Race to the Bottom: What to Expect as the Fed Eases

With the Federal Reserve all but certain to cut interest rates multiple times in the months ahead, central bankers are engaged in a race to the bottom.

As negative interest rates expand in Japan and across Europe, as long-term bond yields in the U.S. plummet, and as President Donald Trump continues to talk tough on trade, the Fed has little choice but to cut.

President Trump has effectively declared a currency war – and enlisted a reluctant Fed to help him fight it. He is convinced that lower interest rates will boost the economy and that a lower dollar will boost U.S. producers in international trade.

Over the past year, Trump has inserted himself into monetary policy matters almost to the point of obsession.

He has berated Fed chairman Jerome Powell, his own appointee, on a regular basis and conferred with White House counsel about removing or demoting him from the Board of Governors. In June, one of his Twitter rants likened the Fed to “a stubborn child” for refusing to undo its 2018 rate hikes.

Trump even went after European central banker Mario Draghi, calling his pro-stimulus (weak euro) policies “unfair” to the United States.

Central bankers insist they aren’t moved by political pressure. Regardless of how true that may or may not be, they ultimately are moved by pressures in the economy and financial markets – which, in turn, are moved by politics.

Fed’s “Symmetric” Inflation Targeting Is Code for Accelerating the Dollar’s Debasement

The question for investors is: Which asset classes will come out on top as the U.S. shifts toward monetary easing?

Heading into the summer, we saw an “everything” rally. Stocks, bonds, precious metals, and even cryptocurrencies all rallied simultaneously.

In late June, gold prices broke out to a 6-year high above $1,400/oz. The S&P 500 traded back up to a new all-time high.

It’s unusual for the Federal Reserve to begin a stimulus campaign with the stock market already juiced. The Fed’s historical habit is to wait until markets break down and recession indicators flash before coming to the rescue.

This time is different.

What appears to be driving central bankers’ preemptive dovishness is their belief that inflation is not only tame, but too low.

They want to push inflation rates higher, above even their stated 2% target for a prolonged period.

Jerome Powell and his fellow Fed Governors have a term to describe their push for above-2% inflation: “symmetric” inflation targeting. By “symmetric” they mean that periods of low inflation should be countered with periods of higher inflation (accelerated currency debasement).

According the Fed’s preferred “core” inflation indicator (which understates some aspects of realworld cost increases), we’ve spent a lot of time running below target in recent years.

Investors are buying long-term bonds with yields that imply inflation will be contained by the Fed at or below target for years to come.

But if inflation starts rising above 2% and the Fed fails to keep it within its symmetrical objective, real losses on bonds and other interest-rate-sensitive assets could be asymmetrical in nature.

On the flip side, inflation risk has been so heavily underpriced by markets that even a slight return of inflation fears has the potential to drive hard assets dramatically higher...

- Source, FX Street

Ron Paul: Is Biden Worse Than Pompeo On North Korea?

Democratic presidential candidate Joe Biden has repeatedly slammed President Trump over his ongoing diplomatic outreach to North Korea, claiming that the move just gives legitimacy to a dictator. 

He has been joined by several other Democratic candidates in this attack. Why are the Democrats trying to out-neocon even neocons like Pompeo when it comes to diplomacy versus.

- Source, Ron Paul

Ted Butler: Mind Boggling Physical Silver Flows Into ETFs

​What "whale" is behind the recent unprecedented buying of silver futures to build a record concentrated position? 

This massive hedge has spurred feverish speculation that it reveals pre-positioning by a huge player in anticipation of a major wave of physical silver buying that could drive the price vastly higher. 

Now, a new revelation of "mind-boggling" recent accumulation of physical silver in response to cash inflows into ETFs begs the question of whether we are witnessing the fulfillment of the anticipated bullion grab. 

Are these separate events really connected as phases of a master plan? Silver market analyst Ted Butler of ButlerResearch.com returns to Reluctant Preppers to report a new development in this unprecedented mystery. 

