The Bank of Russia proposed slapping a ban on mining, issuing, circulating, and exchanging cryptocurrencies, including bitcoin, by any Russian players, crypto exchanges, crypto exchanges, and P2P platforms in Russia. The regulator agrees only to allow citizens to own cryptocurrency, but not to buy it from any Russian infrastructure. Experts told Vedomosti that a complete ban on operations with cryptocurrencies is not the best option to deal with any possible problems. The Bank of Russia wants to ban all financial institutions, banks or, for example, brokers from being intermediaries and providing their infrastructure for carrying out any operations with cryptocurrency. Financial institutions will not be able to invest in cryptocurrencies. The regulator believes that not only does direct ownership of cryptocurrencies but also investing in its derivative financial instruments hold risks. Tight regulation will only apply to cryptocurrencies, but not assets such as NFTs. The regulator proposed introducing fines for all these violations. So far, there are no specifics in the report of the Bank of Russia for public consultations.
The ban on cryptocurrencies in Russia means lost profits for the country's budget, CEO of ANO Digital Platforms Arseniy Shcheltsin told the newspaper. In addition, it would limit the development of Russian projects in this area and provide a signal to developers and professional users not to conduct business related to cryptocurrencies in Russia. The prohibition would not be appropriate either for investors or for the state, attorney at Criminal Defense Firm Daniil Gorky says. Imposing bans can lead to investors losing their crypto-currency assets, while Russia already today ranks third in the world in terms of cryptocurrency mining. KPMG Law Partner Olga Yasko believes that the risks named by the Bank of Russia are real, but it would be more effective to manage them through control mechanisms. The annual volume of operations involving cryptocurrency among Russians, according to the Central Bank, reaches around $5 bln, thereby demonstrating that Russians are one of the most active players on this market.
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Members of the Federal Reserve indicated at their mid-December policy meeting that they were increasingly uneasy about high inflation, while envisioning an accelerated timetable for raising interest rates this year. This was revealed in the minutes of the Fed's latest policy meeting on Wednesday evening.
Most central bank officials foresee three rate hikes before 2022. In September, about half of officials still believed that rate hikes could wait until 2023. In general, participants noted that, given their individual outlook for the economy, the labour market and inflation, it may be justified to raise interest rates earlier or at a faster rate than they previously thought. The minutes also revealed growing concerns among participants that higher inflation could persist and force a more aggressive response from the Federal Reserve, especially as businesses and consumers increasingly begin to expect prices to fall quickly. continue to rise. For months, Fed executives maintained that the higher price pressures in 2021 were mainly caused by supply chain bottlenecks and would subside on their own. But Fed Chair Jerome Powell already said in the run-up to the meeting that he was much less convinced about this. Policy-making committee officials broadly shared his view. Their concerns were reflected in the decision to scale back or phase out bond purchases more quickly. The Fed wants to end this program before raising short-term interest rates to curb inflation. The earlier end of asset purchases - in March instead of June - opens the door for the US central bank to raise interest rates at its second scheduled meeting this year, in mid-March. The next Fed meeting is on January 25 and 26. The pace of decreasing monthly purchases has accelerated from the current $15 billion per month to $30 billion per month. The Fed noted that the pace could be adjusted where necessary. Some officials also believed the Federal Reserve should start shrinking its $8.76 trillion portfolio of bonds and other assets relatively soon once it has started raising interest rates. The federal funds rate remained at 0.00 to 0.25 percent as expected. The discount rate was maintained at 0.25 percent. Turkey's yearly inflation climbed by the fastest pace in 19 years, jumping to 36.08% in December, official data showed on Monday. The Turkish Statistical Institute said the consumer price index increased by 13.58% in December from the previous month, further eroding peoples' purchasing power. The yearly increase in food prices was 43.8%, the data showed.
