Friday, 28-Aug-2015
Ranjeetha Pakiam (Bloomberg) Gold
Bucks Commodity Rout as Turmoil Sends Investors to Havens Gold
was spared from the global market rout that’s sent commodities to the lowest
level since 1999 as investors sought haven assets.
…Mounting concern that global growth is faltering pummeled shares,
emerging-market currencies and commodities last week, and the selloff
deepened on Monday.
Note: Gold displayed remarkable resilience during the latest “Black
Monday” rout as safe-haven demand offset broad-based deleveraging pressures.
Anora Mahmudova (MarketWatch) U.S.
stocks plummet at open; Dow drops 1,000 points U.S. stocks
plunged to lowest levels since last October after a rout in Chinese stocks
triggered a world-wide selloff of risky assets such as equities. The Dow
Jones Industrial Average dropped 1000 points, or 6%, to 15,441. The S&P
500 opened 100 points, or 4.9%, lower at 1,874. The benchmark index is down more
than 10% from its peak reached on May 21. The Nasdaq Composite began the day
down 360 points, or 7.6%, to 4,349.
Note: Monday was an exciting day indeed for investors world wide . . . and
generally not in a good way. While stocks recovered later in the week, many
worry that the rout was a harbinger of things to come.
Koos Jansen (BullionStar) Theory
On China’s Gold Strategy Koos Jansen’s latest study offers
initial proof of a speculation we published here when China announced its
change in the yuan price discovery mechanism. “China says it wants a say in
the gold price and that’s why it established its own fix outside of London
and New York’s purview. If the price of gold in yuan goes higher, it adds
value to both Chinese gold reserves, which are likely much higher than
recently announced, and to the asset structure of the Chinese people and
banks that are hoarding it. In fact the low announcement may have been in
anticipation of the devaluation strategy.
Note: The number of U.S. investors saving in gold remains disturbingly
low. Take heed people! The dollar is part of the “rodeo” too and has dropped
about 7% from the high set early this year.
Matt Egan (CNNMoney) Trading
was halted 1,200 times Monday The selling on Wall Street was so
dramatic Monday that it triggered unprecedented emergency freezes on stocks.
Stocks and exchange-traded funds were automatically halted more than 1,200
times, according to Nasdaq.
The high level of trading pauses highlights just how extreme the selloff
was in a short span of time. Fears about China’s economic slowdown caused the
Dow to plummet over 1,000 points when the market opened. The Dow ended down
588 points, its worst decline since August 2011.
Note: Particularly interesting was the illiquidity of ETFs during the
market rout. That should be an eye-opener for every investor, warranting a
reexamination of your portfolio diversification. Do you have enough physical
gold?
John Crudele (New York Post) Crudele
says Washington attempting to rig the stock recovery, recommends “switching
off” CNBC One of these mornings — or overnight — some mysterious
buyer will suddenly start purchasing an abnormal amount of Standard &
Poor’s 500 stock index futures. So we get down to direct intervention — just
like China did. Only Washington, with Wall Street as its co-conspirator,
won’t be as sloppy as Beijing was. That’ll get the stock market moving higher
and everyone will pretend that the buyers are just ordinary people who
suddenly think Wall Street is oversold.
MK Note: In this cogent piece written two days ago, the New York Post’s
John Crudele accurately predicted events and provided a pretty good summary
on the true forces at work. He is not happy about the cozy relationship
between Wall Street and Washington nor the coverage at our favorite
stock-hyping cable channel (which he says “tens of thousands” have already
abandoned). This piece will confirm what a lot of you are already thinking. .
. . .
(Bloomberg) China
Sells U.S. Treasuries to Support Yuan China has cut its holdings
of U.S. Treasuries this month to raise dollars needed to support the yuan in
the wake of a shock devaluation two weeks ago, according to people familiar
with the matter.
Note: Interesting turn of events. Devalue against the dollar and then sell
Treasuries to prevent the yuan from falling further against the dollar.
Michael J. Kosares (USAGOLD) Key
trade in gold market signals China’s intentions WSJ: “In recent
years, China has come to shape the very way in which commodities are bought
and sold, traditionally the preserve of financial centers such as London and
New York. Late last month, the price of gold fell sharply, to a five-year
low, within minutes of Asian markets opening. That came after almost five
metric tons of gold—close to $200 million of the metal—was sold on the
Shanghai Gold Exchange, according to ANZ Bank. The trade was seen by market
participants as a key moment reflecting how China had moved Asian commodity
markets away from just following the overnight pattern of U.S. and European
trading.”
MK Note: The premise of this article is that China will continue to play a
key role in shaping commodities’ markets in the years to come, despite the
current slowdown, based on its sheer scale. If you follow this blog, you
already know of the infrastructure China is putting in place to influence the
gold trade and insert itself as a third gold trading center along with London
and New York. We should note that the five tonne trade cited above came after
the price had dropped. Keep in mind that Shanghai is a physical market
exchange. In other words, someone in China took advantage of the price drop
to force the market into a delivery of five metric tonnes of the metal.
