SOMETHING EXCITING COULD HAPPEN TO GOLD

There have been many news circulating about gold recently that were hardly reported in the mainstream news media.

One such news is a report from SRSrocco which showed record amount of gold being exported from Switzerland to the US (See chart below)



Have the investors community in the US finally begun their move into gold? Currently, only 1% of the public invest in gold. Now imagine what will happen when that 1% grows to 2%. The chart above could indicate a change of investors' preference for the yellow metal. It will be interesting to watch if the chart is a one time off event or the beginning of a longer trend.

Hot in the news is the Tokyo Commodity Exchange's (TOCOM) pivot into physical settlement, much like the Shanghai Gold Exchange.Recently it was reported that Tanaka Holdings, one of Japan's primary gold dealers has acquired shares of Metalor, a Swiss precious metals refiner. The purchase of Metalor will result in Tanaka gaining access into the in the precious metals recovery and refining business in Europe, North America and Asia.

The Tanaka's purchase and TOCOM's decision could shift the pricing power from the West to the East, which will also dent the power of the COMEX to influence pricing.

Lastly, here's another chart from Marketwatch, which shows that gold discoveries and production are expected to fall off the cliff in the coming years. This could cause a huge re-pricing of gold on the upside.

US GDP GREW WORSE THAN EXPECTED AND QE4 WITH NIRP COULD BE COMING

US GDP grew a paltry 1.2% in Q2 2016 with Q1 GDP being revised down to 0.8% from 1.1% earlier.

In a worst reading of Q2 GDP since 2010, we saw the US$ tanking which boosted the price of precious metals and crude oil and the S&P touching an all time high! The insanity in the price movement of the S&P knows no bounds as expectations of quarterly earnings continue to deteriorate in Q2. Despite the increase in drilling rigs count, crude oil climbed. I would expect crude oil to trend downwards in the coming weeks as we saw the continual buildup of gasoline and storage at Cushing despite this being the peak summer period. If anything, it points to fact that US citizens have far less to spend than the ordinary summer months, and this could reflect on another disappointing GDP data in Q3.

And about that mind blowing June jobs report, be prepared that it could be revised lower too.

I think The Fed is aware of this too, therefore its unwillingness to raise interest rates although it did say that the short term risks have diminished. Let's face the fact, with slowing GDP growth, any rate hike will be devastating for the highly leveraged shale oil plays, the corporations which borrowed trillions of US$ on the cheap and a struggling US government, burdened by huge deficit spending and an escalating debt which could reach US$20 trillion by the end of the year. On top of that, we have a trillion each in consumer debts, student loans and auto loans. Remember the car sales that kept rising higher and higher? Well, its driven substantially by subprime car loans.

Against such a backdrop, I think QE4 and NIRP could be coming to the US. Here's what Zerohedge reported:

As of February, Yellen had not “fully investigated” the legal issues of negative rates.

As of May, Yellen was unwilling to state the Fed had legal authority to go negative.

As of June, Yellen had no doubt the Fed could legally go negative.

So you see, the legality of NIRP is resolved. The Fed could use NIRP if the Fed deems fit.

If that happens the monetary debasement could be huge.

If you have not owned any precious metals and related mining stocks, perhaps you should really consider it before all hell breaks loose. If that happens many will be priced beyond your reach.

The above is just my opinion.

