Eurozone Core Inflation Rate (YoY) came in at 1.6%, beating estimates of 1.5% as inflationary pressures continue to mount. With policy makers maintaining a dovish stance, the European Central Bank (ECB) has suggested that higher inflation is ‘transitory’ and will likely subside once global economies have returned to Pre-Covid activities. While the Energy sector showed the highest annual rate increase from 14.3% in July to 15.4% in August, supply constraints in the oil and gas industry combined with the spread of the Delta variant have dampened sentiment, raising concerns that the increasing pace at which global economies are recovering from the pandemic may have additional long-term consequences if low interest rates remain for the foreseeable future.
0 Comments
The Chinese Government has introduced a new rule that will allow minors to play online games for an hour on Friday, Saturday, Sunday and public holidays between 8 PM and 9 PM. It is also working with game developers, teachers and parents to educate children about the ill effects of gaming addiction. After cracking down on cryptocurrency mining operations located within its borders, the Chinese Government's ire is now directed towards gamers in China. Not too long ago, Tencent cut down the number of hours minors could play its flagship Honor of Kings title. That could have been a test run for things to come because the latest regulations cut down on Chinese minors' playtime to three hours per week.
China's state-run Xinhua news agency has laid down new guidelines to be followed by all game publishers in China. For starters, minors can only play online games between 8 PM and 9 PM on Fridays, Saturdays, Sundays and certain holidays. Second, publishers have to ensure that their games ship with a robust anti-addiction mechanism in place that forbids minors from playing outside of the designated hours. Third, all publishers have to work in tandem with the state, teachers, and parents to ensure that children are educated about the ill effects of online gaming. Lastly, no user will be allowed to sign up for a service without providing their real name. Most of the rules mentioned above, including the real name requirements and anti-addiction measures, have existed for quite some time. It'll be interesting to see if these measures meaningfully affect the likes of Tencent and NetEase. Then again, adults tend to spend a lot more time and money on online games, so minors playing for fewer hours shouldn't make any meaningful impact on the revenue stream. Besides, these regulations only apply to online games, and it isn't immediately clear they will also apply to offline, single-player games. Furthermore, one can also use a VPN to bypass the restrictions altogether, but it is has been quite challenging to get a working VPN service in China of late. EDITORIAL: Germany shows the World why investing in Physical Precious metals is so Important.27/8/2021 Recent World Gold Council data on investment gold demand shows that the German market had the world’s highest gold coin and bar demand in H1 2021, even ahead of China. (Check @ https://twitter.com/KrishanGopaul/status/1430973575989768198?s=20). Demand for gold coins and gold bars in Germany increased by 35% during H1 2021 vs H2 2020, compared with a 20% increase in the rest of the world. (Check @ https://www.bnnbloomberg.ca/inflation-wary-germans-are-loading-up-on-gold-1.1644487).
Germany is Europe’s largest gold market and has a very sophisticated investment gold distribution structure through many banks and gold dealer outlets through the country. A survey in 2019 on gold investments conducted on behalf of the German Reisebank found that Germany’s citizens owned a massive 8918 tonnes of gold, of which 4925 tonnes (55% of the total) was held in the form of physical gold bars and gold coins, with the remaining 3993 tonnes held in the form of gold jewellery. The savvy German public also continues to buy physical gold in huge quantity even though the German government has thrown up obstacles to make the anonymous purchase of physical gold more burdensome. The news that Germans are still stacking up on physical gold should not be surprising given that the country has an historical appreciation of the dangers of Weimar hyperinflation and fiat currency debasement. Maybe we should all take a leaf out of the Germans’ book when it comes to gold, as inflation around the world accelerates and the monetary printing presses continue to whirl unabetted.
