Friday 19th July 2019

Resource Clips


Posts tagged ‘european union’

Rate cuts, bubble-like stock valuations and possible QE with “new non-traditional” interventions look good for gold: WGC

July 11th, 2019

by Greg Klein | July 11, 2019

Some recent dips below $1,400 notwithstanding, yellow metal’s forecast looks positive for the next six to 12 months, according to the World Gold Council. While long-term performance depends on jewelry, technology and savings, shorter-term prices respond to other factors that the WGC considers positive for its favourite element.

Chief among them are interest rates, reflecting an about-face in global monetary policy. Less than a year ago the U.S. Federal Reserve and investors alike expected continued rate increases, the council stated. “Now, the market expects the Fed to cut rates two or three times before the end of the year. And while statements by board members, including Chairman Powell, are signaling a wait-and-see approach, the market has barely changed its forecast. The Fed may not do what the market asks, but it generally doesn’t like to surprise it either.”

The WGC expects Europe’s and Japan’s central banks to follow suit in a global environment of competing tariffs, U.S.-Iran conflict and the ever-looming Brexit. But, the WGC emphasizes, low rates have “the perverse effect of fueling a decade-long stock market rally with only temporary pullbacks. This has pushed stock valuations to levels not seen since the dot-com bubble.”

Should recession strike, central banks might respond with strategies almost guaranteed to bolster goldbugs’ hoarding instincts: “quantitative easing and, possibly, new non-traditional measures to reinvigorate the global economy.”

With over $13 trillion of global debt now offering nominal negative yields, “our analysis shows that 70% of all developed market debt is trading with negative real yields, with the remaining 30% close to or below 1%.”

As for central bank purchases, they came to about $10 billion during the year’s first five months, with continued buying expected. But a 10-year average shows central banks responsible for only 10% of gold demand. Jewelry commands the lead with 51%, followed by 27% for bars and coins, 9% for technology, and 3% for ETFs and similar products.

Positive economic performance, especially in China and India, would likely enhance the top category.

With a mandate to “stimulate and sustain demand for gold,” the WGC represents some of the world’s biggest gold miners.

Download the WGC’s Mid-Year Gold Outlook 2019.

‘The money-conjurers’

July 3rd, 2019

Only a radical reset can solve the central bank problem, says Nomi Prins

by Greg Klein

Only a radical reset can solve the central bank problem, says Nomi Prins

 

Imagine the power—unchecked power, at that—to create money. Then imagine the disaster such power could unleash. While that scenario looms in the foreseeable future, Nomi Prins argues, its precursors have made themselves obvious since 2008. They’re the result of central bank policies and the system that sustains them, institutions absolutely bereft of a Plan B. A mess so manifestly dangerous calls for radical solutions, she maintains.

That’s the perspective of an insider, or at least an ex-insider. A veteran of Lehman Brothers, Bear Stearns and Goldman Sachs, Prins dedicated herself “to exposing the intersections of money and power and deciphering the impact of the relationships between governments and central and private bankers on the citizens of the world.” Six books later came Collusion: How Central Bankers Rigged the World, recently released in paperback.

This is a work of extensive detail, recounting who did what to interest rates, inflation rates, currency valuations and other economic interventions, focusing on quantitative easing and the other euphemisms for her preferred term: “money conjuring.” Collusion also answers a key question: Cui bono?

Only a radical reset can solve the central bank problem, says Nomi Prins

The U.S. responded to the sub-prime crisis by “subsidizing private banks (in particular, the Big Six US banks that were key toxic asset creators). The Fed fashioned an historic bailout program that invoked zero interest rate policy (ZIRP), initiated a strategy of quantitative easing by which the central bank fabricated money to purchase government bonds and other securities, and created massive lending programs for banks with relaxed collateral rules. The Fed coerced central banks worldwide to adopt similar strategies.”

With little or no trickle-down effect, she emphasizes. If the too-big-to-fail rationale claimed to protect the wider economy, the wider economy didn’t notice. Through share buy-backs and other strategies, banks used the largesse to enrich themselves instead of providing loans or investments that would put more people to work. G7 banks also used conjured money to “speculate globally, especially in developing countries, in markets rather than in direct economic investment that benefited populations.”

Only in isolated incidents were malefactors called to account. That happened in late 2016, for example, when the U.S. Justice Department hit European Central Bank beneficiary Deutsche Bank with $7.2 billion in fines “for crimes committed during the financial crisis—a sign of all that conjured-money policy had plastered over…. All the cheap-money subterfuge had not addressed the prevailing and alarming codependencies among too-big-to-fail banks the world over. That meant systemic risk had not been extinguished, it had only been camouflaged. The fine was just that, a fine, not a shift to prevent any of the looming hazards the financial system could still unleash.”