Butler declares that the "whale" is more likely to be an insurance or hedge fund converting COMEX futures contracts into physical silver via ETFs.

- Source, Reluctant Preppers

Jerry Robinson: We Have a Completely Fake Economy...

Today's guest, Jerry Robinson, shares his thoughts on how the global dominance of the USA is fading fast. 

He mentions that the current economic environment will not end well and he's concerned that citizens in America are not prepared for the changes ahead.

- Source, Silver Doctors

The Coming Collision Between Peak Gold and Quantitative Easing

After the upcoming rounds of QE, will central banks abusing NIRP have destroyed the reputation of bonds as a “safe haven,” and will gold become the ultimate destination for a flight to safety? 

With the gold mining industry emerging from a decade of neglected investment in discovery, are we truly “past PEAK GOLD?” If so, how will that likely drive the price of gold (and gold mining stocks) going forward? 

Gold mining industry insider, Warwick Smith, CEO of USGD American Pacific Mining Corp, visits Reluctant Peppers for the first time, to lay out his perspective on how the collision of these mega-trends plays out for bonds, gold, and the surprising alliances of well-funded mid-tier mining companies with agile junior miners in the months ahead!

- Source, Reluctant Preppers

Trump is Right, the Fed is Lost and It Will Get Ugly, Says Ron Paul

The current monetary system is broken, and the economy may be worse before it gets better, said former congressman Ron Paul. 

“It’s a system that isn’t workable, and this is the reason why getting out of this recession hasn’t been so good. 

We got into it because there was too much spending, too much regulation, too much printing money and too much alteration of interest rates,” Paul told Kitco News.

- Source, Kitco News

David Hunter: I’m Calling for $1500 Plus Gold and $26 Silver

David is sticking to his target of $1550-$1600 for gold, which he predicts will be reached around Labor Day. For silver, he feels that $26 is still a definite possibility. 

He says, “When people become more interested in gold silver will head higher. Silver usually underperforms on the downward moves in gold and outperforms when gold rallies.” 

He feels that the markets are heading for another unwinding event similar to 2008, and that is likely to occur early next year.

- Source, Palisade Radio

Michael Oliver Provides Commentary on Gold and Key Markets

Jay introduces the guests and sponsors for the day’s program and Michael Oliver provides his most recent commentary on gold and other key markets.

- Source, Jay Taylor Media

Silver's Price Action Looking Good: Beware of the Silver Whales

Jason talks about the silver market and how silver price action has improved the last month with silver now back above $16/oz at $16.23. 

Despite silver's strong rally lately, the gold:silver ratio is still at 1:~88!

- Source, Wall St for Main St

How High Can Silver Go? Are Banks Still In Control Of Prices?

Gold & silver are on the move, but are the banks still in control of the "markets", and if so, or if not, where will the banks try to put extra pressure on silver prices? Craig has the answers to those questions and a whole lot more...

- Source, Silver Doctors

Lynette Zang And The "Great Reset"

I discuss the "Great Reset" with ITMTrading's Chief Analyst Lynette Zang.

- Source, Walk the World

Gold Settles at Six Year high, Extends Rally in Electronic Trading

Gold futures notched a fresh six-year high on Thursday, then extended their gains into the electronic trading session on the back of dovish comments from a Federal Reserve official, worsening tensions in the Middle East and a drop in the dollar.

“News of the U.S. Navy shooting down an Iranian drone always adds fuel to the market, but the underlying buying momentum after a break of the $1,425 area has propelled gold back to the next big challenge,” the $1,450 area, Peter Spina, president and chief executive of GoldSeek.com, told MarketWatch late Thursday afternoon.

He also pointed to speculation in the market that a “large supranational organization” is acquiring all ounces of gold produced in North America, citing a tweet from Roy Sebag, founder of GoldMoney.

Traders also saw comments from New York Fed President John Williams as endorsing an interest-rate cut at the Federal Reserve’s policy meeting later this month.

