In Fiat Money We Do Not Trust "Chinese Edition"

Perfect follow up on In Fiat Money We Do Not Trust ... I think it´s safe to assume that China will be a net buyer of GOLD for some time to come......Especially when you consider the tiny FX to GOLD Reserves Ratio from the Central Bank......

Paßt hervorragend zu In Fiat Money We Do Not Trust .... Denke man kann ohne Übertreibung sagen das China bzw die Chinesen auf Sicht der nächsten Jahre sicher zu den Nettokäufern von GOLD gehören werden.....Gilt besonders wenn man sich das aktuelle Verhältnis der Fremdwährungen zu GOLD der Chinesischen Notenbank ansieht.....



H/T The Mess That Greenspan Made

I just wanted to add that it was illegal to buy GOLD as an investment vehicle in China for decades and with negative real interest rates & very few alternatives this kind of "GOLD FEVER" is probably less surprising...Since Greece has made headlines here in Germany the same store would have been almost as packed in Hamburg or Munich ;-)

Looks like Sorros knows this chart and wants to frontrun the "ultimate bubble".... Otherwise the 100% increase of his GOLD investment would make little sense.......

Ergänzend sollte man wissen das es in China bis vor kurzem verboten gewesen ist GOLD für Investmentzwecke zu erwerben und das es dank der seit Jahren notorisch negativen realen Guthabenzinsen & fehlender Alternativen nicht weiter verwunderlich ist das solche Läden so prosperieren....Seit Griechenland in Deutschland die Schlagzeilen beherrscht bin ich mir sicher das ein identischer Laden in Hamburg oder München ähnlich erfolgreich wäre.. ;-)

Sieht ganz so aus als wenn Sorros diesen Chart in Verbindung mit dem "ultimativen Bubble" vor Augen hat... Ansonsten würde es wenig Sinn machen das er sein GOLD Investment inzwischen verdoppelt hat.......

Gold Report China H/T ZH

The following chart won´t hurt their appetite for GOLD either......

Der nachfolgende Chart dürfte den Appetit in Sachen GOLD nicht gerade mindern.....

RBS on central banks’ underwater EUR positions FT Alphaville

Because over half the reserve accumulation in this period took place in the last 3 years, Chinese acquisition of reserves has been at relatively high EUR/USD levels. There is no data in the public domain on how much of China’s purchases were in EUR, but presumably diversification to lower the share of USD holdings may have pushed EUR purchases to close to half of all acquired reserves, and a majority of these purchases are well ‘out the money’.

The chart above shows that as much as 77% of Chinese reserves were accumulated at levels above EUR/USD 1.25. This does not discriminate between EUR purchases and USD purchases.

Most Impressive Sovereign Funding Official 2009 Award Went To Spyros Papanicolaou ( Greece )

You cannot make this up......Very hard to hide a big deal of SCHADENFREUDE when you keep in mind that the awards were determined by a poll of bankers and borrowers .... On the other side it´s too bad that exact these same so called "sophisticated" investors ( not speculators! ) got once again bailed out for their ( ongoing ) very poor judgement.....The following quote from John "Anti Spin" Hussman "Prostituting the fiscal stability of an entire nation for the benefit of bondholders who made bad loans ?"( Hussman is really "upset"..... ) & this must see clip :-)! are unfortunately spot on... Go and read the entire link !

Kein Aprilscherz......Wenn man bedenkt das dieser Preis in einer Abstimmung von Bänkern und Investoren vegeben worden ist kann man sich eine gewisse Portion SCHADENFREUDE einfach nicht verkneifen...... Gleichzeitig wird die Wut darüber, das genau diese Investoren ( nicht Spekulanten! ) trotz Ihres offensichtlich zum wiederholten Male vernebeltem Urteilsvermögen erneut über immer größer werdende Bailouts rausgehauen werden, tagtäglich größer ......Leider handelt es sich beim nachfolgenden Zitat von John "Anti Spin" Hussman "Prostituting the fiscal stability of an entire nation for the benefit of bondholders who made bad loans?" ( Wer den ansonsten sehr besonnenen Hussman kennt kann erahnen das hier einer ziemlich "aufgebracht" ist ...) sowie diesem wunderbar humoristischen Clip :-)! um eine treffende Bestandsaufnahme und um keine Übertreibung......Empfehlen allen den kompletten Link zu lesen !