Facing even less scrutiny than private banks are central banks, rarely required to explain their machinations. “They vacillate between taking credit for what they deem are positive results in the world economy and remaining silent in the wake of catastrophic failures that result from their policies.”

While G7 central banks collaborated with the Fed, some of their G20 counterparts resisted. Regardless, globalization globalized America’s crisis. But despite U.S. efforts to reinforce world influence, the country inadvertently helped China rise to second-greatest economy status with a currency that challenges dollar supremacy. Contributing to the Middle Kingdom’s stature were some emerging economies, distrustful not only of America’s ambitions but its economic stability.

The Fed has allowed the biggest banks on Wall Street to essentially double the risk that devastated the system in 2008.—Nomi Prins

Current and future stability, more than past misconduct, remains Prins’ greatest concern. “The Fed has allowed the biggest banks on Wall Street to essentially double the risk that devastated the system in 2008.”

She attributes to manufactured money a global debt equal to three times global GDP, a peril that could itself crash the economy or seriously aggravate a crisis of geopolitical origin. As for solutions, she insists that desperate times call for very desperate measures:

“We could write off all the public debt incurred since 2008 that hasn’t been redirected to the real economy—that is, take a deep breath and cancel it out globally.”

Prins also advocates oversight of the money-conjurers, as well as forcing them to channel their money into constructive investments. She wants the big banks dismantled “so that they can’t hold people’s deposits hostage during the next crisis.”

But, assuming her proposals are sound, where’s the will to carry them out? She depicts G7 countries and central banks as stuck in conventional attitudes and clinging to privilege with no impetus for reform. Emerging economies, meanwhile, might be watching with cautious detachment. China, quite likely, looks on expectantly.

Nomi Prins speaks at the Sprott Natural Resource Symposium, held in Vancouver from July 30 to August 2. Click here for more details.

Technology metals expert Jack Lifton calls for progress on critical minerals

June 17th, 2019

…Read more

U.S. critical minerals strategy includes Canada and other allies

June 5th, 2019

by Greg Klein | June 5, 2019

The country’s tariff tactics might present an image of Fortress America battling its adversaries, but a new critical minerals strategy advocates greater co-operation between the U.S. and its friends. The manifestation of Washington’s growing concern about securing resources and building supply chains, a federal report released June 4 announces six calls to action, 24 goals and 61 recommendations accompanied by timelines for accomplishment.

The U.S. includes Canada and other allies in its critical minerals strategy

Clearly, the Donald Trump administration recognizes the problem of relying on potentially unreliable sources, especially when they’re economic and geopolitical rivals: “If China or Russia were to stop exports to the United States and its allies for a prolonged period—similar to China’s rare earths embargo in 2010—an extended supply disruption could cause significant shocks throughout U.S. and foreign critical mineral supply chains.”

Rare earths provide an especially stark example of the problem, the report emphasizes. “The REE industry has experienced downsizing, business failure, and relocation in all phases of the supply chain, including mining, separation, metal reduction, alloying and downstream manufacturing of advanced technology products such as high performance rare earth permanent magnets.”

The report, A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals, follows a number of American initiatives including the formal classification of 35 critical minerals and a Secretary of Defense study released last September.

For 31 of the 35 critical minerals, the U.S. imports over 50% of its supply. For 14 of them, imports account for 100% of supply, creating “a strategic vulnerability for both our economy and our military with respect to adverse foreign government actions, natural disasters, and other events that could disrupt supply.”

If China or Russia were to stop exports to the United States and its allies for a prolonged period—similar to China’s rare earths embargo in 2010—an extended supply disruption could cause significant shocks throughout U.S. and foreign critical mineral supply chains.

Apart from finding new deposits, the report calls for specific measures to encourage R&D, new supply chains, additional and publicly available exploration data, land access and permitting, a workforce with appropriate skills and expertise, as well as international trade and co-operation.

On the latter topic, the report notes significant American reliance on Canada and Mexico for many essentials. “Working with them to develop their critical mineral deposits can help improve the security of U.S. supply.”

Washington’s agenda also calls for expanded collaboration with Canada, Australia, the EU, Japan and South Korea on a range of issues, from finding and developing resources to creating supply chains.

Although the U.S. began addressing the issue early in Trump’s administration, the report’s timing coincides with fears that another Chinese rare earths embargo could happen imminently. The U.S. relies on China directly for 80% of its imports, while much of the remainder comes from China indirectly. America’s sole REE mine, Mountain Pass in California, exports all its production to China.

That leaves Western Australian miner Lynas Corp as the only major producer outside China that is, as CEO/managing director Amanda Lacaze stated, “focused on rest-of-the-world markets, that is non-Chinese markets.” Although her company faces tremendous challenges meeting Malaysian government demands for its processing facility in that country, the government has made mildly conciliatory statements in advance of a June 28 meeting with Lynas.

