FED Pumps Billions Into Markets, Gold & Silver Reactions?

The Fed pumps another $75 billion into financial markets, continuing capital-injection plan. Impeachment talks begin but do they impact the markets past the initial days? 

We review the price movements of platinum, palladium, and the US Dollar index in relation to gold & silver.

- Source, Golden Rule Radio

Egon von Greyerz: Compared to Gold Assets Will Fall 95%

Financial and precious metals expert Egon von Greyerz (EvG) predicts, “All of these bubble assets that are based on just credit and credit expansion are going to implode measured in real terms, measured in gold. 

I expect the stock market and the property market to lose at least 95% or more in real terms.

The next up cycle for gold (and silver) has started. The next phase of this market has started, and it is going to go on for a long, long time. It is going to go to levels that will be hard to believe today. 

The world cannot have solid growth until this debt has imploded, the transition will be terrible, but I don’t see any other solution to this. 

The debt can only be wiped out by also wiping out all the asset values. You can’t just make the debt disappear and have the assets stand there at the values that they are today.

When this debt is written off or implodes, or whatever they want to call it, that means all these assets are going to go down. 

That’s why I am saying it is going to go down 95% against gold. There is absolutely no other way, in my view.”

- Source, USA Watchdog

Chris Powell: JP Morgan Gold Rigging, is Less than Half the Story

Not only a strong end to the week for the monetary precious metals prices, but also one the week began with one of the biggest bombshell news items and criminal lawsuits filed against the often alleged silver and other precious metals market rigging bank, JP Morgan Chase.

- Source, The Silver Doctors

How the Fed’s funding struggles highlight the fragility of Wall Street confidence

When obscure corners of the financial markets that are typically considered mundane draw outsize attention on Wall Street, it is always cause for investor concern.

That was the case last week when surging overnight borrowing costs laid bare cracks in a key Wall Street funding mechanism, which left many scrambling for cash and the New York Federal Reserve responding by injecting hundreds of billions of dollars into the financial system to restore calm.

In other words, this was no ordinary week in financial markets and more than a few investors were seeing shades of the 2008 financial crisis, reigniting decade-old nightmares of a systemic funding chaos.

“My initial reaction was fear,” said Hugh Nickola, head of fixed income at Gentrust, and a former head of proprietary trading of global rates at JP Morgan. “There’s really nothing more important than the functioning and transparency of financing markets.”

The sudden spotlight on the short-term “repo” market easily overshadowed Wednesday’s highly anticipated Fed decision on monetary policy, where the U.S. central bank cut federal-funds rates by a quarter-of-a-percentage point to a 1.75%-2% range in a divided 7-3 vote.

Rates on short-term funds, that are typically anchored to fed-funds rates, briefly became unhinged, spiking to nearly 10% on Tuesday.

Nickola said his worries only receded after the Fed started to intervene with a series of short-term funding operations that kicked off Tuesday and totaled nearly $300 billion for the week. On Friday, the central bank tightened its grip on rates ahead of the end of the quarter, when liquidity can become scarce, by extending its daily borrowing facilities through at least October 10, and unveiling three, 14-day term operations.

The short-term rate spike also raised concerns about the potential for the funding tumult to shake consumer confidence, at a time when financial markets often are viewed as a barometer of the economy’s vitality.

Bruce Richards, CEO of Marathon Asset Management said the biggest risk to the U.S. economy was a weakening of consumer sentiment, in remarks Thursday at the CNBC Institutional Investor Delivering Alpha conference.

Richards said that while U.S. households are doing well, it would become “very worrisome” if consumer confidence starts to fade, since two-thirds of the U.S. economy is consumer-driven.

“Right now, it is corporate confidence” that is weakening, he said.

Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, also sees reason to fret due to continuing Wall Street liquidity woes that could seep into the real economy.

He pointed to three factors that still leave the money-market plumbing fragile: heavy U.S. Treasury borrowing to fund the widening fiscal deficit, a flat-to-inverted yield curve, and a regulatory environment that limits the ability of banks to absorb government debt.

LeBas thinks overnight funding operations alone won’t be enough to keep credit flowing over the longer run...

- Source, Market Watch

What's the confusion with silver's fundamentals? There is no oversupply

The long-term demand of silver will always outpace supply, owing to strong growth in industrial usage, said Phil Baker, CEO of Hecla Mining. “There’s no oversupply of silver. 

