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“We Have Never Seen Anything Like This” – Swedes Stunned At “Unreal” Surge In Refugee Sex Attacks

As a direct result of Europe’s refugee crisis, new and very unpleasant social fractures have started to emerge.

One particularly troubling issue is the extent to which officials have tended to “blame the victim” in the ever more frequent sex attacks resulting from Europe’s refugee surge, something we first touched upon earlier this week. For instance, Cologne mayor Henriette Reker drew sharp criticism for suggesting that it was German womens’ duty to prevent assaults by keeping would-be assailants “at arm’s length.”

Then there was the now infamous case of the 17-year-old Danish girl who faced a fine from police after she allegedly used “illegal” pepper spray to deter an attacker.

In the most recent example of authorities suggesting that Europeans should adapt to threats rather than compelling authorities to protect citizens, police in Sweden’s Östersund advised women not to walk around by themselves at night, during at press conference on Monday.

As reported on Tuesday, “women in a town in northern Sweden have been warned not to walk alone at night in the wake of a spike in violent assaults and attempted rapes.

Police in the town of Östersund made the unusual move to ask women not to go out unaccompanied after dark, after reports of eight brutal attacks, some by ‘men of foreign appearance’, in just over two weeks.”

It is extremely unusual for Swedish authorities to make such warnings, and it has not been well received in Sweden, a country proud of its progress in gender equality and women’s rights.


All incidents have taken place in Östersund since the 20th of February, and involved outdoor attacks where the perpetrators have been unknown to their female victims.  A police spokesperson added that in addition to the increased frequency, the attacks are also conspicuous as – despite being carried out late at night – none of the perpetrators were drunk.

The observation of “sober rapists” aside, the force’s recommendation that women should avoid being alone at night swiftly prompted criticism in Sweden, a nation that prides itself on promoting gender equality.

According to the Local, “The solution can never be to not go out because of such a warning. We have very many women who work in home and social care at night for example. What are they supposed to do?” the city’s mayor Ann-Sofie Andersson told Swedish broadcaster SVT.

“It’s wrong if it calls on women to adapt to the criminals. It risks leading people the wrong way, if the victims must adapt to the perpetrators,” he said.

There is another word for it: appeasement, and history is rife with examples of how appeasement results in an ever greater threat by the appeased party, in this case refugees who flood European countries as a result of Angela Merkel’s policies.

As the Mail reports, the infamous town of Östersund which is now a no-go zone for women after eight, has seen a surge in sex attacks in just the past three weeks. The most troubling recent examples:

  • February 20: Two ten-year-old girls were groped by a group of adult men. Police say the men surrounded the girls at a bus station and started to touch them while threatening to rape them. Adults saw what was happening and intervened before the men escaped.
  • February 21: A women was walking alone at midnight in the town centre when a man passing by made sexual remark. The woman responded by calling him an ‘idiot’. He punched her, splitting her eyebrow and threatened to kill her. He was interrupted by passers-by and fled.
  • February 26: A women walking to work near the university was attacked by three men, beaten and pushed to the ground. They held her down and forced their fingers into her mouth while saying offensive, sexual words to her. Taleb Moafagh, 22, was arrested over the incident.
  • February 27: Police saw men surround a group of women and grope them outside a nightclub. When police tried to intervene, a drunken brawl broke out between men coming out of the club and the sex attackers fled.
  • March 2: Two women walking home from a bar were stopped by a group of men who told them: ‘Girls should not be out at this time of the night’ – before pushing them into a corner and groping them, then wandered off, laughing.
  • March 5: A woman walking by herself was threatened by a man in passing car, who screamed at her he would get his friends to ‘rape and murder’ her. When she ran off, he chased her but she managed to get to her apartment before he reached her.
  • March 6: A women walking home alone was whistled at by a man. When she told him to stop, he hit her in the head with his fist. She fell down and he punched her a second time, pushed her head into the snow and screamed at her he would rape and kill her before fleeing.
  • March 6: The same day another woman was walking home from a restaurant was attacked by three men. She was hit in the stomach by two of the men and shoved to the ground. A third man began undoing her trousers, but she managed to hit him in the head with her elbow. He started bleeding and fled. She later told police she was trained in martial arts – a skill police say saved her from being raped.

For their part, the police in Östersund (with a population of 45,000) say they have never seen anything like this before.

Stephen Jerand, the county police commissioner, admitted police in the town are struggling to cope – adding that the surge in attacks ‘seem unreal’. He said that ‘we called the press meeting this Monday because we have seen an accelerating development here.

