Tag: news

Today’s AM fix was USD 1,284.00, EUR 930.91 and GBP 771.26 per ounce.                      

Yesterday’s AM fix was USD 1,286.50, EUR 932.45 and GBP 772.67 per ounce.

Gold fell $2.80 or 0.22% yesterday to $1,280.50/oz. Silver rose $0.02 or 0.1% yesterday to $19.81/oz.

Webinar: Dr Marc Faber On Gold, Silver and Asset Allocation In An Uncertain World

This Friday, April 4th at 0900 BST, Dr Marc Faber will give insights into his strategies for protecting and growing wealth in 2014 and beyond. Register today and don’t miss this opportunity to hear one of the world’s most respected investment experts.


Dr Marc Faber and Jim Rickards at the World War D Conference in Melbourne

Gold climbed in London, its first rise in 3 days. It is believed that the seven week low will lead to renewed physical buying in China. Gold bullion of 99.99% purity for delivery in Shanghai traded at a premium to the London price earlier today, Bloomberg data showed. China was last year’s largest gold buyer and is already on course to surpass last years record demand.

Gold fell 3.2% in March due in large part to speculation that the Fed may reduce their massive monetary stimulus and return to more orthodox monetary policies. However, gold was  6.8% higher in the first quarter as many investors viewed the 28% sell off in 2013 as a buying opportunity.


Gold in U.S. Dollars – January 2011 To April 2014 (Thomson Reuters)

Geopolitical risk and the Ukraine crisis led to safe haven demand and may be leading to renewed central bank diversification into gold including from Russia itself.

Fed Chair Janet Yellen said in March that the central bank may end its bond-buying program this fall and increase borrowing costs six months after that. Yellen then changed her tune this week saying that the “considerable slack” in labor markets showed that accommodative policies will be needed for “some time.”

Faber: Gold “Is A Present From God And I Wish It Would Go Lower So I Could Buy More”
After a long first day of presentations at the World War D conference in Melbourne, the international keynote speakers, Marc Faber, Jim Rickards, Richard Duncan and John Robb got up on the stage to answer questions on topics ranging from Bitcoin, to China’s economy to gold.

Faber said his concern about Bitcoin was how reliant it is on the internet and electricity networks functioning properly, something that can’t be taken for granted in the age of digital warfare.

Technology risk is something we have warned of for sometime. It shows the importance of not having all your savings and wealth in digital currencies in banks, in digital currencies like bitcoin and emerging crypto currencies or indeed in digital gold formats whereby you are very dependent on and exposed to websites, servers and technology in general.

World War D: Money, War and Survival in the Digital Age heard from Faber that gold, unlike digital assets, is a physical asset and that it had performed superbly until September 2011.

Faber said that gold has been in a correction since then, which isn’t unusual in a money printing environment. On gold at today’s prices, Faber said that “the fact is that gold down is a present from God and I wish it would go lower so I could buy more,” he said.

The big proviso Faber added was that he had to physically own coins and bars. He also warned that people would be ‘mad’ to own any asset, including gold, in the U.S. Previously, Faber has said that he favors owning gold in fully allocated gold accounts in Singapore and Switzerland.

Jim Rickards said that gold should remain an essential part of diversified portfolios and Mark Faber pointed out that the question should be “how could you NOT own gold?”

The question echoes observations Faber made in January 2013, when he told a well known CNBC presenter that she was “in great danger because you don’t own any gold.” Before wittily reassuring her that she had “a golden personality.”

Webinar: Dr Marc Faber On Gold, Silver and Asset Allocation In An Uncertain World

This Friday only, April 4th, Dr Marc Faber will give insights into his strategies for protecting and growing wealth in 2014 and beyond. Register today and don’t miss this opportunity to hear one of the world’s most respected investment experts.

In this webinar, some of the topics covered with Dr Faber include:

Asian Century?
Western stagnation or collapse?
Implications of events in Ukraine
Allocations to precious metals?
How to own precious metals?
Dollar cost average or lump sum?
Take profits/ rebalance or buy and hold for long term?
When to sell?
Favoured asset allocation?
Other investment and business opportunities?

Dr Faber’s webinar takes place this Friday, April 4th, 2014, at 0900 BST (0900 British Standard Time or London and UK time). Register to attend the event or to receive a recording of the webinar.

