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David Fuller and Eoin Treacy's Comment of the Day
Category - Precious Metals / Commodities

    Australian lawmaker says he isn't a suspect in China probe

    This article by Rod McGuirk for APNews may be of interest. Here is a section:

    The secret service, best known as ASIO, confirmed in a statement that “search warrant activity occurred in Sydney on Friday as part of an ongoing investigation,” but would not comment on Moselmane or its involvement.

    Less than two weeks ago, Morrison said that a “sophisticated state-based cyber actor” was targeting Australia in an escalating cyber campaign that was threatening all levels of government, businesses, essential services and critical infrastructure.

    Most analysts said Morrison was referring to China, but the prime minister would not name the country.

    Already high tensions between Australia and China have been raised by the pandemic.

    China in recent weeks has banned beef exports from Australia’s largest abattoirs, ended trade in Australian barley with a tariff wall and warned its citizens against visiting Australia. The measures have been interpreted by many as punishment for Australia’s advocacy of an independent probe into the origins and spread of the coronavirus.

    Australia’s foreign minister has accused China of using the anxiety around the pandemic to undermine Western democracies by spreading disinformation online, prompting China to accuse Australia of disinformation.

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    Silver Price Forecasts Increased

    Thanks to a subscriber for this report from TD Securities which may be of interest. Here is a section

    Bayer Pays Billions to Put Monsanto Legal Liabilities Behind It

    This article by Jef Feeley and Tim Loh for Bloomberg may be of interest to subscribers. Here is a section:

    The settlement is more comprehensive than expected, since it includes the dicamba and PCB cases, and the price will be reasonable for most investors, Sebastian Bray, an analyst at Berenberg, said by email.

    It’s a “big relief,” Bray said, and “should allow investors to draw a line under the saga of the last two years.”

    The Roundup agreements will resolve 75% of about 125,000 filed claims and those that were unfiled, the company said Wednesday in a statement. Bayer said it will pay $10.1 billion to $10.9 billion to resolve all lawsuits over the popular herbicide, including $1.25 billion for future claims handled as a class action.

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    Investors Are Spending Fresh Billions Hedging Market Mania

    This article by Yakob Peterseil for Bloomberg may be of interest to subscribers. Here is a section:

    Gold and longer-maturity bonds are getting outsized inflows. Protective equity options are outdrawing speculative contracts, while volatility markets are positioning for fresh disruptions.

    It comes as signs of froth are emerging. The S&P 500 Index is on the cusp of its best quarter in more than 80 years even as fears of a second coronavirus wave grow. Speculative mania reigns among retail investors, while the likes of JPMorgan Chase & Co. are turning bullish on U.S. stocks.

    But for all the fears that Wall Street is running headlong into risk in one of the fastest rebounds ever, hedging demand shows the frenzy is being met with some vigilance.

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    The Curious Case of COMEX Gold Deliveries in April and June

    Thanks to a subscriber for this article by Ronan Manly for bullionstar.com which may be of interest. Here is a section:

    Switzerland never normally exports gold to the US. In fact, the US usually exports gold to Switzerland gold to Switzerland – to be refined. Why was 153.3 tonnes rushed into New York during late March and April. Were these COMEX deliveries known about in advance?

    Another coincidence is that the amount of gold that has flowed into COMEX since early April that is reported as eligible for the new COMEX 400 oz gold futures contract totals 155.67 tonnes of gold. Very similar to the total amount of gold ready to be delivered for the June 100 oz contract.

    The next article will look at the flows into the COMEX gold vaults since 23 March, which have totaled a huge 694 tonnes, comprising 363 tonnes in eligible and 331 tonnes in registered. This has brought registered stocks up to 387 tonnes and eligible stocks to 578 tonnes, for a combined total of 965 tonnes.

    Could it be that the entity or entities that were looking for gold in London on 23-24 March and didn’t get it, switched their attention back to the COMEX and demanded delivery through futures, the delivery of which is now panning out? A trans-Atlantic shock that left bullion banks scrambling.

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    Global Thematic Diary June 12th 2020

    Thanks to Iain Little for this edition of his investment note. Here is a section:

    After the recovery from the 23rd March lows (supreme irony: the very date that many countries went into social and economic “lockdown”) and the -6% mini-crash last Thursday, we see stock markets as being in a redistribution phase as “shareholder regret” kicks in. Nervous Nellies who regret holding equities will either exit altogether (“phew, I’m out!”), or switch money into “cheaper”, lagging sectors like banks, oils, real estate, airlines. Optimists will do something similar except that they’ll be more inclined to hold onto the quality (tech, healthcare, FMCG) that has stood them in good stead. These bulls will regret not holding lower quality sectors if their relative outperformance starts to slip. So lower quality could out-perform higher quality for a while. But….Caution!

    A man-made Frankenstein (Modern Monetary Theory, which means hiring monetary policy to do the job of fiscal policy) is ringing an early bell for “stagflation” (low growth plus inflation). There may not be enough global demand or monetary velocity to revive stagflation…..yet. But survivors of the 1970s know what this implies for portfolios at the end of the day: inflation-proof growth equities, index linked bonds, real assets and……gold.

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    Fed Sees Zero Rates Through 2022, Commits to Keep Buying Bonds

    This article by Craig Torres and Matthew Boesler for Bloomberg may be of interest to subscribers. Here is a section:

    “We’re not even thinking about thinking about raising rates,” he told a video press conference Wednesday. “We are strongly committed to using our tools to do whatever we can for as long as it takes.”

    The Federal Open Market Committee earlier said it would increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities “at least at the current pace” to sustain smooth market functioning.

    A related statement from the New York Fed specified that the pace of the increase would be about $80 billion a month for purchases of Treasuries and about $40 billion of mortgage-backed securities.

    “Acting on mortgage-backed securities and Treasuries underscores their belief that more support is needed,” said Diane Swonk, chief economist with Grant Thornton in Chicago. “The Fed does not see a victory in the employment bounce-back. The risk of deflation is still high and the economy needs more support to heal more fully.”
     

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    New King of Copper Trading Sees Demand Coming Back Stronger

    This article by Mark Burton for Bloomberg may be of interest to subscribers. Here is a section:

    By March this year, he was stuck holding video calls with clients and colleagues from his home in Geneva. With the world on lockdown, the outlook for most industrial metals looked bleak. Yet even then, Bintas says there were early signs copper could emerge from the crisis even stronger.

    If anything, he’s even more bullish today. Demand is bouncing back in China and stimulus packages being unleashed across the developed world promise to transform the long-term outlook -- particularly with spending on copper-intensive green energy infrastructure. The coronavirus has also disrupted mines and delayed new builds, throttling current and future supply.

    “Copper is coming out of this crisis differently,” Bintas said by phone from Geneva. “When lockdowns were eased and people started to return to work, we were surprised to see our customers not only taking deliveries of volumes they’d already bought, but requesting more to cover themselves in case there were any further disruptions to supply.”

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    Email of the day - on carbon credits

    First of all, thanks for the excellent service, I have been a subscriber since 1987. One thing that confuses me is the obsession with carbon emission in the world. This has become a political issue, and media deny to debate it. Could you please elaborate a bit on this theme, and let me know what you rely on these days, where do you get your information on this matter, or is it simply follow the money?

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