The growing consumption of silver from industrial, but it’s really more consumer products, has really taken off. It’s happened over the course of the last 20 years, and it continues to increase,” Baker told Kitco News on the sidelines of the Denver Gold Forum.

- Source, Kitco News

Negative Interest Rates Are Social Political Poison

The interest rate business model is dead. Negative interest rates killed it, with no replacement in sight.

Anne Kunz and Holger Zschäpitz co-authored an excellent article for Welt (in German) called the Interest Rate Business Model is Dead.
Here are some excerpts via Google translate with many of my own modifications. For example, the title itself is my translation, not Google's.

Google has the title as "Business Model With the Interest is Dead".

I made an educated guess that Google's title isn't quite right.

I picked up the article from this Tweet.

Translation errors below may be Google's or mine. I took a fair amount of liberty, adding some words, deleting others, or changing the word order so the result makes sense to me.

Apologies to the authors for any of my errors.

Interest Rate Business Model is Dead

The cash cow bank lending model is dead, buried by the European Central Bank (ECB).

The coup de grace came at the recent meeting. As ECB President Mario Draghi squeezed the negative interest rate for banks even deeper.

The ECB will restart its bond purchase program in November. This time, without a time limit. Thus, the monetary authorities have permanently chained the long-term interest rate at a low level and cut the profit opportunities of the financial sector to a level that isn't sustainable. For a long time, institutions have made good money from the difference between long-term and short-term interest rates.That time is now over.

In 2016, Commerzbank employed more than 50,000 people. CEO Martin Zielke wants to close one-fifth of the 1,000 branches and even wants to part with an important source of income including his Polish subsidiary MBank. The workforce should be reduced to around 38,000 by the end of 2020.

The sale of Mbank is a desperate attempt at salvation.

In terms of stock market value, Deutsche Bank and Commerzbank are now loosely hanged even by more regionally active institutions from Norway and Sweden. [That is a direct translation that reads wrong but I do not know how to fix it].

Even the once proud Landesbanken is a restructuring case. This is a dangerous development.

"With the allowance, the ECB has relieved the German banks in the short term by around 500 million euros. At the same time, banks will be burdened considerably by the continuation of the low interest rates for an indefinite period, "says Peter Barkow, financial expert at Barkow Consulting. "Especially the German banks are very much dependent on income from the long-term investment of customer deposits at higher interest rates, called maturity transformation. This strategy only works very limited, "warns the expert. [The allowance refers to the ECB not charging banks a portion of the negative interest on excess reserves]

However, the corresponding earnings impact on the banks will only be delayed. "Many German banks have to find new sources of income in the medium term. In the short term, a further reduction in costs will probably be necessary, "says Barkow.

For more than a hundred years, banks lived on long-term lending or investing in securities their clients entrusted to them in the short term .

Historically, banks made money out of time. If time no longer has a price, because there is no more interest, nothing can be earned. Ten-year Bunds yielded around 1.5 percentage points more than two-year issues in historical terms. Currently, the difference is just under 0.2 percentage points.

In the multi-billion loan portfolios, the institutions are losing a lot of money due to ECB policy. Accordingly, the shares of Deutsche Bank and Commerzbank have fallen in sync with the interest rate differential. How dramatic the situation is for the banks, the analysts of JP Morgan have written down.

In a 120-page analysis, JP Morgan analysts calculated what effects the ECB policy will have on the banks. They used Japan as an example. Japan has had negative interest rates for some time now and there institutions have been unable to earn anything for two decades with time. The JP Morgan analysts' conclusion: Interest margins could continue to shrink and continue to weigh on the earnings side.

"The negative interest rate policy of the ECB is ruining the financial system and is a socio-political poison," says Frank Kohler, CEO of Sparda-Bank Berlin. The financial system is absurd if we have to explain to the children that money has a negative value - and thus debt is good, because you may not have to repay everything.

Socio-Political Poison

Bingo.

- Source, Mish Shedlock

Financial Markets At Very High Risk Of Black Swan Event

Last week, the markets had the risk of war with Iran and the Fed to worry about, but to start these final trading days of September, 2019, there are no major uncertainties on the market's radar, but there is a very specific reason why we might just see a black swan come swooping down onto the markets.

