Financial Crisis III: Stores of Precious Metals in Trusts and Funds - Junk Bond and Credit Market Concerns

Here is the state of the gold and silver holdings in trusts and funds.

In other matters, there were two articles about risks in the credit markets that caught my eye this weekend.

These *could be* stories spread by market operators who are hoping for turmoil in the junk bond markets.

Or on the other hand this could be signs of something which some have feared would be approaching, as we seem to keep repeating the behaviours that prompted the last two financial crises this century.

The truth is hard to discern these days— it has few friends, and even fewer willing to stand for it.

Nevertheless, I thought it would be appropriate to bring them to your attention, for what it is worth.

Greenwich Time, A New Credit Bubble Gets Ready to Burst, May 31, 2019

The Street, U.S. Officials Meet in Secret Over Junk-Loan Frenzy as Recession Alarms Flash, June 1, 2019

Stocks and Precious Metals Charts - And It Is - Non-Farm Payrolls Next Week

"Shanghai Gold will change the current gold market with its 'consumed in the East but priced in the West' arrangement.  When China has the right to speak in the international gold market, the true price of gold will be revealed."

Xu Luode, Chairman, Shanghai Gold Exchange, 15 May 2014


“Imaginary evil is romantic and varied; real evil is gloomy, monotonous, barren, boring. Imaginary good is boring; real good is always new, marvelous, intoxicating. Everything beautiful has a mark of eternity.”

Simone Weil


"Nature is never spent;
There lives the dearest freshness deep down things;
And though the last lights off the black West went
Oh, morning, at the brown brink eastward, springs —
Because the Holy Ghost over the bent
World broods with warm breast and with ah! bright wings."

Gerard Manley Hopkins, God's Grandeur

Stocks dropped significantly after Trump initiated a 'shock tariff' on all Mexican goods effective June 10.

The Dollar declined.

Gold rallied significantly in a flight to safety. Silver tagged along, weighed down a bit by its industrial component.

On the chart gold has broken up and out from a large descending triangle.  Let's see if it can stick this breakout and expand it through the Non-Farm Payrolls report next week.

If so, this may activate the much larger cup and handle pattern that has been lingering on the chart for some time.

The US Treasury yield curve is now more inverted than at any time since 2007 and the inception of the last financial crisis.

Treasuries are apparently pricing in two rate cuts for this year.

At the same time junk bonds are signficantly diverged from this outlook on risk.

Something is going to break, and badly.

There will be a Non-Farm Payrolls report next Friday.

There is an economy of the lord of this world, that rewards the attentions of its adherents, temporarily if not fleetingly.   And there is the economy of God, that embraces all of us in the next, forever.

For some, that the economy of this passing world deems foolish, it is simply a matter of investment assumptions and horizons.   Their hearts are invested in what is to come— and what will endure.

Need little, want less, and love more. For those who abide in love abide in God, and God in them.

Have a pleasant weekend.

Markets Roiled As Trump Imposes 'Shock Tariff' of 5% Up To 25% On All Mexican Goods Over Immigration

Via tweet Trump tanked the markets by imposing a 'shock tariff' on all Mexico goods of 5%, increasing to 25% until Mexico does something to halt illegal immigration from their country.

Someone is taking the imperial presidency out for a test drive.

The China Manufacturing PMI came out tonight with a miss of estimates at 49.4.

The Treasury yield curve is doing some interesting things tonight.  

The world wonders where such shock tariffs as an instrument of US policy objectives as determined by the Imperial President may be imposed next.

Germany better start working on a cure for male pattern baldness.

Bloomberg
Trump to Impose Tariff as High as 25% on Mexico Over Immigration
By John Harney and Peggy Collins
May 30, 2019

President Donald Trump said that he would impose a 5% tariff on Mexican goods until that country stops immigrants from entering the U.S. illegally.

The tariff would take effect on June 10, “until such time as illegal migrants coming through Mexico, and into our country, STOP,” Trump said in a Twitter post on Thursday night.

He warned that the levy “would gradually increase until the illegal immigration problem is remedied at which time the tariff will be removed.” The tariffs could rise as high as 25% on Oct. 1, Trump said in a statement released by the White House.

“Mexico must step up and help solve this problem,” Trump said in the statement...

Read the entire story here.

Stocks and Precious Metals Charts - It is for this that I was born - Gold Moves Higher In Options Expiry

“In a democracy dissent is an act of faith. Like medicine, the test of its value is not its taste but its effect, not how it makes people feel at the moment but how it makes them feel and moves them to act in the long run.  Criticism may embarrass the country’s leaders in the short run but strengthen their hand in the long run; it may destroy a consensus on policy while expressing a consensus of values.  There is, or ought to be, such a thing as being too confident to conform, too strong to be silent in the face of apparent error.

Criticism, in short, is more than a right; it is an act of patriotism, a higher form of patriotism, I believe, than the familiar rituals of national adulation.  If nonetheless the critic is charged with a lack of patriotism, he can reply with Camus, 'No, I didn’t love my country, if pointing out what is unjust in what we love amounts to not loving, if insisting that what we love should measure up to the finest image we have of her amounts to not loving.'...

Throughout our history two strands have coexisted uneasily; a dominant strand of democratic humanism and a lesser but durable strand of intolerant Puritanism.  There has been a tendency through the years for reason and moderation to prevail as long as things are going tolerably well or as long as our problems seem clear and finite and manageable.  But when some event or leader of opinion has aroused the people to a state of high emotion, our Puritan spirit has tended to break through, leading us to look at the world through the distorting prism of a harsh and angry moralism.”

J. William Fulbright, The Arrogance of Power


"Joan [of Arc] was a being so uplifted from the ordinary run of mankind that she finds no equal in a thousand years. She embodied the natural goodness and valour of the human race in unexampled perfection. Unconquerable courage, infinite compassion, the virtue of the simple, the wisdom of the just, shone forth in her. She glorifies as she freed the soil from which she sprang."

Winston Churchill


"I do not know what love or hatred God may have for the English. But I do know that they will all be thrown out of France, except for those who die there.

Even the little children say that people are hung sometimes for speaking the truth to power.

But I do not fear the soldiers, for my road is made open to me.   And if the soldiers come, I have God, my Lord, who will know how to clear the road that leads to the Dauphin.  It is for this that I was born."

Joan of Arc

Today was the May option expiration for the precious metals on the Comex.

Gold moved decisively higher as silver folloed back into the black for the week.

The Dollar finished largely unchanged.

Stocks were struggling after a failed rally attempt this morning, but managed to bounce out of the red into the close.

Malaysia is proposing a common Asian trading currency backed by gold.

Gold is coiled for a move.  Let's see which way it goes.

Have a pleasant evening.