Affichage des articles dont le libellé est central banks. Afficher tous les articles
Affichage des articles dont le libellé est central banks. Afficher tous les articles

2014/01/06

Who could protect JPMorgan bankers and owners?

The endgame is unfolding, as all the persons interested in the gold market now know.
The return of gold as the central asset in the coming new international monetary system is certain.
We have already proposed a method in order to anticipate the next big move.

The current powers are massively accumulating gold, benefiting or causing gold price suppression. We can observe very different strategies among them:
  • BRICS countries, and China in particular, are adding gold into their official monetary reserves but also are officially and strongly encouraging their people to buy and own gold (and see here: even if a simple gold-backed yuan is not the solution to successfully reform the international monetary system, this report is a point in favor of the strongest interest in gold from BRICS governments)
  • The U.S. and U.K. countries (central banks, bullion banks) are publicly discouraging the people to own or buy gold and Bernanke couldn't even remember the reason why the Fed managed gold reserves; but since 2008 and much more since last year JPMorgan has built a strong position in the gold market (as a bullion bank), and is accumulating it at high volume
  • Euroland countries are in a middle position: not publicly advocating gold, not discouraging it; but ECB and european central banks are buying it again, and/or stopped gold leasing (and see here)
You might ask what will happen after the next big move: the new monetary power will be shared between the main gold owners, according to their stocks or geopolitical alliance, and BIS status will be redefined; yes, but then?

I'm wondering what could happen then in the U.S., a state where this next big move will inevitably signal a new era to the society currently in such a difficult and politically dangerous position. Wall Street's Banks' gold will attract the american people's attention, desire and violence.

The best solution for the US people would be to open the Mint and to rebuild a new gold system based on the New Austrian School of Economics' detailed recommendations. But don't hold your breath: this would mean for the US bankers to share power with the people, and they are not individuals of this kind. They will not give this gift unless a new state is proclaimed because they are scared of losing their favoured position. Remember: gold means liberty.

The remaining solution would then be to augment the fascist trends, i.e. to make even closer JPMorgan (and the TBTF banks) and the police state, in deploying a permanent and official protection by the state for these bankers and/or by allowing them to create their own militia.

But we could also think further: JPMorgan could officially merge with the state, to emerge from the deep state and to become a visible part of the new state. Mainly, it could replace or merge with the US Treasury, whose (remaining) gold is currently managed by the Fed. 
The protection of the previous private bankers, then civil servants of the state, and of the newly joint gold reserve would be obviously required, but more easily claimed as a 'usual' protection by the state against the ruled ones.

2013/12/16

Artwork: The One Bond


 Three Strings for the Eastern-kings under the tie,
 Seven for the Oil-lords in their halls of stone,
 Nine for Mortal Banks doomed to die,
 One for the Doll's Mark in the dark thrown
 In the Land of Morgan where the Shallows lie.
 One Bond to rule them all, One Bond to find them,
 One String to bring them all and in the darkness bind them
 In the Land of Morgan where the Shallows lie.

  — inspired by J.R.R Tolkien, The Lord of the Rings, Epigraph


Artwork licensed under Creative Commons BY-SA 3.0  


2013/10/22

US Treasury buyers and sellers, August 2013 data


US Treasury has just released August data about long term US Treasury securities net purchases by foreign countries. This is for us a major indicator for their confidence in the status of the dollar or their support of the current international monetary system. 

The Adjusted Total was -10,762 million US$, including a subtotal for Foreign Official Institutions which is -10,860 million US$.
Conclusion: A strong net lack of confidence by central banks, and a zero net purchase by big investors.

Who were the top 20 selling countries for Long-Term UST this month ?


Euro Area is the top seller, and interestingly this month with the addition of Mexico and Caribbean countries. With the exception of Uruguay and Colombia, all Latin America countries are net sellers.
Who were the top 20 buying countries for Long-Term UST this month ?


"International" means IMF here. 
Surprisingly, part of BRICS and part of Eurozone have bought Long term UST, in addition to the US usual financial allies. Could this be in order to avoid a much  too rapid collapse of UST foreign buying ? 

In any case the global result is currently a freefall, as depicted by TIC flows :

Data serie since 1978 up to now (USD millions);
12 months moving averages, updated monthly; source: nowandfuture.com


2013/05/31

Operation Deceit

 Do you remember Operation Twist Redux from the Fed?