 

via Zero Hedge http://ift.tt/PiLuCd GoldCore

As the world’s investors wait anxiously for the next piece of bad news from Japan, China, Europe, or US as a signal to buy, buy, buy on the back of a renewed “stimulus” of freshly printed money that has comforted them for 5 years, it seems the Fed is turning its attention elsewhere:

• BULLARD SAYS MONITORING FOR ASSET BUBBLES `IMPORTANT CONCERN’
  
• BULLARD SAYS ASSET PRICE BUBBLES MAY BECOME `BIG CONCERN’

The embarrasment continues:

• BULLARD DOESN’T SEE PRICE BUBBLE LIKE IN PRE-CRISIS HOUSING

Because the Fed was accurate in spotting the “pre-crisis housing” bubble, right?

And the punchline:

• BULLARD SAYS FED HAS BETTER `SYSTEMS’ FOR `FLAGGING’ BUBBLES

For now though, of course, the Fed’s Bubble-o-Flagger (which can also be yours for four easy payments of $29.95) has no batteries. Pointing out the irony that the Fed creates the bubbles… and then when it becomes a “big concern” it promises to do something about it if it every sees one.  Finally, we are delighted that the schizhophrenia of the central planners continues to be exhibited for all to see: first Yellen tells everyone to buy stocks on Tuesday with an uber-dovish retracement of her “6 month” flub, and now Bullard is saying to watch out for bubbles. What can one say but… economists.

As a gentle reminder of just how these bubbles are formed…

Bubble Formation: start at the bottom left…

Bubble Bursting: …and end with a ‘debt crisis’ and a ‘rush for the exits’

Rinse and Repeat – Simple. QED

via Zero Hedge http://ift.tt/1ihPOKt Tyler Durden

Long-time readers may recall that in the early days of this website, in addition to HFT, one of our market structure pet peeves was the fact that Goldman Sachs was a Designated Market Maker on the NYSE, reaping various benefits primarily as a result of the firm’s role as of one of the only Supplementary Liquidity Providers at the stock exchange – a form of slower HFT “liquidity provider” if you will. Over time, as HFT became all encompassing and as increasingly more trade took place in the HFT domain, Goldman’s DMM role became less prominent especially with the arrival of such program traders as Latour Trading.

Why do we bring this up?

Because in what is a true double whammy of market structure stunners from Goldman over the past week, not only has the firm done an about face on HFT (we eagerly await Goldman’s pardon of “HFT market manipulator” and former Goldman employee Sergey Aleynikov) and is now actively bashing the high freaks (much to the chagrin of Virtu and its pulled IPO, whose lead underwriter Goldman just happened to be), overnight it was reported that Goldman is also in the process of selling its “designated market-maker” unit to Dutch firm IMC Financial Markets to sell the trading business.

Keep in mind that Goldman bought its presence on the NYSE as part of its 2000 acquisition of Spear Leeds & Kellogg, which it bought for $6.5 billion at the time. Incidentally, we had a few things to say about Goldman’s improprieties in this regard too. Recall from our July 2009 article, “Is Goldman Legally Frontrunning Its Clients?”:

Everyone who is anyone on Wall Street has at some point used the Goldman 360 portal whether for research, news, keeping a track of prime brokerage portfolio or, disturbingly, for trading, via the REDI Plus 9.0 platform (now loaded with enhanced algo trading features to make life for you, dear soon to be frontran Goldman client, so much easier). A second widely accepted Wall Street concept is that a disclaimer is the last thing that anyone reads, if ever. Yet after taking a close look at the Goldman disclaimer for the 360 portal, which is an umbrella waiver or all downstream websites, including REDI, one discovers the following gem:

 

Monitoring by GS: Your use of the products and services on this Web site may be monitored by GS, and that the resultant information may be used by GS for its internal business purposes or in accordance with the rules of any applicable
regulatory or self-regulatory organization.

 

One second: by using Goldman 360 a client voluntarily allows Goldman to provide keystroke by keystroke data of everything the client does, even if that includes launching trades via REDI, to Goldman for the internal business purposes. The third thing everyone on Wall Street agrees on is that “internal business purposes” usually (and in Goldman’s case, almost exclusively) means proprietary trading.

 

Are Goldman 360 clients (in)voluntarily signing off a release to be front ran by Goldman on any portal-based trade? Could Goldman please clarify just what “internal business purposes” means in the context of this overarching disclaimer, and also whether Goldman has ever actually used 360 submitted information in the decision making process of its prop trading desk? Lucas Van Pragg: the floor is yours.

And here are some additional Goldman Sachs and Spear, Leeds and Kellogg form documents that contain an even more crypitc warning in section 4(f) in Use Of Services:

 

You acknowledge that we may monitor your use of the Services for our own purposes (and not for your benefit). We may use the resulting information for internal business purposes or in accordance with the rules of any applicable regulatory or self-regulatory body and in compliance with applicable law and regulation.

