China Commodity Bubble Bursts As Exchanges Curb Goldman’s “Biggest Concern”

China Commodity Bubble Bursts As Exchanges Curb Goldman’s “Biggest Concern”:

During the last week we have highlighted the frightening similarity between the speculative spike in China commodity trading (which has sent industrial metals prices soaring in yet another ‘error’ signal for real supply and demand) and the pump-n-dump in Chinese stocks. Specifically, as Goldman warns the factor that “concerns us the most is the increased speculation in the Chinese iron ore futures market,” and now, as Bloomberg reports, it appears that bubble is bursting as Steel and Iron Ore prices tumble most in 21 months after Chinese exchanges raise margins in an attempt to curb speculation.

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Commodity Trader: “What Is Happening Has Absolutely No “Reasonable” Explanation”

Commodity Trader: “What Is Happening Has Absolutely No “Reasonable” Explanation”:

One commodity trader writes in with some very unique observations. From trader “Peter”

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The insanity has now fully spilled into the commodity markets – a market which I professionally made a transition to after the 2008 crisis from the financial markets, simply because I believed it was a market that would still function according to true fundamentals…

I guess that only lasted so long…

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Bloomberg Commodity Index Crashes To 16-Year Low – 22% Below 2009 Trough

This will surely end ‘well’!!!


Bloomberg Commodity Index Crashes To 16-Year Low – 22% Below 2009 Trough:

Commodity prices have not been this low since early 1999 (and are 22% below the trough in 2009).

Commodities-2

The last time commodities were collapsing like this as stocks were soaring like this… it did not end well..

Commodities

Just keep buying FANGs… they will kepp you safe, right?

Charts: Bloomberg

Marc Faber: ‘It’s A Tipping Point’ – ‘There Are No Safe Assets Anymore’ – ‘Focus On Precious Metals’

marc-faber1

“It’s A Tipping Point” Marc Faber Warns “There Are No Safe Assets Anymore”  (ZeroHedge, Sept 2, 2015):

Markets have “reached some kind of a tipping point,” warns Marc Faber in this brief Bloomberg TV interview. Simply put, he explains, “because of modern central banking and repeated interventions with monetary policy, in other words, with QE, all around the world by central banks – there is no safe asset anymore.” The purchasing power of money is going down, and Faber “would rather focus on precious metals because they do not depend on the industrial demand as much as base metals or industrial commodities,” as it’s now “obvious that the Chinese economy is growing at nowhere near what the Ministry of Truth is publishing.”

Faber explains more… “I have to laugh when someone like you tries to lecture me what creates prosperity”

Some key exceprts…

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“They’ll Blame Physical Gold Holders For The Failure Of Monetary Policies” Marc Faber Explains Everything

“The future is unknown and we are not dealing with markets that are free markets anymore…now we have government interventions everywhere. [But] in the last say twelve months, I have observed an increasing number of academics who are questioning monetary policies. That’s why I think they will take the gold away and go back to some gold standard by revaluing the gold say from now $1000/oz to say $10,000 dollars. An individual should definitely own some physical gold. The bigger question is where should he store it? because… the failure of monetary policies will not be admitted by the professors that are at central banks, they will then go and blame someone else for it and then an easy target would be to blame it on people that own physical gold because – they can argue – well these are the ones that do take money out of circulation and then the velocity of money goes down – we have to take it away from them… That has happened in 1933 in the US.”

Related info:

What Gold Nationalization Really Means

Roosevelt Gold Confiscation In 1933: ‘No American Could Visit A Safe Deposit Box For Some Time Without A Government Agent Accompanying Him’

On This Day In 1933

The Day The Government Seized Americans’ Gold – April 5th 1933


marc-faber
Dr Marc Faber was born in Zurich, Switzerland. He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics magna cum laude. Dr Faber publishes a widely read monthly investment newsletter “The Gloom Boom & Doom Report” report which highlights unusual investment opportunities, and is the author of several books including “ TOMORROW’S GOLD – Asia’s Age of Discovery”.