It seems to me that the Fed just launched another Op, but kept silent about this one. They let Goldman Sachs announce it on behalf of them.

Let me explain: I think Fed has an ever growing appetite for long-term US Treasury, as explained previously (la géoéconomie des Bons du Trésor U.S., in french). Previously on Desperate Fed, they swapped their short-term UST to buy long-term ones. Let see the graph for the shares of UST with different maturities held by the Fed since 2003:

U.S. Treasury held by the Fed, by maturity slice  [blue: maturing in over 10Y; red: over 5Y to 10Y; green: over 1Y to 5Y; orange: over 3M to 1Y; violet: over 15d to 3M; grey: up to 15d] over U.S. Treasury (all maturities), in %, lhs; purple: 10-Y UST yield, rhs; updated weekly

This replacement of short-term treasuries by long-term bonds has begun since december 2007. After Operation Twist Redux, no very short term treasuries remained, and medium term 1Y to 5Y maturities were historically at their lowest (22%). Swap must end, and Fed should buy LT treasuries on the secondary market... but the others current UST holders do not want to sell them because of the always declining yields since 10 years (means price is up). 
The largest UST holders are currently :
  • Rest of the world -- Official institutions : 34.5% of UST shares (in notional value)
  • Fed (not including SSTF special issues) : 14.4% 
  • Rest of the world -- Private investors (i.e. foreign hedge funds) : 13.4%
  • Household sector, not including Savings Bonds -- (i.e. domestic hedge funds, private eq. funds) : 7.4%
  • Money market mutual funds : 4.0%
  • State and local gov. : 1.9%
What better to do then, but to deceit private investors (funds) to make them sell their UST? 
If we follow the new trend in yields since some days (graph below), UST prices are down and this will make the portfolio managers uncomfortable at the end of the second quarter; GS gently advice them to sell before being hurt. But... who will buy them if many obey, except the Fed and its primary dealer banks who know what's behind this move? 

UST yields for different maturities since 2006; updated daily

Let's wait until the end of Q2 (or Q3, depending on the success and duration of this Op) and have a look then on the TREAST graph of maturity slices to verify my hypothesis: shares of long term UST should have increased. And yields will decreased again.

2013/01/19

Foreign central banks decreased their US Treasury holding last november


The department of Treasury has released the last monthly TIC data for November 2012. 
As always, we are interested in Foreign Official Institutions (central banks, BIS, etc)

The data for October 2012 have already shown a net decrease for Foreign Official Institutions holding relative to Agency bonds (US$ -13,5 bn). 

We have started to discuss the big drop in TIC flows in our article on geoeconomy of US Treasury.
November data have confirmed this net decrease for Agency bonds (US$ -8,5 bn), and also a net decrease in US Treasury bonds (US$ -2,7 bn) :


This drop is not unique, but rare since 9/11 :


Who were the remaining friends of Treasury last november ? See below :

Source: nowandfutures.com

2013/01/17

Stop the European bankers who are very reluctant to follow the new fixings regulation


Let's summarize the facts :
"Euribor-EBF believes that the Euribor benchmark should be run by an independent, non-profit driven structure, with the introduction of public supervision. [...] Euribor-EBF supports the introduction of European public supervision on benchmarks. Supervision should also apply before and after the fixing delivery."
"The European Commission [...] wish[es] to have the Euribor panel as large as possible in order to enhance the credibility of the benchmark. Therefore, they are considering making mandatory for banks with a significant turnover in the money markets to be part of the panel."
"Euribor-EBF agrees with the agencies that more specific controls have to be in place and that banks have to implement strictly the Code of Conduct they subscribe to when contributing to Euribor."
"[...] we are closely following the developments taking place as regards the shrinking number of panel members for establishing EURIBOR and EONIA rates. Given the authorities’ commitment to addressing the shortcomings revealed in the rate-setting process, it is in the interest of markets that banks remain in the panel while the regulatory framework is being amended and behave as responsible market participants, thus preventing potential disruption in the functioning of an important financial market segment."