August gold trading GCQ19, +0.01% was at $1,448 an ounce in electronic trade Thursday at 4 p.m. Eastern time. The contract had tacked on $4.80, or 0.3%, to settle at $1,428.10 an ounce on Comex after climbing by 0.9% on Wednesday. The latest settlement was the highest for a most-active contract since May 13, 2013, FactSet data show.

Gold “worked off its ‘overbought’ conditions through time,” said Fawad Razaqzada, technical analyst at Forex.com. “The underlying trend is bullish for both [silver and gold], due to the falling government bond yields and the recent struggles for the dollar and stocks.”

“As things stand, these are good times for buck-denominated and noninterest-bearing precious metals,” he said in a market update.

In electronic trading late Wednesday afternoon, prices took a leg slightly higher shortly after the Beige Book showed that trade U.S.-China tensions were continuing to buffet businesses in the Federal Reserve’s districts.

Gold was “re-energized” by the Beige Book’s “general references to ‘modest’ growth and ‘stable to down’ inflation pressures,” said Brien Lundin, editor of Gold Newsletter, in comments to MarketWatch late Wednesday. “In short, nothing in the report seemed likely to derail the Fed’s plans for a rate cut at their upcoming meeting. This will complete the Fed’s dramatic turn-around from hawk to dove and will be extremely supportive of higher gold prices.”

Jeff Wright, executive vice president of GoldMining Inc., however, warned that “gold will tank” if the Fed doesn’t announce a rate reduction at the end of July.

On Thursday, the U.S. dollar DXY, +0.33% was down nearly 0.1% at 97.132 as gold futures settled, then dropped to 96.704 by the U.S. stock market close. The 10-year Treasury note TMUBMUSD10Y, +1.36% moved down to yield 2.0254% at the stock market close. Both had traded lower on Wednesday. Fading bond yields and a weaker dollar tend to encourage bids for bullion.

Meanwhile, comments from Bridgewater Associates founder Ray Dalio also helped to boost values for precious metals. Dalio wrote in a LinkedIn blog that an environment of central-bank policy easing and negative interest rates in much of the developed world may be a felicitous backdrop for gold gains, adding that it could both be “risk-reducing and return-enhancing to consider adding” the yellow metal as a “portfolio diversifier.”

“While many investors don’t like gold as an asset class given that it doesn’t provide any yield, at one point it may be a necessary portfolio diversifier especially when bonds of developed economies no longer provide a reasonable return,” wrote Hussein Sayed, chief market strategist at brokerage FXTM about Dalio’s comments.

Separately, silver prices climbed to their highest in more than a year.

September silver SIU19, -0.20% added 22.7 cents, or 1.4%, to end at $16.198 an ounce, representing the latest in a series of sharp gains for gold’s sister metal. Most-active contract prices finished at their highest since June 29, 2018, according to Dow Jones Market Data.

“In the short term, the silver market has become the leadership market with yet another sharp range up extension [Thursday] and a return above the psychological $16 level,” analysts at Zaner Metals, wrote in a note.

Among other metals, September copper HGU19, +1.37% settled at $2.71 a pound, down less than a cent, or 0.2%. October platinum PLV19, +0.40% added $2.80, or 0.3%, to $849.90 an ounce, while September palladium PAU19, -0.54% fell $31.30, or 2%, to $1,511.90 an ounce.

Exchange-traded fund SPDR Gold Shares GLD, -1.30% edged up by 0.04%.

- Source, Market Watch

Wolf Street Report: The True Victims of Inflation

Who are the true victims of inflation and who are the winners? On whose side are the Fed and the media?

- Source, The Wolf Street Report

Gold Tier 1 Asset Price Strength vs Silver

Silver & Gold both had positive week’s in fiat US dollar spot price action up a percentage point or two respectively since last week's closes. 

The silver spot price ended the week around the $15.25 per troy ounce mark. While the gold spot price finished the week around the $1,415 fiat Federal Note per troy ounce mark. 