Among central banks of the world, the DAB has always been one of the more transparent when it comes to divulging information about it’s gold reserve holdings, and looking at the DAB’s annual financial statements, you can see why. In the latest annual financial statements of the DAB for the year ended 30 Qaws of solar year 1399 (which is 20 December 2020), note 7.1 to the financial statements states that the DAB holds:
“703,004.944 fine troy ounces of gold in bar from held at the Federal Reserve Bank (FRB), New York as the Bank’s international reserve.” This 703,004.944 ozs is approximately 21.87 tonnes of gold On Sunday evening 8 August at 6:00pm New York time, as the trading of gold futures contracts commenced for the week and the COMEX GCZ1 December 100 oz gold futures contract</a> opened at $1765 per ounce, there was nothing in the market or in wider macro news to suggest that the gold price was about to witness a sudden drop of $87 or 5% to a low of $1677.9, or that 90% of that drop would be in a 12 minute period between 6:45 pm and 6:57 pm when the gold price fell by 4.93% on huge contract trading volume. From a macro perspective, nothing had changed over the weekend, and all news that could arguably have affected the gold price, such as market unease about the US Fed moving to taper QE and asset purchases, was already reflected in the price. Waterfall drop in COMEX gold futures, Sunday evening New York time, August 8
On the previous Friday, August 5, the gold price on COMEX had wrapped up the afternoon at $1763.5 after meandering tightly in the $1760 – $1765 range for the previous 7 hours. Earlier on Friday morning had seen ‘higher than expected’ US non-farm payroll data for July, with the narrative wheeled out to those naïve enough to believe it that this could trigger ‘early’ Fed tapering and higher interest rates. Spoiler – The Fed can’t taper. Despite this fact, the US jobs data was put into the trading desk mix as the US dollar rallied and US bond yields spiked higher, and the COMEX gold price fell sharply Friday morning from $1801.8 at 8:30 am, to $1764.6 by 10:00 am. Before looking at the Sunday evening orchestrated plunge, the key point to remember is that the Friday morning data and how it was digested, was already embodied and reflected in the gold price by 10am on 5 August, and there was no volatile price action in the COMEX gold price over the next 7 hours up to 5pm Friday afternoon New York time (when trading halts for the weekend). Thinly Traded – Timing the Attack As everyone knows, Sunday evening opening hours in COMEX trading New York time (corresponding to Monday morning Asian hours), is a time of thin trading and illiquid markets relative to the Monday to Friday New York mornings when the ‘main event’ of precious metals trading takes place. Additionally, it is currently August, and due to holidays and vacations, far less market participants than normal are at their desks, and furthermore, two of Asia’s main gold trading hubs were on holiday. Singapore had a national holiday on 9 August for Independence Day. Japan had a national holiday on 9 August observing Mountain Day. So would Sunday evening 8 August New York time be a good time to sell thousands and thousands of front month gold futures contracts over a few minute period if the sellers were rational profit maximizing traders. Of course it would not. Which is precisely why said sellers of thousands and thousands of December 2021 gold futures contracts decided to execute their trades on an August Sunday evening (Monday morning Asia time) during thinly traded hours when New York and London were closed, and where two of Asia’s largest financial centres, Singapore and Tokyo, were on holiday. Because the sellers of these gold futures contracts had only one motive, and that was to bomb the gold futures price and trigger stops and further selling by other contract holders, simultaneously torpedoing the international spot price and achieving the desired effect of negative gold headlines around the world, but above all else attempting to disarm the gold price as the barometer of inflation expectations, and strangle the gold price as the ‘canary in the coal mine’. This year has been shaping up to be a strong one for central bank gold buying. This is despite the official absence from the buy side of central bank gold powerhouses such as Russia and China. Instead, there has been a noticeable trend of a diverse group of central banks who are not regular gold buyers, deciding to step up and make substantial gold purchases over short periods of time. Thailand, Hungary and Brazil First up in Europe was the central bank of Hungary, Magyar Nemzeti Bank (MNB), which stunned the gold market in early April, when it announced that it had bought 63 tonnes of monetary gold during March 2021. Next up in Asia was the central bank of Thailand, Bank of Thailand, which revealed that over the two months of April and May 2021, it had added a total of 90 tonnes of gold to its reserves, specifically 43.5 tonnes during April, and another 46.5 tonnes in May. And now most recently, the attention has moved to South America, where IMF data submitted by Brazil’s central bank, the Banco Central do Brasil (BCB), reveals that after adding 11.7 tonnes of gold in May, the Brazilian central bank bought another 41.7 tonnes of gold in June, making a 2-month buying total of 53.5 tonnes of monetary gold. This now boosts Brazil’s gold reserves to a claimed 121 tonnes and puts South America’s largest economy in 32nd position in the sovereign monetary gold holding rankings. These three sets of gold buying from Thailand, Hungary and Brazil now make this trio the top 3 central bank gold buyers so far in 2021. In the case of Thailand, 2021 was the first time since 2011 that the Bank of Thailand had made a substantial purchase of gold. In the case of Hungary, the 2021 purchase was only the second time it had entered the market for many years (the other time being Hungary’s large gold purchase of 28.4 tonnes in October 2018). In the case of Brazil, 2021 was the first time since 2012 that the Banco Central do Brasil (BCB) had gone out and purchased gold, and at 53.5 tonnes, was BCB’s largest gold purchase since the year 2000.