One bank withdrew from the Euribor panel and four from the Eurepo panel between July and end November 2012. But the list of reluctant bankers is still growing :
  • Dec. 2012: HSBC ceases contributing to the Eurepo Index after 7 December 2012 
  • Dec. 2012: Rabobank stops contributing to the Eurepo & Eonia Swap Index on 11 December 2012 
  • Dec. 2012: DZ Bank stops contributing to the USD Euribor and Eonia Swap Index on 1 January 2013 
  • Jan. 2013: BayernLB has stopped contributing to the Euribor-Eonia, USD Euribor and Eurepo Indexes on 1 January 
  • Jan. 2013: Helaba Landesbank Hessen-Thüringen ceased contributing to the USD Euribor Index on 2 January 2013 
  • Jan. 2013: Banque et Caisse d'Epargne de l'Etat (Luxembourg) will stop contributing to Eurepo after 4 January 2013 
  • Jan. 2013: Raiffeisen Bank International (RBI) will stop contributing to Euribor, Eonia, USD Euribor and Eurepo on 15 January 
  • Jan. 2013: Société Générale will stop contributing to the Eonia Swap Index after 15 January
  • Jan. 2013: Citigroup will cease contributing to the Eurepo Index as of 1 February 2013
These banks are clearly defying the regulators and the European Commission, hence harming the EU financial stability and our common interest. This is irresponsible. As citizens, we can boycott these banks. But we can also collectively ask to the european banking regulators to withdraw their banking licences, if the European Commission do not make them mandatory quickly to be part of the panel. If players do not want to play the new rules, they are not the players any more.

Euribor-EBF current Panel Banks
  • Euribor® Panel Banks : here
  • Eonia® Panel Banks : here
  • Eurepo® Panel Banks : here
  • Eoniaswap® Panel Banks : here

Update 02/08/2013 : citizens have been listened by EC 
"The Governing Council of the European Central Bank welcomes the European Commission’s intention to introduce further legislation regulating systemically important reference rates. [...]
The Eurosystem notes the recent decisions of some banks to withdraw from the Euribor panel. [...]
For such rates to remain representative, it is essential that there is an appropriate level of bank participation in the respective panels. The Eurosystem therefore welcomes the Commission’s intention to also include in its legislative proposal the power to compel mandatory submissions for systemically important reference rates, in order to prevent disruptions to their production process."
Source: ECB press release

"The Commission is considering a legal obligation for banks to participate in Euribor. Euribor-EBF considers this as a sensible precautionary measure against which there can be no objection."
Source: Euribor-EBF


Update 02/18/2013 : too-big-to-be-ruled banks (or thinking so) are still defying the EC and Euribor-EBF
  • Feb. 2013: Barclays will cease contributing to the Eurepo Index as of 18 February 2013
  • Feb. 2013: Deutsche Bank will stop contributing to the Eurepo and Eonia Swap Indexes as of 18 February 2013

Update 04/6/2013 : in March others too-big-to-be-ruled banks (or thinking so) again defied the EC and Euribor-EBF, but in April the institutions reacted: the operators of the transactions have to be located in EU or EFTA, targeting international banks. 
  • Feb. 2013: LBBW will cease contributing to the Eurepo and USD Euribor on 22 February
  • Feb. 2013: JP Morgan will cease contributing to the Eurepo Index as of 1 March
  • March 2013: Credit Suisse will stop contributing to the Eurepo Index as of 8 March
  • March 2013: Svenska Handelsbanken will cease contributing to the Euribor-Eonia panel as of 20 March
  • March 2013: UBS will stop contributing to the Euribor-Eonia panel after 28 March

"Eonia is computed as a weighted average of all overnight unsecured lending transactions in the interbank market, undertaken in the European Union and European Free Trade Association  (EFTA) countries by the Panel Banks."
The EFTA countries list is: Liechtenstein, Iceland, Norway and Switzerland.

The Euribor reform will be implemented by mid-June 2013.