“They’ll Blame Physical Gold Holders For The Failure Of Monetary Policies” Marc Faber Explains Everything (Marcopolis, Aug 7, 2015):

Interview with Marc Faber, Editor and Publisher of “The Gloom, Boom & Doom Report’”

In this exclusive interview with Marcopolis.net Marc Faber covers it all: from commodities and China to the outlook on inflation, the Euro and gold. According to him the global economy is not healing. To the contrary, we might find ourselves back into recession within six months or a year. In that case he expects more money printing by central banks, which eventually could lead to high inflation rates and renewed strength in commodity prices.

On the bright side, he sees great economic potential in Vietnam. Also, the Iraqi stock market has good potential now that a deal with Iran has been reached. While mining stocks are extremely depressed we might see defaults before any meaningful recovery.

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In your 2002 book “Tomorrow’s gold” you identified two major investment themes: emerging markets along with commodities. That was a great call. As for commodities, they had a great run up until 2008. Then they crashed sharply along with everything else just to recover strongly into 2011. Since then they have acted weakly, and recently commodities even reached a 13-years low. Is this the end of the commodities-super-cycle, as some have claimed, or is it more like a correction?

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The Commodity Crash Is “A Canary In The Coal Mine For The Global Economy”

Indeed.

And the big reset is coming.

I would protect my assets by owning physical gold and silver (outside the banking system).

This is not about short term gain, this is part of the strategy to survive the coming total financial collapse.

That said, I believe the gold bugs will be proven right and at one point, both gold and silver prices, will jump to unknown heights.


Full interview with Stephen Schork after the jump:

schork_0

Stephen Schork: The Commodity Crash Is “A Canary In The Coal Mine For The Global Economy” (ZeroHedge, Aug 8, 2015):

The best thing about the commodity crash relapse taking place so quickly after the last swoon – recall tha we have had two oil bear markets within 8 months – is that all those hollow chatterboxes and econo-tourists who swore that tumbling oil is “unambiguously good” and “great for the economy” (first and foremost Larry Kudlow and then proceeding with every single sellside strategist and economissed), have been laughed out of even CNBC’s studio, and are nowhere to be found this time around because not only did all those promises of a surge in consumer spending never materialize (for reasons, or rather one reasonwhich we explained extensively before), but the observent public still remembers all too well how countless ‘experts’ confusing cause (a gobal slowdown in the economy) with effect (crashing commodities).

Therefore, we were delighted when someone who actually understands the energy market for a change, The Schork Report’s Stephen Schork, appeared on BBG’s Pimm Fox yesterday to explain not only what the immediate future holds for both oil and gasoline prices, but why, when one actually gets cause and effect right, “this drop in oil prices, this drop industrial metal prices, this is not good. It’s a canary in the coal mine that something is not right in the global economy, and that is a concern for us all.

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‘Something Has To Give’: Wall Street Finally Noticed The Epic Divergence Between Stocks And Commodities


“Something Has To Give”: Wall Street Finally Noticed The Epic Divergence Between Stocks And Commodities (ZeroHedge, Aug 6, 2015):

We have shown the following chart, showcasing the unprecedented divergence between commodities and stocks countless times:

Bloomberg Commodity Index

And now the sellside is finally starting to notice, and instead of merely falling back on its traditional “but if you ignore energy…” platitudes aimed squarely at the 5-year-old trader market, is taking it seriously. Here is Credit Agricole’s Valentin Marinov with a note released yesterday, which it seems took the market about 24 hours to read and digest.

Stocks still up even as commodities are down – something has to give

The persistent selloff in global commodities (and commodity currencies) of late is attributed to mounting growth concerns (centred on China) as well as USDappreciation in the run up to Fed lift-off. Lower commodity prices have already sent gauges of inflation expectations lower and weighed on global bond yields.

Yet, it seems that these developments are in stark contrasts with the apparent resilience of the developed stock market indices. For example, the VIX index is still trading close to its lowest level this year. The question is then, should we view the apparent resilience of the developed stock markets as a sign that investors are overdoing it selling commodity and risk-correlated currencies. Market shorts seem substantial indeed. It took only some adjustments in RBA’s language to send AUD more than 1.5% higher at one point yesterday.