The gold-silver ratio is still hovering around 30-year highs, closing the week near 93 ounces of derivative silver to acquire 1 ounce of derivative spot price gold. 

This week we welcome a new guest to this silver and gold podcast. 

Hear why this long-time gold trader believes the yellow precious monetary metal has been trading stronger than fiat silver prices of late, and how long he thinks this trend may continue along for. 

As well, what are some catalysts that might change the pattern? We also touch on the Gold-Silver Ratio, where it may go and why. 

A long-time commodity trader, Mr. Vince Lanci of Echobay Partners, speaks with us.

- Source, Silver Doctors

Jeff Berwick: Crypto from Beginning to the End Game

Topics include: being early into the crypto space, accepting diverse opinions without hating, who is Satoshi Nakamoto, origins of The Dollar Vigilante, hearing about Bitcoin for the first time, crypto and Anarchapulco, picking the top of the market, crypto vs gold and silver, silver price suppression, if you don't hold it you don't own it, unregulated crypto with decentralized exchanges (DEX), handling crypto securely, fractional reserve lending, Facebook's Libra coin, a global currency? the heart of Anarchapulco.

- Source, Dollar Vigilante

All Hell is Going to Break Loose: Silver is Going to Skyrocket

With silver rallying while gold continues to consolidate, is the price of silver about to skyrocket? Plus “All hell is going to break loose.”

“All Hell Is Going To Break Loose”

Peter Schiff: “Our entire way of life has been built on the privilege of issuing the world’s reserve currency. And when the dollar loses that status, all hell is going to break loose here in the US.”

ECB Balance Sheet Expanding Again

Holger Zschaepitz: “ECB balance sheet resumes uptrend. Rose by €6.9bn as QE reinvestments > QE redemptions. Now at €4,684.4bn, just shy of a fresh high, and equal to 40.4% of Eurozone GDP vs Fed’s 18.1% and Bank of Japan’s 102.2%. (See chart below).

ECB Balance Sheet Expanding Again

Silver Breakout:

Lawrence McDonald, Former Head of Macro Strategy Society Generale: “Silver making its move on gold, copper, and nickel as well. Capital is flying into reflation bets, Mr. Powell has his hands full. (See chart below).

Capital Flying Into Reflation Bets As Silver Breaks Out:

Silver May Be Set To Skyrocket

Peitro Di Tora, Analyst & Global Macro Investment Strategist: “Silver keeps following fractal from sharp move up 1970-73. History always repeats itself. True silver bull market classic signals supporting the breakout: 

1) Silver miners start to outperform and push Silver up. 

2) Silver strongly outperforming Gold and USD on the move up.

- Source, King World News, Read More Here

Bank Run Accelerates: Deutsche Bank Clients Are Pulling $1 Billion A Day, Lehman 2.0

There is a reason James Simons' RenTec is the world's best performing hedge fund - it spots trends (even if they are glaringly obvious) well ahead of almost everyone else, and certainly long before the consensus.

That's what happened with Deutsche Bank, when as we reported two weeks ago, the quant fund pulled its cash from Deutsche Bank as a result of soaring counterparty risk, just days before the full - and to many, devastating - extent of the German lender's historic restructuring was disclosed, and would result in a bank that is radically different from what Deutsche Bank was previously (see "The Deutsche Bank As You Know It Is No More").

In any case, now that RenTec is long gone, and questions about the viability of Deutsche Bank are swirling - yes, it won't be insolvent overnight, but like the world's biggest melting ice cube, there is simply no equity value there any more - everyone else has decided to cut their counterparty risk with the bank with the €45 trillion in derivatives, and according to Bloomberg Deutsche Bank clients, mostly hedge funds, have started a "bank run" which has culminated with about $1 billion per day being pulled from the bank.

As a result of the modern version of this "bank run", where it's not depositors but counterparties that are pulling their liquid exposure from DB on fears another Lehman-style lock up could freeze their funds indefinitely, Deutsche Bank is considering how to transfer some €150 billion ($168 billion) of balances held in it prime-brokerage unit - along with technology and potentially hundreds of staff - to French banking giant BNP Paribas.