The yearly inflation rate was the highest since September 2002. Inflation has been rising in the country while the Turkish lira has been slumping to record lows after the country's central bank _ under pressure from President Recep Tayyip Erdogan _ cut a key interest rate by 5 percentage points in September. The weakened lira has made imports, fuel and everyday items more expensive and has left many in the country of some 84 million struggling to buy food and other basic goods. Many have been purchasing foreign currencies and gold to protect their savings. Last month, Erdogan announced measures to safeguard lira deposits against volatility after the Turkish currency hit an all-time low of 18.36 against the dollar. The lira rebounded following the announcement but has since lost some of those gains. The lira depreciated by around 44% against the dollar last year. Erdogan insists on lowering borrowing costs to boost growth, even though economists argue that higher interest rates is the way to tame soaring prices. Also on Monday, Erdogan announced that Turkey's exports increased by 32.9% in 2021, to reach ''a record'' $225.4 billion. Addressing a group of exporters in a televised speech, Erdogan said the figure amounted to a 7.8% narrowing of Turkey's trade deficit. Turkey would revise its export target for 2022 to $250 billion, he added. Meanwhile, the independent Inflation Research Group, made up of academics and former government officials, put the yearly inflation rate at a much higher 83%. It said consumer prices rose by 19.35% in December compared with November. In today's editorial I'm going to show how the implementation of CBDCs, which stands for Central Bank Digital Currencies, and how they are going to change the World of money, banking and the way we live - forever.
With the most disturbing thing being the amount of control it will create over your life via the implementation of carbon & social credit scores which have already been successfully trialled. In effect, the Government will own you and tell you exactly how, when and what you will spend your money on. And no, I’m not scaremongering or exaggerating here, this is coming and it's already started. A CBDC would be implemented using a database run by the central bank & government, notice I didn't mention any banks here. Why? Because a CBDC will cause the end of the modern day banking sector. Because the Central Bank will make transactions with you directly making it possible for a central bank to keep track of every single transaction you make. Commercial banks still have control right now creating competition around lending. But with a CBDC they want to use something different than credit scores because they will ban diversity unfriendly credit scores in favour of credit scores. Need a mortgage? Let me just check your social credit score here… Socialism, at the click of a button: They can simply give money to some people, take money from others. Imagine you or your family worked and saved for decades and the Central Bank just pressed a button and sent your life savings to the poorest in society because they decided that they needed to redistribute the wealth. They don't see it as theft because it's the law and for the greater good Never again will you be able to withdraw cash from the bank because it won’t exist anymore, with cash you're in control but with a CBDC you have no control You have to just trust the government that your money is actually there Spend it or lose it! They want to create a world of spenders and get rid of savers. In China, the CBDC was programmed with an expiration date, which encouraged spending and discouraged money from sitting in a savings account. In the end, 90% of the vouchers were spent in the allotted time the Government wanted. Why do Governments want this? This is due to the velocity of money principle where the government earns taxes every time the money is spent. So what are the stages you need to look out for then? NOW - Stage 1: Stage one has already been achieved by issuing free stimulus and this worked well because very few people saved the money & instead they spent it, creating more velocity of money & inflation. The inflation was good for the Government because it inflated away the government debt at the expense of our household budgets becoming more expensive. 2-3 yrs - Stage 2: Is to issue welfare payments or UBI via a digital wallet. This hasn't officially started yet in the US, but some other countries have now adopted this method of payment delivery. 1-4 yrs - Stage 3: Incentive for the public to download the government digital wallet and get some free CBDC like they did in China, because who’s going to turn down free money? 1-7 yrs - Stage 4: Nationwide rollout of CBDC. With all employees now being paid not into their bank accounts but into their digital wallets. Employers will be mandated to do this and employees will be penalized for not using the digital wallets. At this point, dirty virus spreading cash will be phased out and no longer printed anymore. Any cash that makes its way back to the bank will be destroyed and converted into CBDC 20+ yrs -Stage 5: ONE CBDC to rule them all. If you’ve ever studied financial history, you'll know that there used to be tens of thousands of different currencies around the world, now there are just 180 left After bringing the United States to within two weeks of a potential debt default, Congress late Wednesday was on the verge of a deal that would avert the crisis through November by passing a small increase of the limit on how much the federal government is allowed to borrow. The measure would do nothing to bridge the serious divide between Democrats and Republicans over how to avoid a default on the country’s debts over the longer term. It would also make it likely that by mid-November lawmakers will be dug in on the same battle lines. That means that the Biden administration and its Democratic congressional allies will be back in crisis mode, looking for ways to avoid a catastrophic default on the country’s financial obligations. When that happens, one unconventional option that has gained support in recent weeks is likely to be back in the mix: minting a $1 trillion platinum coin to provide the Treasury with the funds it needs to pay the country’s bills in the coming months.
