Fear! Hungarian National Bank Increased Their Gold Reserves By Ten Times!

Yes, Central Banks are growing more fearful of how their policies may have created staggering asset bubbles that could burst. Though Hungary is a small player, it says something about what is happening around the globe.

Budapest, October 16, 2018 – In view of the long-term national and economic strategygoals, the Monetary Council of the National Bank of Hungary has decided to increase the gold reserves of the country. As a result, in October 2018 the precious metal stock ranges from the previous 3.1 to 31.5 tons increased tenfold. Since 1986, the Hungarian National Bank has been buying gold for the first time since 1986. After the substantial increase in the stock of gold reserves in physical form, its repatriation has already taken place.

The possession of precious metal within the country is in line with international trends, supports financial stability and strengthens market confidence in Hungary. In keeping with the historical role of gold, it remains one of the safest instruments in the world, which, even under normal market conditions, exposes its stability and confidence-building function. With a current stock of about $ 1.24 billion in gold reserves of 31.5 tonnes, it reached the historical level that was available to our country at the time of the “golden train”. Within the international reserve, the share of gold reserves rose to 4.4 per cent, which corresponds to the average of non-euro area Central and Eastern European countries.

The role of gold reserves in the nation and economy strategy is becoming more and more appreciated while both the possession and the increase of the precious metals nationwide appear to be a decisive international trend. In this process, according to the strategic decision of the Hungarian National Bank, the domestic gold reserves rose to 31.5 tons. The raising of the gold reserve and the returning of it in physical form took place in the first half of October 2018.

Increasing and repatriating gold reserves can be considered a significant step in economic history. Since the founding of the Hungarian National Bank in 1924, gold reserves have been maintained, but the stock of the population has fluctuated considerably over the decades, depending on the purpose of keeping. The amount of gold reserve is in the II. World War II, and at the end of the day, he pulled out some 30 tons of gold balloons and gold coins on the MNB’s legendary “gold train” in the Spital am Pyhrn in Austria. This amount was fully returned to the country after the war, while providing cover for the introduction of the new currency of the country, the forint, thus supporting financial consolidation and the stabilization of the post-war Hungarian economy. At the end of the eighties, Hungary’s gold reserves, driven by short-term investment objectives, fluctuated between 40 and 50 tons and then, at the time of the change of regime (between 1989 and 1992), the ruling central bank executives decided to reduce to a minimum level of about 3.1 tons by the end of September 2018. level. With the decision of the MNB today, the stock of 31.5 tonnes of gold reserves reached the level of the stabilization period of 1946 by October 2018.

Gold reserves are held for short-term investment and / or long-term stability purposes by country central banks. The current decision of the Hungarian National Bank was led by the stability goals, and there are no investment concerns behind the holding of gold reserves. Gold also has a confidence-building effect in the normal period, that is, it can play a role in stabilizing and defending it not only in the extreme market environment, structural changes in the international financial system or in deeper geopolitical crises. Gold is still considered to be one of the safest assets that can be attributed to unique properties such as the finite supply of precious metal, which is not linked to credit and counterparty risk, since gold is not a claim against a specific partner or country.

Over the past few years, more and more countries have decided to continue to play a decisive role in the use of precious metals, which serve as traditional reserve assets, and raise their gold reserves. This was followed by Poland, in spite of the fact that it had one of the highest gold reserves in the region. When raising domestic gold reserves to 31.5 tons, the MNB also paid attention to the international and regional role played by precious metals in central bank reserves. As a result, the Hungarian gold reserve increased to 4.4 percent in the Central Eastern European region averaging the entire international reserve ratio. This move from the end of the international rankings to the middle of the way has progressed, both in terms of size and proportion of gold reserves.

On the occasion of the announcement, the National Bank of Hungary also published a “golden book”, which gives an insight into decisive periods such as centuries of golden coins, the rescue of our national treasures by gold trains, or the recent homecoming of the country’s gold reserves.

The National Bank of Hungary must have seen this film clip of fear being wrestled to the ground. By buying gold.

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Gold Man! Net-shorts In Gold Futures/Options Largest Since 2006 (But Will It Continue After Last Week’s Bloodbath In Equities?)

Too bad Black Sabbath didn’t sing Gold Man.

Hedge funds and other large speculators increased their net-short position in gold futures and options in the week ended Oct. 9 to the most in data going back to 2006, surpassing a record reached last month, according to a government report released Friday. The wagers came days before turmoil in equity markets sent investors flocking back to the metal, pushing prices to the biggest gain since 2016 on Thursday after six straight monthly losses.

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Let’s see if gold shorts continue with the reversal of fortune in the S&P 500 index and gold.

