Bank Deposits Update and ECB QE

Ok, so when the ECB prints money, we will see bond yields rise in the eurozone and we will see deposit rates go back up, when banks get more liquidity.

This chart below will reverse itself and we see it already for Portugal and Spain.

Peter Schiff / Jim Rickards Interview

Just want to bookmark this very interesting interview between Peter Schiff and Jim Rickards about the German gold repatriation scam.

ECB Quantitative Easing 2014

The eurozone is on the verge of entering a deflationary period as we can see on the inflation chart below from Tradingeconomics. The inflation rate for the eurozone came in at just 0.4% for August 2014.

The chart below from the ECB shows long term interest rates with maturity of 10 years. As you can see, bond yields are plunging, indicating subdued growth expectations.

'la Caixa" research recently put up a chart that shows that excess liquidity in the eurozone is drying up. We are now going under the 150 billion euro threshold level of excess liquidity, which is very important.

Go here to read the analysis.

Euro/USD exchange rate Vs. U.S. Bond Yield

The Euro/USD exchange rate is highly correlated to the U.S. Bond Yields.

Money flows to U.S. bonds at the same time when people flee into the U.S.dollar. So whenever U.S. bonds go up (U.S. bond yields go down), the U.S. dollar strengthens.

Let's look at the Euro/USD exchange rate as an example. Mastering this correlation will give you an edge whenever arbitrage occurs.

 

The chart below shows the correlation between currency value and bond yields. The higher the bond yield goes, the lower the currency falls.

Market Outlook

(First I want to thank Jeff for giving me an idea to go over our correlations as I was completely out of ideas on blog posting... )

Our "Correlation Economics" website has already amassed more than hundred correlations describing stock and bond valuations, gold, debt, deficits, the mortgage market, employment, GDP, etc...

In this article I'll go over the most prominent market moving correlations to give a thorough market outlook for the coming months. This way, investors know what to expect in the future. I'll also briefly touch my favourite correlations in the process.

Go here to see the analysis.

Managed money short update on gold and silver

This week we see a divergence between gold and silver. It looks like silver from a technical perspective is much more desirable at this stage. Another short squeeze in silver is almost imminent as managed money short positions are rising again in silver (not so much in gold).

That's also why silver has a high premium at this moment in Shanghai (8.2%).

Conclusion: if you're planning on buying precious metals, go for silver.