the U.S. treasury.
Can also be found here: https://www.federalreserve.gov/releases/h41/current/

http://katchum.blogspot.be/2017/04/us-treasury-cash-balance.html

vrijdag 9 februari 2018

Falling Wedge Formation Spotted in Silver

Let me introduce you to the bullish falling wedge formation, which is presently active in silver.




Interest payments on excess reserves at the Federal Reserve

Very nice article on the Federal Reserve and its interest payments to the banks.

http://www.businessinsider.com/fed-paid-banks-30-billion-on-excess-reserves-for-2017-2018-1?international=true&r=US&IR=T

One wonders what will happen when yields go up and the FRB unwinds its balance sheet in this environment. Will it have enough revenue to pay these interests on excess reserves, especially with higher fed funds rates. Will it have enough money left to remit to the treasury? We already see these remittances to the treasury going down since 2015. More debt will be issued once the treasury is empty again.



The Fed started to pay interest on reserve balances at the Fed since 2008, to address conditions in credit markets.

https://www.frbsf.org/education/publications/doctor-econ/2013/march/federal-reserve-interest-balances-reserves/ 

Once the Fed becomes insolvent (because interest rates rise), it will have to monetize and create even more money. It won't be able to execute remittances anymore to the treasury. It won't be able to pay interest on excess reserves to the banks. This paper explains it perfectly.

https://minneapolisfed.org/research/wp/wp747.pdf 

And by the way, the central bank is on its way to becoming insolvent as unrealized losses are growing.


https://www.federalreserve.gov/releases/h8/current/

You can see here that when bond yields go up, the unrealized losses will go up.


And each time, these losses worsened, the Federal Reserve started another round of QE.

One of my favourite tools to see if the Fed is in deep trouble is the cash balance at the U.S. treasury.

http://katchum.blogspot.be/2017/04/us-treasury-cash-balance.html