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Tag Archives: Alasdair Macleod

The futility of central bank policy

Goldmoney Insights  . November 11, 2021 It is only now becoming clear to the investing public that the purchasing power of their currencies is declining at an accelerating rate. There is no doubt that yesterday’s announcement that the US CPI rose by 6.2%, compared with the longstanding 2% target, came as a wake-up call to markets. Along with the other major central banks, the Fed’s reaction is likely to be to double down on interest rate suppression to keep bond yields low and stock...

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Money, funny-money and crypto

Goldmoney Insights . November 4, 2021 That the post-industrial era of fiat currencies is coming to an end is becoming a real possibility. Major economies are now stalling while price inflation is just beginning to take off, following the excessive currency debasement in all major jurisdictions since the Lehman crisis and accelerated even further by covid. The dilemma now faced by central banks is whether to raise interest rates sufficiently to tackle price inflation and lend support to their...

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The funding challenges ahead

Goldmoney Insights – October 7, 2021 This article looks at the Fed’s funding challenges in the US’s new fiscal year, which commenced on 1 October. There are three categories of buyer for US Federal debt: the financial and non-financial private sector, foreigners, and the Fed. The banks in the financial sector have limited capacity to expand bank credit, and American consumers are being encouraged to spend, not save. Except for a few governments, foreigners are already reducing their...

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Inflation is a monetary curse

Goldmoney Insights Remarkably, in a speech on monetary policy given at the Jackson Hole conference last Friday, Jay Powell never mentioned money, money supply, M1 or M2. With money supply expanding at a record pace to fund both QE and intractable budget deficits the omission is extraordinary. The FOMC (the rate setting committee) appears to no longer take the consequences of monetary expansion into account. But the fact is that rising consumer prices caused by monetary expansion have driven...

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The extinction of gold derivatives

Goldmoney Insights This month is the fiftieth anniversary of the Nixon shock, when the Bretton Woods agreement was suspended. And the expansion of commercial banking into credit for purely financial activities became central to the promotion of the dollar as the international replacement for gold. With the introduction of Basel 3, commercial banking enters a new era of diminishing involvement in derivatives. The nominal value of all derivatives at the end of last year amounted to seven times...

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Western socialism and Eastern capitalism

Goldmoney Insights – July 30, 2021 There has been a significant shift in geopolitics in recent months, with the US consciously deciding to withdraw from Asian conflicts, notably in Afghanistan. But the diplomatic war against Iran also appears to have been downgraded and the US presence in Iraq is to be wound down. Furthermore, President Biden has downplayed his objections to the Nord Stream 2 pipeline between Russia and Germany. In this, the greatest of Great Games, America has seen the...

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Alasdair Macleod: 2020—2022 versus 1929—1932

Current levels of equity markets are not only divorced from their underlying economic and business realities but are repeating the madness of crowds that led to the Wall Street crash of 1929—1932. The obvious difference is in the money: gold-backed dollars then compared with unbacked fiat today. We can now begin to see how markets and monetary events are likely to develop in the coming months and this article provides a rough sketch of them. Obviously, the financial asset bubble will be burst...

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Swaps can’t close their bears in gold

Market Update. July 223, 2021 As can be seen in our headline chart, the gold price has gently climbed for a month now. Silver held its level until this week, when it sold off sharply and is yet to recover its poise. This morning, gold was at $1802, down $9 from last Friday’s close, and silver was trading at $25.20, down 40 cents on the same timescale. Silver dipped as low as $24.75on Wednesday, the lowest since mid-April. The physical shortages have eased, with SLV’s inventory declining by...

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The end of paper gold and silver markets

Goldmoney Insights – May 20, 2021 This article looks at the likely consequences of the Bank for International Settlements’ introduction of the net stable funding requirement (NSFR) for bank balance sheets, insofar as they apply to their positions in gold, silver and other commodity markets. If they are introduced as proposed, banks will face significant financing penalties for taking trading positions in derivatives. The problem is particularly important for the London gold market, as...

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The end of the LBMA is nigh

Goldmoney Staff asel 3 is on course to regulate the LBMA out of existence. And with it will go all the associated arbitrage business and position-taking on Comex, because most bullion bank trading desks will cease to exist. The only supply to buy-side speculators of gold and silver contracts will be producer hedging. In recent months there has been some limited commentary concerning the introduction of Basel 3 regulations and the implications for precious metals trading. These new regulations...

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