In case you’re wondering whether depositors are fleeing the banks, in particular Deutsche Bank, here is the soothing answer.
Depositors are nowhere near the idea of a bank run.
Month: September 2016
U.S. Dollar Liquidity Vs. Emerging Markets
When U.S. dollar liquidity goes down, it means that there is a tightening in U.S. dollar funding conditions. This coincides with a negative EUR-USD cross-currency swap basis.
Dollar borrowing conditions can be improved by implementing quantitative easing (QE). This will depreciate the U.S. dollar. One of the global effects of this is that emerging markets will benefit from this added U.S. dollar liquidity (see chart below).
Tightening of liquidity is best seen at the shorter end of the curve. See chart below when Deutsche Bank started to have troubles in September 2016.
As U.S. dollar liquidity tightens in September 2016, I expect that the Federal Reserve will initiate another round of quantitative easing to ward off such U.S. dollar liquidity panic.
Gold Silver update: silver is better than gold
Premiums on gold and silver have been very low, just like months before. So it is not the best time to buy precious metals.
But there is one thing I want to point out.
Silver stocks at the COMEX have been going up (registered silver). This means funds are buying silver now.
Gold stocks at the COMEX on the other hand have topped out (registered gold). This means that funds aren’t buying physical gold anymore, for example in the GLD trust.
The idea is that you should buy silver instead of gold at this moment.
The same can be said on the COT report.
Gold shorts are low, so there won’t be a short squeeze on gold.
Silver shorts on the other hand have gone slightly up, so there is more chance that silver will go up due to a short squeeze.
Merk Election Webinar September 2016
Axel Merk talks about the VIX, elections, LIBOR, the U.S. dollar, peso, bonds, commodities, equities and currencies.
September 2016 FOMC Meeting: Erik Schatzker Asks One Simple Question
Erik Schatzker asked a very revealing question.
Why would the Fed increase interest rates over time while GDP growth expectations go down? The shaky answer of Janet Yellen sent the gold price slightly higher.
SLV pointing to imminent silver surge
I present you the most important chart of the year for silver.
A rising SLV inventory (red chart) has proven to be a proxy for higher silver prices.
And we just saw an almost all-time high in SLV inventory. If this uptrend maintains, I’d be quick to buy some silver miners or physical silver. The surge will be coming soon.
Japan Gold: The First Foreign Gold Miner in Japan
The recovery in the gold price has been driving investor interest into gold mining companies. In this article I’ll introduce you to one country that has just started to open its doors to gold mining: Japan.
In 2012, the Mining Act of Japan was amended for the first time in 61 years. The Mining Amendment Act came into force on January 21, 2012.
Now there is one company that is leveraging on this new mining act and that’s Japan Gold (TSX-V: JG) which started trading on 19 September 2016 on the TSX Venture Exchange.
To read more, go here.
Rig Count Vs. Oil Field Production
Rig counts are a 18-month leading indicator for oil field production. So if you know that oil production will go down next year, I would bet on rising oil prices.
Rig counts = Blue line
Oil production = Red line
Time to look at emerging markets
When you compare the Western markets with the emerging markets, you’ll see that there are tremendous opportunities overseas. In this article I’ll show you some of my ideas.
A quick look at the forward P/E ratio of both markets (Yardeni) shows that emerging markets are almost 2 times cheaper than developed markets, trading at a P/E ratio of 12. The arbitrage between the two markets is at a record high, so it’s a good idea to diversify from Western markets to emerging markets.
China and Russia are most likely to be the best place to invest in at this moment as they are the cheapest of the BRIC countries.
To read some of my stock ideas go here.
China is booming: power consumption rises 10% yoy
Finally some good news for China.
Correlation Economics (Backup) 