Saturday, October 19, 2019

Will Commodity Prices Reverse Course and Head Higher Soon? – Gary Christenson (27/12/2017)


by Gary Christenson, Sprott Money:

The factories and people of the world need commodities, crude oil, copper, nickel, coffee, wheat and others.

But listening to the media, we might think paper stocks, bonds (debt) and Bitcoin are all that matter. Think about it…after a quick trip to your favorite coffee shop, while you enjoy a coffee and muffin, and watch a video on your smartphone, check the prices for your favorite tech stocks, Bitcoin, and the latest celebrity news.

Your trip to the coffee shop used gasoline, oil, coffee, sugar, wheat, electricity, water and others. You used commodities but Bitcoin, a ten year Treasury note, and Facebook stock were not directly necessary for your morning coffee experience.

Have digital and debt based paper “assets” crowded out common sense and the importance of commodities? Yes, but not for long.

Look at the graphs of Netflix and Amazon stocks. Yes, they might rise farther, but at what risk?

Both charts show near vertical rises, highly over-bought monthly Relative Strength Indexes (RSI) and could easily drop 30 – 70%. The NASDAQ 100 Index dropped 84% from its year 2000 high before it hit a nasty bottom. It could happen again.


We need them for our trip to the coffee shop and to feed, house, cloth, transport, heat and cool over seven billion people. We may not need the latest Apple phone (about a thousand U.S. dollars) but we do need commodities.

The Thomas/Reuters Commodity Index dates back to about 2001. Crude oil prices are a significant portion of any Commodity Index and are a long-term proxy for commodity prices.

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Blockchain: The Greatest Paradigm Shift Of Our Generation

from The Dollar Vigilante:

Jeff Berwick at World Blockchain Forum, London closing speech, topics include: being an early Bitcoin adopter, the early days of the internet, Bitcoin still in its early days, one of the most important points in human history, getting the power back to the people, Bitcoin is self regulating, the most important thing for freedom this century.

Can’t miss podcast – Recorded live from the 2018 Investor Summit at Sea

by Simon Black, Sovereign Man:

I’m writing you today from a cruise ship, on my way to Puerto Rico.

Every year, I get together with some of the smartest guys in finance and investing for my friends, the Real Estate Guys, Investor Summit at Sea.

I almost never speak at conferences outside of Sovereign Man events. But I always make an exception for this one.

It’s rare that you get to spend a week chatting with and learning from guys like Robert Kiyosaki, Peter Schiff, G. Edward Griffin, Chris Martenson and Adam Taggart.

Click HERE to listen


by SGT, SGT Report:
Mitch Feierstein returns to SGT report with an urgent warning, get ready for the free fall collapse. “We are in a euphoric bubble blow off top.”

Mitch explains, “I’ve been talking about the Swiss national bank intervening in the equities markets along with the European central bank buying corporate bonds, which allows companies to buy their stocks back, which pushes the markets even higher, inflating the bubbles. It’s a bubble machine. How could anything go wrong in an environment like this when you have unlimited money printing going on? Bad things happen when you print money..”

Financial Storm Clouds Gather Over Italy


by Don Quijones, Wolf Street:

Wishful thinking may not be enough.

The financial markets have been exceedingly calm in Italy of late. At the end of October the government was able to sell €2.5 billion of 10-year debt at auction at a yield of 1.86{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, the lowest since last December — an incredible feat for a country that four months ago witnessed a major bank bailout and two bank resolutions, and that has so much public debt that it spends €70 billion a year to service it, the world’s third-highest.

And there’s the ECB’s recent decision to slash its bond buying from roughly €60 billion a month to €30 billion as of Jan 1, 2018. Then there’s the over €432 billion of Target 2 debt the government owes the ECB, the growing likelihood of political instability as elections approach in 2018, the recent referendums for greater fiscal and political autonomy in Lombardy and Veneto and serious unresolved issues in the banking sector.

Monte dei Paschi di Siena may still be alive as a bank, but it’s not out of the woods. Last week its stock resumed trading after ten months of being suspended from Italy’s benchmark index, the FTSE MBE. Shares opened on Wednesday at €4.10, then rose 28{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to €5.26. But it didn’t stick. On Friday, shares closed at €4.58.

It’s a far cry from the €6.49 a share the Italian government paid in August when it injected €3.85 billion into the bank to keep it alive. It spent another €1.5 billion shielding some of the bank’s junior bondholders, whose debt was converted into equity. As part of the rescue, the Tuscan bank was forced to present a plan to cut 5,500 jobs and close 600 branches until 2021, in addition to transferring 28,600 million euros in unproductive loans and divesting non-strategic assets. Investors clearly have their doubts.

In Veneto the situation is, if anything, even bleaker as over 40,000 businesses have been left starved of credit following the impromptu resolution of the region’s two biggest banks, Popolare di Vicenza and Veneto Banca. Bloomberg:

While Intesa Sanpaolo SpA, Italy’s second-largest bank, paid a symbolic sum to acquire the healthiest parts of the two Veneto lenders, the state entity that’s absorbing the 18 billion euros ($21.3 billion) of troubled debt the banks amassed, called SGA, isn’t fully operational yet. That has left small and midsized companies in the lurch—in many cases unable to do business.

