Felix Zulauf was interviewed on the FT’s ‘Long View’ program early in the summer. He had some really interesting views on global monetary policies, emerging markets, commodities, currencies and the US Treasury bond. See below for the video and summary. continue reading »

The concomitant surges in the dollar prices of gold and the US treasury note seem to have got many market participants scratching their heads. For isn’t gold an ‘inflation asset’ and the treasury note a ‘deflation asset’? Aren’t they supposed to be antagonistic to one another? We square this price action by noting that the means of the currency skeptic are distinctly peculiar in this post-Bretton Woods experiment — it matters that the Federal Reserve note is by and large ‘backed’ by US government securities and gold. That being said, our hunch is that this price action is a relatively temporary phenomenon; for whereas gold remains intact regardless of an increasingly precarious stock of irredeemable claims upon it, US government securities do not. We believe that the current tolerance of the US bond market should be regarded as the last gift from above. Here I outline why a world with an intolerant bond market might not be that pleasant. continue reading »

The total size of the Federal Reserve’s balance sheet increased by around $1.5 billion over the week ending August 24, 2011. Moreover, further evidence of a dire desperation for dollar funding emerged as the Fed increased its lending to foreign central banks and shuffled around its liabilities. See below for the usual Federal Reserve balance sheet charts and an outline of the funny business that went on over the past week.

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In an edit to last week’s update of the daily treasury statement charts, we noted that:


The US Treasury’s cash balance was $10.927 billion as of Wednesday, 19th August 2011. This is the lowest level since September 2008!


Over the week just passed, we’ve seen a minor increase to just under $13 billion. Here I present the usual charts of the US Treasury’s cash balance and of the cash balance lagged against US equity indices.

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Here we present this month’s update of the global real interest rate charts. Thanks to the idea of a participant on dasgelbeforum.de.org, we’ve decided to include local currency gold prices alongside the usual ‘real’ interest rate lines.


‘Real’ interest rates remain generally negative around the world. However, there are signs that this could be changing for the developing markets at least.

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Marc Faber was interviewed on Bloomberg TV yesterday. He spoke about the usual asset classes (equities, bonds, commodities & cash), the technical picture for the major stock indices as well as the course of monetary policy in the US. See below for the video and summary.

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We all think we know the story of the recent ‘bubble in credit’. As the explanation goes; Americans took on too much debt, those debts were ‘packaged up’ into complex financial instruments, those instruments were then bought, sold and ‘re-packaged’ by people who didn’t even understand them, blah blah blah… Even with this cursory and boringly consensual view of recent history, at least people have figured out that they shouldn’t blindly trust the mathemagicians… or have they? Here I ask; what about the king of all derivatives; the one that deviously subsumes all others? Indeed, what about the derivative that even derivative traders assume to be axiomatically fundamental and distinctly not derived? continue reading »