The plan The plan, according to its proponents, is simple. Treasury Secretary Janet Yellen would order the U.S. Mint to create a single coin in the denomination of $1 trillion. The platinum coin would then be transported to the Federal Reserve, the nation’s central bank, and placed on deposit in the Treasury Department’s account there. Then, when necessary, the Treasury would draw funds from the account to pay the nation’s bills. The controversial move relies on the statutory power of the Treasury Secretary to authorize the minting of platinum coins “in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”. While it may sound fantastical, the fact that the trillion-dollar coin is part of the conversation in Washington reflects just how fraught the fight over the debt limit, a cap on how much the Treasury can borrow, has become. Deadline approaching There is no debate over whether or not the debt limit should be raised. Leaders of both parties insist that the government must be allowed to borrow the money it needs to pay its bills. The fight is over how it ought to be done. Republicans are demanding that Democrats use a complicated procedure known as “budget reconciliation” to vote on the debt limit. Democratic leaders have rejected that proposal, saying that it is too time consuming and could bring the country dangerously close to the point of default. Concern that the country might inadvertently lurch into default because of an accident of timing has made the trillion-dollar coin idea more appealing to some because, by all accounts, it could be executed very quickly. Legal loophole This week, Philip Diehl, the former director of the U.S. Mint, explained to the news website Axios that it would be possible to design and mint a trillion-dollar coin in a matter of hours. The Mint has an ample supply of platinum “blank” coins, and could easily reconfigure the mold used to produce an existing platinum commemorative $1 coin. The legal statute that gives the Treasury Secretary the authority to mint a trillion-dollar coin was tucked into a 750-page appropriations bill in 1996, and was never meant to be used to avert a fiscal catastrophe. The reason why the law specified that the Treasury Secretary’s authority to issue new types of coin was limited to those made of platinum, is because rules already existed limiting the ability to strike coins from metals historically used for money: gold, silver, and copper. The platinum coins issued by the Treasury are typically commemorative in nature, and are purchased by collectors. However, because the law was not written in a way that specifically bars the Treasury Secretary from minting platinum currency, advocates of the idea say it remains an available option in an emergency. Idea not new This is not the first time there have been proposals to use a trillion-dollar coin to get around the debt limit. During the 2011 debt ceiling crisis the idea surfaced among some academics and political commentators, though it didn’t receive broad acceptance. The idea picked up more momentum in 2012, when it was endorsed by Nobel Prize-winning economist and New York Times columnist Paul Krugman. Lawmakers took the idea seriously enough that there was a brief effort to pass legislation banning the creation of such a coin in 2013, although it failed. There has been much speculation about what a trillion-dollar coin might look like, but in the end, that wouldn’t matter much, because virtually nobody would ever see it. The coin would go from the Mint to the Fed -- likely to the vaults at the Federal Reserve Bank of New York -- and would remain there in perpetuity. Yellen opposed The biggest impediment to the plan, at the moment, appears to be Treasury Secretary Janet Yellen herself. Last week, she dismissed the idea during testimony before the House Financial Services Committee. On Tuesday, she made her opposition to the plan more emphatic in an interview with CNBC. “I'm opposed to it, and I don't believe that we should consider it seriously,” she said. “It's really a gimmick.” She continued, “What's necessary is for Congress to show that the world can count on America paying its debts. The platinum coin is equivalent to asking the Federal Reserve to print money to cover deficits that Congress is unwilling to cover by issuing debt. It compromises the independence of the Fed, conflating monetary and fiscal policy. And instead of showing that Congress and the administration can be trusted to pay the country's bills, it really does the opposite.” Legal quandary Supporters of the plan will note one thing that Yellen did not say: That minting the coin would be illegal or illegitimate. Some argue that if Congress fails to act, the Treasury Secretary might, in fact, be obligated to use her authority to mint new currency to pay the country’s bills. While the debt ceiling places a real, legal limit on the amount of money the government can borrow, spending bills passed by Congress also legally obligate the administration to spend funds as Congress has specified. Additionally, the 14th Amendment to the Constitution specifies that “The validity of the public debt of the United States ... shall not be questioned,” which some legal scholars have interpreted as meaning that allowing a debt default would be unconstitutional. Rohan Grey, a professor of law at Willamette University, said that Yellen’s belief that the trillion-dollar coin is a “gimmick” would be no defense if minting the coin were the only thing standing between the United States and default. “You can't say, I find this silly or uncomfortable, therefore, I'm going to intentionally violate the Constitution,” he told VOA. “Their obligation is to honor the debts under the 14th Amendment and to honor Congress’s spending directives.” Lesser of two evils While minting a trillion-dollar coin might avoid a technical default on the nation’s debts, some experts worry about the effect such a radical proposal would have on public perceptions. The idea is so “wacky,” said Kenneth Kuttner, Williams College professor of economics, that it might undermine the faith that ordinary people, and even sophisticated financial markets participants, have in the U.S. government. “They're managing things so poorly that they're having to resort to these gimmicks to obviate [raising] the debt ceiling?” he told VOA. “That may look bad for regular people and for the financial markets.” Climate Lockdowns: New CO2 monitoring credit card enables tracking of ‘carbon footprint on every purchase’ – ‘Monitors & cuts off spending when we hit our carbon max’ – Mastercard & UN join forces. Get ready for a Chinese-style social credit system scoring when it comes to your personal spending habits and how they impact “climate change.” A new credit card called Doconomy, has launched that is “working in tight collaboration with Mastercard” and an alliance with the UN Framework Convention on Climate Change (UNFCCC) is now available so you can monitor your personal CO2 budget on every purchase you make. The new CO2 monitoring Mastercard called Doconomy debuted in order to enable “all users to track, measure and understand their impact by presenting their carbon footprint on every purchase.” The credit cards feature the slogan on them reading “DO. Everyday Climate Action” and have a personal pledge on the rear of the card boasting: “I am taking responsibility for every transaction I make to help protect the planet.” The Mastercards feature the UN “Global Climate Action” logo on them as well.
Mathias Wikström, the CEO of Doconomy, explained, “Reducing carbon emissions needs to be prioritized by all parties. At Doconomy we are proud to engage and educate around our lifestyle’s impact on the planet…The financial sector has developed a tremendous efficiency. Now that same force can address the planetary fragility.”
This new CO2 monitoring credit card follows on the heels of the new study in the Journal Nature in August 2021 calling for “personal carbon allowances” that would monitor individuals’ CO2 emissions through smart meters and tracking apps. The central banks of Australia, Singapore, Malaysia and South Africa have announced a joint initiative to trial international settlements using central bank digital currencies (CBDC). The initiative, dubbed Project Dunbar, will prototype shared platforms enabling direct transfers between institutions using digital currencies issued by multiple central banks. The pilot’s findings will be used to inform the “development of global and regional platforms” in addition to supporting the G20’s roadmap for improving cross-border payments. Project Dunbar will be carried out in partnership with the Bank for International Settlements (BIS) Innovation Hub from its Singapore Center. The project will engage multiple partners to develop different distributed ledger technology (DLT) platforms and explore different designs that would enable central banks to share CBDC infrastructure. A joint announcement emphasizes the efficiency savings associated with DLT-based payments, stating: “These multi-CBDC platforms will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks, eliminating the need for intermediaries and cutting the time and cost of transactions.” Michele Bullock, assistant governor of the Reserve Bank of Australia (RBA), highlighted that “enhancing cross-border payments has become a priority for the international regulatory community,” adding that the RBA is “very focused” on the matter in its domestic policy work. “Project Dunbar brings together central banks with years of experience and unique perspectives in CBDC projects and ecosystem partners at advanced stages of technical development on digital currencies,” said Andre McCormack, head of the BIS Innovation Hub Singapore Centre. He added: “With this group of capable and passionate partners, we are confident that our work on multi-CBDCs for international settlements will break new ground in this next stage of CBDC experimentation and lay the foundation for global payments connectivity.” The RBA has consistently downplayed the need for a domestic CBDC, however, citing the success of the New Payments Platform, which allows instant digital transfers 24-hours a day.
