Getting Out of Dodge…

People are nervous. They are looking for signs everywhere. At the end of last week US markets rallied on one Fed member talking down a September rate rise. Over the weekend another talked it up so who knows what happens next.

Credit Suisse noted late last week the phenomenon shown in the chart below. For the first time since Q4 in 2008 (ala GFC precipice) we’ve just had back to back months (July and August) of retail investors getting out of both shares and bonds. As they said:

“Anytime you see something that hasn’t happened since the last quarter of 2008, it’s worth noting…..It may be that this is an interesting oddity but if we continue to see this it could reflect a more broad-based nervousness on the part of household investors.”



Whilst this is another red flag for the bond market, it pails to what we reported last week with China dumping over $100b in US Treasuries in just 2 weeks on top of what they’ve been unloading through Belgium and Switzerland this year.

 

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Something no one has been able to explain -- China sold a boatload of bonds. "Somebody" bought them. So what's the difference? It's not like they turned into pumpkins at midnight...

 

All I know is that if I don't sell I don't lose no money. It's all on paper till I cash it in and I ain't ready to cash it all in........

 

Banks used to have the same point of view. Then the courts decided that financial institutions had a fiduciary responsibility to "mark to market" all their various assets; this is why some of the German and Austrian banks are in much worse shape than generally believed -- they carried obscure tranches of defaulted bonds at par to make their earnings look better. Now it's catching up with them.

 

I'm not into bonds.......

 

I agree Doug, I never bought into it is not a loss until you sell. That is only true, from the tax man's perspective. To me that would be like someone sitting at a roulette wheel, 5 large in the hole, and thinking he didn't lose anything until he walks away.

 

When he walks away, he walks away with something, or nothing. I don't play roulette.....

 

Me neither, the odds are terrible, .

 

Im investing in copper atm. For every $0.01 cent I invest, I am up 50% right off the bat. If all hell breaks loose, and copper crashes....then I still have my original investment coin of $0.01. Safe and reliable.

 

Not a good sign for the crackheads that are tearing up peoples houses to get copper-huh?

 

Copper prices reflect two major trends; one, a reduced growth rate in China, and two, a global slowdown due to deflationary pressures.

However, the Wall Street Journal comments:

"Roughly 70% of the world’s silver supply is produced while mining other metals, particularly gold, copper, lead and zinc. Declines in the prices of these commodities are also likely to weigh on silver supply going forward, the report said.

Global physical demand for silver fell 4.1% in 2014, largely due to a 19.5% drop in demand for silver coins and bars, according to the report. Weaker prices spurred demand for silver jewelry, as jewelers switched to making larger-format, heavier pieces made of sterling silver.

A similar trend was spotted in silverware, where fabricators switched to sterling silver and away from plated products. Demand for silver from industrial sources, which accounts for 56% of total physical demand, slipped 0.5% as silver use in electronics and photography decreased..."

 

get it all cheap when you can!

 

United States Circulating Coin ValuesThis table does not reflect U.S. Mint production costs, but the pure base metal value that composes the coin. Calculations are based on coin weight, metal composition, and base metal prices. The "Metal % of Face Value" column represents the percentage of metal that comprises the denomination's purchasing power. A coin that is over 100% in this category has more base metal value than purchasing power.

Table based on August 31, 2015 mid-day base metal prices:
Copper $2.3272/lb 0.0070 Zinc $0.8149/lb 0.0012 Nickel $4.5361/lb 0.0000

Description Face Value Metal Value Metal % of Face Value
1909-1982 Cent (95% copper) *
$0.01
$0.0154374
154.37%
1946-2014 Nickel
$0.05
$0.0317398
63.47%
1982-2014 Cent (97.5% zinc) *
$0.01
$0.0046994
46.99%
1965-2014 Dime
$0.10
$0.0125551
12.55%
1965-2014 Quarter
$0.25
$0.0313895
12.55%
1971-2014 Half Dollar
$0.50
$0.0627796
12.55%
1971-1978 Eisenhower Dollar
$1.00
$0.1255600
12.55%
1979-1981, 1999 SBA Dollar
$1.00
$0.0448423
4.48%
2000-2014 Sacagawea Dollar
$1.00
$0.0397751
3.97%
2007-2014 Presidential Dollar
$1.00
$0.0397751
3.97%

* The U.S. Mint issued both compositions in 1982; they can be differentiated by weight (3.11 g copper, 2.5 g zinc). The 1943 steel cent is not included in the table above. Also, a tin alloy is used in one cent pieces from 1864 until 1962, but that value isn't significant enough to calculate.



Base metal coins not included above: 1938-1942 Jefferson Nickel, 1913-1938 Buffalo Nickel, 1864-1909 Indian Cent

 

David Stockman.

http://dailyreckoning.com/central-bankers-war-on-your-savings/

 

Sometime after the Reagan years, David Stockman emigrated from the Dark Side over to the Constitutional Sentinels' camp. A second ex-official, Paul Craig Roberts, took a roundabout route but managed to arrive in time.

These are two of the smartest guys around, and I read them several times a week.

 

That was the first time I have ever read anyone from the Daily Reckoning. Besides being riddled with inaccuracies, the disturbing part is how the "author" uses buzz words, and hot buttons, that are designed to inflame and scare the reader. I guess it is the oldest sales pitch in the World, but is very very sad.......

 

Those equity sales dudes would never do something like that...

 

Of course they do, my bank employs such a guy who is always pushing the banks investment product's. Their products have very high fees, which tears right into your returns and puts money directly into the banks pockets. They even stooped so low, they even called my wife, trying to schedule an appointment, suggesting I wasn't qualified to manage the money.

This of couse isn't a forum to discuss equity investment so that stuff really shouldn't even come up.

I also don't understand you argument of, "Well, they do it too" Wrong is wrong and it was totally disgusting to disguise that sales pitch as a news article. It actually depressed me.

I know this is a long shot, but how about you do your stacker buddies a solid, and denounce the article for what it is. That would be epic.

Anyway, I am done for now,

Good Night Peace.....

 

Yeah....okay Mike.