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Hedge fund manager: It’s a ‘truly scary time’
A hedge fund manager who warned about the last financial crisis is seeing parallels of that run-up in the market today.
“I think it is a truly scary time,” Andy Redleaf, CEO of $4.2 billion hedge and mutual fund manager Whitebox Advisors, said in an internal memo Sunday night obtained by CNBC.com.
Redleaf wrote that the stimulus used to put fresh money in markets could end poorly, just like loose credit standards in housing before 2007 crushed that market.
“We do not know exactly where all the credit creation of this cycle has gone. Certainly money sits idly as excess reserves, but just as certainly money that would not exist but for unconventional monetary policy has distorted prices and resource allocation,” Redleaf wrote.
He noted that the oil market – which recently crashed from around $100 a barrel to $43 today – may have been overly inflated by China “buying on easy credit” and other excess money going to oil producers who in turn increased supply.
Redleaf also said that stock markets may similarly be propped up by sovereign wealth funds and the Swiss central bank owning large amounts of equities.
“There are some parallels with the collapse in home prices which preceded the financial crisis,” he explained.
Redleaf has some history in predicting crises. …
Venezuela negotiating again to pawn its gold reserves
CARACAS, Venezuela – Venezuela’s central bank is in talks with Wall Street banks to create a gold swap that would allow it to monetize some $1.5 billion of the metal held as international reserves, according to government sources familiar with the operation. The move would help the government of President Nicolas Maduro boost its hard currency position as the OPEC nation struggles with soaring consumer prices, chronic product shortages and a shrinking economy caused by low oil prices. Under the swap, the central bank would provide 1.4 million troy ounces in exchange for cash, said a central bank source. After four years, it would have right of first refusal to buy the gold back, added the source, who asked not to be identified.
Flipping a coin: Rare U.S. coin market hits records
NEW YORK – A rare five-dollar gold piece and a prized silver dollar each could fetch $10 million or more in upcoming auctions, making the American rare coin market as attractive, though not nearly as glamorous, as fine art.
Sales of rare U.S. coins reached a record of nearly $536 million last year, and now collectors are turning to the D. Brent Pogue Collection, which could boost it higher. Gathered over more than 30 years by Texas property developer A. Mack Pogue and his son, D. Brent, it is considered the most valuable collection of federal American coins dating from the 1790s to the late 1830s in private hands. An 1822 Half Eagle five-dollar gold piece, one of only three known to exist, and an 1804 Silver Dollar dubbed the “King of American Coins” are expected to be among the top lots when the collection is sold in a series of auctions in New York beginning in May and continuing into 2017. “These two coins in particular, we think, have a possibility of being up around that $10 million mark,” Brian Kendrella, the president of Stack’s Bowers Galleries, told Reuters. …
Comex gold can’t be crashed, but would go to cash settlement
Neither Russia nor anyone else is ever likely to crash the Comex gold futures market in New York, Singapore fund manager and market analyst Grant Williams says, because the exchange would refuse to make delivery and instead substitute settlement in cash. His comments come in an interview with freelance financial journalist Lars Schall, working for Gold Switzerland. The interview is 16 minutes long and can be heard at Gold Switzerland’s website.
From King World News:
Little about the markets makes sense anymore, says asset manager
Markets don’t make sense anymore, from counter-intuitive price movements to phony economic data, Sprott Asset Management’s John Embry tells King World News. Embry says he’s sticking with gold and silver. An excerpt from the interview is posted at the KWN blog.
Will the ‘Shanghai Fix’ fix the gold market?
China’s new involvement in the London gold market and its opening of a physical gold exchange in Shanghai may be meant less to bust the Western paper gold racket than to facilitate the flow of Western gold to Asia that is already underway, USAGold proprietor Michael Kosares writes. “I see China’s latest forays in the international gold market as an attempt to fuse with and influence the current market structure rather than circumvent or supersede it,” Kosares writes. “China, in my view, seeks synthesis, not antithesis, and though some might be disappointed in the strategy, I see it as bracing for gold’s future and even more bullish for gold in the long run than a policy of confrontation. By taking its seat at the gold-pricing table, China inadvertently will act as a proxy for gold coin and bullion owners all over the world.” Kosares’ commentary is headlined “Will the Shanghai Fix Fix the Gold Market?” and is posted at USAGold.
The mechanics of the Chinese gold market
Bullion Star market analyst and GATA consultant Koos Jansen, who alone in the world has made documented sense of the Chinese gold market – thanks in part to the Chinese sources he has cultivated and the Chinese friends who have kindly translated for him – has published a comprehensive summary of the mechanics of that market, which seems likely soon to become the world’s primary gold market. Jansen’s report is headlined “The Mechanics of the Chinese Gold Market” and is posted at Bullion Star.
From the (UK) Telegraph:
Global finance faces $9 trillion stress test as dollar soars
By Ambrose Evans-Pritchard
The Telegraph, London
Sitting on the desks of central bank governors and regulators across the world is a scholarly report that spells out the vertiginous scale of global debt in U.S. dollars, and gently hints at the horrors in store as the U.S. Federal Reserve turns off the liquidity spigot. This dry paper is the talk of the hedge fund village in Mayfair and the stuff of nightmares for those in Singapore or Hong Kong already caught on the wrong side of the biggest currency margin call in financial history. “Everybody is reading it,” said one ex-veteran from the New York Fed.
The report – “Global dollar credit: links to U.S. monetary policy and leverage” – was published by the Bank for International Settlements in January, but its biting relevance is growing by the day.
It shows how the Fed’s zero rates and quantitative easing flooded the emerging world with dollar liquidity in the boom years, overwhelming all defenses.
This abundance enticed Asian and Latin American companies to borrow like never before in dollars – at real rates near 1 percent – storing up a reckoning for the day when the U.S. monetary cycle should turn, as it is now doing with a vengeance.
Contrary to popular belief, the world is today more dollarized than ever before. Foreigners have borrowed $9 trillion in U.S. currency outside American jurisdiction, and therefore without the protection of a lender-of-last-resort able to issue unlimited dollars in extremis. This is up from $2 trillion in 2000. …
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