Japanese Equities Outperforming Japanese Bonds

As I warned everyone already in March 2012 in this article, it is finally happening. Japanese equities are indeed outperforming Japanese bonds and we can see this event starting in one of the most important equities brokers, Nomura Holdings (Chart 1). In my previous article I said that Nomura Holdings would flourish as it is the primary brokerage service in Japan.

Nomura, which pays a dividend that's higher than the 10 year Japanese bond yield, has skyrocketed just recently and is going to keep going upwards according to me.

Chart 1: Nomura Holdings

To find out why this is, go here to read the analysis.

LIBOR scandal and the Significance of it on gold & silver lease rates

Following the LIBOR scandal we need to take a look at gold and silver lease rates, because lease rates are calculated as LIBOR - GOFO (London Interbank Offered Rate - Gold Forward Offered rate).

The London Interbank Offered Rate is the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks. GOFO is the interest we need to pay if we swap gold for U.S. dollars. Whenever GOFO goes down (or gold lease rates go up), it means people are craving to get their hands on gold. At the same time, when LIBOR goes up (or gold lease rates go up), it basically means the same: higher gold prices to come.

To read the effect of LIBOR on the gold lease rate in more detail, go to: LIBOR scandal and its effects on gold and silver lease rates.