In The News Today

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Bill Holter’s Commentary

This is the article we spoke of on today’s recorded call. “2 gold prices”, one for physical and one via paper derivatives…where did you first hear this?

Quantum Leap For ABN AMRO As It Questions Gold Price Discovery
December 15 2019

Submitted by Ronan Manly, BullionStar.com

Earlier this week, an interesting article appeared on the website of the major Dutch bank ABN Amro, written by the bank’s currency and precious metals strategist, Georgette Boele.

The article, titled “A world with two gold prices?”, questions how, if gold is a safe haven asset, its price has not continued to reflect the ongoing crisis and stress in financial markets.

Boele then seeks an explanation of this puzzle in terms of a framework which consists of both safe haven gold demand and speculative gold demand, one of which reflects the purchase of physical gold (safe haven demand), and the other which speculates on the gold price via paper and synthetic gold products (speculative demand) which are not physically backed by gold.

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Bill Holter’s Commentary

Does this mean anything? To anyone? Buehler?

China’s “Moment Of Reckoning” Arrives: $38BN State-Owned Giant Announces Largest Dollar Bond Default In Two Decades
December 14, 2019

Two weeks ago we previewed what we said would soon be a D-Day for China’s bond market, as a massive commodities trader and Global 500 state-owned enterprise was set for an “unprecedented” bond default in dollar bond market. And as of last week, this historic default is now in the history books after Tewoo, the closely watched Chinese commodities trader, became the biggest dollar bond defaulter among the nation’s state-owned companies in two decades, in what Bloomberg called a “moment of reckoning” for Beijing as China struggles to contain credit risk in a weakening economy, and as bond defaults hit an all time high and are set to keep rising in the coming years.

Last Wednesday, Tewoo Group announced results of its “unprecedented” debt restructuring, which saw a majority of its investors accepting heavy losses, and which according to rating agencies qualifies as an event of default. As a result of the default, until recently seen as virtually impossible for a state-owned company, investors’ perceptions are undergoing a dramatic U-turn about government-owned borrowers whose state-ownership had for years offered an ironclad sense of security.

No more: The fact that a state-owned enterprise such as Tewoo has now defaulted on repaying its dollar bonds in full, confirms that Beijing will no longer bail out troubled SOEs, let alone private firms, perhaps due to the strains imposed by the economy which while growing at just below 6%, is slowing the most in three decades. It also raises concerns over the Chinese province of Tianjin, where Tewoo is based, following a series of rating downgrades and financing difficulties suffered by some of the city’s state-run firms. The metropolis near Beijing also has the highest ratio of local government financing vehicle bonds to GDP in China.

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