metals no rush

Hi Readers once again we see metals taking a hit after the numbers which came out yesterday.

All but insuring that the Fed will move another 50 basis point in September.

The CNBC goons squad was pushing that the Fed was done only to realize that another move is coming.

I just want to explain how metals are traded in funds as some have asked the Question, while others have no clue.

So an equity fund/hedge fund will have its allocation stocks whatever it is and then will have 5 or 10% in metals physical exposure.

Reason for this is they are only allowed to be in cash of up to 2-5% that's the way most are structured.

 Have more than that amount in cash holding is a violation of the managers fiduciary responsibility to its holders and will be exposed in the quarterly audits.Any violation of there responsibility can have serious legal ramifications.

I say this because both wholesale and retail clients can be pain in the asses, with complaints that the manager was too conservative with there investments or is to bearish on there outlook. Believe me money will move if this is the case, especially in the US.

So what managers do is buy metals and just hold them.

Should they ever get margin called or want to buy a certain stock, rather than mucking up the balance of the portfolio they dumb the metals and have the cash on call for whatever they need to do.

No violations and no drama with cash on call.

So now we come to the other part about when do metals go up?

For those who have been here a while you know that metals don't increase in value on an inflationary environment. Metals like crypto coins are a deflationary tool.Metals will hold and trade much much higher in a deflationary environment. Currently as your all aware we are in an inflationary environment and its for this reason metals will continue to trade sideways to higher but slowly. Please don't believe some of the crap YouTube posters state. they have there own agenda. 

So lets look as some of the scenario's .

1. We have explained above how managers use metal positions, so if we get a slow winding death in the stock market of economy where do metal prices go?

2. February-March 2023 the potential for a crash is very real? where will prices be then!

3. Does the user case for the metal far exceeds the supply?

4. While its a storage of wealth how do you buy necessary. yes heard about the barter way but I'd like to see it before I'm confident to say that..

 This post is only for educational purposes 

ask your financial advisor on more on the above

10.1 UK inflation and its going higher

 Hi Readers markets around the world are trading higher but lets see for how long?

The illusion that the central banks will pivot is nothing more but a dream and hope.

We have just had the Reserve bank of New Zealand increase rates again by .50bps for the fourth time in a row. We have just seen the UK inflation figures and yes over 10% CPI ,so what does that tell you ?

What the central banks are doing isn't working this slow and steady approach is making it worse as inflation is becoming stuck on the economy. 

So what are the options going forward for the central banks? there are a few but they are quickly becoming irrelevant if they don't act soon.

1. Squeezing the balance sheet has to occur this side of Christmas and completed.

2. Raise interest rates way quicker than what they are doing so, the softly softly approach is feeding inflation. Yes central banks are looking to curb demand and allow things to settle down without stimulus, but this idea works well on a computer model not in reality.

3. The biggest fear central banks now have is wage inflation, should the people up-rise for wage rises then this inflation will last for 5 years at the minimum.

4. The other option is to use American economics and have an inflation figure less everything that's going up, if we calculated inflation the same as we did in 1990 the current US inflation would be 16.8% where would interest rates be then ?

5. The only other option which is the right option is to immediately increase rates higher than the rate of inflation. As the IMF said to other countries like Argentina, Brazil and Colombia. These countries got forced to increase rates higher than the rate of there inflation rate. But as the western world is so indebted a interest rate of such would bankrupt or wipe out 30 years of wealth. Now you can see why every government around the world is trying to blame Russia for there inflation which had begun way before Russia's invasion. Inflation begun when all government had started giving stimulus cheque's for free. Regardless of the conditions no government had the right to do what it did. But society has become so entitled in there thinking that instant gratification is a cancer culture.

 So as you can see we are in some very difficult times and those of you who are start can put the two together. The you will own nothing and be happy statement is taking shape infront of our very eyes.

 

This post is for educational purposes.

Seek professional advise on the above.