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Gold/Mining/Energy : KITCO - Gold discussion

GLD 386.47

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From: mugwump9	6/5/2016 6:34:35 AM
	of 989

I tend to view yen and euro devaluations as part of last gasps in both policy experimentation and leveraged speculation. For a couple years, devaluation provided extraordinary speculative opportunities, in the process helping to mask the general deteriorating backdrop for leveraged speculation. Now, the yen is near 18-month highs against the dollar and the euro not far from one-year highs. Currency markets generally have turned volatile and uncertain. Slam dunk trades are a thing of the past. The backdrop is no longer conducive to leverage. Integral to my bursting global Bubble thesis, I believe a monumental de-risking/de-leveraging cycle has commenced. This fledgling "risk off" backdrop helps to explain why BOJ and ECB QE measures have of late had such muted impact on global risk markets. At the same time, ongoing liquidity operations continue to bolster market sentiment in the face of a disconcerting fundamental global backdrop. Clearly, relative stability in China in concert with BOJ and ECB policy measures has been key to containing "risk off" over recent months. China, commodities and EM have been the global markets' weak links. The view has been that dollar weakness helps to ameliorate these fragilities. At the same time, there is the issue of how much speculative finance flowed into the U.S. in pursuit of king dollar returns. One more Crowded Trade to unravel? And there's another issue worth pondering: confidence in QE has waned considerably over recent months. There's increasing talk of "helicopter money" and central bank forgiveness of government debt obligations. Both would create serious issues in terms of the true underlying value of central bank Credit. And who holds the vast majority of central bank Credit? The major global commercial banks have accumulated Trillions of central bank obligations, as assets backing deposit liabilities. Perhaps waning confidence in central banking helps explain why the big global bank stocks trade as if something very serious is unfolding. It would also explain the seemingly insatiable appetite for safe haven assets. doug noland at safe haven safehaven.com

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