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’. The European Commission has proposed legislation updates this week that introduce new rules for cryptocurrency service providers. Under the new updates to the EU’s anti-money laundering and countering terrorism financing (AML/CFT) rules, providers of cryptocurrency services will be mandated to collect information on the sender and recipient of cryptocurrency transactions and the owners of cryptocurrency wallets.
The new rules effectively lift cryptocurrency service providers from a murky and unregulated industry and impose the same know-your-customer (KYC) rules that the EU financial and banking systems have been enforcing for the past decades. “The proposed reform will extend these rules to the entire crypto sector, obliging all service providers to conduct due diligence on their customers. Today’s amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing,” EC officials said today. “In addition, providing anonymous crypto-asset wallets will be prohibited, just as anonymous bank accounts are already prohibited by EU AML/CFT rules.” EU officials hope the new rules will help authorities impose stricter rules on the cryptocurrency ecosystem and crack down on cybercrime and terrorist groups using accounts at cryptocurrency exchange portals to launder illegal funds. While the new rules are being enforced in the EU, any cryptocurrency service provider that wants to operate or transfer funds to an EU entity or individual would have to collect data on all users, even if the other party resides outside the EU. The new rules are currently proposed as an amendment to the 2015 EU Regulation on transfers of funds (Regulation 2015/847). The proposed text is available here [PDF]. A vote on the proposals is expected later this year, barring any delays or additional ammendments. China's digital yuan trials racked up 34.5 billion yuan ($5.34 billion) in transactions by the end of June, according to a white paper released Friday by the People's Bank of China. The currency has been used in 70.75 million payments so far across more than 1.32 million "scenarios" -- not only in retail settings like stores and restaurants, but also for public transportation, utility bills and government services. The central bank said it has "no preset timetable" for a full launch.
The test shows the rapid strides Beijing has made toward a central bank digital currency, an idea that is seeing increasing interest elsewhere in the world, including in the U.S. China has recently cracked down on other digital currencies, with the PBOC warning that asset-linked "stablecoins" pose risks to global financial systems. The pilot program for the virtual currency began in late 2019 in five locations, including Shenzhen and venues for the 2022 Winter Olympics in Beijing, with Shanghai and five others added last November. More than 20.87 million personal wallets and 3.51 million wallets for organizations and companies have been created so far. Smartphone apps, wearable devices and smart cards can all house digital-yuan wallets. According to a source familiar with the situation, the PBOC intends to continue local trials during the 2022 Winter Olympics in Beijing toward an official rollout as early as next year. For now, the central bank will further expand the pilot program to cover "all possible scenarios" for transactions and improve the system's stability and data security. Research will continue into the digital yuan's impact on monetary policy and the financial system, and Beijing will move forward with changes to the relevant legislation to provide a legal basis for the currency. The booming popularity of cryptocurrency has triggered criticism across the globe, particularly in Vietnam. However, both investors and regulators have shown keen interest in a potential central bank digital currency. Statistics compiled by cryptocurrency data provider Chainalysis ranked Vietnam 13th in Bitcoin investment gains at $351 million in 2020. The country outweighed several larger and more developed economies such as Australia, Saudi Arabia, and Belgium. To boot, Vietnam has high levels of grassroots cryptocurrency adoption, ranking tenth overall on Chainalysis’ Global Crypto Adoption Index.
