Author Archives: Pater Tenebrarum

     

 

 

Global Monetary Architecture

The quarterly Incrementum Advisory Board meeting was held last week (the full transcript is available for download below). Our regulars Dr. Frank Shostak and Jim Rickards were unable to attend this time, but we were joined by special guest Luke Gromen of research house “Forest for the Trees” (FFTT; readers will find free samples of the FFTT newsletter at the site and in case you want to find the link again later, we have recently added it to our blog roll). Below we add a few remarks on a topic Luke Gromen is paying a great deal of attention to.

 

Special guest Luke Gromen of FFTT.

 

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Étatiste Crackpottery

Shortly after we posted Jayant Bhandari’s recent article that inter alia discussed  the new complex GST (general sales tax) regime introduced in India by the Modi government (see “The Lunatics Have Taken Over the Asylum” for details), we were contacted by Lakshminarayanan Kumaraapuram, a small businessman in Mumbai. He asked us whether we would be prepared to publish a comment he originally mailed to the prime minister’s “grievance portal”, so as to transform it into an open letter.

 

Let’s keep it simple… but not too simple. The chief surgeon gets ready to wield his scalpels and cleavers.

 

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Frisky Fed Hike-o-Matic

We haven’t commented on central bank policy for a while, mainly because it threatened to become repetitive; there just didn’t seem anything new to say. Things have recently changed a bit though. A little over a week ago we received an email from Brian Dowd of Focus Economics, who asked if we would care to comment on the efforts by the Fed and the ECB to exit unconventional monetary policy and whether they could do so without triggering upheaval in the markets and the economy**, so we are taking this opportunity to do just that.

 

Outside view of a famous crime scene: the building where the central planners of the fiat money regime gather to “steer” the economy.

 

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Maurice Jackson Interviews Jayant Bhandari

We are happy to present another interview conducted by Maurice Jackson of Proven and Probable with our friend and frequent contributor Jayant Bhandari, a specialist on gold mining investment, the world’s most outspoken emerging market contrarian, host of the highly regarded annual Capitalism and Morality conference in London and consultant to institutional investors.

 

As soon as Jayant touches down in London, he is accosted by microphone-wielding young women eager to hear what he has to say…

Photo via financialpost.com

 

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The Crypto-Bubble – A Speculator’s Dream in Cyberspace

When writing an article about the recent move in bitcoin, one should probably not begin by preparing the chart images. Chances are one will have to do it all over again. It is a bit like ordering a cup of coffee in Weimar Germany in early November 1923. One had to pay for it right away, as a cup costing one wheelbarrow of Reichsmark may well end up costing two wheelbarrows of Reichsmark half an hour later. These days the question is how many wheelbarrows of US dollars one may need to pay for a bitcoin.

 

Is it real? (As our readers know, the nature of reality poses certain problems).  When we started writing this, bitcoin had just moved up by more than $600 in one week to its then level of $2,400 –  within a little more than a day it reached an interim peak of $2,760, then plunged to an interim low of around $1850 in just two trading days, only to rally to a new high of $2,930 over the next two weeks. Currently it trades at $2,750 (don’t hold it against us if these figures are no longer true by the time this post is published).

 

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[Ed. note: This article was originally posted in November of 2010 – we have decided to republish it with updated charts, as it has proved to be very useful as a reference – the mechanics of QE are less well understood than they should be, and this article explains them in detail.]

 

Printing Money

We have noticed that lately, numerous attempts have been made to explain the mechanics of quantitative easing.  They range from the truly funny as in this by now ‘viral’ You Tube video with two robotic teddy-bears discussing the Fed chairman’s qualifications (‘my plumber has a beard too’), to outright obfuscation such as the propagation of this ‘Bernanke explains he’s not printing money, it’s just an asset swap‘ notion. This was apparently repeated by NY Fed president William Dudley on one occasion as well.

 

Are they printing money? You bet they do.

 

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The 11th Annual In Gold We Trust Report

This year’s Incrementum In Gold We Trust report by our good friends Ronald Stoeferle and Mark Valek appears about one month earlier than usual (we already mentioned in our most recent gold update that it would become available soon). As always, the report is extremely comprehensive, discussing everything from fundamentals pertaining to gold, to technical analysis to statistical studies on the behavior of gold under different economic scenarios.

 

August gold, daily – gold itself continues to look fairly strong recently, but its rally is currently not confirmed by precious metals stocks.  Silver is lagging the advance as well – click to enlarge.

 

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Keeping it Simple

We recently (on Thursday last week to be precise) put together a few gold-related charts based on the “keep it simple” principle. The annual Incrementum “In Gold We Trust” report is going to be published shortly and contains a quite thorough technical analysis section, so we will keep this brief and just discuss a few things that have caught our eye.

 

Going for the gold: The two gentlemen on the left are standing at what is officially the deepest below-ground spot humans have ever stood on. It is more than 4 kilometers or approx. 2.5 miles below the surface, at the very bottom of the Mponeng deep level gold mine in South Africa. The rock face with the grid painted on it is about to blasted to smithereens (the giant rock drill to the right drills holes into it, which are then filled with explosives). The people working in this tunnel, we kid you not, are referred to as the “mine deepening team”. That’s right – they are drilling down another 7,000 feet to reach an ore body at a depth of 3 miles – or more than 4.8 kilometers deep.  Where they stand right now, the rock face has a surface temperature of more than 66 degrees C, or about 151 degrees F. The gold-bearing reef that is eventually going to be mined when the tunnel reaches it has a thickness of only about one meter, or 3.3 feet – but it will lengthen the mine’s life until around 2030.

Photo credit: Discovery World

 

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Central Banks Produce Dire Consequences for the Free Market

Todd “Bubba” Horwitz has recently produced a podcast with our friend Claudio Grass of Global Gold, which we can be called up further below. Bubba has provided a summary of the topics discussed, an edited version of which you find below as well.

 

Global Gold CEO Claudio Grass, tireless advocate for free markets, sound money and liberty.

Photo via Global Gold

 

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Money Supply and Credit Growth Continue to Falter

The decline in the growth rate of the broad US money supply measure TMS-2 that started last November continues, but the momentum of the decline has slowed last month (TMS = “true money supply”).  The data were recently updated to the end of April, as of which the year-on-year growth rate of TMS-2 is clocking in at 6.05%, a slight decrease from the 6.12% growth rate recorded at the end of March. It remains the slowest y/y growth since October of 2008, when the Fed had just begun to pump quite heavily.

 

US money supply and credit growth keep slowing.

 

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Endangered Recovery

As we noted in a recent corporate debt update on occasion of the troubles Neiman-Marcus finds itself in (see “Cracks in Ponzi Finance Land”), problems are set to emerge among high-yield borrowers in the US retail sector this year. This happens just as similar problems among low-rated borrowers in the oil sector were mitigated by the rally in oil prices since early 2016. The recovery in the oil sector seems increasingly endangered though.

 

Too many oil barrels are filling up again.

Photo credit: Kay Nietfeld / DPA / Corbis

 

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The Guessers Convocation

On Wednesday the socialist central planning agency that has bedeviled the market economy for more than a century held one of its regular meetings.  Thereafter it informed us about its reading of the bird entrails via statement (one could call this a verbose form of groping in the dark).

 

Modern economic forecasting rituals.

 

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