We are far less sanguine and think that the developed stock markets may be lagging behind other asset classes as investors position ahead of Fed tightening while global economic data continues to fuel market worries. We still see risks on the downside for risk-correlated and commodity currencies going into lift-off, which we expect in September. As highlighted in our recent publication, falling central bank reserves should ultimately bring global asset prices (stocks and bonds) more inline with falling commodity prices and slowing global growth (and global trade). In particular, the FX reserves should fall more on the back of weak (commodity and manufacturing) export revenues. In turn, fears about weakening global demand for stocks and bonds should mount, making current valuations difficult to sustain. Risk appetite should remain subdued and continue to undermine risk-correlated, commodity currencies while propping up safe havens like JPY and EUR. USD should do well as well, but mainly against G10 smalls.

Expect the remainder of the sellside penguin crew to finally “notice” and this gaping divergence in the coming days.

Commodities Collapsed Just Before The Last Stock Market Crash – So Guess What Is Happening Right Now?

Grid-Stock-Exchange-Economy-Finance

Commodities Collapsed Just Before The Last Stock Market Crash – So Guess What Is Happening Right Now? (Economic Collapse, July 22, 2015):

If we were going to see a stock market crash in the United States in the fall of 2015 (to use a hypothetical example), we would expect to see commodity prices begin to crash a few months ahead of time.  This is precisely what happened just before the great financial crisis of 2008, and we are watching the exact same thing happen again right now.  On Wednesday, commodities got absolutely pummeled, and at this point the Bloomberg Commodity Index is down a whopping 26 percent over the past twelve months.  When global economic activity slows down, demand for raw materials sinks and prices drop.  So important global commodities such as copper, iron ore, aluminum, zinc, nickel, lead, tin and lumber are all considered to be key “leading indicators” that can tell us a lot about where things are heading next.  And what they are telling us right now is that we are rapidly approaching a global economic meltdown.

If the global economy was actually healthy and expanding, the demand for commodities would be increasing and that would tend to drive prices up.  But instead, prices continue to go down.

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Commodities Collapsed Just Before The Last Stock Market Crash – So Guess What Is Happening Right Now?

11 Economic Crashes That Are Happening RIGHT NOW

Commodities Collapsed Just Before The Last Stock Market Crash – So Guess What Is Happening Right Now? (Economic Collapse, July 23, 2015):

If we were going to see a stock market crash in the United States in the fall of 2015 (to use a hypothetical example), we would expect to see commodity prices begin to crash a few months ahead of time.  This is precisely what happened just before the great financial crisis of 2008, and we are watching the exact same thing happen again right now.  On Wednesday, commodities got absolutely pummeled, and at this point the Bloomberg Commodity Index is down a whopping 26 percent over the past twelve months.  When global economic activity slows down, demand for raw materials sinks and prices drop.  So important global commodities such as copper, iron ore, aluminum, zinc, nickel, lead, tin and lumber are all considered to be key “leading indicators” that can tell us a lot about where things are heading next.  And what they are telling us right now is that we are rapidly approaching a global economic meltdown.

If the global economy was actually healthy and expanding, the demand for commodities would be increasing and that would tend to drive prices up.  But instead, prices continue to go down.

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Last Night’s Gold Slam So Furious It Halted The Market Not Once But Twice, And The Funniest “Explanation” Yet

Last Night’s Gold Slam So Furious It Halted The Market Not Once But Twice, And The Funniest “Explanation” Yet (ZeroHedge, July 20, 2015):

Yesterday, just before the Chinese market opened, precious metals but mostly gold, flash crashed in milliseconds with a violent urgency never before seen. We documented the unprecedented event last night, but for those who missed it, the following chart from Nanex clearly lays out just how sudden the “out of nowhere” selling was, which led to not one but two 20-second halts in the gold futures market spaced out precisely 30 seconds apart as a result of a Velocity Logic (or lack thereof) event.

gold halted twice

For those following the gold market, last night’s event was not surprising: after all just on this website we have documented at least three occasions when furious algorithmic gold selling broke the gold futures market for at least 10 seconds, to wit:

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Gold, Precious Metals Flash Crash Following $2.7 Billion Notional Dump

Related info:

China Increases Gold Holdings By 57% ‘In One Month’ In First Official Update Since 2009


 

gold smash_0

Gold, Precious Metals Flash Crash Following $2.7 Billion Notional Dump (ZeroHedge, July 19, 2015):

The last time gold plummeted by just over $30 per ounce (dragging down silver and bitcoin with it) and resulted in a crash so furious it led to a “Velocity Logic” market halt for 10 seconds, was on January 6, 2014. Many said this was just perfectly normal selling, although we explicitly said (and showed) that it was a clear case of an HFT algo gone wild (following an order to do just that and slam all sell stops) when someone manipulated the market and repriced gold substantially lower.

Precisely one month ago, some 18 months after the incident, the Comex admitted as much, when it blamed the collapse on “unusually large and atypical trading activity by several of the Firm’s customers and caused the mass entry of order messages by Zenfire, which resulted in a disruptive and rapid price movement in the February 2014 Gold Futures market and prompted a Velocity Logic event.” Curiously despite the “errant” order, gold did not rebound because the entire purpose of the selling slam was to reset the prevailing price far lower. This is what the Comex said in Disciplinary action 14-9807-BC:

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Copper Crashes, In Danger Of Breaching 15-Year Support Level

Welcome to the recovery!

Prepare for collapse …


–  Copper Crashes, In Danger Of Breaching 15-Year Support Level (ZeroHedge, July 6, 2015):

While the PBOC was literally everything in its power to keep the SHCOMP green (it was too late to save the Shenzhen, the Chinext or most Chinese stocks as the PBOC’s firepower was limited to just the largest companies), it forgot about that other proxy of overall Chinese health: copper which, as the chart below shows, plunged by 4% to the lowest price since February when the oil commodity crash left everyone speechless and was threatening to destroy the entire junk bond space.

copper 2015-07-06_6-15-31

But while in this centrally-planned world, in which nobody even denies anymore that all markets have become central banker playthings, fundamentals are irrelevant and few have a clue what this latest crash in copper may signify (some do, and it isn’t pretty) an even more disturbing clue for the fate of this erstwhile “market doctor” is revealed when looking at the long-term price chart. Here, as SocGen notes, copper is in danger of breaching a huge 15 year support line… after which it is free fall for a long, long time.

From SocGen

Copper is probing again the 15-year trend line support (5550 levels).

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Commodities Crushed: WTI Plunges To $48 Handle, Copper Breaks Key Support

Commodities Crushed: WTI Plunges To $48 Handle, Copper Breaks Key Support (ZeroHedge, Feb 23, 2015):

Perhaps the world is beginning to realize that “it’s the demand, stupid” as crude oil prices are collapsing this morning (not helped by “all out production” news from Oman). While ‘markets’ rallied peculiarly after last week’s epic surge in inventories and production data, that has all been given back as one trader noted “the market got ahead of itself, even though the rig count has been falling it is not until mid-yr that we are going to see some impact on supply.” WTI is back under $49.  To complete the gloom, Copper is probing lower, breaking key support with projections to 222.50 if this move takes shape.

Dr. Paul Craig Roberts And Dave Kranzler: The Lawless Manipulation of Bullion Markets by Public Authorities

COMEX-Silver-Futures

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.

The Lawless Manipulation of Bullion Markets by Public Authorities (Paul Craig Roberts and Dave Kranzler, Dec 22, 2014):

Note: In this article the times given are Eastern Standard Time. The software that generated
the graph uses Mountain Standard Time. Therefore, read the x-axis two hours later than the axis indicates.

The Federal Reserve and its bullion bank agents are actively using uncovered futures contracts to illegally manipulate the prices of precious metals in order to keep interest rates below the market rate. The purpose of manipulation is to support the U.S. dollar’s reserve status at a time when the dollar should be in decline from the over-supply created by QE and from trade and budget deficits.