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Fear? One of Traders’ Worst Fears Realized as VIX Curve Inverts

One must vanquish fear! Or at least the fear index, VIX. 

(Bloomberg) — The scariest Halloween costume imaginable pales in comparison to a Friday inversion of the VIX futures curve.

A severe sell-off in technology stocks has pushed the front-month VIX futures contract to a premium relative to the second-month contract.

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VIX futures are based off the Cboe Volatility Index, a measure of 30-day implied volatility for the S&P 500 Index that’s often called the “fear gauge.”

Typically, the curve is in contango — that is, upward sloping — because the outlook for U.S. equities is more uncertain over longer time periods than shorter ones. The historical pattern of realized volatility shows it’s prone to outsized spikes but generally trades in a modest range.

A curve that’s in backwardation — the opposite of contango — indicates traders are acutely concerned with the near-term outlook for equities. This structure also provides a tailwind to investors looking to go long volatility through exchange-traded products.
The same situation happened on a pair of inauspicious Fridays. The VIX futures curve inverted on Aug. 21, 2015 and Feb. 2, 2018.

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Yes, tech stocks took a beating last week (as can be seen in the FANG+ chart).

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Yes, the VIX is up slightly today after a large surge on Friday.

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Yes, one must vanquish fear!

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Stimulypto! How The Federal Reserve’s Stimulus Model Is Like A Block Of Sugar

Following The Great Recession and the financial crisis, The Federal Reserve enacted their zero-interest rate policy (ZIRP) and started buying Treasury Notes and Agency MBS.  QE1, the first round of asset purchases by The Fed starting in late 2008, was like a block of sugar for the economy and real hourly wages.  Real Average Hourly Earnings growth YoY shot up in 2009 (orange box), but then suffered a “sugar crash” but rose again with QE3 that also died out. As Powell and The Fed began to “normalize” interest rate policies (unwinding their balance sheet and raising The Fed Funds Target rate, Real Average Hourly Earnings have slumped to near zero growth.

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The flaw with The Fed’s model of real earnings growth is that it is not organic growth, but a massive block of sugar. And a sugar crash invariably follows.

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US Treasury 10Y Shorts Rise To Record As 10Y Rate Rises (Jay Powell And The Sunshine Band)

10 year Treasury Note shorts just hit an all-time high as speculators bet on more interest rate hikes and rising 10 year rates.

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Because .. that’s the way Central Banks like it!

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“Fiat Franklin” D. Roosevelt Signed Gold Seizure Order In 1933, Purchasing Power Of US Dollar Destroyed (But Gold Prices Rise)

In 1933, President Franklin Delano Roosevelt (aka, “Fiat Franklin”) signed an exective order #6102 confiscating gold coin, bullion and certficates owned by private citizens. Why? So the Federal government could print and spend almost without constraint.

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Between order #6102 and the Gold Reserve Act of 1934, gold held in Treasury and Federal Reserve Banks skyrocketed!

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How about currency? Here is an example of 1928 US currency before Fiat Franklin’s seizure order. Redeemable for gold.

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Now here is an example of a post-1933 US currency (1934). Notice that “redeemable in gold” has been replaced by “will pay to the bearer on demand $10,000” … of paper. This is Fiat Franklin’s paper revolution!

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Look at the purchasing power of the US Dollar since 1933.

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In 1971, President Richard Nixon enacted a plan that ended dollar convertibility to gold and implemented wage and price controls, which soon brought an end to the Bretton Woods System.

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Where was the US Supreme Court about Fiat Frankin’s seeming illegal executive order? The constitutionality of #6102 and the Gold Reserve Act of 1934 were ultimately upheld by the Supreme Court.

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The second man from the left looks like George Soros.

And THIS is the worst call in NFL history! HOW is this not a fumble??????

 

 

China And Gold: As The Yuan Goes, So Goes Gold (Trade War Effect?)

Over the past year, Gold has been looking quite similar to China’s currency, the Yuan. Eerily so.

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Bloomberg had this story back in July of this year:  “China’s Gold Mystery: Is Nation Slowly Increasing Reserves?”

The case for China raising its gold holdings seems compelling.

A potential trade war with the U.S. that threatens growth, simmering tensions on the Korean peninsula and this year’s slump in gold prices are reasons to buy. But People’s Bank of China data show the country’s gold reserves haven’t risen since Donald Trump was elected President in 2016. Still, this wouldn’t be the first time the central bank has kept silent while adding to its stash.

I guess the answer is yes, but not since Trump was elected President. But I have the sneaking suspicion that China is adding to its gold stash.

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I simply must buy one of those natty Mao suits to wear to George Mason University faculty functions.

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