WSJ

Beware the lessons of history—especially when they involve Greece. The winner of Euroweek's 2010 award for most impressive sovereign funding official richly deserved it: Robert Stheeman, head of the U.K. Debt Management Office, steered through a whopping £185 billion ($268 billion) of gilt sales in the last fiscal year.

But Mr. Stheeman might not want to look too closely at the award's history: Last year's winner was one Spyros Papanicolaou, the former head of Greece's Public Debt Management Agency.

Rough times for GILTS & the POUND ahead.....

Sieht ganz so aus als wenn es für GILTS und das britische Pfund demnächst ruppig werden könnte......

In Fiat Money We Do Not Trust

Nice addition to Gold...The Ultimate Triple-A Asset . If you are still not in the GOLD camp & "stunned" by the recent price action you really should give the link a chance..... Especially if you think GOLD is a bubble...... I think it´s more important than ever that a prudent asset allocation should at least have "some" GOLD exposure.......Doesn´t mean you have to do the "SPROTT","PAULSON" or "KAPLAN"......

Passt perfekt zu Gold...The Ultimate Triple-A Asset . Denke jeder der bisher die Preisbewegung beim Gold mit ungläubigem Staunen betrachtet sollte sich den Link zwingend zu Gemüte führen.... Gilt besonders für alle die ( oftmals seit Jahren ) im "GOLD IS A BUBBLE" Lager zu finden sind......... Ich bin mehr denn je der Meinung das jede vernünftige Portfolio Strukturierung zumindest "etwas" mit GOLD zu tun haben sollte.....Man muß ja nicht gleich den "SPROTT", "KAPLAN" oder "PAULSON" machen.....

H/T Wall Street Follies

The image from Wall Street Follies is well over 10 years old and an updated version would obviously include "QUNATITIVE EASING" aka "PRINTING MONEY"..... ;-)

Der Cartoon von Wall Street Follies ist deutlich über 10 Jahre alt..... Eine aktuelle Version würde sicher die Wörter "QUANTITIVE EASING" bzw "PRINTING PRESS" beinhalten..... ;-)

David Rosenberg ZH

Gold has broken out to the upside even as the U.S. dollar has done likewise on the back of a renewed flight-to-safety bid. What this means, of course, is that gold has managed to hit new highs even as, (i) the U.S. dollar has risen, which means gold is breaking out against all major currencies; and, (ii) other industrial commodities, such as oil and copper, have slumped from their recent highs.

So what this all means is that gold is no longer being considered as part of a resource complex that is outperforming the segment but is increasingly being viewed as a currency of its own.

Gold is a hedge against instability of all kinds — don’t think for a second that deflation does not engender instability whether it be financial, economic or political. To be sure, gold is also a hedge against inflation — but that is going to come much, much later and will be the icing on the cake.

Totally agree on the his deflation / inflation view & timeline....

Stimme zu 100% mit der Deflations / Inflationszeitachse überein....

In Fiat Money We Do Not Trust FT Alphaville

....the price of gold is rising against every major currency, not just the embattled euro.

Gregg Gibbs : "If the market won’t buy the government bonds, the central banks have to. There is no other choice. The alternative is just too damaging for the economy to contemplate. If the central banks don’t buy the debt, then governments are forced into a budget surplus (a surplus is required to cover interest payments on existing debt).

Imagine the carnage if major economies were forced from double digit deficits to surplus, you are talking Great Depression type scenario or worse."

Even though inflation is yet to break out, the price of gold is telling us that this threat is very real over the longer term. People rightly so do not trust fiat money anymore.

Pimco’s Mohamed El-Erian via Felix Salmon

I am inclined [to warn] against the long-term implications of additional steps to turn monetary authorities (with revolving balance sheets) into fiscal agencies (with more permanent exposure to dubious assets).