BEHIND THE SMOKE AND MIRRORS - MY LIST OF TICKING TIME BOMBS

The Fed once again attempted to talk up the dollar by indicating that an interest rate hike is in the horizon. Well the dollar did rise but fell further into the red soon after... perhaps investors are no longer buying the Fed's words or the Fed has entirely lost their credibility and investors now decide to ignore the noise.
Gold and silver had one of their best one day gain since BREXIT, but the bullion banks will monkey-hammer the precious metals towards the announcement of the US GDP.
However, there could be some events which will mitigate the pressure on gold and silver going into Friday night as there will be the announcement from the BOJ and the EU's GDP report due out on the same day.
On the banking front,several banks in Portugal are in need of additional funding due to NPLs while Deutsche Bank reported earnings that were 98% down from the year earlier.
Here are my lists of ticking time bombs in the world:
1) EU banks
2) Japanese economy and debt
3) US and China's debt
4) China's economy slowdown
5) EU terrorist attacks
6) EU migration crisis
7) US shale oil debt implosion
8) Negative global bond yields
9) Escalating geopolitical conflict in Middle East and South China Seas
The US Presidential Election results could be a potential for riot as the US government militarise their police force, rumours of FEMA camps for "citizens imprisonment" and movement of military and armoured vehicles nationwide.
One black swan event could be what Turkey will do next.
As one commentator puts it at King World News, if there is a financial crisis the central bankers will print more money, but it will be game over when the bond market implodes because no one would buy any bonds, and without the issue of bonds, the central bankers could not print more money.
Ex-PIMCO boss, Bill Gross (ex- bond king) has mentioned time and again the possibility of a bond market implosion due to the negative yields while Jeff Gundlach (emerging bond king) is shunning bonds by putting his money into gold.
While I have written much about precious metals, one other asset class that promises respectable returns are REITs. With global interest rates likely to remain low, the pressure for the increase in funding cost is almost non-existent, therefore REITs with strong balance sheet will likely acquire assets on the cheap as price of properties crashes. My favourite are Singapore REITs as I see stability in the Singapore Dollar vs other fiat currencies. The other incentive being the tax free element on income distribution.
If you are selecting REITs, look for the strong sponsors such as Capitaland, City Development, Frasers Group and Mapletree Group. But please do you own research before investing.

INTERESTING NEWS OVER THE LAST FEW DAYS

Several news website reported that the Tokyo Commodity Exchange will be a full fledged physical gold exchange starting from 25 July. Was anyone surprised that this was not reported by any of the main stream news media? This could impact on the price of gold as the eastern market opens as we have now both the Shanghai and Tokyo physical gold exchanges to counter the COMEX paper gold.

Also in development is a Syariah compliant gold exchange in the Middle east but there has been not many news of this development in recent weeks.

A stunning rumour was the news that Mexico could consider backing her Peso with silver, but this is unconfirmed at the moment.

And a according to a poll, Trump is in the elad over Hillary by 3 points.

The coming weeks could prove interesting.

IT'S GOING TO BE VOLATILE NEXT WEEK FOR PRECIOUS METALS

All eyes will be on the GDP reading next week on Friday. The Atlanta Fed is projecting a GDP growth of 2.4%. Any reading above 2.4% will likely result in a sell off of precious metals and will impact upon gold and silver mining stocks.

Meanwhile commercial shorts are at a record high for silver and near record high for gold. If anything it goes to show the desperation to push the price of gold and silver down, for fear of both the metals rising higher. This is unsurprising given the host of weakness and uncertainty in the global markets.

Nevertheless, gold and silver will likely propel higher in the ensuing months due to the following factors:

1) More than US$13 trillion of bonds are already in the negative zone in terms of yield. Should the amount of bonds with negative yield continue to expand past US$13 trillion, we could see a move towards precious metals as investors lose confidence in sovereign bonds. As it is, it is preposterous that one pays to lend the opposite party money. 

2) Imminent banking crisis in the EU involving Deutsche bank and the Italian banks.Also look out for weak earnings among the EU banks which could widen the crisis further, involving banks from other countries, most notably, France. When the crisis becomes full blown, it is inevitable that precious metals will shine. 

3) A full blown asset bubble in the US stock market as central bank interventions continue to push the US stock market higher despite the sixth quarter where GAAP earnings have fallen. The non-GAAP earnings however were above expectations due to the ingenuity of financial engineering, share buybacks and write backs. The higher it goes, the harder it will fall. Panic buyers who fear missing out on the "false" rally will have the fingers burnt.

4) As we go into the fall, the US Presidential Election will heat up. There will be more uncertainties, and this will give support to the demand for precious metals.

5) Major data for transportation and freight within the US is already showing a slowdown. The regional economic indicators are also not robust, and inventories continue to build up and durable good orders fell. The US is already in a recession already but the no one in power is willing to acknowledge this fact. Look at the massive number of people dependent on food stamps (47 million) and almost 100 million people of employable age remain unemployed.