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Bloomberg’s Commodity Index Drops To Lowest Since 2009: What Does It Mean?

Commodity Index Bloomberg

Bloomberg’s Commodity Index Drops To Lowest Since 2009: What Does It Mean? (ZeroHedge, Dec 22, 2014):

Moments ago we learned that for all talk of a commodity “bottom”, the “energetic” dead cat has resumed its inverse bounce. To wit:

  • BLOOMBERG COMMODITY INDEX EXTENDS DROP TO LOWEST SINCE 2009

So what does that mean? The answer: it all depends on whose narrative one chooses to believe and/or which narrative the US Ministry of truth is promoting on any given day in order to boost confidence.

The main plotline now is simple: plunging commodity prices (just don’t call them deflation, “negative inflation” is much better) are a huge tax cut on the US consumer the pundits will have you know. And why not: so simple a Jonahtan Gruber could have come up with it.

The only problem is that you learn all this from the same pundits who told you just a few months ago, that soaring commodity prices are great for the economy, for jobs, and, drumroll, for the consumer.

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Commodity Trading Giant Exits Physical Gold … Due To ‘Lack Of Physical With A Documented Origin’

Gold-Vault

Commodity Trading Giant Exits Physical Gold Due To “Lack Of Physical With A Documented Origin” (ZeroHedge, Dec 16, 2014):

Back in March, otherwise very under-the-radar Swiss commodities trading giant Gunvor and the fifth largest oil trader in the world, made headlines in the press when one of its then-Russian owners, billionaire Gennady Timchenko (estimated net worth of $8.5 billion), sold his entire 44% stake in the company to his partner in the firm, Torbjorn Tonqvist, just a day before the US revealed its first round of sanctions against individuals affiliated with the Putin regime. Timchenko was among them. As a result of the sale, however, Gunvor avoided falling on the US sanctions list and a Treasury official said that “Gunvor Group Ltd. isn’t subject to automatic blocking from dealing with U.S. persons under Russian sanctions because co-founder Gennady Timchenko owns less than 50 percent of the company.”

Since then the Geneva-based company rarely appeared in the media which is how the nondescript company lliked it. Until last week, that is, when Bloomberg reported that the company was giving up trading physical precious metals, read gold, less than a year after the commodity house started a business dedicated to buying and selling gold. Gunvor is, or rather was, one of the few large commodity firms that handles precious metals. The move into gold was part of an expansion into non-oil businesses that now include iron ore, industrial metals and natural gas. Gold trading was done by a handful of people in Singapore and Geneva.

Gunvor’s move away from physical commodities trading in itself is not surprising: recall that first it was Germany banking titan Deutsche Bank which announced it would no longer trade physical precious metals last month.

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The silent crash in commodities – a warning sign

The silent crash in commodities—a warning sign (CNBC, Dec 9, 2014):

If the commodity markets were followed as widely as the stock market, the financial world would be buzzing with the news of a crash that has taken place in the value of “stuff.”

While the plunging prices of oil, natural gas and gasoline are making headlines every day, thanks to the benefits accruing to consumers of energy products, the message of the commodity markets, in many ways, is hardly a reassuring one when it comes to the outlook for global economic growth.

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Global Commodity Prices Are Collapsing At The Fastest Pace Since Lehman

Global Commodity Prices Are Collapsing At The Fastest Pace Since Lehman (Zerohedge, Nov 5, 2014):

Nothing to see here, move along…

We are sure it’s nothing to worry about, and in now way indicative of any global aggregate economic weakness, but global commodity prices (that would be the ‘stuff’ that is used to make the ‘stuff’ we all buy every day) are collapsing at the fastest rate since Lehman…

Global Commodity Prices Are Collapsing At The Fastest Pace Since Lehman

Of course, it’s all about over-supply, not under-demand… just like the Baltic Dry was not low because of shitty trade volumes but because of too many ships… but it’s just the other side of an uncomfortably real mal-investment-driven fiasco…

As the chart below shows… maybe it is the economy stupid and with US GDP expectations being ratcheted down after construction spending and trade deficit data, maybe the US is not decoupling after all.

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