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Gold & Precious Metals

Blockchain: Team Gold's Newest Player?


Posted by Stewart Thomson - Graceland Updates

on Tuesday, 20 June 2017 07:15

Jun 20, 2017

  1. After the US markets close today, Morgan Stanley will announce whether Chinese stocks get the green light for inclusion in their emerging market index.
  2. Please  click here now. This announcement has the potential to create substantial international liquidity flows into Chinese stocks. 
  3. That can have a very positive effect on the price of gold. Here’s why: Gold plays a huge role in Chinese culture. When the citizens are happy or in the mood to celebrate, they buy gold. 
  4. For most of 2017, the Chinese stock market has left the US market in the dust, and today’s announcement could add even more zest to the rally.
  5. Please  click here now. Double-click to enlarge this FXI chart (a Chinese stock market ETF).
  6. It’s clear that even without inclusion in the Morgan Stanley indexes, the Chinese stock market is roaring higher. Note the bullish island reversal pattern that is in play now.
  7. The Chinese gold market (especially the market for investment grade bars of gold) is recovering in step with the new bull cycle in Chinese stocks.
  8. Please  click here now. Double-click to enlarge this daily gold chart. I realize that gold market investors are a bit disappointed that gold hasn’t surged above $1300 in 2017, but good things come to those with patience.


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Bonds & Interest Rates

Treasury Yields: A Long-Term Perspective


Posted by Jill Mislinski - Advisor Perspectives

on Tuesday, 20 June 2017 06:25

Let's have a look at a long-term perspective on Treasury yields as of Friday's close. The chart below shows the 10-Year Constant Maturity yield since 1962 along with the Federal Funds Rate (FFR) and inflation. The range has been astonishing. The stagflation that set in after the 1973 Oil Embargo was finally ended after Paul Volcker raised the FFR to 20.06%.

Last year was a remarkable one for yields. The 10-year note hit its historic closing low of 1.37% in July and then rose 123 BPs to its 2016 closing high of 2.60% in mid-December. The yield on the 10-year note to date has dropped to 2.16% as of Friday's close.

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....read more HERE

 



Wealth Building Strategies

Here Comes Quantitative Tightening


Posted by Peter Schiff - Euro Pacific Capital

on Monday, 19 June 2017 08:26

Quantitative-TighteningAll of a sudden the Fed got a little tougher. Perhaps the success of the hit movie Wonder Woman has inspired Fed Chairwoman Janet Yellen to discard her prior timidity to show us how much monetary muscle she can flex when the time comes for action.
 
Although the Fed's decision this week to raise interest rates by 25 basis points was widely expected, the surprise came in how the medicine was administered. Most observers had expected a "dovish" hike in which a slight tightening would be accompanied by an abundance of caution, exhaustive analysis of downside risks, and assurances that the Fed would think twice before proceeding any farther. But that's not what happened. Instead Yellen adopted what should be viewed as the most hawkish policy stance of her chairmanship.


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Energy & Commodities

PetroDollar System In Trouble As Saudi Arabia Continues To Liquidate Foreign Exchange Reserves


Posted by Steve St. Angelo - SRSrocco Report

on Monday, 19 June 2017 07:36

Petro-Dollar-FIMAGE2The U.S. PetroDollar system is in serious trouble as the Middle East’s largest oil producer continues to suffer as the low oil price devastates its financial bottom line.  Saudi Arabia, the key player in the PetroDollar system, continues to liquidate its foreign exchange reserves as the current price of oil is not covering the cost to produce oil as well as finance its national budget.

The PetroDollar system was started in the early 1970’s, after Nixon dropped the Gold-Dollar peg, by exchanging Saudi Oil for U.S. Dollars.  The agreement was for the Saudi’s only to take U.S. Dollars for their oil and reinvest the surpluses in U.S. Treasuries.  Thus, this allowed the U.S. Empire to continue for another 46 years, as it ran up its ENERGY CREDIT CARD. 

And run up its Energy Credit Card it most certainly did.  According to the most recent statistics, the total cumulative U.S. Trade Deficit since 1971, is approximately $10.5 trillion.  Now, considering the amount of U.S. net oil imports since 1971, I calculated that a little less than half of that $10.5 trillion cumulative trade deficit was for oil.  So, that is one heck of a large ENERGY CREDIT CARD BALANCE.

Regardless… the PetroDollar system works when an oil exporting country has a “SURPLUS” to reinvest into U.S. Treasuries.  And this is exactly what Saudi Arabia has done up until 2014, when it was forced to liquidate its foreign exchange reserves (mostly U.S. Treasuries) when the price of oil fell below $100:

So, as the price of oil continued to decline from the mid 2014 to the latter part of 2016, Saudi Arabia sold off 27% of its foreign exchange reserves.  However, as the oil price recovered at the end of 2016 and into 2017, this wasn’t enough to curtail the continued selling of Saudi’s foreign exchange reserves.  The Kingdom liquidated another $36 billion of its foreign exchange reserves in 2017:



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Bonds & Interest Rates

Bonds and Related Indicators (and more macro discussion)


Posted by Gary Tanashian - NFTRH

on Monday, 19 June 2017 07:16

The target for TLT continues to be around 129. Treasury bonds are in bull trends (remember back a few months ago to all the bond hatred in the media). How does an eventual decline in bonds square with what we just noted above regarding Q4 2008? [work done in the preceding Precious Metals segment] Treasury bonds were a wonderfully bullish asset during Armageddon ’08 and who’s to say that an upside blow off may not be coming sooner rather than later amid massively over bullish sentiment? I mean, there is certainly no stop sign at our 129 target. Sentiment, as we are all too aware, can take a long while to manifest in pricing.

b-tlt

And that sentiment (and CoT) data are still pointing to a bearish bond future. Public optimism is still extremely over bullish on the 10yr bond.



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