Stephen Jerand, the county police commissioner

“‘This is a small town where groups of men are attacking women during the night. We wanted to warn the public and urge women not to walk home on the streets in the central part of the town after dark, because it is not safe.”

“The situation is tense. We have never experienced anything like this before. It is almost unreal. Eight attacks and just three this last weekend. This is a quiet part of Sweden where we barely have had any attacks on women and now this.” Officers are confident they will catch the perpetrators and say victims claim their attackers were of ‘foreign origin’.
So far only one man, whose nationality is unknown, has been arrested.

Taleb Moafagh, 22, was caught allegedly attempting to flee to Germany on board a ferry in southern Sweden. He was detained in connection to an attack on February 26.

For those living in the town surrounded by mountains, 350 miles north-west of Stockholm, there is no doubt where to find these criminals: among the migrant men who have arrived in droves in recent months, forcing them off the streets of the town they call home.

An asylum centre has opened 10km outside the town holding 900 refugees, mostly from Afghanistan, Syria and Iraq.

Many within the community have blamed the migrants for the attacks. Police have not released any nationalities of suspects but have admitted victims described their attackers as men of ‘foreign origin‘.

Commissioner Jerand added: ‘We have had a lot of problems with immigration. It strikes our resources really hard. We are often called out to asylum centres.

‘We see increasing violence towards women and children at the centres and do not really have the resources to cope with everything.’

The string of assaults began on February 20, when the two young schoolgirls were groped.

Fortunately, a number of adults saw what was happening and intervened – but the attackers fled from the scene before police could arrive.

Other incidents include women being molested outside a nightclub, a group of women walking home being groped by a laughing mob of men, and a woman being told she would be raped and murdered.

Even before this week’s warning, the women and teenagers who live in the city were too terrified to walk alone at night, telling MailOnline the situation has got ‘out of hand’.

Josefine Larsson, 16, told MailOnline it is ‘really worrying’ and that she is frightened to out late on her own.

‘Everyone is saying that there are immigrants responsible for this. But they are always blamed when something goes wrong,’ she said. ‘Hopefully the police will eventually arrest these psychopaths and then we will see who they are.’

Josefine Larsson, 16, told MailOnline it was ‘really worrying’ the streets were no longer safe after dark

Others said the situation had already got ‘out of hand’, and admitted they were ‘terrified’ to go outside after dark. Lovis Jonsson, 16, said: ‘It is terrible that women are the ones who are targeted. I feel afraid and exposed. I will never go out by myself after dark after the police warnings.’

Lovis Jonsson, 16 (right), vowed to never go out alone after dark

Gry Abrahamsson, also 16, said ‘It is really creepy what is going on in town.

Gry Abrahamsson, 16, vowed to never again walk the city streets alone at night

Abrahamsson said “I never thought the police in a small town like this would have to tell
women to stay inside because of groups of men attacking innocent women
during the night. This has gotten out of hand.”

Perhaps things will change for the better, in the meantime, as a result of flawed policies taken in a country far away, the reverberations of Merkel’s agenda has converted Östersund into a ghost town.

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Stocks rally…<b>Crude oil</b> prices climb… BP won’t have to pay businesses for losses after government <b>…</b>

NEW YORK (AP) — A jump in crude oil prices and a rise in European markets are being credited with setting off a stock rally yesterday that capped a …

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The Moment Of Truth – What The Charts Say

The Moment Of Truth – What The Charts Say

Via NorthmanTrader.com,

We have arrived. The moment of truth. If you have followed my writings you know I’ve been talking about the January gap fill and major MA reconnects to come for quite some time. No matter whether you believe this to be a bull market ready to re-assert itself or you view the recent rally in the context of a bear market about to unfold you must acknowledge the pivotal nature of where the market now finds itself in the days ahead.

The $SPX has just rallied 11.6% off of the February lows and is about to return to the scene of the crime: The January gap. In doing so it has traversed all resistance in a virtual straight line in a multi week rally ever so reminiscent of similar rallies we have witnessed in the past 2 years:

The magic uninterrupted weekly ramps….
What do they all have in common…. pic.twitter.com/QXORKFHklQ

— Northy (@NorthmanTrader) March 11, 2016

What did all these rallies have in common besides being uninterrupted? Well for one they all ultimately failed and ironically right around that topping zone that has formed over the same time period. Also all of these rallies began after a correction into the 1800 zone and invariably ended with promises of or more actual central bank action. In October 2014 it was the infamous Bullard bottom, last year it was promises of more QE by the ECB and policy action by the PBOC and of course this year we just witnessed further central bank action by the BOJ and the ECB and an array of Fed speakers hinting at delays in further rate hikes. Dudley in particular had a positive impact spurring a rally in financials. And of course any correction creates oversold corrections and so rallies make sense in this context.


