Month: March 2014

Full-time Vs. Part-time Workers

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When recessions hit, we historically see a conversion of full-time workers into part-time workers. This is visible in the recession of 2008-2009.

The increase in part-time workers is also visible in the chart below, which shows how many hours people work per week. We see that the average weekly hours dropped in the 2008-2009 recession and it is starting to drop in 2014. This means that a new recession is in the making in 2014. The key is to predict recessions by looking at the increase in part-time employment.

When Obamacare rolls out in 2014, we will continue to see a shift to part-time employment as employers will fire full-time workers (>30 hours/week) and hire part-time workers (<30 hours/week) to avoid paying for Obamacare.

Chinese Commodity Financing Deals

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Just wanted to point to an article that documents the very complex theory of Chinese Commodity Financing Deals (CCFD), which started in 2012.

Basically, China manipulated the paper price of gold down to create excessive physical gold demand we saw in 2013. China is the culprit and it’s my job to get this out in the media. This is the only reason how gold prices didn’t go up while physical gold demand was up. You would think when China unwinds, won’t this excessive physical demand slow down and send prices lower? The article apparently says that prices will go lower for copper and other commodities, but not for gold.

So, when China collapses and needs to unwind all of these trades, they will have to buy the paper price again which will send gold higher, back to the 2012 level. The opposite happens with the copper price, which will go lower.

Another very important conclusion is, when China collapses, then China won’t be able to do these CCFD’s anymore, which will mean that gold manipulation will end (at least from China’s perspective). This could be bullish for gold as I pointed out already in another post: “When China Implodes, This Might Be Bullish For Gold”.

I’m just summarizing that article, it’s too complex for me to understand for now.

Now what’s more important to us is: “How do we spot the unwinding of China?”. Obviously, the unwind will mean that the yuan collapses, so we look at the forex market.

You can see the collapse starting in 2014. And lo and behold, which commodity soared in 2014? Gold. Which commodity collapsed? Copper.

And with our correlation between trade and currency in mind, we know that when a currency collapses, the trade numbers will go from surplus to deficit, which means imports are higher than exports. So we also need to monitor the trade numbers of China.

Goldman Sachs says this unwinding will have a time frame of 24 months.

Black Swan Event

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Jberni1 has a new prediction ready. He sees a black swan event coming and a falling knife will happen in the stock market. And he’s pretty good at predicting things, I follow this guy’s predictions all the time.

A falling knife can occur when the stock market fails to follow the exponential curve upwards. So we should monitor this critical point. This is obviously a bubble alert that I’m giving here. (remember my call on the bitcoin bubble)

NASDAQ

Jim Rickards Exposes Goldman Sachs’ Call for $1000/ounce gold

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The latest Peter Schiff Show with guest Jim Rickards was a nice one. In this interview Jim Rickards says that some insiders at Goldman Sachs’ are actually bullish on gold. They are actually disagreeing with their own research where they are calling for gold to go to $1000/ounce.

China gold imports up considerably in February 2014

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As predicted here, I knew that China gold imports from Hong Kong had to rise to replenish the lunar New Year buying at the SGE.

So February 2014 gold imports were up massively, especially net imports went up 30%.

If you look at these charts, especially the second one, how can you expect the gold price to go to $1000/ounce? This is impossible. When the gold price was $1000/ounce in 2009, Chinese demand was tiny, now the Chinese demand is multiples of what it was in 2009, at the same gold price.

India Set to Import Twice as Much Gold

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It begins. This week, India allowed 5 private sector banks to import gold. The Reserve Bank of India (RBI) has allowed gold imports by HDFC Bank (HDBK.NS), Axis Bank (AXBK.NS), Kotak Mahindra Bank (KTKM.NS), IndusInd Bank (INBK.NS) and Yes Bank (YESB.NS), officials at the respective banks told Reuters.

This is major news because this will double the amount of gold imports to India from the current level.

As you know, Indian gold imports were flat in 2013 due to the tax imposed on gold imports in August 2013. Imports have been sharply down more than 50% ever since. But now that these 5 Indian banks are allowed to import gold, we expect the Indian gold import number to double again to its previous levels.

Indian Gold Imports

Monthly India Gold Trade (Koos Jansen: In Gold We Trust)

Premiums have soared to more than 20%. But I expect these premiums to come back down to the 10% level as imports double from the current level.

India Gold Premium

Will India become the largest gold importer once again? Read on here.