What a difference a few years makes. Back in the summer of 2015, a WSJ op-ed writer, who somehow was unaware of the past 6,000 years of human history, infamously and embarrassingly said "Let’s Be Honest About Gold: It’s a Pet Rock."
Fast forward to today, when with every central bank once again rushing
to debase its currency in what increasingly appears to be the final race
to the debasement bottom, when even BOE head Mark Carney recommends
that it is time to retire the dollar as the world's reserve currency, pet rock gold has emerged as the second best performing asset of the year... and at the rate it is going -4th in 2017, 3rd in 2018, 2nd in 2019 - gold will be the standout asset class of 2020.
Which naturally has sparked comparisons for gold's performance in
2019 with 2008+, when gold exploded higher as the financial system
nearly collapsed and central banks started injecting trillions in
liquidity into the system to keep it afloat.
Are such comparisons appropriate?
As Bank of America writes in "anatomy of two gold bull markets", in comparing the gold bull markets in 2008 and 2018, real rates remain key price drivers,
while a critical difference in market dynamics - this time around - is
that central banks have been unable to reflate global economies and
even as metrics like the value and proportion of negative yielding
assets has been increasing, further easing is on the cards. Linked to
that, Bank of America makes a stunning admissions: "the risk of quantitative failure, which was not a concern in 2008, makes gold an attractive asset."
Taking a step back, for those who have not been following the
performance of gold in the past year, the yellow metal has been one of
the best performing commodities over the past year, rallying by 31%
since bottoming in August 2018, as whon in the first chart which
highlights that recent price dynamics have to some extent mirrored those
seen in 2008+; the data also shows that the current bull market is
still young. Partially because of that, Bank of America notes that it
has been frequently been asked how the current macro backdrop compares
to dynamics 10 years ago.
So what sparked the tremendous 2008 rally which lasted for the next three years?
では２００８年の素晴らしいラリーは何が原因だったのだろう、しかもその後三年も続いた。
Looking back at the Great Financial Crisis, central banks reacted to
the turmoil on financial markets by easing monetary policy through both
traditional, but increasingly also non-traditional policy tools
Since gold is a non-yielding asset, the reduction in opportunity
costs and uncertainty over where the global economy and markets were
headed made the commodity an interesting investment.
This is shown in Chart 4, which suggests that sharp declines in US real rates post GFC were accompanied by steady increases in gold quotations. Yet,
US rates then started to change direction in 2013, the year Fed
chairman Ben Bernanke caused the taper tantrum announcing that the Fed
would gradually reduce its bond purchases (Chart 5). This effectively
put an end to gold increases.
この状況はChart 4に示される、GFC後の米国実質金利が急落しそれにともな０１３いゴールド相場が安定して上昇している。しかし２０１３年に米国金利がその動きを変えた、この年FED議長 Ben Bernankeがtaper tantrumを引き起こしたのだ、FEDが徐々に債権買取を減らすと宣言した（Chart 5)．これが実質的にゴールド上昇に終わりを告げた。
After the gold price rally ended, and fell sharply in the wake of the
taper tantrum, gold prices then remained subdued also because ongoing
monetary policy support kept markets buoyant. This is shown in chart 6, which highlights that falling volatility was ultimately accompanied by lower gold quotations.
Of course, this was also influenced by an acceleration of the US
economy, which picked up post GFC and in 2015 printed some of the
highest growth rates in a decade
Unfortunately, the central banks' fairy tale did not last, and the
"strong economic growth" came with a significant wrinkle: inflation
remained well below the 2% target. The chart shows data for the US, but
the lack of upward pressure on general price levels has been equally
pronounced in other countries/ regions including Japan/ Europe.
Yet notwithstanding the ongoing lack of reflation, central banks
around the world seem adamant that monetary easing will ultimately do
the job - as in it didn't work last time, but it will work this time, we
promise - and hence expectations are for more stimulus. The
side-effects of that are mirrored by Chart 8 and Chart 9: value
and proportion of debt with negative yields has risen almost
exponentially of late and this has been a powerful driver of the gold.