One problem, as Bloomberg notes, is that such a forced attempt to change prime-broker counterparties, would be like herding cats, as the clients had already decided they have no intention of sticking with Deutsche Bank, and would certainly prefer to pick their own PB counterparty than be assigned one by the Frankfurt-based bank. Alas, the problem for DB is that with the bank run accelerating, pressure on the bank to complete a deal soon is soaring.

Here are the dynamics in a nutshell, (via Bloomberg): Deutsche Bank CEO Christian Sewing is pulling back from catering to risky hedge-fund clients, i.e. running a prime brokerage, as he attempts to radically overhaul the troubled German lender while BNP CEO Jean-Laurent Bonnafe wants to expand in the industry. A deal of this magnitude would be a stark example of the German firm’s retreat from global investment banking while potentially transforming its French rival from a small player in the so-called prime-brokerage industry to one of Europe’s biggest.

Of course, publicly telegraphing that DB is in dire liquidity straits and needs an in-kind transfer of its prime brokerage book would spark an outright panic, and so instead the story has been spun far more palatably, i.e., "BNP is providing “continuity of service” to Deutsche Bank’s prime-brokerage and electronic-equity clients as the two companies discuss transferring over technology and staff", according to a July 7 statement. The ultimate goal of the talks is for BNP to take over the vast majority of client balances, which are slightly less than $200 billion currently.

There is just one problem: nothing is preventing those clients who would be forcibly moved from a German banking giant to a French banking giant from redeeming their funds. And that's just what they are doing. Or rather, nothing is preventing them from moving their exposure for now, which is why they are suddenly scrambling to do it before they are suddenly gated.

Which is why the final shape of the deal remains, pardon the pun, fluid, and it is unclear how it will proceed, facing a multitude of complexities, including departing clients.

In an attempt to stop the bank run, BNP executives are meeting with U.S. hedge-fund clients this week to convince them to stay following similar sit-downs with European funds last week, Bloomberg sources said.

However, if this gambit fails, and hedge funds keep moving their business elsewhere, officials at the German bank may just relegate its assets tied to the prime finance division into the newly formed Capital Release Unit, i.e. the infamous "bad bank" which is winding down unwanted assets totaling 288 billion euros ($324 billion) of leverage exposure, and the prime brokerage is responsible for much of the 170 billion euros of leverage exposure that’s coming from the equities division into the division, also known as CRU a presentation shows.

It also means that countless hegde funds are suddenly at risk of being gated on whatever liquid exposure they have toward Deutsche Bank.

To be sure, Deutsche Bank’s hedge fund balances have been declining throughout the year as speculation swirled around Sewing’s intentions for the prime brokerage, but the rate of redemptions was far lower than $1 billion per day. Now that the bank jog has become a bank run, the next question is how much liquidity reserves does DB really have and what happen if hedge funds clients - suddenly spooked they will be the last bagholders standing - pull the remaining €150 billion all at once.

We are confident we will get the answer in a few days if not hours, until then please enjoy this chart which compares DB's stock decline to that of another bank which was gripped by a historic liquidity run in its last days too...

- Source, Zero Hedge

Why Do The Fed And Powell Hate Gold and The Gold Standard?

Powell was asked a question about gold and the goldstandard, which conveniently left out silver. 

Why does the Fed hate gold? Tune-in to find out why!

- Source, Silver Doctors

Martin Armstrong: USA Prettiest Ugly Sister in Global Economy

Legendary geopolitical and financial analyst Martin Armstrong says America’s economy is like being “the prettiest ugly sister in the family” of nations. 

So, if the U.S. economy is so good, why the rush to cut interest rates? Armstrong explains, “It’s really the world economy which is in serious trouble. You really have to look closely and pay attention to the words (Fed Head) Powell said. 

