Can HyperInflation REALLY Hit the US?

The Bears Are Back - Presenting Part 5 Of The Silver "Thesis"

Submitted by Tyler Durden on 03/25/2011 13:11 -0400

The bears are back, discussing the usual topics du jour, which in this case is a rather humorous listing of the most recent 99 black swans year to date in 2011, and their impact on silver. Funny stuff. 

Charles Plosser Speaks On The Fed's "Exit"

Submitted by Tyler Durden on 03/25/2011 12:22 -0400

Highlights from the just released speech by Philly Fed hawk Charles Plosser:

• Fed's Plosser says would want to make explicit the Fed's commitment to a numerical inflation objective
• Says important to communicate a systemic plan that describes where Fed is going, how it will get there
• Says his proposed strategy would tie pace of asset sales to size of interest rate increases
• Says his preferred exit strategy would raise rates, shrink balance sheet concurrently
• Says failure to exit in timely manner will have serious consequences on inflation, economic stability in future
• Says monetary policy will have to reverse course in the not too distant future
• Says consumer spending continues to expand at reasonably robust rate
• Says US economy seems to be on much firmer foundation
• Says labor market conditions are improving

In other words, an attempt to return confusion over the fate of QE3. As for the Fed existing anything.... good luck. As part of his exit proposals, Plosser proposes two exit plans (12 and 18 months) both of which sees a dramatic reduction in reserves, a hike in IOER, and asset sell offs. Should the Fed indeed proceed to do this, the market will prolapse.

Dylan Grice Explains Why He Likes Gold, And Why $7,500/Oz Makes A Gold Standard Possible

Submitted by Tyler Durden on 03/25/2011 10:04 -0400

Three months ago, there was some confusion when SocGen's Dylan Grice, one of the brightest big picture strategists out there, released a report profiling the long-term real return on commodities (which was zero), leading some to speculate he was bearish on gold and/or other precious  metals. Today, Grice puts the matter to rest with his latest Popular Delusions piece: "Why this commodity specific value investor likes gold." To wit: "In the hard sciences knowledge builds cumulatively. It propels the relentless growth in man’s ability to do more with less, which makes commodities such a lousy investment in the long term. Yet in the realm of social decision-making mankind is a fool, unable to learn the wisdom of posterity and doomed to repeat its mistakes: the first credit crunch occurred in the Rome of 33AD and the ancient Greeks lived with high inflation. Confidence in central bankers’ ability to learn from past inflation is as likely to be misplaced as it was in their ability to learn from past credit booms. Gold remains the cleanest insurance against such overconfidence." And confirming gold's very unique position in the investment pyramid, Grice's conclusion borders on the ontological: "Shorting mankind’s ingenuity isn’t a smart thing to do. But ingenuity isn’t wisdom. And shorting mankind’s ability to absorb wisdom … well, aren’t you silly if you don’t? With less of the technological risk you’re taking when you buy any other part of the commodities complex, gold is the oldest, purest and simplest way." It appears ever more are starting to agree with this perspective.

People’s Bank of China Positive On Gold Due To ‘Value Preservation’; Concerned About Euro, Dollar And Paper Currencies

Submitted by Tyler Durden on 03/25/2011 09:04 -0400

The People’s Bank of China are very positive on gold in their just released annual Financial Markets Report. They remain concerned about risks posed to fiat currencies such as the dollar and euro, about asset price bubbles internationally and the risk competitive currency devaluations poses to fiat currencies. The report is much more positive than last year when they appeared to talk down gold’s prospects somewhat. Skeptics suggested that this was in order to allow them to continue accumulating gold without the price running away from them. The Chinese central bank said that inflation risks in economies internationally will support demand for gold, with prices for the precious metal likely to continue to make record highs. While the risks of falling gold prices shouldn’t be ignored, political conflict is likely to support higher gold prices. Inflation risks mean demand for gold will remain strong and investment demand from a 'value preservation' angle will be very strong supporting gold at higher levels. It said it is considering allowing more foreign financial institutions and companies to participate in China's interbank bond market, beyond international development agencies, and it is studying gradually opening the country's gold and futures markets to overseas yuan holders. 

 

 

 

 

Portuguese Bond Liquidity Disappears As LCH.Clearnet Kicks Portugal Paper Out From RepoClear Basket Eligibility

Submitted by Tyler Durden on 03/25/2011 08:16 -0400

And another major hit for all those still unlucky enough to own Portuguese bonds: "Following S&P's lowering of its sovereign credit ratings on Portugal to BBB on Friday 25 March 2011, RepoClear participants are advised that with effect from Monday 27 March 2011 Portuguese Government bonds will no longer be eligible for delivery in any of the RepoClear €GC Baskets. Until today’s downgrade Portugal had been eligible for the single A €GC Basket." Luckily, Portuguese bonds are still eligible for trading on OTC/Bulletin Boards, where the bid/ask will soon be greater than the actual bonds price. 

 

 

 

Follow The Fall Of The Canadian Government Live

Submitted by Tyler Durden on 03/25/2011 13:27 -0400

The no confidence vote in Prime Minister Stephen Harper's Canadian government is expected to start momentarily. Just like two days ago when Portugal fell, this event will likely be seen as a buying opportunity of both the USDCAD and the CADUSD. After all - there are trillions in excess liquidity sloshing around which must be put to use even if in mutually offsetting trades. Follow the event live at the following webcast from CTV.