Thursday and the Doctor is In
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Brazil is dumping all the US treasuries they can.
Do you have a link?
Click on “boletin Online” and then in “Mercadoria” select OZ1 ouro 250g.
http://www.bmfbovespa.com.br/Sumario2TopoPequeno.aspx?menu=6&sitemap=6667&idioma=pt-br
Thanks Peter!
Último preço is the actual price in Real (R$) terms.
Interesting Peter, I wonder how long dumping of treasuries can go on till it has some effect.
The Banco Central do Brasil is dumping 1,5 billion dollars today to “control” the rise of dollar price. The dollar price up 2% in starting market.
Peter,
Thanks for the link. I mistakenly thought that you meant that the Brazilian Government is dumping their Treasuries so I was looking for some article officially stating that.
Use the translator…
http://br.reuters.com/article/topNews/idBRKCN0RA2CA20150910
I keep telling myself that I should have taken Spanish instead of German when I was in high school even though I know that all Spanish is not the same.
They don’t speak Spanish in Brazil.
Portuguese is the official language[1] of Brazil, and is spoken by more than 99% of the population.[citation needed] Minority languages include indigenous languages, and languages of more recent European and Asian immigrants. The population speaks or signs approximately 210 languages, of which 180 are indigenous.[2] Less than forty thousand people actually speak any one of the indigenous languages in the Brazilian territory .[3] Until today, German is the second most spoken first language or second mother tongue in the country.[4][5]
Depends if you prefer frauleins, señoritas or senhorinhas!
Great point GH! 🙂
There’s an awful lot of coffee in Brazil!
This is interesting, Brazil is the only country that speeks portuguese in entire South America.
The best think here are the the girls (gatinhas) from Rio Grande do Sul state, where I live. Actualy is the birth state from Gisele Bündchen.
Lots of dividend paying stocks around, even some in PMs.
Trading might be challenging for people tho.
The Standard & Poors does not deserves any attention for me, because they upgrated Lehman Brothers just before the BIG CRASH in 2008. And further more, Soros bought A LOT of Petrobras equities last month…
Peter,
I with you on this. Brazil is going to be fine. They are on an upswing shortly.
A lot going on, to say the least!
Doc, I wish you well and thought I should add my 2 cents to your sub 100 HUI call before I vanish into a active trading blog which is where I belong.
3 possible big head winds for Gold, obviously the first would be a rate hike next week, lets see what the FOMC creates, this situation in India could be very bearish towards gold if in fact the government takes it further. The big event will be the BOJ Oct meeting, Doc put up your $Yen chart back to last Oct’s BOJ announcement, see how Gold, silver and the miners followed the devaluation of $Yen (gold down $120) into mid Nov as yen fell 13 cents before regaining 4 cents taking gold higher into mid Jan…calls for further action by the BOJ has started again to rebalance the PBOC action
http://www.zerohedge.com/news/2015-09-10/start-indias-gold-confiscation
Short the miners again as of Tuesday, no point it fighting the trend based on hope or fundamentals…I’d rather be long… maybe another tradable low off Dec again?
Gold has always risen with interest rates. Any selloff won’t last long.
Matt, think about 1980. It all depend on the real interest rate.
The 1980 interest rate hikes came at the end of a long period of rising rates. Gold went up (25x) with rates throughout the bull market of the 1970s.
There’s more than meets the eye with respect to what really ended that bull. Was it Volcker’s rate hike alone or was it the fact that:
1.) gold had reached a price that was way more than sufficient back every dollar with the (claimed) 8133 tons U.S. gold reserve?
2.) gold had reached a price way more than sufficient to back all foreign-held U.S. debt?
3.) Gold had reached almost 1 to 1 with the Dow?
I’d say it was all of the above and more, but gold certainly had little upside left by any measure in real terms.
Still, I should have been clearer. Gold has always risen with interest rates at the start of a new rising rate cycle when the real economy is contracting. It did very well as Greenspan raised rates 17 times in a row from 2004 to 2006.
Like Doc, I think metals and miners are bottoming…could go a little lower, maybe Gold dips below 1000oz maybe not. I think the market, especially gold is looking for a rate hike. I think continued QE or near zero rates only supports the deflation argument in that the U.S. has not prevented it. To that end, I think miners and metals will continue lower until deflation is history. Not far off though in my opinion.
Volcker was shutting down inflation. There was a boom in everything and it needed to be curbed. They werent looking at gold.
Gold rise was a product of this just as in the last cycle. But no major inflation now and just commodities deflating after another boom bust cycle.
I like reits at 8% now!
Volcker did what those in government always do, he came in at what was destined to be the end of the trend anyway and pretended to be everyone’s knight in shining armor.
