Latest data shows no deposit flight yet in February 2013. Greece did decline together with Portugal, Ireland and Cyprus. But Italy and Spain had deposit increases.We'll see what happens in March 2013...Chart 1: Deposits Euroz...
Sunday, 31 March 2013
Saturday, 30 March 2013
I came across an interesting article that gives an empirical correlation between the yield spread between the 10 year and 3 month treasuries/bill and the probability of a recession when that yield spread narrows.The key is to monitor that the 10 year yield is always higher than the 3 month yield. If the 10 year yield starts to go closer to the 3 month yield and even goes below it, then we have a high probability of a recession.That correlation can...
Thursday, 28 March 2013
As I said before here and here, Belgium is the next domino to fall after Greece.If you don't believe me, believe Zerohedge. As you can see on chart 1, the countries on the left have the least equity/capital reserves as a percent of deposits.So to avert insolvency of Belgian banks, depositors need to be thrown into the fire eventually. But luckily, Greece will be first...Prepare yourself.Chart 1: % bad debt that can be impaired before deposit...
Tuesday, 26 March 2013
I have the feeling that we are going to make a bottom in copper soon, the contango will at one point begin to reverse. We are at 1.4% contango to price ratio now, it will go up to about 2-5% before it will reverse. Even when we have a copper surplus and record copper stocks in China.Chart 1: Copper Contango Vs. Copper PriceThe CFTC data shows that copper will most likely go up because large commercials are long.Chart 2: CFTC Cop...
Monday, 25 March 2013
Following the crisis in Cyprus of which I talked about here, there has been a question on how much stress the banks can have during a bank run, before their liquidity is at stake.A typical bank balance sheet looks like this (Figure 1). If the deposits get drained on the right side, the cash gets drained on the left side. The question is, how high is the limit of a drain on deposits?Figure 1: Balance SheetLet's analyze the bank reserve requirements...
Saturday, 23 March 2013
I happen to live in Belgium and there are some people there arguing with me about gold. I keep telling them to buy gold but they insist not to buy it.What they don't take in account is that Belgium is the next in line of the PIIGS. Belgium has one of the largest debts in the Eurozone and has the highest taxes. As a result I don't think that higher taxes will be an option.So the only other option is to take your deposits like in Cyprus. Belgium...
Friday, 22 March 2013
Just wanted to add another couple of correlations to my collection. We will learn about fixed and adjustable rate mortgages. These are correlated against treasury yields and fed funds rate respectively.1) Conventional (Fixed) Mortgage Rate Vs. Treasury YieldsAs you can see mortgage rates are always higher than treasury yields because U.S. treasuries are considered much safer than mortgages.Chart 1: 30 Yr. Treasury Yield Vs. 30 Yr. Mortgage Rate2)...
Peter talked a lot about housing on the radio show of 21 March 2013. He said that house prices could drop a lot from here, but I don't agree with that.To see where housing prices will go we need to look at 3 fundamentals. The most important one is wages and income. If your monthly disposable income doesn't match with the house you are buying, you will not be able to pay off your house. The second factor is mortgage rates. If you need to pay an ever increasing higher interest, you will have difficulties to pay off your house (at an adjustable rate...
Thursday, 21 March 2013
This is what incomplete COMEX gold stock data looks like after a laptop crash.Nevertheless you can see that total gold stock is declining very rapidly and the most important of all, it is a real trend changer. Look at how soft the curve was before and suddenly everyone takes their gold back starting from 2013.I think we are in for a rally. Especiallly in silver, where open interest is still very high.Chart 1: Comex G...
Once in a while I need to post an update on all discovered correlations, we're getting a huge list already. If I only had some software to get automatic updates of these charts...Positive correlations mean that if one goes up, the other goes up too. Negative correlations mean that if one goes up, the other goes down.Positive correlations:1) Silver premium Vs. Silver Price 2) Baltic Dry Vs. Industrial Commodities3) Baltic Dry Vs. Copper4) Copper Vs. S&P5) Oil Vs. Dow Jones6) Agriculture Price Vs. Health of Economy7) Agriculture...
Now that everyone is scared of the bank runs, it is necessary to monitor the deposits at the peripheral countries.The data is available at the ECB site:I compiled the data for the most important countries to watch, namely, the PIIGS. And of course Cyprus.Chart 1: Total Deposits of Peripheral Eurozone CountriesIf Cyprus falls, let's see what will happen to the PIIGS. Probably they will fall too.I will give a monthly update on this.I challenge you:...
Tuesday, 19 March 2013
As December and January were pretty good months (no deficit), February 2013 marked a record deficit of $204 billion. The deficit to outlay ratio spiked to 60%, way over the hyperinflation ceiling of 40%.If the U.S. keeps going at this rate, we will see $2 trillion dollars in deficit soon.Chart 1: Deficit to Outlay Ra...
On 15 March 2013, Cyprus said it will impose a levy of 6.75% on deposits of less than 100,000 euros and 9.9% above that. The measure will raise 5.8 billion euros ($7.5 billion), which implies that we have about 68 billion euro ($85 billion) in deposits in the Cypriot banks. What this means is that each depositor in a Cypriot bank will get a haircut on their savings. This event is actually a very important one in history as it marks the first time that depositors actually lose their money, despite the presence of a deposit insurance. Of course,...