Update 05/14/2013 :
  • April 2013: Citibank ceased contributing to the Eonia Swap Index panel as for 16 April
  • May 2013: LandesBank Berlin ceased contributing to Euribor- Eonia and USD Euribor panels on 1 May

Update 05/29/2013 :
  • May 2013: Bank of Ireland will stop contributing to the Eurepo after 31 May
  • May 2013: LBBW will cease contributing to Euribor after 31 May
  • May 2013: Helaba will cease contributing to Euribor after 31 May

Update 06/02/2013 : Euribor and Eonia panels to be differentiated as of 1 June 2013; whatever banks may believe,  or the current practices in other part of the world, they simply cannot win their fight against public regulation in Europe.
"Euribor-EBF takes this opportunity to invite former panel banks to re-join either the Eonia or the Euribor panel of contributing banks. As publicly stated by Commissioner Barnier, the forthcoming European Commission’s proposal on benchmarks will indeed include the power to impose mandatory submissions on banks." 
Source: Euribor-EBF and ECB 

    Update 06/20/2013 :
    • June 2013: ING ceased contributing to the Eurepo after 7 June

    Update 07/06/2013 :
    • June 2013: Allied Irish Bank (AIB) ceased contributing to the Euribor, Eonia and Eurepo fixings after 28 June
    • June 2013: Norddeutsche Landesbank Girozentrale (NordLB) ceased contributing to Euribor and USD Euribor after 28 June

    Update 07/23/2013 :
    • July 2013: Credit Agricole ceased contributing to Eurepo as of 1 July 2013 
    • July 2013: HSBC France ceased contributing to the Eonia Swap Index after 12 July 
    • July 2013: Commerzbank ceased contributing to USD Euribor after 19 July 
    • July 2013: Natixis ceased contributing to the USD Euribor as of 5 July 
    • July 2013: Danske Bank ceased contributing to Eonia as of 15 July

    Update 08/23/2013 :
    • August 2013: BNP Paribas will cease to contribute to the Eurepo and Eonia Swap indexes as of 12 August

    Update 09/20/2013 :
    • Sept. 2013: Credit Agricole and Credit Suisse have ceased contributing to the Eonia Swap Index as of 18 September 2013
    09/18/2013: "Euribor-EBF welcomes the European Commission’s Proposal for a Regulation on indices used as benchmarks in financial instruments and financial contracts. The possibility for supervisors to impose mandatory contributions is a positive measure. Until it is in place, it will hopefully lead panel banks and authorities alike to take their responsibilities and ensure that Euribor is not discontinued."

    Update 10/07/2013 :
    • 10/1/2013 : publication and of the new Euribor Code of Conduct, immediately in vigor. The highest possible sanction in case of misconduct is a permanent exclusion from the Euribor panel. 

    Update 10/23/2013 :
    • Oct. 2013 : Erste Group ceased contributing to the Euribor and Eurepo indexes after 11 October 2013.

    Update 11/20/2013 :
    • Oct. 2013 : RBS will ceased contributing to the Eonia Swap Index after 31 October 2013.

    Update 12/15/2013 :
    • Nov. 2013 : KBC has ceased contributing to the Eurepo index as of 13 December 2013.

    Final update 01/7/2014 :
    • list of Euribor panel banks and rates since 2004, by month

    Gold, the renminbi and the multiple-currency reserve system

     The Official Monetary and Financial Institutions Forum and the World Gold Council have just released a new report called "Gold, the renminbi and the multiple-currency reserve system".

    The foreword is by itself a very good synthesis of the current situation :
    " The world is preparing for possible twin shocks from the parlous position of the two main reserve currencies, the dollar and the euro. As China weighs up its options for joining in the reserve asset game, gold – the official asset that plays no formal part in the monetary system, yet has never really gone away – is poised, once again, to play a pivotal role. [...] No other reserve asset seems safe from the coming dollar shock. "
    If this new international monetary system preparation and the dollar replacement as the major reserve and international currency still looks incredible for you, here are others synthetic views of the current situation :

    ECRI U.S. Weekly Leading Index ;
    data serie from 1967 to 1/4/2013; click to zoom

    Share of AAA-rates assets as part of the total fixed income markets

    ...this is the rush towards new safe assets (for instance below Australian AAA sovereign bonds) :


    ...and out from the U.S. Treasury and Agency securities :



    ...and add to this the reports about gold massively bought and recycled out from LBMA system or newly claimed by Asian countries.

    Now back to the OMFIF report : Chapter 4 summarizes different prospective scenarii for the 2013-2018 timeframe. As usual with prospective-only scenario, they simply ignore the politics, and let the readers do their own choice. More, they do not argument at all why they have chosen these scenario and not others ones, and do not even mention Japan.

