The three words in the title sufficiently describe the state of the globes financial markets.
It has been 81 months, and counting. The US Federal Reserve has missed another opportunity to raise interest rates.
August was the 80th successive month of the US Federal Reserve standing pat and not adjusting their key policy interest rate known as the federal funds rate. This Wednesday could mark the first rate move since December of 2008.
There is no shortage of stories for what is affecting global financial markets.
It may just be my natural bias, but it seems the "anti-gold
bugs" have more animosity and emotion when expressing their views on gold then the gold bugs have in their excitement for the yellow metal.
Markets don’t seem to be overly obsessed with developments in Greece. I, however, continue to watch with absolute astonishment as the idea of a currency that was established only 23 years ago sees the potential of fracturing so quickly.
Conventional wisdom about gold and the strength of the U.S. dollar holds that as the dollar strengthens, the value of gold decreases.
The unorthodox specificity found in the International Monetary Fund’s
latest forecasts for the US economy reintroduces a level of confusion and
uncertainty for investors surrounding when the Federal Reserve will raise
The best comment between the statuses of either the US or the Canadian economy comes from a Bank of Montreal Economist, Jenifer Lee. In referring to US economic growth in the first quarter she writes “the good news is its history.”
As the dollar strengthens, speculation driving down the price of gold is considered by many to be automatic. But with a strengthening dollar comes talk of a dollar “bubble,” which could result in a fast and sharp decline of the U.S. currency, causing a rush toward gold again as a viable wealth insurance policy. This means that financial markets tend to balance, and that we aren’t guaranteed to see the dive in gold that some are anticipating.
The chief executive of the world’s largest asset management corporation made comments this week that suggested gold was passé. He said gone are the days where gold acts as the de facto store of wealth. Instead, those with excess cash flow are looking to acquire condominiums in international cities or are making a bid for contemporary art; however, gold is being viewed as nothing more than a relic of the past.
The US dollar index has fallen around 3 per cent since its high the beginning of March. This past week saw the best weekly performance for the Canadian dollar in the last four years. Obviously the two events are related as one currency’s strength is another’s weakness; moreover, the question is whether the Canadian dollar is rising on its own merits, the US dollar rally is over or taking break, or perhaps, a combination of both.
As the euro makes its way towards parity, we are witnessing the sole desired outcome of the policy initiative of the European Central Bank and their member governments. It prompts the question whether this policy approach will render what Mario Draghi and his team of central bankers are attempting to achieve by following the actions of like institutions and endeavouring on a journey of quantitative easing. But as the European Union is governed by a number of sovereign governments that have autonomy over their own domestic policy, the lack of coordination narrows the scope of what targeted bond purchases will accomplish when compared to other monetary experiments like in the US or Japan.
Greece can declare a small victory. As Prime Minister Alexis Tsipras stated Friday evening, “a battle has been won, but not the war.” Since their new government was elected with a mandate to better the terms of their bailout, they have now successfully dealt themselves more time to negotiate with other member European countries and the IMF. Whether negotiations will be successful four months from now and they will actually be able to deliver on their mabndate against austerity is still to be determined. The headline "Greece Reaches Deal with EU," which sent financial markets joyously higher was not based on a solutino, but instead a deal to make a deal four months from now as we revert back to the oft to used expression of kicking the can down the road.
“The best the ECB can do is to buy time in the hope that other policy-making entities with better instruments will step in, both at the national and regional levels”
-Mohammed El-Erian, Former CEO of PIMCO
The Swiss National Bank (SNB) shocked currency markets Thursday of this week with a policy decision that crippled the Euro-Franc cross. Their announcement sent the franc soaring 30 per cent against the euro before settling lower, (still 16 per cent stronger) into the end of the week. This was as the SNB abandoned their 1.20 franc peg they’ve been defending since September of 2011, coincidently when the gold market peaked at over 1,900 USD per ounce. The decision by the SNB has far reaching implications for not only financial markets, but also for when policy becomes exhausted and policy makers themselves are rendered helpless.