Brazil’s Gold Reserves – No Transparency And then it suddenly struck me. No one seems to know very much at all about Brazil’s sovereign gold reserves. Look on the main pages of the BCB website about Brazil’s gold reserves, and you will find nothing. For a top 3 purchaser of gold during year-to-date 2021, this seems very odd. For example, where are these gold reserves held and stored, and in what form? More importantly, where did the Banco Central do Brasil buy the gold that it claims to have bought so recently during May and June, and who was the seller? What were the BCB’s gold buying motivations in adding 53.5 tonnes? And critically, does Brazil lend out its gold and only hold ‘claims on gold’, or does it hold only allocated and unencumbered gold bars in set-aside accounts with foreign central banks? So I decided to put my questions to the BCB directly, whose headquarters are in Brazil’s federal capital in Brasilia. And this is where it gets interesting. For while Hungary’s central bank was very forthcoming in explaining why it purchased 63 tonnes of gold during March (and even published a press release and photos of the gold bars purchased), the same cannot be said of the Banco Central do Brasil. The overall sentiment among cryptocurrency enthusiasts is back to “neutral” after the significant gains Bitcoin has posted in the last 12 days. Despite the renewed optimism, BTC needs to reclaim a crucial price level as support to advance further. Bitcoin Must Reclaim $40,000 Bitcoin has enjoyed an impressive 43% rally over the past two weeks, gaining over nearly 13,000 points in market value. Its price went from a low of $29,800 on Jul. 21 to hitting a high of $42,600 over the weekend. The bullish impulse was forecasted by a descending triangle pattern that developed on BTC’s daily chart. Although the technical formation projected a 40.5% advance from the breakout point at $32,600 towards the 200-day moving average at around $46,000, the $40,000 resistance zone has proven challenging to break through. The leading cryptocurrency has retraced by more than 8.6% over the last few hours, dropping below the 100-day moving average at $39,900. Now, Bitcoin must reclaim this crucial support level to continue its upward advance. IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model reveals that over 750,000 addresses have previously purchased nearly 550,000 BTC at a price of around $40,000. Such a large concentration of addresses “Out of the Money” at this level suggests that any signs of price weakness could encourage them to exit their positions to avoid further losses. Under such unique circumstances, a sell-off would likely push Bitcoin towards the next critical area of support that sits at $36,770 based on transaction history. Nonetheless, a spike in buying pressure that allows Bitcoin to reclaim $40,000 as support could lead to an upswing towards $44,000. The IOMAP model shows no critical supply walls between these price points, crediting the optimistic outlook.
|
Thank you for choosing to make a difference through your donation. We appreciate your support.
This website uses marketing and tracking technologies. Opting out of this will opt you out of all cookies, except for those needed to run the website. Note that some products may not work as well without tracking cookies. Opt Out of CookiesCategories
All
Archives
April 2024
|