“Upon further inspection, what stands out the most is the number of countries that appear to be punching above their weight in Bitcoin investment as compared to their rankings in traditional economic metrics. Vietnam can perfectly epitomise the situation,” the data analysis noted. Elsewhere, according to a recent survey in March by Statista, 21 per cent of around 1,000-4,000 respondents in Vietnam said they had used or owned cryptocurrencies in 2020. While Vietnam has seen extraordinary economic growth over the last two decades, significantly reducing its poverty rate from over 70 per cent to below 6 per cent since 2002, the country ranks 53rd in GDP at $262 billion and is categorised as a lower-middle income country by the World Bank, according to Chainalysis. Meanwhile, US investors are the greatest beneficiaries, collectively making over $4 billion in realised Bitcoin gains in 2020 – three times as much as the next highest country, China. The surging appetite for bitcoin and other types of cryptocurrencies is undeniable, illustrated by their skyrocketing price over year within one year. As of July 3, 2021, Bitcoin price reached nearly $34,000, compared to around $9,000 in the same day last year. Several central banks across the globe have aired intentions to trial central bank digital currencies (CBDC) trials, including the Bank of Korea (BoK) and Bank of Japan (BoJ). BOK and BOJ's experiments to study the feasibility of issuing their own digital CBDC would pave the way for South Korean and Japanese companies, including those operating in Vietnam, to implement digital currencies. Regulators believe CBDC could "modernise their financial systems, ward off the threat from cryptocurrencies and speed up domestic and international payments," according to Reuters. Regional asset owners are still wary of volatile cryptocurrencies, but they say central bank-backed digital currencies could become investment-friendly over the next five to 10 years, according to Financial Times. The BoJ in April confirmed it would test the technical feasibility of the core functions and features required for CBDCs as a payment instrument, including issuance, distribution, and redemption. Similarly, the BoK said on May 24 that it would start a 10-month test of the digital won in August with a budget of around $4.45 million. Most recently, El Salvador became the very first country in the world to adopt bitcoin as legal tender at the beginning of June, a move that delighted the currency’s supporters. The commodities boom has taken a knock this month, and while there are many reasons to still bet on a so-called supercyle, it’s unlikely to be plain sailing. Vast amounts of stimulus, economies reopening from the pandemic and strong Chinese demand have driven a surge in raw-material prices this year, some to record highs. Yet they’ve slumped in the past two weeks – with some wiping out gains for the year – on a more hawkish U.S. monetary policy tone, China’s bid to cool inflation pressures and better weather for crops.
While that’s blown away some of the speculative froth from the market, the big question is whether the latest commodities bull run has passed its peak or is just taking a breather. Either way, the direction may not be broad based, with each market having its own individual levers pushing and pulling. Copper traders need to balance a short-term cooling in China with long-term green-energy prospects. Oil’s dip could be limited by falling stockpiles and supply concerns, iron ore is being whipsawed by Chinese policies, while gold will largely be at the mercy of when Federal Reserve tapering starts. “I can still see a lot of inflationary pressures in the supply chain, and the reality is that it’s going up,” said Michael Widmer, head of metals research at Bank of America Merrill Lynch in London. “From a commodity-price perspective, I can see the structural argument still for prices to stay elevated or go higher going forward.” Copper The year-long rally to a record in May was sparked by surging Chinese demand, but there are signs orders from manufacturers are starting to wane. Bulls are confident that the rest of the world will pick up the slack as renewable energy and electric-vehicle investment creates a step-change in demand in Europe and North America. Still, it could be a while before that spending makes its way to factory order books, and softer demand in the meantime could embolden bears who say current high prices aren’t justified by fundamentals. Gold Bullion is more susceptible to Federal Reserve actions than perhaps any other commodity. It tumbled to the lowest since early May after the U.S. central bank signaled monetary policy tightening could start earlier than expected and the dollar jumped. Although the precious metal is often bought as a hedge against inflation, the Fed signaled this week that higher-than-expected inflation would not be allowed to persist, opening up the door for faster stimulus tapering. That weighs on the appeal of non-interest bearing gold. UBS Group AG forecasts prices at $1,600 an ounce by year-end, compared with about $1,780 now. The last few days has seen huge volatility and sharp plunges in the prices of crypto currencies, with coins and tokens across the board falling by between 20% - 40%, and then followed by the inevitable bounce back. The story is the same across mega and large cap names such as Bitcoin and Ethereum, through to the myriad of mid and small cap coins and tokens.
Over the last few days, Bitcoin hit a low of $30,000 while Ethereum hit as low as $2000, before Bitcoin bounced back to $37,400 (at the time of writing) and Ethereum retraced up to the $2680 range (at the time of writing). This huge and sharp plunge across cryptos in the last 24 hours has occurred on the back of a week long period in which many crypto prices were already in a sustained downtrend. Is what we are seeing now a shakeout or a healthy correction? Is the bounce back a dead cat bounce or the turning point in a new uptrend? Who knows. There are many views on crypto asset prices (just look at Twitter), and at the end of the day, it’s the combined trading and liquidity of the millions of traders and speculators across the world which create the prices, and the volatility. But in this volatile period, it may be worth diversifying some of your crypto holdings into gold and silver bullion, real and tangible assets that have been wealth preservation and financial insurance for thousands of years. |
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