Commodity Trade Mantra

Posts Tagged ‘Global Economy’

More Surprises ahead with Implications for Gold Price Volatility

What many Western investors fail to realise is that investment demand for gold knows no borders. It will be the growth in physical demand for gold from India & China that drives gold prices to unheard of heights over the coming years. Political & social developments, growth in middle classes with investible incomes in these countries will be more important than who’s occupying the White House.

Gold And Silver Prices Crash Despite Financial Instability & Political Turmoil

Despite the negative bond yield environment, political turmoil in a number of countries, a tumultuous US presidential election campaign & uncertainty in the aftermath of the Brexit vote, gold and silver prices plummeted. Not to mention the current fragility of the global financial system. Now is the time to buy assets physical gold and silver that offer a meaningful hedge against such a scenario.

Gold Investment Necessitated by Failed Monetary Policies

Many analysts are interpreting weak Japanese Government Bond demand as a signal that investors are starting to lose confidence in the effectiveness of unconventional monetary policies, following increasingly desperate bids by the world’s central banks to reflate the global economy. In this environment, we believe investors are using gold to hedge portfolio risk as they add more stocks.

Gold and Silver Can Protect You from the Coming Bank Account Tax

Deutsche Bank thinks central bankers should go directly after people’s savings accounts. In other words, it’s lobbying for a wealth tax—or “bank account tax”—that would be a more radical version of negative rates. A bank account tax would promote more reckless borrowing and spending than we’re seeing already. When people realize it, they’ll pile into gold and silver.

Central banks may do more harm than good, says RBI's Rajan

Raghuram Rajan, governor of the RBI, has been leery of the unconventional monetary policy tools used by central banks since the financial crisis. At some point, he said, pushing interest rates low seems to have the perverse effect of making people save rather than spend. The asset-price boost that comes with QE may disappear if these assets can’t grow into their valuation.

Negative Rates Confirm The Failure Of Globalization: Deutsche Bank

Negative interest rates may or may not be a thing of the past, but the confusion about their significance remains. Here is Deutsche Bank’s Dominic Konstam explaining how, among many other things including why Europe will need to “tax” cash before this final Keynesian experiment is finally over, negative rates are merely the logical failure of globalization.

Relying on a Pension to Retire? Food Stamps May Be Your Future

Public pension funds are going broke. Certain state pensions are laughably short the money needed to pay retirees. The Central States Pension Fund – a giant private pension fund, recently decided to cut benefit payments by as much as 61%. Retirees currently getting monthly checks for $3,000 will only get $1,180 now. The cuts will affect hundreds of thousands of people.

Helicopter Money - The Recipe For Inflation Gathers Momentum

Where will inflation come from? With helicopter money, Congress spends the money. It covers its deficit with more borrowing & the Fed prints the money to cover the borrowing. It’s essentially monetizing the debt. The difference is that in the case of QE, there’s no extra spending. In the case of helicopter money, there is because Congress spends all the money. – Your recipe for inflation.

Negative Interest Rates Bullish for Gold Prices

With money printing in full gear & negative interest rates, it’s puzzling to see negative sentiment building up for gold prices. If you want to know where gold prices are headed, just pay attention to what’s happening in the global economy. Know that negative interest rates and money printing means devaluation of currency, and gold is one of the only hedges against this.

The Negative Rates "Doom Loop" That Can Wipeout Banks & Global Economy

In a way, the move below zero was a gamble. The theory went like this: Banks would take a hit, but negative rates would get the economy moving. A stronger economy would, in turn, help the banks recover. It appears that wager isn’t working. The consequences are deeply worrying. Weak banks may now drag the economy down further.

Could China's Housing Bubble Bring Down the Global Economy?

China’s stated intent is to move from a fixed-investment/export dependent economy to a consumer economy. But if we consider what happens when housing slows or even grinds to a halt, we realize the impact on incomes, wealth and consumption will be extraordinarily negative, not just for China but for every nation that sells China vehicles and other consumer goods.

Is Crude Oil Close To A Tradable Bottom?

By all accounts, the world is awash with oil. Despite the downward pressure on oil, the devil’s advocate wonders: could oil be setting up a tradable bottom? By tradable bottom I mean a level from which oil might bounce. For example, oil reversed from the low $40s earlier in 2015 and climbed to about $60 before resuming its downtrend.

Why Gold Is Surging: BofA Says To Expect A "Massive Policy Shift In 2016"

This is how investors should trade this “massive policy shift”: Short Wall Street, buy gold. If accurate this could be the biggest policy shift since the artificial price controls were imposed on gold by the BIS trading desk in September 2011 when the SNB unleashed its now failed currency peg, just hours after gold hit its all time nominal high just shy of $2000.

Death Of Cognitive Dollar Dissonance & The Remonetization Of Gold

Gold, the only internationally-recognised non-national money provides the international monetary solution to an economically multipolar, globalised, competitive world. As gold again begins to circulate to settle cross-border balance of payments, it resolves the perennial floating fiat currency dilemma of ever-growing imbalances & associated ever-growing debts to finance them.

Emerging Market Meltdown May Plunge Global Economy Into Recession

When the Fed effectively telegraphed its new reaction function last month, the FOMC served notice to the world that it was not only acutely aware of what’s going on in emerging markets, but also extremely worried about the possibility that hiking rates could end up triggering something far worse than the “tantrum” that unfolded across EM in 2013.

Dependence On Central Banks Is "Unrealistic And Dangerous", BIS Warns

This is a world in which interest rates have been extraordinarily low for exceptionally long and in which financial markets have worryingly come to depend on every word and deed of the central banks, in turn complicating the needed policy normalisation. It is unrealistic and dangerous to expect that monetary policy can cure all the global economy’s ills.

Could Gold Prices Soar in September?

Gold prices began this week on a slightly negative note as prices drifted back towards their lowest levels since mid-August after US payrolls data failed to provide clarity on the timing of a US Fed rate hike. People are also waiting to see what’s going on in China. That & the Fed rate decision will be the most important factors for gold prices over the next days.

Why the Stock Market Could Soar From Here

If the Powers That Be let markets melt down from here, where’s the bottom? Where’s the plan to bail out all the pension plans, banks, insurers, etc. that will be crippled by a full-blown stock market meltdown? It would be a lot cheaper and less painful to prop up stocks at these levels (a 10% decline) rather than let them fall off a cliff to a 40% decline.

5 Trends That Are Shredding the Global Economy

In the wake of the Global Financial Meltdown of 2008-2009, central banks launched monetary stimulus programs aimed at pumping money into the economy. The stated goals of these stimulus programs were 1) boost employment and 2) generate enough inflation to stave off deflation, which is generally viewed as the cause of financial depressions.

10 Reasons Why The Fed Won't Raise Interest Rates

The Fed won’t raise interest rates because we haven’t hit our full unemployment (moving) target. Also, the IMF warned about potential risks of a Fed tightening. Weakening of commodity prices could be bad news if it indicates global demand is weakening. The Fed is watching out for inflation, but we haven’t hit the magic 2% target yet. Here are some more reasons why.

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