6) Demand for gold in the summer months has traditionally weak, but going into the fall, with the coming festivals in India, demand for gold could rise. The fall is also the period when marriages are most popular in India.

I continue to be long in precious metals, miners and related ETFs.

GOLD AND SILVER HAMMERED AGAIN BUT THE FUTURE LOOKS PRESSING

Gold and silver continued to be monkey hammered as central bankers act in unison with the bullion banks to pull up the stock markets and suppress the price of gold and silver.
But this is not new. Gold price has been suppressed over the years when it reached its peak at US$1,900 per oz. But the recent gain in gold and silver prices shows that the suppressors are losing control just as gold and silver shorts are at record highs.
Why the suppression of gold and silver prices? To allow both these precious metals price to skyrocket is an admission by the central bankers that their monetary policies have failed. And failed they did. The purchasing power of the US$ has declined 97% since 1913!
Global economy cannot rely solely on debt for growth. It is akin to suppressing the future growth in order to enjoy the present growth. And that is why future generation will face a rather bleak economy. The current generation misery is the result of the debt accumulated from the actions of the previous generation. With so much debt at hand, the future is even worse for the next generation.
The only asset that has withstood the ups and downs of the world economy for the past few thousand years is gold. That is why it is wise to have some of your holdings in physical form rather than in paper form. The other opportunity is to profit form the exposure in the miners. Only then could you protect and create wealth.
From where we stand events will be unfolding in the coming months and these are the things to look out for.
EU banking and debt crisis will worsen as Die Welt reports, the total exposure of French banks to Italian debt exceeds €250 billion. That’s triple the amount of exposure of the second most exposed European nation, Germany, whose banks hold €83.2 billion worth of Italian bonds. Deutsche bank alone has over €11.76 billion worth of Italian bonds on its books. The other banking sectors most at risk of contagion are Spain (€44.6 billion), the U.S. (€42.3 billion) the UK (€29.77 billion) and Japan (€27.6 billion). Source: Zerohedge. US presidential Election which could end up in a crisis as Trump gains in support but the Establishment refuses to bend to the will of the people. If Trump wins, his drive to make America great again will come with a US$ devaluation due to huge monetary and fiscal stimulus. If Hillary wins, there could be turmoil as the masses may create chaos in the belief that they have been cheated of their votes. Hillary will keep the status core - more money printing - and maybe start a few wars which could push the investors to safe assets such gold and silver.
The world reacted by pushing the S&P to record highs as Japan unveils another massive stimulus of US$98B. This is nothing new. Japan has been unveiling stimulus after stimulus since their deflation spiral began in 1990. Remember Abe's Three Arrows? Japan has remained in deflation and this new stimulus will be no different form the previous. One economist joked that Japan's stimulus has more sequels than the Police Academy movies.
Which is precisely that. The global financial system has become a sick joke as central bankers kill the price discovery of a free market economy.
The above is just my opinion.

WHAT IS SO WRONG WITH THE STATE OF AFFAIRS

Here's my list of what is so wrong about the state of affairs in the global economy:

1. Soon after Ben Bernanke's visit to Japan, Japan announces massive US$98B fiscal stimulus to upgrade infrastructure and a host of other initiatives, on top of the BOJ's monthly bond and ETF purchases with NIRP. How's that for more money printing?  As articulated by Zerohedge, could Japan be the first experiment of helicopter money?

2. The S&P continue to reach all time highs despite 4 consecutive quarters of earnings recession. is there any sanity left in the market? As it stands, the free market economy where price discovery happens is lost in all the market intervention by the central bankers.

3. Italy banks are in a dire situation. In fact, the IMF warns today that Italy banks could create a global contagion if left unarrested. Germany has been against any bailout of the Italy banks using taxpayer money.