    I have then to give my own view, based on previous political anticipation about the strenghtening of the eurozone, more political integration into Euroland+ (i.e. EU less UK plus Scotland), more weakness of the Fed blunt monetary policy, increasing defiance towards Fed monetary policy from others interests, and a new monetary policy from Japan following the recent election (cf Yahoo News). 

    Currency zone
    Macroeconomic developments
    Currency effect
    Impact on gold
    U.S.
    US economy in recession due to fiscal tightening and ineffective policies. Public finances remain weak, as does domestic demand.
    Dollar drops as fast as the new reverse system is taking momentum.
    Gold market manipulation and Euro strength are initially gold negative, but US weakness then cannot avoid to boost gold.
    Eurozone / Euroland+
    Euro area works through its problems and survives intact, thanks to the new integrated policies and macroeconomics tools.
    Euro strengthens as Europe appears to have overcome the crisis.
    Euro strength is gold negative, but US weakness then cannot avoid to boost gold.
    China and South Asia
    China tries to stimulate domestic demand.
    Renminbi decouples from dollar as further de-pegging is seen as attractive.
    Chinese buying continues. Emerging market central banks continue opportunistically to build up gold stocks.
    Japan
    Japan tries to stimulate domestic economy using a new monetary policy.
    BoJ decouples from Fed policy as further pegging of Yen with Renminbi is seen as attractive.
    BoJ have to buy some gold stocks to back their own currency, and/or sell their U.S. Treasury for others bonds.

    I will discuss UK geoeconomics in a future article, if this priority increases.


    2012/11/15

    Gold and Central Banks, Q3 2012

     The new issue of Gold Demand Trend is released.

    Here is a short summary about the gold demand by Official Sector :
    • Central banks continued to purchase gold in Q3 2012, albeit at a slower pace. Demand of 98 tonnes, worth US $ 5.2 bn, accounted for 9% of overall demand during the period.
    • Brazilian central bank purchased 1.7 tonnes, for the first time since june 2005.
    • Paraguay central bank purchased 7.5 tonnes, representing a more than 10-fold increase from its previous reserves of 0.7 tonnes
    • South Korea central bank increased its holdings of gold by 29% in July (adding 16 tonnes).
    • Sales between central banks (under CBGA agreement) in the last 12 months was the lowest since the beginning of this Agreement in 1999, with an amount of 5.9 tonnes.
    Below are shown the biggest official gold reserves, where I've chosen to calculate aggregates relevant to the current multipolar world :

    Country or economic pole
    Gold Reserves (tonnes), Nov. 2012 WGC report
    Euro Area (incl. ECB)
    10 787
     EU 27 sum
    11 538
    USA
    8 135
    Switzerland
    1 040
    China + Taiwan + Hong-Kong
    1 480
    Japan
    765
    Russia
    935
    Brazil
    35
    India
    558
    South Africa
    125
     BRICS sum
    3 133
    Iran
    500 (source, Feb. 2012)
     Gulf Countries sum (Saudi Arabia, Kuwait, Bahrain, Qatar)
    419
    Venezuela
    362
    U.K.
    310
    Turkey
    302
    Lebanon
    287
    Algeria
    174
    Libya
    117
    Syria
    26