It worked but it was a hard choice and the right one 🙂
Why holding gold is so important. I feel sorry for the Brazilian population.
http://www.indexmundi.com/commodities/?commodity=gold&months=120¤cy=brl
Yup.
Doc you mentioned that “these currencies get shoved lower in these countries, the debt has not been ultimately impacted”
As the debt is increasing, you can see how much more the real price of gold is appreciating. Therefore the ability of these countries to purchase gold is going up. They will recognize that gold (the only thing that can protect them) is appreciating in value by staying within the rules of Brenton Woods and the Washington agreement.
These governments will wise up and say enough is enough.
They will recognize that it cost them double to purchase the gold they were persuaded to avoid buying and instead holding dollars.
THIS is one heck of a read.
The Shanghai Gold Exchange said on Thursday it will allow A-shares, exchange-traded funds and treasuries to be used as collateral for gold trading. The move comes as Beijing unleashes a slew of measures to stave off a collapse in its stock market and restricts trading in stock index futures.
With counterparty and sovereign risk remaining high although unappreciated, gold is no longer being seen simply as a commodity – particularly in China, India and Asia. Rather, it is increasingly viewed by more astute market participants as an important asset and a currency with no counterparty risk.
Gradually, we are seeing the re-monetization of physical gold as it is being reincorporated into the modern financial and monetary system. Keynes’s ‘barbaric relic’ is becoming less barbaric by the day.
The development is an important one for the gold market and is bullish for the “pet rock.” It shows, once again, that gold is slowly but surely becoming a cash equivalent and as money again.
In china, the majority of demand is still jewlery
Actually Al, I suggested that the Brazil junk rating might be positive for the US dollar and would it be negative for gold? That is gold in US dollar terms. In Brazilian Real terms, maybe gold will go up, depending if there is a dump of the Brazilian Real.
Well spotted Al later in the interview! Thanks very much for discussing my modest comment.
Don’t fret over Brazil just because its the worlds seventh largest economy (or was). Coming up in next place is India which by coincidence is also one of the BRIC’s and it is set to take seventh displacing both Italy and Brazil in the process.
The Lord giveth and the Lord taketh away.
India to Overtake Brazil as World’s Seventh Largest Economy
http://www1.folha.uol.com.br/internacional/en/business/2015/01/1570578-india-to-overtake-brazil-as-worlds-seventh-largest-economy.shtml
Markets do not trade in a linear fashion. I still expect gold to rally with the target over 1200, oil will head over $50 and many will get sucked in.
Then, we will see a global commodity bust that takes gold down to $600, oil down to the $10’s, and the SPX to an eventual target in the 500 range probably sometime in early 2016.
Not so sure about your $600 gold and your $10 oil!
I also have taken a look at the meaning of the Trade Weighte Dollar indexes issued by the Fed. The wider dollar index out of those is very interesting and is very close to its high. It also seems to have just back-tested a possible breakout from a downtrend line taken from the 1985 and 2001/2002 highs.
The narrower USDX already broke out of that downtrend line last year (at what level depends on whether you use linear of log charts).
It seems right now the upward movement is turning from the USDX to the wider trade weighted dollar index which compares the US dollar against many countries including the BRICS and much smaller weightings against the Euro, Yen and Pound for instance.
Chart here:
https://research.stlouisfed.org/fred2/series/DTWEXM
There’s some really interesting and good stuff on the Fed website actually.
When I said “wider dollar index … is very interesting and is very close to its high” I meant its high for the current dollar bull market (since 2008) made earlier in 2015.
Excellent Silverbug. I actually went over this myself not so long ago. The trade weighted dollar has topped and that indicates USD has also peaked. I would not believe anybody who told me the dollar is about to rise a whole lot higher anytime soon. Your chart is the smoking gun.
Here is another fascinating article on bank runs, etc:
http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/the-runnables-20150903.html
Looking at gold in BRICS currencies:
Brazil: gold at all time high.
Russia: gold quite near all time high from 2014.
India: gold in shallow downtrend after highs in 2012/2013, poorer performance than I had expected to see when I looked.
China: gold looking fairly awful; almost as bad as the US dollar price; high was in 2011 as per USD price as expected from currency peg.
Interesting breakdown of Gold in BRICs.
on would have already done very nicely indeed in gold if one were living in Brazil as the longest reigning British monarch might say:
http://www.indexmundi.com/commodities/?commodity=gold&months=240¤cy=brl
One made a typo at the start.
Corporate debt has risen 62% since 2007 while student loan debt has more than doubled.
“You will hear from the talking heads that America’s corporate sector has never been in better shape. But like a peach, the fruit never looks better than just before the rot sets in.”
http://howestreet.com/2015/09/this-is-another-subprime-waiting-to-blow/
good article………thanks………….as he says’……. “eat the fruit now”
Actualy, my gold has risen since january…