Following a year where US equity markets found the ability to overcome a Russian invasion of Ukraine, a tremendous decline in oil and commodity prices, and policy uncertainty in the major economics of the European Union and Japan, investors have to question whether the same resilience can hold through 2015. Renowned bond fund manager Bill Gross asked a similar question this week in his monthly investment outlook, taking a look at the year ahead and then suggesting we are now at an inflection point where the western world's troubles of slowing economic growth can no longer be solved with dept creation and money printing. Consequently, 2015 will be a year for losses in most asset classes as capital looks for a new harbour that can produce positive returns.
Mr. Popescu is an independent investment analyst and studies the gold and silver market and their future role in the international monetary system. He has followed regularly since 1970 the gold, silver and foreign exchange markets. He has a bachelor degree in physics (1993) from Concordia University in Montreal, Canada and has completed the Canadian investment management certificate (1999) of the CSI. He is a member and was the president in 2004 of the CSTA and also was president in 2005 of the Montreal CFA Society. He is a member of the CFA Institute, the MTA, NYSSA, UKSIP, the CSTA and the Gold Standard Institute International.
The focus of financial markets has certainly stuck with the fallout in the price of crude oil, and rightly so as its impacts will be far reaching from global economic growth projections to domestic monetary policy.
With less than a month to go in 2014 investors are faced with the question, what gives?
In the wake of the Swiss referendum on whether the central bank should increase their allocation to gold, investors are tasked with the question, is the no vote yet another reason to be bearish on gold at present time.
It seems that once again the direction or trend playing out in the markets has been interrupted by geopolitical tensions heating up between Russia, Ukraine, and the Western powers.
It’s puzzling why Europe is more an issue now than it was a few months ago.
It’s a challenge to put a finger on what was the most significant event that took place in financial markets this past week.
There have been an increasing number of factors that have begun to put pressure on global financial markets.
As the markets awoke at the beginning of the week to news of a US air strike on Iraq, one aspect of the risk off trade that had been ensuing became clearer.
Who would of figured that in a week when the US economy reported initial estimates of second quarter GDP growth of 4 per cent, that the Dow Jones Industrial Average would simultaneously erase its gains for the year.
The Obama administration is becoming quite critical of US corporations acquiring foreign firms in order to relocate their tax domicile to a country with a more favorable regime.
The Financial Times reported this week that central banks around the world are in the process of repositioning their portfolios as they pare back their exposure to US treasuries.
The European Central Bank, as expected, unveiled a shotgun approach last Thursday to uplifting the Eurozone's stagnating economy.
There is a bizarre dichotomy between financial markets and the economy.
The controversial drilling method for extracting oil from underground layers of shale rock — known as “fracking” — has created a divide in public opinion, while simultaneously growing as a common practice.
An ominous rumor is circulating online: July 1 will see the complete collapse of the United States dollar, because of a bill called H.R. 2847.
A survey from Luxembourg Income Study Database (LIS) has made headlines this week from an article in the New York Times.
Friday's US payroll numbers revealed a key milestone for the US labour market.
The Federal Reserve used their policy announcement and the press conference following the announcement to alter their method of forward guidance.
Bloomberg reported on a study this past week that points to decades of manipulation in the gold market.
There is a stark difference in the financial world today than a few year’s prior.
To suggest that the Canadian Federal Government is pushing a weak dollar policy must imply than that in years past they too were opting for a stronger Canadian dollar. At the least the price of the Canadian dollar would suggest that, but unfortunately its nonsense.
A RISING DOLLAR and stronger stock markets saw the price of gold drop 1.2% Tuesday afternoon in London, taking the metal towards the brief low hit by Monday's "flash crash" after much better than expected US data.
LAST WEEK's losses of 3.6% in gold were extended Monday morning, with silver also falling again as world stock markets rose yet again.