    2012/09/08

    The growing role of gold in the evolving international financial architecture


    Let's start with a relevant extract from the last WGC report :
    "The second quarter was another period of significant purchasing by official sector institutions, with demand amounting to 157.5 tonnes.This was a record quarter for central bank buying since the sector began recording net purchases in Q2 2009 and was more than double the 66.2 tonnes of purchases made in the same period of 2011. 
    Purchases in the first half of the year totalled 254.2 tonnes, 25% up on 203.2 tonnes from the same period last year. The official sector accounted for 16% of overall Q2 gold demand.
    Some central banks have clearly indicated their intention to bolster gold reserves. One such institution is the National Bank of Kazakhstan, which stated in July that it had increased its 2012 target for gold purchases from 24.5 tonnes to 26 tonnes. 
    The bank has previously stated that it plans to buy the country’s entire domestic production over the next two to three years in order to reduce its reliance on the US dollar as a reserve assetconfirming that it is targeting an allocation to gold of 15% of its foreign exchange reserves.
    Following the confirmation in June that it had purchased over 32 tonnes of gold in March, the central bank of the Philippines made no net changes to its reserves throughout the second quarter. The bank’s stated policy of buying local mine production remains in place and reserves as at the end of June stood at a provisional 194.2 tonnes, equal to around 13% of total reserves. 
    Russia’s programme of buying saw the central bank add a further 22.3 tonnes to its reserves during the April to June period. Total gold reserves at the end of the period stood at around 920 tonnes, roughly equal to 9% of total reserves. 
    The National Bank of Ukraine appears to have accelerated a programme of very small sporadic purchases, which it has made over recent years, with four consecutive monthly additions to its gold reserves since March of this year. These transactions have been small in size, with purchases in the second quarter totalling 3.6 tonnes, but relative to total holdings of 32.8 tonnes this represents a significant percentage increase in the bank’s gold reserves.
    Small purchases were also made by a range of central banks across Europe and South America, including Serbia (+0.2 tonnes), Guatemala (+0.2 tonnes) and the Kyrgyz Republic (+0.2 tonnes).
    Turkey continued to record increases in its gold reserves; however, these additions are excluded from our data. As reported in the previous issue of Gold Demand Trends, recent legislation allows commercial banks to pledge gold as part of their reserve requirements to the central bank. The reported changes in Turkey’s gold reserves reflect changes in gold pledged by commercial banks, rather than acquisitions by the central bank in the open market. While not representing a traditional addition to official sector reserves, the increase in reserves reflects the growing role of gold in the evolving international financial architecture.
    Following a similar pattern to its actions last year, South Korea’s central bank announced in August that it had purchased 16 tonnes of gold in July, having “judged ...market conditions were good” to make a purchase as part of its stated ongoing diversification of reserves. Coming as it did after the end of the quarter, the purchase is not captured within the second quarter data but is confirmation of a continued trend of purchasing by the sector. The bank has increased its gold holdings by 56 tonnes since June last year, with the aim of diversifying its portfolio. The latest purchase takes South Korea’s gold reserves to 70.4 tonnes, accounting for around 1% of total reserves. 
    Sales among central banks remained muted in the second quarter. Under the terms of the third Central Bank Gold Agreement, sales [...] amount to just 13.9 tonnes."
    The gold buying policy of Russia Central Bank is not new. But in just 4 years of global systemic crisis, ALL central banks have switched the diversification policy of their reserves, as depicted below :



    Except Switzerland, the bar and coins demand market has increased in Europe since last quarter. It is now the biggest market in the world, above China or India. 

    Source : WGC Gold Demand Trend Q2 2012 report

    2012/05/18

    Central Banks are adding tonnes of new gold to their reserves : statistics

     According to the World Gold Council, during the last quarter centrals banks and others official sector institutions from Russia, Mexico, Kazakhstan, Philippines, Belarus, Ukraine, Tajikistan, Turkey, Argentina added tonnes of new gold to their reserves, mainly to reduce their exposure to US dollar. Moreover,
    "Central banks sales were virtually non-existent during the quarter. Signatories to the CBGA-3 have almost ceased sales of their gold, with occasional small sales announced as related to the sale of gold coins."
    The 80.8 tonnes added during Q1 2012 are exclusive of the 14.3 tonnes net addition to Turkey gold reserves.


    Read the source for more details : Gold Demand Trends Q1 2012

    2012/03/02

    Primary Dealers to Fed : "Checklist OK. We are ready for a massive QE3"


    As anticipated...
     An operation like QE needs a complex planning to be executed with the less possible risks (speaking for the Wall Street players, primarily).

    Here are some of the known steps of the preparatory process, which seem completed now :


    "In a reverse repo, the Fed lends securities for a set period, temporarily draining cash from the banking system. 
    In a tri-party arrangement, a third party functions as the agent for the transaction and holds the security as collateral. JPMorgan Chase and Bank of New York Mellon are the only banks that serve in a trade-clearing capacity in the tri- party repo market."
    This will allow a new massive lend of securities by the FED and only 2 banks will be drained of cash. The FED has sub-contracted the new clearing operations (and subsequent margins) to its 2 closest primary dealers.