- Source, Silver Doctors

If Silver's Price Was Suppressed, Then Buy Physical Silver

Simon says we need to play the cards we've been dealt, and if that means silver's been driven down in price and we can buy it cheaper, then back-up the truck and buy physical, but is that the only reason to back-up the truck? 

On Thursday, Half Dollar had the opportunity to chat with one of our favorite analysts from across the pond, Simon Popple. 

Today we are talkin' silver, gold, the gold-to-silver ratio, gold & silver mining and a whole lot more!

- Source, Silver Doctors

Big Money Sees the Economy Hitting the Wall

Why are big money managers and investors like Ray Dalio and Mark Mobius telling people to buy precious metals? Do they see the economy hitting the wall? Analyst and entrepreneur Karl Denninger says, “Everyone sees the wall. 

Everyone sees the problem. The monthly Treasury statements are public. Go pull it up on a computer.

It is the general ledger of the federal government, and it’s terrible. The thing is everyone knows it is terrible, and it has been terrible for a long time. It was terrible when Obama was President, and it is terrible now.”

- Source, USA Watchdog

Bull Market Weekly Update: A Predictable Pullback

Bitcoin, Silicon Valley, and The Future of Money

Outspoken bitcoin bull and noted Silicon Valley investor Tim Draper joins Thiel Macro’s Mike Green for a discussion on how the worlds of venture capital and crypto are colliding. 

The two investors also discuss crypto's potential impact on fiat currency, and the ways in which new rules and regulations could alter the future of trading.

- Source, Real Vision Finance

Will Central Banks Use QE to Prevent a Liquidity Crisis?

Michael Howell, founder and managing director of Crossborder Capital, joins Real Vision to talk about his views on global liquidity and capital flows. 

He says that the global economy is sputtering, and that central banks will have to reengage in quantitative easing in order to inject liquidity into markets. Howell argues that this will ultimately lead to rallies in equities, gold, bonds and bitcoin.

- Source, Real Vision Finance

The Wolf Report: Snapback Bloodletting in the Overripe Bond Market

The 10-year US Treasury yield rips. Unstoppable negative yields become stoppable.

- Source, The Wolf Report

Binyamin Appelbaum: The Problem With Modern Economics

Why do we have the economic policies we do today? These policies drive decision-making on Capitol Hill, corporate boardrooms, and on Wall Street. 

But who made them, why, and how did they come about? And how well are they serving us? 

Binyamin Appelbaum has made these questions the focus of his new book The Economists' Hour: False Prophets, Free Markets and the Fracture of Society, which shines a bright light on the rise of modern Economics and its dominating influence on society. 

From anti-trust law to central banking, Appelbaum explains how Economics has evolved (metastasized?) into its current form, where the solutions it now offers may be no better (and possibly substantially worse) than the problems it's designed to address.

- Source, Peak Prosperity

Kyle Bass on China's Major Risks and Opportunities

Legendary investor Kyle Bass, the founder of Hayman Capital, joins Real Vision’s Grant Williams for a deep dive into China. 

From shifting capital flows around the world to the threat of China devaluing the yuan, these two discuss threats and opportunities that China presents investors now.

- Source, Real Vision Finance

The Era Of Central Banks Pushing The Economy Forward Is Ending

Today's guest, Charles Hugh Smith, shares his thoughts on how capitalism as we have know it is being challenge. 

During our discussion he shares his thoughts on how monetary policy makes it hard for citizens to save and invest because there's now a problem with then earning little to no interest.

- Source, Silver Doctors

Why the Fed is stuck between a rock and a hard place

The world has seen a “paradigm shift” where nothing is the same as before, and the Fed has difficult choices to make, says Will Rhind, CEO of GraniteShares. 

“On the one hand you could make the case for, which obviously the president would make, that yes, interest rates are too high and it’s now against the backdrop of almost zero if not zero or negative rates in other countries and the U.S. is at a competitive disadvantage. 

On the other hand, you could say that even now with the rates coming down, the rates are still very, very low by historical standards and it’s still a nightmare for savers and for anybody that’s looking for income in the market,” Rhind told Kitco News.

- Source, Kitco News

Silver Looking Good But What Will it Take to Hit $50?

It may take another miracle to hit $50 an ounce for silver, said Todd Horwitz, chief strategist of BubbaTrading.com, but another analyst offers a different view. 