“Many of these borrowers are profitable companies, but they’re stuck in limbo,” said Mauro Rocchesso, head of Fidi Impresa e Turismo Veneto, a financial firm that provides collateral to companies seeking lines of credit. “They don’t have a counterparty anymore and can’t find fresh capital from a new lender because of their exposure to the two Veneto banks.”

It’s not just businesses and investors that are losing faith in Italy’s financial sector; so too is the public. Just 16{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Italians still have confidence in the country’s lenders, according to a poll by the SWG research group of Trieste on Friday.

Trust in the Bank of Italy is also in decline, having plunged from 36{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in June to 24{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in October. Such widespread public mistrust didn’t stop the national central bank from awarding the bank’s governor, Ignazio Visco, another six-year term after presiding over the worst banking crisis of a generation.

The Bank of Italy’s reputation was further dented this month after documents presented in a Milan court case revealed that Italy’s central bank knew that MPS’ management had papered over a loss of almost $500 million in 2010 and failed to report it. At the time the governor of the Bank of Italy was Mario Draghi.

Now, as chairman of the ECB, Draghi is in charge of withdrawing the QE monetary punch bowl upon which many peripheral EU economies have grown dependent to keep servicing their debts.

Saddled with one of the biggest public debt mountains on the planet, Italy is particularly vulnerable to this change in policy. Even after three years of QE, Italy’s economy is growing at a rate of 1.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} a year — good for Italy, but still the worst in Europe. Once the the ECB stops snapping up Italian debt over the coming years, the southern European nation will almost certainly struggle to find buyers for its government bonds.

The ECB has purchased €300 billion ($353 billion) of Italian bonds under its QE program, which is more than three times the net bond issuance for the country during that period, according to Christian Schulz, European economist at Citigroup. That means the ECB has not only bought pretty much all new bonds issued in Italy since 2015, but also existing bonds from other investors.

As the ECB cuts its purchases by roughly half in two months’ time, those investors, including foreigners, Italian households and Italian retail investors, will have to come back into the market in a big way; otherwise the yields on Italian bonds will begin soaring, driving up the costs of funding for the government.

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Wall Street Banks Tank Yesterday as Contagion Threat Grows

by Pam Martens and Russ Martens, Wall St On Parade:

Big Wall Street bank stocks outpaced the decline in the markets yesterday by a big margin. That’s a serious problem but here’s a bigger problem: if you get your information from mainstream media, you have no idea this happened or what it portends for the U.S. economy.

Corporate media (a/k/a “mainstream” media) is obsessed with ratings, clickbait and celebrities behaving badly – which goes a long way in explaining why the U.S. has a billionaire celebrity in the oval office who publicly talks about television ratings when he greets hostages released by North Korea.

It’s also now clear why so many members of Congress claimed that nobody could have seen the 2008 financial crisis coming: mainstream media simply refused to heed and report on the many warnings. The same thing happened yesterday.

My bank in Denmark just offered me a NEGATIVE rate of interest to borrow money

by Alex Moneton, Sovereign Man:

Yesterday I called my bank in Denmark, Nordea, and couldn’t believe what they told me…

They offered to lend me money at MINUS 0.12% for a ten-year mortgage.

In other words, the bank would PAY ME to take out a loan.

Of course, as a Sovereign Man editor, I’ve written a lot about negative interest rates. But most of these cases were always reserved for big banks or institutions.

Light vs Darkness: When Is Now


by Jim Sinclair, JS Mineset:

My Dear Extended Family,

The Bank for International Settlements (BIS), just recently warned of the dire impact that is certain if any hawkish maneuvers by Powell, our newest genius at the Chair of the Federal Reserve.

Carstens, a former central banker, commented in the recent BIS report that the US dollar makes up at least 80% of all the letters of credit outstanding, which are the means of settlement of international trade contracts. Think about 80% of all trade contracts.

He went on to explain this subject’s danger without any question or doubt. He said, “Any dollar shortage among non-US banks could cripple international trade.” That is the Richard Russel’s Synthetic Dollar Short.”

India Goes Bitcoin: Zebpay Will Add 500k Users Monthly by 2018


by William Suberg, Coin Telegraph:

Indian Bitcoin exchange Zebpay is adding 200,000 users a month and is eyeing half a mln by the end of 2017.

In an interview with Forbes India, the exchange, which is one of the country’s ‘big names’ in Bitcoin along with Unocoin and Coinsecure, described recent market transformation as “crazy.”

“It is crazy now. But when we started Zebpay we had no idea the price would shoot up,” Zeb Ventures CEO and co-founder Saurabh Agrawal commented. “We were here to build a business model and not play the valuation game.”

In September Zebpay passed 1 mln downloads of its mobile app for Bitcoin trading, just three months after the 500,000 mark in May.

Unocoin has reported similar successes, with Indians increasingly turning to Bitcoin interaction in the face of currency shake-ups and bank bailouts.

On Wednesday Cointelegraph reported that the Indian government would provide aid to its ailing banking sector worth $32 bln, or 1.3 percent of its GDP.

“We are adding 2 lakh users a month,” fellow co-founder Mahin Goenka added. “After two months we will be adding 5 lakh users a month.”

Zebpay only provides trading via its app and doesn’t have an exchange website.

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