This, according to BofA commodity strategists, has various
implications. Most notably, "ultra-easy monetary policies have led to
distortions across various asset classes"; worse - and these are not our
words, but of Bank of America - "it also stopped normal economic
adjustment/ renewal mechanisms by for instance sustaining economic
participants that would normally have gone out of business", i.e. a
record number of zombie corporations.
In addition, as everyone knows, debt levels have continued to
increase, making it more difficult for central banks to normalize
monetary policy as 2018 showed so vividly (and for Powell, painfully).
Which brings us to BofA's conclusion: "We fear that this
dynamic could ultimately lead to "quantitative failure", under which
markets refocus on those elevated liabilities and the lack of global
growth, which would in all likelihood lead to a material increase in
volatility." こういう状況でBoAはこう結論づける：「この力学が「量的失策」となることを恐れている、市場は再度債務増加と世界的成長欠如に注目している、これはボラティリティを大きく増やすことだろう。」
How does gold fall into this: "At the same time, and perhaps
perversely, such a sell-off may prompt central banks to ease more
aggressively, making gold an even more attractive asset to hold." この状況でゴールドはどうなるだろう：「それと同時に、たぶん株式下落を見て中央銀行にさらなる緩和を督促するかもしれない、こうなるとゴールドは更に魅力をますことになる。」
In other words, as the world approaches the financial endgame and
central banks are out of ammo beside just doing more of the same - that
led the world to the current catastrophic state - gold will be the
biggest beneficiary of the upcoming financial cataclysm. And, no, this
is not some fringe blog predicting the apocalypse, this is the
prediction of one the 4 largest US banks.
The Next Decade Will Likely Foil Most Financial Plans by Tyler Durden Tuesday, Jan 26, 2021 - 15:20 Authored by Lance Roberts via RealInvestmentAdvice.com, There are many individuals in the market today who have never been through an actual “bear market.” These events, while painful, are necessary to “reset the table” for outsized market returns in the future. Without such an event, it is highly likely the next decade will foil most financial plans. 現在の市場参加者の多くは本当の「ベアマーケット」を経験していない。こういう事が起きると、痛みを伴うが、将来の大きなリターンを可能にするために必要なちゃぶ台返しとなる。これがないと、多くのファイナンシャルプランは今後１０年ひどいことになりそうだ。 No. The March 2020 correction was not a bear market. As noted: ２０２０年３月の調整はベアマーケットと呼べるようなものではなかった。以前にも指摘したが： A bull market is when the price of the market is trending higher over a long-term period. ブル相場とは長期に渡り市場価格が上昇するものだ。 A bear market is when the previous advance breaks, and prices begin to trend lower. ベア相場とはこれまでの上昇が止まり、市場価格が下落し始めることだ。 The chart belo...
The Fed And The Treasury Have Now Merged by Tyler Durden Thu, 04/09/2020 - 14:21 Submitted by Jim Bianco of Bianco Research As I've argued, the Fed and the Treasury merged. Powell said this was the case today (from his Q&A): 私はこれまでも申し上げてきたが、すでにFEDと財務省は一体化している。Powell自身がこれに当たると今日話した（彼の Q&Aでのことだ）： These programs we are using, under the laws, we do these, as I mentioned in my remarks, with the consent of the Treasury Secretary and the fiscal backing from the congress through the Treasury. And we are doing it to provide credit to households, businesses, state and local governments. As we are directed by the Congress. We are using that fiscal backstop to absorb any losses we have. 我々FEDが今行っている一連のプログラムは、法に基づいており、それを実行している、私が注意喚起したが、 財務長官の同意を得ており、財政に関しては議会の承認も得ている。私どもは家計、ビジネス、連邦地方政府に貸付を行っている。議会の意向のもとに我々は行動している。以下ほどに損失が生じようともそれを財政的に支えている。 Our ability is limited...