One of the data that can't be wiped out from my computer is the Copper Contango Experiment.We see that the contango is widening each day, while copper price is declining. That is a normal thing.Once the contango reverses, we will see a spike in copper. I don't know when it will reverse though.Historically we need to go as high as 2-10% contango to mark a bottom in copper price as I pointed out here. Today we are at 0.04/3.5 = 1.1%. So there is still...
Monday, 18 March 2013
Wednesday, 13 March 2013
There is a potential for a new correlation here. Shanghai Silver Premium Vs. Silver Price.The premise is that when Shanghai silver premiums are high (against London Silver Prices), then we hit a bottom in the silver price.Let's see if this correlation makes sense, I need more data points.Chart 1: Silver Premium Shanghai Vs. Lon...
Tuesday, 12 March 2013
The latest results indicate that the copper bull market is far from over. Contango keeps steepening (Chart 1) and the large commercials have covered their shorts in copper (Chart 2).Copper will go higher. (as will the stock market probably)I hope the record amount in copper stock won't put a damper on my contango theory.Chart 1: Copper ContangoChart 2: CFTC Cop...
Monday, 11 March 2013
Sunday, 10 March 2013
China gold imports plunged in January: 51 tonnes. This was not expected, considering the low gold price in January 2013 ($1660/ounce). The result was a 5% decline in the gold price in February ($1580/ounce).Chart 1: China Gold Imports from Hong KongNet imports were 19.58 tonnes. That's 19.58/51.3 = 38%. That's a steep decline from the previous month, which was 74%.I don't expect February to be much better as we have the Lunar New Year and a shorter...
I have a small warning here for the COMEX stock.I predicted that the total gold stock would come down here. That's because I saw a very high surge in registered gold from J.P. Morgan's vault. And several months later the total gold stock hit new lows (Chart 1).There is a tight gold market right now, as we see lease rates go above 0%. GOFO rates are still at record lows and premiums are highest ever. APMEX premium on silver coins just went to the...
Thursday, 7 March 2013
On the Belgian Investors Competition, I'm still standing on last place. But let's take a look at the top 10.We see a lot of the leads stay in the top ten. What do they have in their portfolio?1) Maarten Janssens: short stocks, Royal Imtech2) pmanager: ING, long stocks3) Diddenboyke: short gold, Barco, Adidas, Total, GDF Suez4) Nicolas812: Gold Fields, long gold, Harmony, short stocks5) Ghost: China, long stocks, L'oreal, Aegon6) Yamayoze: short stocks, Gold Fields, Commerzbank7) DRACHE: Long Stocks, long gold8) Iduardo: Short stocks, long gold,9)...
Wednesday, 6 March 2013
Tuesday, 5 March 2013
A year ago in March 2012, 4 Swiss parliament members launched the "Swiss Gold Initiative" to repatriate their gold (GLD) to Switzerland. Today, one year later, we have got the 100000 supporters needed for this initiative.So not only the Germans will get all of their 3400 tonnes of gold back, now the Swiss repatriation is almost reality.As of September 2012, the SNB had 55591 million CHF gold (Table 1). That's 59139 million USD gold or 33.4 million...
Monday, 4 March 2013
Just for Discerning Admirer I looked at the CFTC report for Dr. Copper.The same correlations as in silver and gold can be found here. When large commercials go short, we hit a top in the copper price. When large commercials cover their shorts and go long, the copper price bottoms out.In the most recent February 2013 smackdown of copper we see that a lot of shorts have covered their short positions in copper. The red bars were very negative (a lot...
Sunday, 3 March 2013
I once said there was a correlation between the Federal Reserve balance sheet and the gold price. As a result there is also a correlation between M1 and the gold price. This is still the case.But gold is universal, so you should look at the balance sheets of every central bank in the world.Chart 1: Total Central Bank AssetsEven though the Federal Reserve balance sheet has been going up due to QE3, there is one central bank that did the opposite recently....
Saturday, 2 March 2013
Since 2008 we have started a new era. We entered the period of deleveraging. For more than half a decade we had an exponential growth system in credit, but we have ended this period. I will show you by analyzing "Total Credit Market Debt".Total Credit Market Debt today, is at an astonishingly $55.3 trillion dollars.Chart 1: Total Credit Market Debt OwedAnd it is 350% of GDP.Chart 2: Total Credit Market Debt as a Percentage of GDPThe total credit...
Another correlation Azizonomics taught me is the Fed Funds Rate Vs. 10 Year Bond Yield (Chart 1).As long as the federal reserve keeps interest rates at zero, there is no way the 10 year bond yield will go up.Chart 1: Fed Funds Rate Vs. 10 Year Bond YieldsIf you think about this, we have 2 forces. One is debt growth (Chart 2), which is skyrocketing and the other one is the fed funds rate (Chart 1) which is at historic lows. Debt growth induces...
Azizonomics taught me another correlation. When debt grows faster (red line goes up), normally the treasury yield should go up.But from year 2000 onwards it didn't happen. Either the treasury yields should go up, or the debt growth should slow down.Chart 1: Federal Debt Growth Vs. 10 Year Bond Yie...
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