Jim’s Mailbox

Posted at 11:54 AM (CST) by & filed under Jim's Mailbox.

CIGA Kevin with notes on RMB gold.

Bill

There is no permanent peg to RMB Gold. It only appears that there is a peg when the Chinese are accumulating physical gold production from overseas and draining the West’s inventory. This is now complete and RMB gold price is set to move big while RMB stays mostly constant.

Fact – RMB Gold x RMB = $US Gold Price

$US Gold

  • In $US Gold there is an Inverted H&S Pattern that encompasses a $344 price range from 2013-2019. Breakout point on a monthly close necessitate a close above $1377.
  • “Coincidentally” the exact same inverted H&S Pattern and price range existed in 2008-2009 that started the move then.
  • Breaking out of that pattern in November 2009 had an initial target of $1377 “coincidentally” the price that would now confirm the breakout of current Inverted H&S Pattern.

Second target in the 2009 breakout was a Fibonacci expansion by 1.619 of the first point move added to the initial target price. $1377 + ($344 x 1.619) =  $1934 This was nearly exactly the price it hit in August 2011.

  • Breaking out of the current Inverted H&S Pattern indicates an initial projection of $1721/oz. Expanded Fibonacci target would be $1721 + ($344 x 1.619) =  $2277 This could coincide with Reset #1.

$RMB Gold

  • He who has the gold makes the rules and sets the price of gold.
  • In RMB Gold a similar Inverted H&S or Cup and Handle pattern exists today with break out point at 9202 RMB/oz. This implies a basically unchanged $0.1496 RMB – (9202 RMB/oz) x (0.1496 $/RMB) = $1377/oz. During first move higher to $1721 gold and 11,695 RMB/oz, the RMB does not need to move higher and likely will not move higher in percentage terms when compared to RMB gold price itself.
  • During the second expanded move to $2277  likely to coincide with Reset #1, the RMB may catch the bid higher as does RMB gold.

Kevin

 

CIGA Peter checks in

Bill

Just in case you missed it.

Peter

Jim Grant: ‘Fed Is Insolvent’ And ‘It Is Leveraged 100 To 1’
January 30, 2019

Jim Grant, the founder and editor of Grant’s Interest Rate Observer, and Judy Shelton, a former member of the Trump Economic Advisory Council, discuss the Fed rate hike decision with CNBC’s “Closing Bell” team.

More…

 

Jim/Bill,

Dalio understands.

The Great Reset is coming.

Do your readers?

Dalio’s View Is Likely Understated. 

The real crisis comes when there is a “run on pensions.” With a large number of pensioners already eligible for their pension, the next decline in the markets will likely spur the “fear” that benefits will be lost entirely. The combined run on the system, which is grossly underfunded, at a time when asset prices are dropping will cause a debacle of mass proportions. It will require a massive government bailout to resolve it.

But it doesn’t end there. Consumers are once again heavily leveraged with sub-prime auto loans, mortgages, and student debt. When the recession hits, the reduction in employment will further damage what remains of personal savings and consumption ability. The downturn will increase the strain on an already burdened government welfare system as an insufficient number of individuals paying into the scheme is being absorbed by a swelling pool of aging baby-boomers now forced to draw on it. Yes, more Government funding will be required to solve that problem as well. 

As debts and deficits swell in the coming years, the negative impact to economic growth will continue. At some point, there will be a realization of the real crisis. It isn’t a crash in the financial markets that is the real problem, but the ongoing structural shift in the economy that is depressing the living standards of the average American family. There has indeed been a redistribution of wealth in America since the turn of the century. Unfortunately, it has been in the wrong direction as the U.S. has created its own class of royalty and serfdom.

The issue for future politicians won’t be the “breadlines” of the 30’s, but rather the number of individuals collecting benefit checks and the dilemma of how to pay for it all.

The good news, if you want to call it that, is that the next “crisis,” will be the “great reset” which will also make it the “last crisis.”

The time to own gold is NOW!  While you can still get it.

CIGA Wolfgang Rech

Dalio’s Fear Of The Next Downturn Is Likely Understated
January 31, 2019

Authored by Lance Roberts via RealInvestmentAdvice.com,

“What scares me the most longer term is that we have limitations to monetary policy — which is our most valuable tool — at the same time we have greater political and social antagonism.” – Ray Dalio, Bridgewater Associates

Dalio made the remarks in a panel discussion at the World Economic Forum’s annual meeting in Davos on Tuesday where he reiterated that a limited monetary policy toolbox, rising populist pressures and other issues, including rising global trade tensions, are similar to the backdrop present in the latter part of the Great Depression in the late 1930s.

Before you dismiss Dalio’s view Bridgewater’s Pure Alpha Strategy Fund posted a gain of 14.6% in 2018, while the average hedge fund dropped 6.7% in 2018 and the S&P 500 lost 4.4%.

The comments come at a time when a brief market correction has turned monetary and fiscal policy concerns on a dime. As noted by Michael Lebowitz yesterday afternoon at RIA PRO

“In our opinion, the Fed’s new warm and cuddly tone is all about supporting the stock market. The market fell nearly 20% from record highs in the fourth quarter and fear set in. There is no doubt President Trump’s tweets along with strong advisement from the shareholders of the Fed, the large banks, certainly played an influential role in persuading Powell to pivot.

Speaking on CNBC shortly after the Powell press conference, James Grant stated the current situation well.

More…

 

Would you expect anything else?

Bill

 

Bill/Jim,
Wow!

 

 

 

 

 

 

The move away from the Dollar is gaining quite some momentum.
Not just Asia and the MidEast, as we are all well aware of, but now Europe.
CIGA Wolfgang Rech

Europe Launches SWIFT Alternative To Send Money To Iran
January 31, 2019

 In a move sure to unleash fury from the Trump administration, the European Union has announced it has set up a transactions channel with Iran to bypass US sanctions. The launch of INSTEX — or “Instrument in Support of Trade Exchanges” — by France, Germany, and the UK will allow non-dollar trade with Iran and is being described as facilitating humanitarian goods-related transactions only, including food, medicine and medical equipment.

Long anticipated, Thursday’s EU announcement marks the most concrete action Europe has taken to thwart Washington sanctions after the US pullout of the 2015 nuclear deal last May, and after SWIFT caved to US pressure. Europe is hoping the mechanism will act as a legal means to preventing Tehran from quitting the JCPOA, which promised sanctions relief should the country halt nuclear weapons research and development. INSTEX is expected to receive the formal endorsement of all 28 EU members, which aims to encourage skittish pharmaceutical and agricultural companies to the table with Tehran after many stopped doing business in Iran for fear of US economic retribution.The Iranians welcomed the new mechanism: “It is a first step taken by the European side… We hope it will cover all goods and items,” Iranian Deputy FM Abbas Araqchi told state TV, referencing EU promises to stick to its end of the nuclear deal.

More…