The Race To Depreciate Fiat Currencies Is Accelerating

By Mike Gleason – Re-Blogged From Silver Phoenix

Metals investors are anxiously awaiting the market’s reaction to next week’s Fed meeting. We may see players in the futures markets move to smash gold and silver prices down to lower support zones in the trading around the Fed’s decision.

But flushing out some more speculative longs and late comers with weak hands would be a healthy development in setting up the next rally.

Those who got left behind in this summer’s big moves in metals markets should certainly consider taking advantage of favorable buying opportunities as they present themselves ahead of a possible seasonal push higher in the sector this fall.

Conventional financial markets could become volatile as uncertainties surrounding America’s economy and political future weigh on investors. We are potentially only one election away from falling into socialism and one quarter’s GDP report away from falling into recession.

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Central Banks In Panic Mode

By Egon von Greyerz – Re-Blogged From Gold Eagle

In this interview Max Keiser and Egon von Greyerz discuss the enormous pressures in the financial system and the coming stampede into gold. Also:

  • The final phase of the currency race to zero has just started
  • Massive energy in gold, built up over the last 6 years
  • Gold will break its all-time high of $1920, without effort
  • Gold hit new all-time highs in many currencies. Now on its way to at least $10,000 or even $50,000
  • Central banks panicking over global banking system
  • Negative rates – Government bonds, world’s most risky investment
  • At some point, investors will dump overvalued bonds, resulting in hyperinflation and implosion of bond market
  • Dow Jones stock index, will face a vicious fall very soon and in years to come

HERE IS THE INTERVIEW:

The Yield “Curve” Knows

By Craig Hemke – Re-Blogged From Gold Eagle

As global interest plummets to historically negative levels—and as the U.S. bond market reveals a deeply inverted yield curve—it’s time again to assess what all of this means for the precious metals investor.

Just yesterday, a fellow on CNBC remarked that “no one had seen this coming”. By “this”, he meant a sharp rally in both gold and bonds. Oh really? We write these articles for Sprott Money each and every week.

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Deeply Negative Nominal Rates Are On Their Way

Growing evidence of a severe global recession is sure to provoke more aggressive monetary policies from central banks. They had hoped to have the leeway to cut interest rates significantly after normalising them. That hasn’t happened. Consequently, as the recession intensifies central banks will see no alternative to deeper negative nominal rates to keep their governments and banks afloat through a combination of eliminating borrowing costs and inflating bond prices. It will be the last throw of the fiat-money dice and, if pursued, will ultimately end in the death of them. Gold and bitcoin prices are now beginning to detect deeper negative rates and the adverse consequences for fiat currencies.

The problem

Central banks face a dilemma: how can they cut interest rates enough to stop an economy sliding into recession. A central banker addressing it will note that the average cut required to put an economy back on its feet is of the order of 5%, judging by the experience of 2001/02 and 2008/09 and what their economic models tell them. Yet, in Euroland the starting point is minus 0.4% and in Japan minus 0.1%. In the US it was 2.5% before the recent reduction and in the UK 0.75%. The solution they will almost certainly favour is deeper negative nominal interest rates.

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Negative Interest Rates And Cash

By Bart Klein Ikink – Re-Blogged From Gold Eagle

Is it possible to have cash with negative rates?

War on cash?

There is talk about a war on cash to pave the way for negative interest rates. Negative interest rates and cash go not well together, at least so it seems. People may opt for cash when interest rates on bank accounts and government bonds are negative. In Europe many interest rates are already in negative territory but the central bank still promotes the use of cash. So is there a war on cash? At least not at the European Central Bank (ECB) it seems. Some ECB policy makers can even get a bit emotional about cash being the only real link between the central bank the people.1

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Europe’s Hail Mary Pass

By Rick Ackerman – Re-Blogged From Silver Phoenix

Europe took competition to a new level last week in the global currency-devaluation olympiad. Nominating the politically-minded IMF chief Christine Lagarde rather than a blue-blooded financier to run the ECB is akin to making Trump chairman of the Federal Reserve. No longer can we pretend that the staid protocols of old-school banking still obtain in the financial realm. Instead, there is a strong whiff of desperation as Europe readies a last-ditch attempt to stimulate itself out of a liquidity trap with the ECB’s deposit rate already at minus 0.4%.

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Gold Sees Safe-Haven Gains As Stocks Fall Sharply And Deutsche Bank Plummets

By Mark O’Byrne – Re-Blogged From Gold Eagle

Gold rose to a two week high and was higher in most currencies today after Washington’s threat of tariffs on Mexico exacerbated fears of a global trade war and recession, which saw a ‘flight to quality’ and gains for safe haven gold.

Spot gold jumped 0.9% to $1,298.80 an ounce this morning, its highest since May 15. Gold bullion has risen over 1.2% this month and appears headed for its first monthly gain in four months. This is important from a technical perspective and the fundamentals of growing risk aversion and robust demand should lead to further gains in June.

European trading has seen a clear flight to quality after President Trump unexpectedly politicised tariffs by slapping 5% on all goods coming from Mexico.

The increasingly hopeless case of a U.S. and China trade deal looked even further away after China drew up an “Unreliable entities” list of foreign parties (presumably mostly U.S.) that harm Chinese firms.

Stocks are red across the board globally with the S&P 500 breaking down sharply below its 200 day moving average (DMA). 2776 is a key level and Wall Street and Wasshington will not want a close below this level. Market intervention is quite possible, if not likely.

A weekly close below the 200 day moving average (DMA) could lead to follow through selling on Monday which could get ugly given the economic backdrop.

Financial stocks are particularly under pressure including UBS and embattled Deutsche Bank with the latter posting new “all time” lows of around €6. A whiff of contagion is in the air.

US and German bond yields hitting recent lows indicate the Fed might be backed into a rate cut sooner than they have been guiding with an inverting yield curve being a good barometer of trouble ahead

The greenback has also benefited somewhat from the risk off trade, in the face of this, silver and particularly gold are holding up well despite the recent sell off.

$1,300/oz and $14.60/oz are the respective hurdles approaching for both. Weekly closes over these levels should see follow though buying and further gains.

How far down we go, nobody knows, but it makes sense to stay cautious and prepared.

Fasten your seat belts it could be a lively Friday afternoon and weekend…

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