Baltic Dry Index. 771 -11 Brent Crude 55.62
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"There
is no reason whatever to fear a crash".
Charles
Mackay. 2 October 1845, Glasgow Argus, on Railway Mania.
We return from the Christmas – New Year break with more of the same in
the global economy. Oil prices continue to slump from excess production and
falling consumption, bond prices continue falling from the expectation of
deflation in Europe and Asia, plus Abenomics on steroids in Japan and QE to
come this month from the ECB. Germany is signalling that as EU paymaster it’s
had enough of trying to keep Greece in the euro and EU for that matter. If the
Greeks want a walk, that’s just fine with Chancellor Merkel. The Baltic Dry
Index suggests that global trade is in deep trouble again. The Ukraine faces
bankruptcy this quarter, plus a renewal of the US created civil war now that
Uncle Scam has started rearming Kiev’s armed forces and militia. It seems like
the good old days just aren’t going away.
Stay long fully paid up physical precious metals. Any or all of these
good times can blow up in the worst possible way. The Great Nixonian Error of
fiat money is now deep into the final act. Though the fat lady isn’t yet
onstage she’s waiting in the wings. Eventually a new opera starts with a story
line based of graphene, but first we must end the present opera and await a new
script and score. Somehow we must get from 2015 to about 2020-2025.
Below, the opening of 2015. 2008-2009 looks about to repeat.
Euro Extends Slide on ECB Outlook; Asian Stocks, Oil Slip
Jan 5, 2015 6:32 AM GMT
The euro weakened to an almost nine-year low and Asian stocks fell amid
concern Greece will exit the
European currency union. Chinese shares jumped, while oil slumped to its lowest
level since 2009. The euro depreciated 0.5 percent to $1.1939 at 3:05 p.m. in Tokyo, after touching its weakest level since March 2006. The dollar gained against all but two of its 16 major peers. The MSCI Asia Pacific Index (MXAP) declined 0.6 percent and Standard & Poor’s 500 Index futures were little changed. The Shanghai Composite Index surged 3.6 percent to its highest level in five years. A gauge of global bond yields approached a low of 1.29 percent. Crude slid 1.8 percent and silver rose 1.9 percent.
Greece’s
political parties have embarked on a campaign for elections this month that may
determine the fate of the country’s membership in the euro currency area, with
Der Spiegel magazine reporting German Chancellor
Angela Merkel
is ready to accept a Greek exit. Data this week will probably show consumer
prices in Europe fell for the first time in five years in December, adding to
the argument for European Central Bank president Mario Draghi to extend
stimulus.
----Draghi
said in an interview with German newspaper Handelsblatt published last week
that while deflation risks are “limited,” policy makers “have to act against
such risk.” Asked how much the ECB might spend on government bonds, he answered
that it’s “difficult to say.”
More
http://www.bloomberg.com/news/2015-01-04/euro-extends-slide-as-japan-resumes-n-z-stocks-advance.html
Europe's bond yields fall to lowest since the Black Death
'What we are seeing is the "Japanification" trade. The eurozone is sinking into corrosive deflation,' warns RBS
Bond yields have plummeted to
record lows across the eurozone as deflation becomes lodged in the system and
markets bet on a blitz of asset purchases by the European Central Bank this
month.
German five-year yields dropped
below zero for the first time ever, touching -0.007pc on the first day of new
year trading, implying that investors are willing to pay the German government
to store their money for the rest of this decade.
Italian, Spanish and Portuguese
yields have seen spectacular drops over the past two trading days. The French
state can borrow for five years at a rate of 0.13pc, and Ireland can do so at
0.32pc.
Nothing like this has been seen
in European history since the 14th century, after the depletion of silver mines
set off a slow monetary contraction, followed by Edward III's default on debts
to Italian banks and the Black Death soon after, compounding a deflationary
collapse.
“What we are seeing is the
'Japanification' trade,” said Andrew Roberts, credit chief at RBS. “The
eurozone is sinking into corrosive deflation and it is too late to stop. We
think the inflation rate in December may already have been negative. The ECB
are in trouble, and they know it.
Mario
Draghi, the ECB’s president, told Germany’s Handelsblatt that a slip into
deflation “cannot be ruled out completely” and admitted that the bank is at
mounting risk of breaching its price stability mandate.
More
Draghi Prepares to Act Against Risk of Deflation
Jan 2, 2015 1:29 PM GMT
Mario Draghi gave
his strongest signal yet that the European Central Bank
is likely to start large-scale government-bond purchases by saying he can’t
rule out deflation in the euro area. The ECB president seldom gives interviews and his comments to the German newspaper Handelsblatt reflect a drive to win over that nation. Policy makers there have led criticism of quantitative easing, saying it threatens financial stability, reduces the incentive for governments to restructure their economies, and is legally tricky.
“The risk cannot be entirely excluded, but it is limited,” Draghi said when asked if the region could enter a spiral of declining prices, falling wages and postponed spending. “We have to act against such risk.”
While Bundesbank President Jens Weidmann has argued that more action is unwarranted as slumping oil costs provide an economic stimulus, others have warned that the drop in crude prices could tip the currency bloc into full-fledged deflation. Data next week is forecast in a Bloomberg survey to show euro-area consumer prices dropped 0.1 percent in December from a year earlier, the first decline since 2009.
“Traditional hawks who had wanted to stick to standard monetary-policy instruments in the wake of the worst financial crisis in 80 years have been proven wrong and wrong again,” said Holger Schmieding, chief economist at Berenberg Bank in London. “Instead of inflation and moral hazard as the feared result of some non-standard policies, the euro zone is getting ever closer to deflation.”
