Gold Macro

“Sold” refers to the answer you would have got last week, and still get this week, if you go to buy physical gold or silver, anywhere, unless you were offering a $200p/oz premium for gold and 100% on silver, with an online “dealer”.

Do you think there was one mention in the media last week of problems in the Precious metal derivative market or sold out gold and silver, globally? There wasn’t.

Probably because of Coronavirus, right?

By now we hope you realise that one part of the twin crisis we’re dealing with right now is man-made. Let’s ignore the interestingly wonderful theory’s out there that call COVID:19 anything but an act of nature/God, or whatever.

What is happening now in financial markets is a result of unhinged “financialization”, over multi decades, particularly since the deregulation of the banking industry in 1998. The creation of bubble after bubble, culminating in this most recent bubble, the greatest of them all.

The Central Bank fiscal response to each bubble they created has been larger and larger, making themselves and their government masters (despite the appearance of independence) bigger and bigger, which you should now recognise as part of the problem, not solution.

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It’s been very hard to find words this week to describe what is happening on the financial side of the twin pandemics this week.

The US Fed finished the week with a USD100 BILLION QE purchase of treasuries and mortgage-backed securities. IN ONE DAY.

The most QE got to at the height of the GFC was $80B per month. Chicken feed.

It seems like every other day another $TRILLION bailout promise of some sort was introduced over the last two weeks. Fire at will, if you like, it’s been hard to keep up.

By the way, have you seen any these $$$ floating around? Neither have we.

This is because most or all of said “new” money is being poured into markets for one main reason: to avoid a credit event.

It may sound simplistic to smart financial types, but at some point people are going to start asking, what if the same money was spent on front line Covid-19 support and medical development, rather than bailing out a financial system that was done already done for?

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Welcome to an appropriately named “Black Friday”. This week has been quite the show, so far.

Before we discuss the what and when of “opportunity” arising from this current calamity, let’s make sure we know where we are.

What we’re dealing with here is a collision of two Pandemics.

The first is known as the Coronavirus, and seemed to have kicked off around December 2019.

The second, a “financial virus”, has been around for many years and muted into its current form around September last year.

The financial virus’s collision with the Coronavirus has bought forward a day of reckoning to a financial system close to the end of its use-by date.

All the “can kicking” and money printing to main status quo and boost asset prices to the moon over the last 10 years has left central bankers with very little ammunition.

As has been evidenced all week. No matter what they’ve thrown at markets, markets have not come to order.

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