Gold is setting records dating back over 5,000 years — against silver
Credit Suisse/Zoltan Pozsar/3-17-2020
“The Fed needs to offer dollars on a daily frequency through the swap lines, and other central banks need to lend dollars on to both banks and non-banks. The Fed needs to broaden access to the swap lines to other jurisdictions as dollar funding needs are large in Scandinavia, Southeast Asia, Australia and South America, not just in the G-7. The dollar funding needs of both banks and non-banks is what’s at risk and the assets that are being funded are U.S. assets – Treasuries, MBS and credit – so the Fed has a vested interest.”
USAGOLD note: In short, the Fed must bail out the world and bail it out now or face the consequences, according to Mr. Pozsar in this panic memorandum……
Linkedin/Ray Dalio/3-16-2020
“I imagine many others in similar circumstances and what that will mean for economic activity and market prices, and that’s seriously worrisome. These are only a couple of things that I’m thinking about and I’m sure what I’m thinking about is only a small percentage of the financial disruptions that will happen. Remember that most investors and businesses are long (i.e. holding assets hoping that they will go up in price) on a leveraged basis (financed with debt) so that the declines in asset prices that we are seeing will have even bigger financial effects than the unlevered price declines that we are seeing.”
USAGOLD note: A must-read …… Dalio’s analysis and recommendations go beyond what can be summarized here. What he describes, though, is a situation that defies easy resolution. Though he does not mention gold ownership as a means to bridging the current crisis in this article, he has recommended it in the past with his firm, Bridgewater, saying at the beginning of the year the metal could surge to $2000 per ounce (See below). We would be surprised, under the circumstances, that he has changed his mind even with the price declining. Hopefully, we will hear more from Dalio (or Bridgewater) on this score soon.
Please see: Bridgewater sees gold rallying as central banks ease/Financial Times/1-14-2020
Seeking Alpha/Hebba Investments/3-16-2020
“While we were writing this article, the Federal Reserve made an emergency rate cut and introduced QE5 to try and add liquidity to markets. While we expected the rate cut, the QE was a surprise and despite that move markets are down significantly. Despite all of this it is important that investors don’t miss the forest for the trees. Despite the recent plunge in gold (and all assets) these events are actually extremely bullish. With the fall in gold we wanted to share one chart from a presentation we did earlier in the week – one that pretty sums up the case for gold.”
Sources: Hebba Investments, Congressional Budget Office ••••••• Click to enlarge.
“So on the one hand we have a currency backed by a government growing its debt at a much faster rate than its revenues, and the expectation is that that will be sped up as the government spends its way out of a crisis. On the other hand we have gold, which is going through a period in which discoveries and future production are expected to drop.
Which one would you rather own over the long term?”
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