The economy is strong, unemployment is fine. Why would you cut interest rates when the stock market is making record highs? 

Powell said basically because it was things happening outside the country. The Fed, as I have said before, has become the central bank for the world.

This is the problem, and Europe is a complete basket case. They don’t get it, and they keep trying to hold onto their power and punish anyone who disagrees with them. 

Why is the U.S. economy so good? Why is the Dow at a record high? 

China is in trouble. Europe is in trouble. Japan is a basket case. The capital is coming here.”

- Source, USA Watchdog

The Fall of the UK Economy: British Pound Enters BEAR MARKET As Currency CRASHES

Josh Sigurdson talks with author and economic analyst John Sneisen about the fall of the UK economy as the British Pound sees 2 year lows that if not for what we saw in early 2017, would be closer to 34 year lows. 

As the Bank of England desperately attempts to prop itself up as Brexit among countless other reasons play into the new bear market, the bank intends to lower interest rates. The problem is, they are already at a mere 0.6% rate! 

They will likely be going negative as Australia heads in the same direction and the Federal Reserve talks about lowering interest rates as well. Meanwhile, the European Union ECB interest rates are even lower... AT 0%! 

They've attempted to prop up this old guard system far too long. It's been propped up on debt, derivatives and faith. It had to go down eventually. 

Everything appears to be in a slow spiral downwards on a global basis and individuals need to understand that all fiat currency eventually fails. It always has, it always will. They need to be financially responsible and understand money to be able to control their own money.

- Source, World Alternative Media

More Proof The Elites Have Lost Control Of Gold and Silver

Are gold & silver really breaking free from the price suppression? Join Mike & Half Dollar as they dive into fresh new evidence which suggests the cartel is losing control of the "markets". 

In addition to this new evidence, additional topics discussed include: 

- Fed Chair Jerome Powell's Q&A session with Congress going on today and tomorrow. 

- Big changes are coming down the pike as evidenced by the recent shakeups at major central banks and institutions around the world, including the latest developments from just yesterday. 

- How safe are pension plans are retirement systems? - What is the end game for the US dollar? 

- Debunking the "1 oz of gold buys a fine suit" myth. For discussion on those topics and a whole lot more, including addressing some comments and questions in the chat, tune-in to today's show in its entirety.

- Source, Silver Doctors

Trapped: Are You In An Illiquid Fund Full Of Ghetto Bonds?

Trapped! Are You In An Illiquid Fund Full Of “Ghetto Bonds”? Trump’s best cheerleaders & supporters - The angry, crowded democrat candidates. DOW has best June in 81 years (on low volume) Safe haven investors flee into cover. Will SWIFT be swiftly replaced?

- Source, Golden Rule Radio

Everyone Needs Exposure To Gold and Silver, Heres Why

Thanks for watching this Silver Doctors Interview. Share your thoughts below and make sure to click the subscribe button to join the Silver Doctors Community. 

Today's guest, Simon Popple, joins us to share his thoughts on the economy and the importance of everyone having exposure to gold and silver. He believes the time is approaching where to much debt will lead to the financial ruin of everyone not holding metals.

- Source Silver Doctors

Michael Pento: The FED Will Crush the Dollar

Today's guest, Michael Pento, joins us to share his thoughts on the economy and how the Federal Reserve's monetary policy will crush the dollar like a sledgehammer.

- Source, Silver Doctors

We Are in a Gold Bull Market that May Well Last 20 Years

Collin Kettell fills in for Kerem and interviews Jordan Roy-Byrne about the potential of a new bull market in gold. Jordan is not sure how long this particular move will last, but it could be a big one that lasts at least the next six months to a year. 

Jordan has said previously, “The market will move when the Fed cuts rates, because gold rises with declining interest rates or rising inflation rates.” He says, “This is now playing out exactly as it should, but it’s too early to determine how long it will last. The days of a thousand dollar gold are long gone. We are just at the start of something that is going to be historical and last the next fifteen plus years.”

- Source, Palisade Radio