Gold, Silver, and Currencies

Laurence Fletcher and Henry Sanderson report in the Financial Times about hedge fund efforts to use gold to fight fiat currency inflation. They write: Some of the world’s largest hedge funds are raising their bets on gold, forecasting that central banks’ unprecedented responses to the coronavirus crisis will lead to devaluations of major currencies. Paul Singer’s Elliott Management, Andrew Law’s Caxton Associates and Danny Yong’s Dymon Asia Capital are all bullish on the yellow metal, which has risen about 12 per cent this year. They are wagering that moves to loosen monetary … [Read more...]

Henry Sanderson reports in Financial Times on the historically wide gap in the valuations of the two most common precious metals for investment. He writes: Investors are betting on a rally in silver, after the gap between gold and the industrial metal soared to its widest level in more than three centuries. In March the price of an ounce of gold was 125 times higher than the same amount of silver — a record going back to at least 1687, according to data compiled by Ross Norman, a veteran gold trader. But since then the gap has closed to about 113 times, and analysts say more gains for … [Read more...]

Six years ago, oil was trading at $100 per barrel and the Russian ruble was trading at 35 to the dollar. Translating that exchange rate into oligarch terms, it would have taken about 4.5 million rubles to buy one of Mercedes’ coveted G-class SUVs. Today, oil trades at about $20 per barrel and for oligarchs with 4.5 million rubles to spend on a SUV, it's time to start looking at Chevys. … [Read more...]

Below is a chart of the Federal Reserve’s balance sheet. The Fed has gone into money-printing overdrive. Over the last month, the central bank has conjured over $1 trillion out of thin air to buy Treasury bonds and mortgage-backed securities. The Fed is printing at a pace of up to $125 billion per day. Once the stimulus passes, the Fed will be given about $500 billion in capital that can be leveraged up to 10X to buy more assets. The source of that leverage is newly printed money. We are talking about an additional $4.5 trillion. Meanwhile, the Federal Government is likely to run a … [Read more...]

We hear a lot about Bitcoin being the new and improved "digital gold." Bitcoin is a store of value the bulls contend. Maybe, but since the market peaked on February 19th, Bitcoin is down more than 30%. For the year, Bitcoin is down 14%. How about that old barbarous relic, gold. Gold is up 7% on the year. … [Read more...]

Could the price of gold rally to a record high of over $2,000 as central bankers print more money? According to Greg Jenson of Bridgewater Associates, the answer is yes. Jennifer Ablan reports Jenson's prediction in The Financial Times: Mr Jensen, who helps oversee more than $160bn at the Connecticut-based group, told the Financial Times he believed the Federal Reserve, in particular, would let inflation run hot for a while and “there will no longer be an attempt by any of the developed world’s major central banks to normalise interest rates. That’s a big deal”. At the same time, … [Read more...]