Posts On Economic and Geopolitical News

September 26, 2016 |

The Party Continues

Dollar Sign

The highly anticipated September FOMC meeting has now come and gone. The Fed elected to hold rates steady by a vote of 7-3. Although this vote may have been closer than many had expected, perhaps more important than the vote itself was the central bank’s economic outlook and commentary. The Fed’s so-called “dot-plot” is pointing to a very gradual pace of rate hikes, with the Fed Funds target rate also being lowered from a three percent target to a 2.9 percent target. It is now... Continue Reading

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September 22, 2016 |

The Elephant in the Room

going on

China’s currency reserves are not what they used to be. According to some estimates, the dollar’s share of China’s reserves has been slashed to a record low, as the world’s second largest economy looks to diversify away from the greenback. Not only that, but China has reportedly been selling U.S. securities. Thu far, this has not caused any type of panic and doesn’t even appear to be on the radar for most investors. You could certainly make the argument that a pullback in buying by... Continue Reading

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September 20, 2016 |

Putting U.S. Debt into Perspective

Credit card flag

The issue of debt is often discussed in the same context as physical gold, and with good reason in our opinion. While the U.S. debt situation comes up now and again among investors, it is amazing how the issue is most often simply swept under the rug. It seems that the only time it really becomes a concern with the public is when the government is facing a possible shutdown over budgetary disagreements. Debt is one of those types of problems, however, that will not... Continue Reading

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September 16, 2016 |

Will the Fed Sink the Ship By Hiking?

without a deal

The debate about the pace and timing of any further interest rate hikes by the Fed has been a primary focus of investors since the historic Brexit vote in late June. Although some data has looked promising, other key pieces of data have been an outright letdown. Due to some of the mixed signals being seen in the data stream, Fed Funds futures have seen frequent changes and markets are currently pricing in only a small chance of a September rate hike. These contracts are,... Continue Reading

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September 12, 2016 |

If Not Now Then Later

House of Cards

As investors look to get back into the swing of things following the Labor Day Holiday and many last minute vacations, their focus remains the same as it has for several weeks, if not months. When will the Fed raise rates again? That is the question that many market participants are still asking. As we wrote previously, last week’s jobs data was essentially a dud, and recent manufacturing data was also not so great. The services sector also showed a surprising and significant slowdown, further... Continue Reading

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September 7, 2016 |

Deutsche Bank Warns Gold Price Should Be Much Higher Based on Central Bank Balance Sheet

central bank graph

Gold could be worth far more than what speculators and traders have determined to be the current spot price. There’s a hidden indicator for the intrinsic price of gold that many investors have ignored. In addition to looking at the cost of mining gold, the level of government debt and total gold production, a major indicator that perceptive investors should pay attention to is central banks’ balance sheets. According to Deutsche Bank’s Michael Hsueh and Grant Sporre, there is a correlation between the rates at... Continue Reading

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September 2, 2016 |

Is Chinese Overleveraging Coming to Roost?

Chinese Construction

There has been no shortage of news in recent months-both financially and otherwise-to keep investors busy. The 2016 Rio Olympics garnered considerable attention as did the historical vote by the people of Great Britain to leave the European Union. Investors have also been preoccupied with the Fed, and whether or not the central bank will raise interest rates again this year. Somewhere in the middle of all this news and noise is the fact that the Chinese Yuan has been weakening. What makes this noteworthy... Continue Reading

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August 31, 2016 |

Another Vote Against Negative Interest Rates

Negative rates

As the spread of negative interest rates is set to continue, German bank boss John Cryan is voicing his thoughts on the monetary policy tool. Cryan is the CEO of Deutsche Bank, Germany’s largest bank and a bank that is recognized all over the globe. As more financial experts weigh in on the potential effects of negative interest rates, Cryan made his opinion fairly clear, stating that such a policy could have “fatal consequences.” Deutsche Bank has felt the effects of negative interest rates which... Continue Reading

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August 25, 2016 |

World Bank to Become First SDR Bond Issuer in China

Yuan

The People’s Bank of China recently approved the inaugural issue of bonds denominated in SDRs (Special Drawing Rights) by the World Bank. This is the first bank to receive such approval and represents the beginning of the SDR bond market in the world’s second largest economy. In issuing the SDR bonds, the World Bank is expanding its product base as it looks to open and develop new markets. Why is this important? This new issue of SDR bonds in the Chinese market may yet be... Continue Reading

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August 23, 2016 |

Arizona Considering Gold Bonds

Arizona

The state of Arizona is reportedly considering a way to monetize gold in an effort to counteract the world of negative interest rates and lack of yield. The state recently set up a committee to examine the possibility of issuing treasury bonds that would be payable in gold. Dr. Keith Weiner, the founder of Monetary Metals Inc. and committee member, discussed the potential role such a bond might play. Mr. Weiner is of the opinion that such a bond could benefit not only the state... Continue Reading

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