Update: Following a June 20, 2019, meeting between Trump and Prime Minister Justin Trudeau, the two leaders “instructed officials to develop a joint action plan on critical minerals collaboration,” according to Reuters.

August 4th, 2016

De Beers’ $520-million diamond sale defies summer slowdown NAI 500
JPMorgan Chase analyst says central banks rigged markets after Brexit GoldSeek
Five Quebec gold juniors that could be acquired soon SmallCapPower
Living in uncertain times: An updated picture of country risk Equities.com
What experts predict for the new silver bull market Streetwise Reports
Lithium contract prices begin Q3 move towards high China levels Benchmark Mineral Intelligence
Canada welcomes move towards ratification of EU trade deal Industrial Minerals
A classic case of failed socialism: What’s next after Brexit? Stockhouse
Limestone: Commodity overview Geology for Investors
Lithium in Las Vegas: A closer look at the lithium bull The Disruptive Discoveries Journal

August 3rd, 2016

JPMorgan Chase analyst says central banks rigged markets after Brexit GoldSeek
Five Quebec gold juniors that could be acquired soon SmallCapPower
Living in uncertain times: An updated picture of country risk Equities.com
What experts predict for the new silver bull market Streetwise Reports
Lithium contract prices begin Q3 move towards high China levels Benchmark Mineral Intelligence
Nickel near eight-month high as metals gain on stimulus speculation NAI 500
Canada welcomes move towards ratification of EU trade deal Industrial Minerals
A classic case of failed socialism: What’s next after Brexit? Stockhouse
Limestone: Commodity overview Geology for Investors
Lithium in Las Vegas: A closer look at the lithium bull The Disruptive Discoveries Journal

July 29th, 2016

Five Quebec gold juniors that could be acquired soon SmallCapPower
Brexit post-mortem GoldSeek
Living in uncertain times: An updated picture of country risk Equities.com
What experts predict for the new silver bull market Streetwise Reports
Lithium contract prices begin Q3 move towards high China levels Benchmark Mineral Intelligence
Nickel near eight-month high as metals gain on stimulus speculation NAI 500
Canada welcomes move towards ratification of EU trade deal Industrial Minerals
A classic case of failed socialism: What’s next after Brexit? Stockhouse
Limestone: Commodity overview Geology for Investors
Lithium in Las Vegas: A closer look at the lithium bull The Disruptive Discoveries Journal

July 28th, 2016

What experts predict for the new silver bull market Streetwise Reports
Lithium contract prices begin Q3 move towards high China levels Benchmark Mineral Intelligence
Lies, fraud and obstruction: A look back at Enron’s downfall Equities.com
SWOT analysis: Is there increased political risk building into the gold market? GoldSeek
Nickel near eight-month high as metals gain on stimulus speculation NAI 500
Canada welcomes move towards ratification of EU trade deal Industrial Minerals
Gold junior climbs on assays SmallCapPower
A classic case of failed socialism: What’s next after Brexit? Stockhouse
Limestone: Commodity overview Geology for Investors
Lithium in Las Vegas: A closer look at the lithium bull The Disruptive Discoveries Journal

July 26th, 2016

Lithium contract prices begin Q3 move towards high China levels Benchmark Mineral Intelligence
Lies, fraud and obstruction: A look back at Enron’s downfall Equities.com
SWOT analysis: Is there increased political risk building into the gold market? GoldSeek
Nickel near eight-month high as metals gain on stimulus speculation NAI 500
New stock market highs correlate to $57 trillion in printed global currency units Streetwise Reports
Canada welcomes move towards ratification of EU trade deal Industrial Minerals
Gold junior climbs on assays SmallCapPower
A classic case of failed socialism: What’s next after Brexit? Stockhouse
Limestone: Commodity overview Geology for Investors
Lithium in Las Vegas: A closer look at the lithium bull The Disruptive Discoveries Journal

July 25th, 2016

SWOT analysis: Is there increased political risk building into the gold market? GoldSeek
EU to tackle China on critical mineral trade Benchmark Mineral Intelligence
Remembering the dotcom bubble burst Equities.com
Nickel near eight-month high as metals gain on stimulus speculation NAI 500
New stock market highs correlate to $57 trillion in printed global currency units Streetwise Reports
Canada welcomes move towards ratification of EU trade deal Industrial Minerals
Gold junior climbs on assays SmallCapPower
A classic case of failed socialism: What’s next after Brexit? Stockhouse
Limestone: Commodity overview Geology for Investors
Lithium in Las Vegas: A closer look at the lithium bull The Disruptive Discoveries Journal