An even larger-scale use of central bank balance sheets, if it were to materialize, would provide only a temporary respite, and the collateral damage and unintended consequences would be serious, including the impact on inflationary expectations.

Welcome to the OECD debt trap George "Minsky" Magnus via FT Alphaville

There is little on offer in the underlying details of most governments’ deficit and debt arithmetic moreover that would suggest these debt ratios are about to peak and then decline to more manageable levels in the period ahead.

Indeed on current policy settings the evidence suggests that debt-to-GDP ratios will continue to climb.

The reasons are two-fold and relate to conventional textbook definitions of a ‘debt-trap1’

The first reason is that most governments will still be running a deficit on their cycle-adjusted primary budget balance in 2011 – the budget balance excluding interest payments that would appear if the economy was operating at full capacity.

The second reason concerns the relatively high real borrowing costs that governments are confronting at present, partly a function of low levels of inflation and – for some economies – the increasing premium that investors have been demanding to hold their sovereign debt. The ‘effective’ real borrowing rates for most OECD governments last year on their accumulated debt position was north of 3 percentage points (see charts below). For some economies it was north of 4 percentage points. Against an underlying backdrop where potential growth rates for most OECD economies are probably south of 2% and for many closer to 1.5%,this is deeply concerning.

Bill Gross WaPo

"In order to pay the interest and the bill when it comes due, we'll simply have to issue more IOUs. That, to me, is Ponzi-like," Gross said. "It's a game that can never be finished."

AMEN.....

Hinde Capital - ECB the European Commisssion's Whore May 2010

H/T ZH

Debasing the ECB’s Balance Sheet Hussman via Tim

A “sterilized intervention” is one where the euros created through the purchase
of distressed Euro-area debt will also be absorbed by selling other assets from
the ECB’s balance sheet

Therefore, we are fundamentally promising to debase the quality of our balance sheet, by exchanging higher quality Euro-area debt with lower-quality debt of countries that are ultimately likely to default.”.

Looks like even Hussman is too otimistioc when it comes to the ECB & "sterilisation"......

Beim Anblick des nächsten Links muß man leider sagen das wie zu befürcvhten war selbst Hussman beim Thema EZB und "Sterilisation" noch zu optimistisch ist....

Sterilised and scandalised FT Alphaville

But here’s the key bit from the ECB’s statement:

Fixed term deposits held with the Eurosystem are eligible as collateral for the Eurosystem’s credit operations.

Which means the ECB’s govt bond purchases will be offset for a full week — until the banks can repo the fixed term deposits at things like the Long-Term Refinancing Operation (LTRO). What liquidity the ECB takes away with one hand, via the term deposits, it gives in unlimited amounts with the other.

JP Morgan’s David Mackie

In the event, there was less symbolism than we expected . . .

what the ECB is doing is potentially far more worrying. The ECB is now purchasing the government debt of sovereigns whose solvency is in question: neither the Bank of England nor the Federal Reserve did that

"CENTRAL BANKSTERS".....;-)

Complacency Is Over....... "Cancel All Orders, Cancel All Orders....."

I hope he has "survived" the trading day.... If you want a good explanation how the "surprising" market action could happen at you should read NO FAT FINGER! & "Rise ( & Fall ) Of The Machines" ... ... If my market view is correct i think we can enjoy similar clips in the future.........

Bleibt zu hoffen das er den Handelstag gesund überstanden hat....Mehr Hintergründe für das nicht wirklich überraschende Marktverhalten gibt es in NO FAT FINGER! & "Rise ( & Fall ) Of The Machines" ... Sollte ich mit meiner Marktbeurteilung recht behalten dürften uns noch einige solcher unterhaltsamen Videos ins Hause stehen....



H/T The Reformed Broker

Did he really cancel his orders near the bottom..... ;-)

Hört sich für mich so an als wenn er nahe dem Tief alle Orders gecancelt hat...... ;-)

UPDATE:

Ben Lichtenstein’s Breathless SPX Order-Taking



H/T Barry Ritholtz

INSTANT CLASSIC!