Gold Telegraph
@GoldTelegraph
One of the world’s largest agricultural commodity traders is warning that the world is on the brink of food wars.
Again, a theme I have touched on for years is playing out.
Paper assets vs. Hard assets.
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Gold Telegraph
@GoldTelegraph
Japanese authorities spent $62 billion in the foreign exchange market to support the yen in April and May.
Today, it hit a 38-year low vs the dollar.
I put so much energy into Japan because their decades-long monetary experiment will be remembered in history as a massive disaster.
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Gold Telegraph
@GoldTelegraph
BREAKING NEWS
JAPAN FINANCE SAYS HE’S READY TO ACT ON YEN’S DECLINE
Ok.
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Gold Telegraph
@GoldTelegraph
BREAKING NEWS
THE LONDON METAL EXCHANGE IS EXPLORING SETTING UP ITS FIRST WAREHOUSE IN HONG KONG AS IT SEEKS TO STRENGTHEN SERVICES TO CLIENTS IN CHINA
The trend…
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Gold Telegraph
@GoldTelegraph
“They are starting to panic as this prolonged monetary experiment has started to catch fire…”
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Gold Telegraph
@GoldTelegraph
Unrealized Losses: The Financial Pig in the Details
Capitalism without financial failure is not capitalism at all, but a kind of socialism for the rich. – James Grant
Many mainstream journalists claim unrealized losses from long-dated bonds on commercial bank books are insignificant.
However, consider the collapse of Silicon Valley Bank early last year.
Its extensive portfolio of long-dated bonds lost value as interest rates surged, leading to a run on the bank.
Billionaires were pleading for a bailout, and they ultimately received one.
Instead of allowing the system to cleanse itself, we witnessed the usual response:
Mistakes got erased by a financial bailout.
Fast forward to now,
In Q1 2024, unrealized losses on securities held by commercial banks rose by $39 billion (8.1%) from Q4, which now total $517 billion.
The United States is putting allied countries such as Japan on a currency monitor list as they scramble to prevent their currencies from collapsing under the pressure of a strong dollar.
Japan has already intervened in the currency market this year, spending $62.25 billion between April 26 and May 29.
This has not resolved the issues concerning the Japanese yen, and as you are all well aware:
Japan is the largest holder of United States treasuries.
If the yen continues to weaken, Japan is likely to use its holdings to defend its currency.
The Japanese yen has declined nearly 40% against gold over the past year, highlighting my theory that gold is a hedge against stupidity.
Japan’s economy is like a chaotic circus, a wild ride where fools are at the wheel.
The financial system?
It’s a twisted monopoly controlled by the central bank, pulling strings from behind the scenes, making the whole show an absurd spectacle where they have essentially bought up everything.
This is a central bank that has long experimented with negative interest rates and holds about 7% of the Japanese stock market through ETFs.
This doesn’t even touch on the mountain of government bonds it owns.
But now?
They are starting to panic as this prolonged monetary experiment has started to catch fire.
But now, another dilemma has emerged.
Norinchukin Bank plans to sell roughly $63 billion in U.S. and European sovereign bonds to counteract losses from incorrect interest rate bets.
The bank is warning that losses this fiscal year may swell to $9.5 billion, triple the estimate made less than a month ago.
Japan’s bankruptcies have now also climbed to a 12-year high.
As Japan attempts a desperate unwind, it will be fascinating to see the impact on the United States, especially if the yen remains weak, which could directly affect the demand for American debt.
It is never a dull day in the financial world; it is time for the system to cleanse itself, which has been long overdue.
With record global debt, aggressive gold purchases by countries worldwide, and a fragmented world starting to take shape, a reset of sorts may be closer than we think.
Remember,
“Never wrestle with a pig. You just get dirty, and the pig enjoys it.” – George Bernard Shaw.
The entire system is filled with pigs.
There are lots of pigs currently wrestling with each other right now.