 

NOT FOR YOUR BENEFIT? I mean, come on, how more clearer does it need to get.

Anyway, back to the topic at hand and Goldman’s disposition of NYSE assets: according to the NYT, Goldman is seeking a paltry $30 million for the DMM post. In other words, a total loss on $6.5 billion in old school assets courtesy of HFT.

Not unexpected.

However, what is unexpected, is the complete transformation Goldman has undergone in in the past several weeks: first Goldman, the bank that everyone else on Wall Street always imitates, waving goodbye to HFT, and now departing the NYSE? 

When the world’s most intelligent FDIC-backed hedge fund, pardon, bank says the current market structure is no longer necessary to Goldman, people notice, and promptly imitate.

To be sure – if this is not indicative of a major storm coming for traditional “lit” market structure (as opposed to dark pools of which IEX, until recently, was one and where Goldman has nearly complete dominance with Sigma X), we don’t know what is.

Once again: if we were HFT vacuum tubes, we would be sweating nanobullets right about now.

via Zero Hedge http://ift.tt/1pQPRQq Tyler Durden

As we entered the year, Goldman Sachs set out a target of 1,900 for the S&P 500 by the end of 2014. Thanks to the plethora of bad news (which, obviously, is great news) and the promise of more money printing if things get worse, with the mini-melt-up of the last few days (ahead of the ECB hope tomorrow and traders desire for a dismal print at Friday’s NFP), the S&P 500 is now within 10 points of Goldman’s year-end target (it seems 104.50 USDJPY will do it). The Dow is also about to go green year-to-date for the first time in 2014.

 

The S&P is within 10 points of Goldman’s year-end target (just 9 months early?)

 

Trannies are the best YTD but the Dow is about to go green for

 

Why?

via Zero Hedge http://ift.tt/1h2ODSA Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Right now China is at the top of the S-Curve, and the problems of stagnation are still ahead.

What happens after all the low-hanging fruit has been picked? We can phrase the same question using a different analogy: what happens when all the oxygen in a room has been consumed?

One way to understand why the global financial meltdown occurred in 2008 and not in 2012 is all the oxygen in the room had been consumed. In the U.S. housing market, there was nobody left to buy an overpriced house with a no-document liar loan because everyone who was qualified to buy a McMansion in the middle of nowhere had already bought three and everyone who wasn't qualified had purchased a McMansion to flip with a liar loan.

Once the pool of credulous buyers evaporated, the dominoes fell, eventually circling the globe.

What happens after the low-hanging fruit has been picked? Here's an analogy: erect an enormous 13-story building on a thin slab foundation that is barely adequate for a 2-story house, and tie that flimsy foundation to the earth with fragile hollow pilings. What happens? Collapse.

Analysis of the Collapse Of 13-Story Building in China
Shanghai building collapse (Telegraph, UK)

Anyone tracking the global economy has an eye on China, for obvious reasons.China has led the world's growth for the better part of two decades, and now the growth story has entered a new phase. China is weakening its currency (renminbi/yuan), and trying to throttle its vast credit/shadow banking expansion even as Chinese officials claim China's economy is still expanding at a phenomenal clip (7+% annually).

I think we can shed some insightful analytic light by saying that the low-hanging fruit in China has all been plucked, and this creates an entirely new set of problems and challenges.

The first thing to note about nations experiencing rapid growth is the mathematical impossibility of continued break-neck growth: when China's economy (in purchasing power parity (PPP) or nominal dollars) GDP was $500 billion, an expansion of $50 billion equated to 10% a year.

Now that China's PPP gross domestic product is around $13 trillion, a 10% growth rate would require an expansion of $1.3 trillion–roughly the entire GDP of Spain or Canada.

Obviously, fast growth is easy when the low-hanging fruit are abundant, and it becomes progressively more difficult to maintain as the economy expands.
This pattern of rapid growth, maturity and stagnation can be seen in the S-Curve, a pattern that natural and human-made systems alike track.

When a country lacks infrastructure, or the infrastructure has been destroyed by war, then building infrastructure is the dominant activity in the low-hanging fruit/fast growth phase. Nations such as Japan and Germany experienced rapid growth after World War II for much the same reason China has boomed: infrastructure.

China has reached the maturity phase of the S-Curve in a mere 20 years: every major city has a subway system, thousands of miles of rail and highways have been laid, tens of millions of housing units have been built, and so on. As a result of this single-minded pursuit of building, China now sports nearly empty cities, train stations, malls and highrise residential towers.

