Jim’s Mailbox

Posted at 10:28 AM (CST) by & filed under Jim's Mailbox.

Jim/Bill,

Mr. Dimon is correct.  Hedge yourself.

“Preparing for an era of zero rates in the U.S. is part of the “normal course” of risk management, the CEO said.”

Because it may be coming…..free money globally!

And we all know there will be the Devil to pay!

Nothing, but nothing, is ever free.   A concept foreign to most.

Furthermore, we now have a culture embedded with false values.

“Some businesses would see no impact from zero rates, “

As with Student Loans (where the government is seeking to forgive them, at the expense of those who struggled to pay their way),

zero rates will benefit the excessive debtor, at the expense of the frugal saver.

The wrong people are being rewarded.

Some businesses would see no impact from zero rates,

CIGA Wolfgang Rech

There is nothing “normal” about zero interest rates Wolfgang…

Bill

JPMorgan CEO Jamie Dimon: Potential For Zero Rates ‘Obviously’ A Concern
September 11, 2019

JPMorgan Chase & Co. (NYSE: JPM) CEO Jamie Dimon downplayed the likelihood of interest rates hitting zero, but the bank executive is taking steps to prepare for it, CNBC reported Tuesday. 

What Happened

Dimon said Tuesday at a conference in New York he doesn’t believe the U.S. will join other countries worldwide with negative or zero interest rates, according to CNBC. But the bank executive is “thinking about how to be prepared” if this occurs and said it will “obviously” be a problem.

Some businesses would see no impact from zero rates, although there are others that would see their margins diminish — and there is “very little” that can be done in that case, CNBC quoted Dimon as saying.

The 10-year yield dipped as low as 1.44% in August and moved higher to 1.69% Tuesday. In contrast, benchmark bonds in developed economies like Germany come with a negative yield, CNBC said. 

Why It’s Important

Even a veteran bank executive like Dimon was caught by surprise with the Federal Reserve’s move to lower interest rates, Fox Business reported.

Dimon said at the conference he believed rates would be “heading up, not down” in 2019.

More…

 

Jim/Bill,

If Central Banks are scrambling for gold at any cost, shouldn’t everyone be?

“Price is not the determining factor in central bank buying—

When central banks are “buying as heavily as they are, it provides cover and a rationale for other central banks to do the same.”

They smell a massive currency war in the air and are diligently preparing for the aftermath.

“The moves are due to concerns about the outlook for currencies, including the dollar and the euro, says Mark O’Byrne, research director at GoldCore in Dublin.  

O’Byrne added that the risk of the trade war descending into a currency war may also be feeding central bank diversification into gold.”

When there is no where else left to turn, people will realize the true value of gold!

CIGA Wolfgang Rech

 Why Russian And Chinese Central Banks Will Keep Buying Gold
September 13, 2019

Emerging markets have beefed up gold holdings, undeterred by prices near their highest levels in more than six years, as countries such as Russia and China diversify their foreign-exchange reserves—a trend that is likely to continue.

“Central bank buying is, of course, important to the supply/demand dynamic for the metal, but is much more important in terms of sentiment toward the metal,” says Brien Lundin, editor of Gold Newsletter. When central banks are “buying as heavily as they are, it provides cover and a rationale for other central banks to do the same.”

Russian central bank gold reserves stand at 2,219.2 metric tons, according to the World Gold Council, or WGC, based on the latest data available in September from sources including the International Monetary Fund. China’s holdings are at 1,936.5 metric tons.

Given the latest prices, with the most-active gold futures contract GCZ19, -0.80%  settling at $1,499.50 an ounce on Friday, and about 32,151 troy ounces in one metric ton, the value of Russia’s gold reserves is at roughly $107 billion.

More…