More
Oil Falls to 5 1/2-Year Low as Russia, Iraq Boost Output
Jan 2, 2015 8:50 PM GMT
Oil dropped to the lowest in more than five and a half years amid growing
supply from Russia and Iraq and signs of manufacturing
weakness in Europe and China. Futures capped a sixth weekly loss in New York and London. Oil output in Russia and Iraq surged to the highest levels in decades in December, according to data from both countries’ governments. Euro-area factory output expanded less than initially estimated in December. A manufacturing gauge in China, the world’s second-largest oil consumer, fell to the weakest level in 18 months, government data showed yesterday.
Prices slumped 46 percent in New York in 2014, the steepest drop in six years and second-worst since trading began in 1983, as U.S. producers and the Organization of Petroleum Exporting Countries ceded no ground in their battle for market share. OPEC pumped above its quota for a seventh month in December even as U.S. output expanded to the highest in more than three decades, according to data compiled by Bloomberg.
“We’re seeing more of the same,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “The Chinese and European PMI figures signal weaker demand, while there’s ever-increasing supply. Nobody is cutting back on output and now the Russians are posting post-Soviet production highs.”
More
Canada’s Richest Grain Family Betting on Rebound in Oil
Jan 5, 2015 3:43 AM GMT
A decade after expanding its grain business during a slump in prices, the
Richardson family of Winnipeg, one of the richest in Canada, is making a
similar bet on oil. With crude futures collapsing to the lowest in five years, the Richardson’s Tundra Oil & Gas unit last month agreed to buy 550 wells in Manitoba, part of a $410 million divestiture of Canadian assets by EOG Resources Inc. (EOG) Tundra’s biggest purchase ever will boost its output this year by one-third to 32,000 barrels a day, and Chief Executive Officer Ken Neufeld says he remains on the lookout for more deals.
“If you’ve got a sustained low oil price for a period of time, you’re going to have companies out there that are going to run into some financial difficulty,” Neufeld said in a Dec. 16 telephone interview from Winnipeg. “There may be a buying opportunity there.”
As the oil slump forces some energy companies to cut spending, Tundra said it will expand drilling in a bet that prices will rally. To zig when others zag isn’t new for privately-held James Richardson & Sons Ltd., a company founded as a crop merchant more than 157 years ago, before Canada became a nation. Over the past decade, the family invested in grain facilities during a drought and expanded in financial services amid the worst economic crisis since the Great Depression.
More
“But it (the boom) could not last forever
even if inflation and credit expansion were to go on endlessly. It would then
encounter the barriers which prevent the boundless expansion of circulation
credit. It would lead to the crack-up boom and the breakdown of the whole
monetary system.”
Ludwig Von Mises
At the Comex silver
depositories Friday final figures were: Registered 64.60 Moz, Eligible 110.92
Moz, Total 175.52 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Wind turbine collapses in Northern Ireland
Investigation after 328-foot turbine buckles at wind farm in County Tyrone despite only light winds
A 328-foot tall wind turbine
worth more than £2 million has buckled and collapsed on a mountainside in
Northern Ireland.
Unconfirmed reports suggested the
blades of the turbine had spun out of control - despite only light wind speeds
- before the structure came crashing to the ground on Friday.
Locals claimed the sound of the
turbine hitting the mountain could be heard up to seven miles away from the Screggagh
wind farm, near Fintona in County Tyrone.
Some people compared it to an
explosion while others claimed to have heard the sound of metal grinding
throughout the day.
No-one was injured in the
incident, which left debris scattered across the wind farm site.
The turbine was one of eight at
the site, which opened in 2011 at a total cost of £26 million, implying a
project cost of more than £3 million per turbine.
The actual turbine equipment
itself cost just over £2m, Screggagh wind farm's owners said. Each has a
nominal power-generating capacity of 2.5 megawatts.
Each turbine's tower is almost
200 feet tall, with the rotor blades spanning a diameter of more than 260 feet,
giving a total height from base to tip of 328 feet, Screggagh wind farm's
owners said.
The remaining seven turbines have
been shut down while manufacturers investigate what went wrong. Wind speeds
were "medium" or 10 to 12 metres per second, they added.
Doreen Walker, director of
Screggagh Windfarm Ltd, said: "There were fortunately no injuries and no
personnel on site at the time."
She said: "We are currently
investigating the circumstances that led to the collapse of the turbine at
Screggagh wind farm.
"We are however satisfied
that the site's precautionary health and safety alert processes worked well
with local emergency services in attendance within minutes of the incident
taking place."
She said officials were
"working closely" with Nordex UK, the supplier of the wind farm
turbines, to ensure the site is safe.
----German manufacturer Nordex is currently delivering a new, even bigger turbine design for other sites in the UK.
The accident is not the first
safety incident involving Nordex turbines.
In 2012 the company was fined
£26,000 after admitting health and safety failings at a site in Stirlingshire
where a 19-year-old worker fell 100ft down a turbine to his death.
The company had previously been
told to upgrade to a lift system instead of ladders, but the court found there
was no link between the safety breaches and the teenager's death.
Defence lawyers in the case said
that Nordex UK had been "practically insolvent" in the preceding
years.
And in September 2013 an
eight-year-old Nordex turbine in a German wind farm reportedly caught fire.
A spokesman for Nordex was
unavailable for comment on the Northern Ireland case.
Morehttp://www.telegraph.co.uk/news/earth/energy/windpower/11324119/Wind-turbine-collapses-in-Northern-Ireland.html
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."Henry Hazlitt
The monthly Coppock Indicators finished December.
DJIA: +138 Up. NASDAQ:
+247 Down. SP500: +198 Down.
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