In other words, all the low-hanging fruit of infrastructure have been picked.
Observers in Beijing see (well, not very far, due to the severe smog) endless growth of housing, due to strong demand. But this rosy view overlooks the fact that housing throughout China is out of reach not just of the millions of poorly paid migrant workers pouring into the cities but for college graduates–assuming they can even find a job (Chinese College Graduates Cannot Secure Jobs)

Even the cheapest condos cost well over $100,000 (in USD) in 3rd tier cities and much more in 1st and 2nd tier cities. The average starting salary for graduates is 2,000 to 3,000 yuan ($326) a month (roughly $4,000 to $6,000 a year), and salaries of around 50,000 yuan a year ($8,600) are considered good.

As a result, a double-income middle class household can only own a flat if the parents' savings are devoted to the down payment, which is usually 50% of the purchase price in China.

So all the stories of housing demand being permanent are misleading, because only a tiny sliver of the millions of people coming to cities can afford even the cheapest flat in the suburbs.

The other problem is that the low-hanging fruit have all been stripped via an unprecedented expansion of credit. Credit has a pernicious characteristic: it inevitably leads to diminishing returns as low-value, high-risk projects get funded in the rush to build anything and everything everywhere.

In other words, once the high-value low-hanging fruit has been picked, the sensible, high-value investment opportunities have all been taken and all that's left is marginal malinvestments.

In the U.S., this led to the famous McMansions in the middle of nowhere. In China, the general faith is that every building project, no matter how marginal, will soon be filled (and regardless of demand, the government will never let housing decline, even in ghost cities).

But as pointed out above, this presumes the millions of poorly educated rural migrants and the 7 million students graduating from college every year will soon be earning upper-middle-class incomes. Once the fast growth phase has ended, this becomes much more problematic. And indeed, reports of unemployed college graduates are now the norm (see below). As for migrants, most toil in very marginal jobs with low, insecure pay.

Another systemic problem arises when the low-hanging fruit have been picked:expectations of future prosperity have been pushed into the stratosphere, and these expectations will inevitably be disappointed as growth slows.

Rapid industrialization leads to rampant pollution. China has spent very little of its GDP on environmental investments, and now the bill is coming due. It is mathematically impossible for China to spend what needs to be spent (say, 5% of GDP for a decade) on cleaning up the environment and maintaining 7.5% annual growth. Promising people both will only set up a profound disappointment as neither goal can possibly be met.

Lastly, China lacks the cultural capital of maintaining infrastructure. In the 20 years of picking low-hanging fruit, buildings have been routinely torn down and replaced. The idea that a building will have to last 50 years, never mind 100 years, does not compute: if a building shows signs of aging, the solution for the past 20 years has been to tear it down and replace it with something grander.

This was possible in the fast-growth phase, but it is impossible in the stagnation phase for the same reason noted above: it's possible to tear down and replace 1,000 major buildings a year in the early years, but it becomes physically and financially impossible to replace millions of aging housing units.

Those familiar with construction and this lack of infrastructure to oversee and fund maintenance foresee tens of thousands of buildings that will slowly but surely become uninhabitable as elevators break down, pumps stop working, leaks cause concrete to spall, etc.

Anyone with even modest construction experience can see that the foundation beneath the toppled 13-story building is not even remotely adequate; the slightest temblor will destabilize all such buildings, and such feeble footings built directly on grade will lead to cracked pipes and a host of other impossible-to-fix problems.

Right now China is at the top of the S-Curve, and these problems of stagnation are still ahead. The most severe challenge in my view is not material or fiscal, it's psychological: when sky-high expectations crash to earth, social discord starts its own S-Curve of rapid growth.

Chinese College Graduates Cannot Secure Jobs: 28% Of Beijing's 2013 Graduates And 44% Of Shanghai's Have Found A Job:

This year a total of 6.99 million students graduated with a master's, bachelor's or technical college degree in China, an increase of 190,000 from 2012. In contrast, the number of jobs available decreased by 15 percent compared with 2012, according to China Youth, a state-run youth newspaper. Combined, these statistics mean a large portion of graduates will not have a job coming out of school.

Making matters worse for graduates, the "lucky" ones with jobs can expect an average salary of 3,000 yuan per month ($487.89). Netizens have calculated that at this rate, a 2013 graduate will have enough money to purchase a bathroom in the suburbs of Beijing in 10 years, if she doesn’t eat and chooses to live on the street.

via Zero Hedge http://ift.tt/1fsPdai Tyler Durden