4. And herein seals the fate of Deutsche Bank. If  Germany does not allow the Italian Government from bailing out her banks, Germany could likewise deny Deutsche Bank of any government aided bail out. So Deutsche Bank is all alone in this debacle. Deutsche Bank is the most intoxicated bank in the world. Laden with derivatives that are 20x Germany's GDP, it comes as no surprise that the IMF has included Deutsche Bank on its list of world most dangerous bank. To mark the effect, the bank's bond yield just spike 11.5%

5. China too is joining into the fray of central bank intervention when she announced a war chest of US$400B from her pension fund to support the market. China is also devaluing her Yuan which exports deflation worldwide, which contravenes the other central bankers policy of creating inflation. We are now in a never ending vicious cycle which could be a race to the bottom.

6. Meanwhile, global debt continue to mount. US student loans, auto loans and consumer credit have surpassed US$1 trillion each. The ECB and BOJ's balance sheet too are getting bloated through their monetary actions.

Precious metal prices continue to be suppressed as record shorts on precious metals reached all time highs.it is like a coiled spring and when unleashed with push the prices upwards. nevertheless, mining stocks and related ETFs have done well and will continue to do well as we move into the US Presidential Election.

I continue to be long in precious metals, miners and related ETFs.

Please do your own research as our risk appetite often differs.

A US JOBS REPORT THAT FAILED TO DETER INVESTORS FROM BUYING GOLD AND SILVER

The US reported an astounding growth in jobs, registering 287,000 jobs in June and what followed next was a raid by the Cartel on gold and silver, pushing gold down to US$1,330s while silver down to the US$19.20s per oz.

No one really believed in the report as Treasuries sank to their lowest yields on record, and investors were encouraged to buy the dip in gold and silver and the closing on Friday both were up significantly. At the point of writing on Monday, both gold and silver are once again up,with gold above US$1,370 and silver above US$20.50 per z.

Zerohedge dissected the jobs report and found that more than 100,000 jobs were taken up by senior citizens above 55 years old. Now if senior citizens made up the bulk of the jobs what happened to the young people fresh out of college? It comes as no surprise that student loans have now become a pressing issue as many fresh graduates are finding it difficult to find a job. The magnitude of the loan? More than US$1 trillion!

Then we have more than 100,000 jobs being in the minimum wage category. Were we any surprised? It was no wonder why the wage growth fell below expectations. Also, states across the country have been reporting falling revenue from personal income tax and is bearing on their budget allocations.

What we are facing is an unprecedented crisis with more than US$14 trillion of sovereign debt with negative yield, and a mounting banking crisis in the EU.

So what about the S&P being traded in thin volume yet managing to register gains. The S&P earnings have been down for four quarters and possibly the coming quarter will be the fifth.

The safest place to put your money now is n precious metals, miners and related ETFs and do avoid all financials.it could be an ugly earnings season ahead.

MORE QE ON THE CARDS - GOLD AND SILVER ARE SOARING!

Well, well, what do you know? Both ECB and BOE are now signalling more QE. Euro and Pound is now plunging while gold and silver rise. Silver especially has risen over US$1 per oz in less than a week. 

Best to stay off US stocks except mining companies.

The rally in US stocks has been supported by the Plunge Protection Team and even more buybacks by the banks in low volume trade. The valuation of the S&P is not justifiable.

Pretty soon the Fed will also ease and we have the precious metals move several legs up. Is it too late now to buy precious metals? No it's not. You should own precious metals, mining companies and related ETFs before gold pushes past US$1,400 and silver US$20 per oz, because after that the amount of gains will be fast and you would have missed out entering at an affordable range.

You may also like to consider exiting the ETFs which short the indices as more QE signals a bullish market - as an initial reaction. But the market will still crash further down the road due to recession in earnings, more debt driven asset bubbles and QE failure. QE is NEVER a solution. It is just a way to kick the can further down the road until the responsibility passes on to another.

As the market push towards an unsustainable peak, you may want buy back the inverse ETFs.

I continue to be long in precious metals, mining stocks and related ETFs and have a buy position in Bitcoin which production is due to halve in mid July. This will create and environment where  demand will be more than supply. Still, Bitcoin is a risky investment and you should only do so with awareness of the risks.

Remember, always do your own research as our risk appetite differs.