“I think it’s going to be more of an organized rally but you never know. Once the big money comes into these markets, these markets really move. We saw quite a bit of funds flow into platinum, platinum’s up $35 today, and that’s a smaller market,” said Phil Streible, senior market strategist of RJO Futures. 

Streible added that while a parabolic move for silver may occur, he doesn’t see it happening quite yet.

- Source, Kitco News

USA Watchdog: Bad Guys Won't Be Allowed to Keep Stolen Wealth

Federal Reserve watcher Wayne Jett wrote about the Fed, “The Fruits of Graft,” and says the bad guys are not going to be able to keep all the vast wealth that has been stolen out of the United States. 

Trump signed an Executive Order in December 2017 that allows the Treasury to freeze assets of people engaged in “human rights abuse and corruption.” Jett thinks this is a way to cushion the fall for the masses in turbulent political and economic times. 

Jett explains, “There has been a great deal of theft of gold at various levels. There has also been a great deal of fortunes built in such things as the drug trade and all of which relates to the corruption of the Executive Order you and I spoke about.

It was signed in 2017 to declare a national emergency related to human trafficking and corruption. I think a great deal of wealth has been confiscated or at least frozen.

That wealth is frozen and subject to confiscation. Our military has, I think, been used to recover large amounts of stolen gold. 

We have to wait and see how successful President Trump has been in making recovery of assets.”

- Source, USA Watchdog

Ron Paul: Delusions of Grandeur, Socialism is A Fool's Errand

It's hard enough to plan and manage one's own individual life, is it not? It's foolish to think you can even plan the life of another single individual... 

You can't!... 

But to believe that you can plan the lives of hundreds of millions of people? This is a complete fantasy!

- Source, Liberty Report

Euro zone inflation unchanged in August, more ammo for ECB to ease monetary policy

Euro zone inflation remained low at 1.0% in August, well below the European Central Bank’s target, a first estimate showed on Friday, bolstering market expectations that the bank will further ease monetary policy next month.

The European Union’s statistics office said on Friday that inflation in the 19 countries sharing the euro was unchanged from the July reading, in line with expectations in a Reuters poll.

The rates of price increases in July and August are the lowest since November 2016, well below the ECB’s inflation target of below, but close to, 2% despite years of unprecedented monetary stimulus through rate cuts and trillions of euros of bond purchases.

Economists said the latest economic data strengthened the case for further loosening monetary policy.

“There is nothing in today’s data releases to change the minds of ECB policymakers meeting the week after next: we still expect them to cut the deposit rate from -0.4% to -0.5% and to provide further strong hints that more QE is on the way,” Capital Economics’ Andrew Kenningham wrote in a note.

The ECB’s Governing Council holds its next monetary policy meeting on Sept. 12 and has all but promised a stimulus package, with economic growth faltering amid a global trade war and Germany’s manufacturing sector already in recession.

Market expectations are that it will carry out several interest rate cuts in the coming year, along with a fresh round of bond purchases, commonly known as quantitative easing.

The ECB’s measures are also set to include a way to compensate commercial banks for the side effects of negative interest rates.

Core inflation, which strips out volatile unprocessed food and energy and which the ECB scrutinises in policy decisions, was steady at 1.1% in August.

The even narrower measure excluding also alcohol and tobacco prices that many market economists look at was unchanged at 0.9%.

Eurostat’s flash estimate for the month does not include a monthly calculation.

The low overall level of inflation strengthens the case for a package of ECB measures to support the economy and faster inflation.

The ECB’s problem is that inflation has undershot its target since 2013 despite a lengthy economic boom, which saw the creation of over 10 million jobs.

Such an expansion should have fuelled inflation already but hidden slack in the labour market, the growing share of services in the economy and the population’s ageing, all kept a lid on price growth.

While the bank has argued that inflation would eventually come, it has already exhausted much of its firepower and now faces economic turbulence with a relatively depleted arsenal that could force it to once again to reinvent its policy toolkit.

The ECB is also facing the added difficulty that much of the current economic weakness is due to external factors, such as Brexit, a trade war and China’s own slowdown, against which monetary policy is largely ineffective.

While the ECB is unlikely to admit that the current troubles are outside its control, economists say that the best it can hope for is to prop up confidence and preserve already favourable financing conditions...

- Source, Reuters