Zerohedge: Buy. Real. Assets. NOW! (GLD, SLV, AGQ, USO, DBC)
Dominique de Kevelioc de Bailleul: “Buy. Real. Assets. Now!” That strong suggestion, from the highly-trafficked website to which investors go for their daily dose of critical analysis of daily economic and financial events, was posted for its readers, Monday.
The spark for the advice from the folks at zerohedge to run to gold, silver, oil, among other tangibles, is directed to those new to the site who may be finally awakening to the realization that inflation, notdeflation, is in our future, globally. Get my next ALERT 100% FREE
Zerohedge’s ‘Exhibit A’ comes from the news wires, which reported that Bank of England policymaker Adam Posen sees no way out of the global Kondrateiv Winter other than to now monetize privatedebt, such as small business loans, automobiles and anything connected to vital components of the British economy.
- BOE’S POSEN SAYS TIME FOR CENTRAL BANKS, INCLUDING BOE, TO BUY PRIVATE ASSETS
- POSEN SAYS BUYING PRIVATE-SECTOR ASSETS WOULD HELP ECONOMY
“Further asset purchases by central banks can improve the economic situation we are now in,” Posen said in London, Monday. He added, it is “time for the major central banks, including the Bank of England, to engage in purchases of assets other than government bonds.”
Posen goes on to say in his speech that he was wrong about the UK economy, and he now believes economic activity has manifestly stalled, justifying further unconventional central bank actions to ward off an Armageddon-like financial collapse for another few days, or so. A suggestion from a policymaker of the relatively lesser-important BOE to other central bankers that they should look to monetizing privatedebt decidedly moves the world that much closer to hyperinflation, as statements made by the BOE might just as well have come from the Fed, itself, as today’s central bankers no longer step out alone, but work together closely.
It appears Posen’s comments hint to another coordinated policy response among central banks to include any form of debt monetization they deem impeding credit creation and liquidity. To minimize volatility between major currencies, monetary policy among central banks is coordinated to achieve a homogenous problem between the euro, dollar, yen and sterling, leaving investors with no meaningful currency of choice among the big four. There’s no question: central banks sink or swim together.
Consider, for example, the shock announcement of Nov. 30, 2011, during which six major central banks simultaneously slashed overnight rates of dollar holdings among their respective member banks. Equities and precious metals soared, as traders fell over each other to buy ‘risk-on’ assets in huge volumes in an effort to front-run future inflationary effects. After opening at 11,559.27, the Dow never ticked down and soared nearly 500 points to close at the high of the day’s trade of 12,045.68, for a 4.2 percent jolt higher. Similar, or better, percentage moves to the upside were seen in the DAX, CAC, FTSE and Nikkei. Currencies remained relatively stable in comparison.
In the case of Posen’s most recent statement, it’s most likely that such a heretical buying spree to shave further value off the world’s major fiat currencies will be conducted globally. It appears, too, central banks are also coordinating preparatory language for the collective grand announcement—the bazooka.
Other hints of desperate measures forthcoming comes from the EU, according to Reuters. Capital flight akin to the 1970s in Europe is expected to escalate, mostly out of the PIIGS banks, this time, and into Swiss banks, again, where monetary policymakers there have recently stated their undying resolve to prevent a spike up in the franc during the capital flight out of the PIIGS banks.
Moreover, to limit destabilizing capital movements, free movement (of human bodies) across EU member states, afforded Europeans by way of the Schengen Agreement of 1985, may be coming to an end, as memories of the 1997 Asian currency crisis saw money from SE Asia and Indonesia flooding over the boarders in suitcases into the Switzerland of Asia, Singapore. Instead of Europeans moving unrestricted from country to country as Americans move from state to state, inspections of passport stamps and bulky suitcases will most likely reemerge, suddenly.
- EU SOURCES HAVE DISCUSSED IMPOSING CAPITAL CONTROLS AS WORST CASE SCENARIO IF GREECE LEAVES EUROZONE – RTRS
- IMPOSING BORDER CHECKS, LIMITING ATM WITHDRAWALS ALSO PART OF WORST-CASE SCENARIO PLANNING – EU SOURCES – RTRS
- SUSPENSION OF SCHENGEN ALSO DISCUSSED
“Contingency planning is underway for a scenario under which Greece leaves,” one unnamed EU source told Reuters. “Limited cash withdrawals from ATMs and limited movement of capital have been considered and analyzed.”
As Europe prepares for the end game of the global monetary system, Bloomberg reports that China’s whopping dollar and euro reserves have been fleeing into physical money at rates historically never seen before by any country.
Gold imports by mainland China from Hong Kong climbed 65 percent to a record in April, advancing for a third straight month as investors sought a hedge against financial-market turmoil and an economic slowdown. Shipments totaled 103,644.5 kilograms (103.6 metric tons) in the month from 62,913 kilograms in March, according to export data from the Census and Statistics Department of the Hong Kong government today. In the first four months, imports were 239,174 kilograms from 27,114 kilograms a year earlier, according to Bloomberg calculations. China doesn’t publish such figures.
And with gold imports into China up 782 percent for the first four months of 2012, compared with the first four months of 2011 (nearly 1,300 percent for April 2012, YoY), comments made by Wang Xinyou of Agricultural Bank of China Limited seem rather comical, when he told Bloomberg, “We can’t rule out the possibility that the central bank [of China] is buying gold.”
As data concerning exports of gold bullion from the (now) world’s largest producer of the yellow metal is zero, China’s reported stockpile of slightly more than 1,000 tons appears to be as comical as the suggestion that maybe, just maybe, the People’s Bank of China is stockpiling gold.
In defiance of the Warren Buffett and Charlie Munger duo, the Bond King, himself, Bill Gross of PIMCO, in a recent note to clients, stated this about the extent of the debt requiring some form of reconciliation:
Soaring debt/GDP ratios in previously sacrosanct AAA countries have made low cost funding increasingly a function of central banks as opposed to private market investors. Both the lower quality and lower yields of previously sacrosanct debt therefore represent a potential breaking point in our now 40-year-old global monetary system. […] As they (investors) question the value of much of the$200 trillion which comprises our current system, they move marginally elsewhere – to real assets such as land, gold and tangible things, or to cash and a figurative mattress where at least their money is readily accessible. Emphasis added.
And the screaming implications of Gross’ assessment comes by way of Eric Sprott of Sprott Asset Management, who stated in his own letter to clients, “Is the bond king recommending gold? YES, YES YES!”
And for Sprott’s recommendation regarding silver? YES, YES, YES, and one more YES!
Related Tickers: SPDR Gold Trust (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), ProShares Ultra Silver (NYSEARCA:AGQ), U.S. Oil Fund (NYSEARCA:USO), PowerShares DB Commodity Index Tracking (NYSEARCA:DBC).
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