And so we find ourselves at a critical stage of MA reconnects:


What hasn’t happened during any of these rallies is a sense of an improving revenue or earnings growth picture. Both have deteriorated during the same time frames and hence wanting to attach any fundamental improvement as an explanation for a large rally seems a bit of a stretch in light of the facts:

Bottom-up EPS for $SPX for Q1 has declined 8.8% since Dec. 31 and 14.7% over past 26 weeks. https://t.co/1pfCwpkVVW pic.twitter.com/XHmOhOhsbN

— FactSet (@FactSet) March 11, 2016

No, fundamentals have long not mattered in this market. Markets are driven by supply and demand and demand vanished quite a bit during the recent earnings period and buybacks were forced to be dormant, hence a very quick drop in prices occurred accelerated by a massive drop in oil prices. But now buybacks are back with a record vengeance and crude price have just rallied back over 47%.


So in context of extremely oversold conditions, returning demand from buybacks, and massive central bank interventions a strong rally is not a surprise. Just don’t confuse it with an improving fundamental picture.

Also not a surprise is the simple fact that markets are reconnecting with major moving averages. I’ve outlined these in the past and one of the key ones to watch is the nifty 50, the weekly 50MA. Why? Because it, more than any other MA, has proved to be a key pivot point for markets at key turning points.

Both the 2000 and 2007 corrections began with a break below it and were confirmed by a subsequent failure to recapture it on a weekly basis. The data is self evident:


Friday’s close of 2022 brings us within a mere 11 handles of the weekly 50MA.

Similarly the $ES shows us how critical the next few days may be:


Now consider the context: Next week brings a number of key events that all can toss this market around in a major way. Not to mention key primary elections in the US, we have $VIX roll-over, the FOMC, the BOJ and of course OPEX.

We’ve talked about OPEX plenty in technical charts so I do not need to repeat it here. But it should be clear that the ammunition is there to try to force a tag of the weekly 50MA and to potentially fill the open January gap:


So we have event potential to create the price tag, but one might also want to consider the historical context. In 2008 we experienced a very similar set of events: A violent down gap in January, an aggressive correction resulting in a double bottom and then a rally to fill the January gap. What happened then is history:


We also have a technical context and this context suggests that any further price acceleration may meet a sudden and potential violent end. Consider this recent rally in context of these technical chart readings:

$BPSPX is cooked to the upside showing a potential negative divergence:


$NYSI is jammed to the max:


And the $NYMO has been putting in massive overbought readings over the past 2 weeks:


But more concerning are the longer term structural patterns.

Namely in the $VIX:


And the Value Line Geometric Index:

XVG Monthly

None of these suggests the dawning of a new bull market is about to begin.

And why should it? Earnings expansion? The incredible lack of productivity growth in the economy? Desperate central bankers forcing ever more negative rates on society? FOMO? Buybacks? If that’s the basis for the bull case then say so.

Bailouts and QE were always about saving the banks and to re-inflate damaged assets prices that had made most bank balance sheets untenable. How is that going? Central bankers across the world have been adamant about ensuring the world that banks are safe and doing so much better and can pass all stress tests.

Have you looked at the bank with the largest derivative exposure in the world, Deutsche Bank, lately?


The entire banking index?


Banks love rate hikes? Really?


No there’s a reason the BOJ and ECB are going all in. Fund manager Gundlach has outlined these concerns well in a presentation this week.  And so it’s no surprise the ECB is now cutting rates further and adding to QE going forward at a clip of 80 billion Euro a month. Can anyone imagine what would happen if they didn’t? Nobody can, hence they rather imagine the opposite. PIMCO is even suggesting that the ECB’s next step may be to buy blue chip stocks altogether. Not kidding. And why not? The BOJ is buying ETFs, the SNB is buying individual stocks, so why not the ECB?

In summary the state of affairs: 7 years after the financial crisis market lows US markets find themselves below the weekly 50 MA and having just rallied back 11.6%, they are vastly overbought on the heels of additional massive central bank interventions and the alleviation of oversold readings.

So Janet Yellen wants to hike more this coming week?

I can’t say if she will or won’t, but either way markets are faced with the nifty 50 at 2033 and January gap fill. Maybe it will all magically sort itself, but at best markets may be faced with some sort of pullback to fill some of the open gaps below in the weeks to come before mounting a lasting rally above the January gap. At worst it was indeed a rally in context of an emerging bear market and the monthly chart will fulfill its structural promise:


All I can surmise here is that so far we remain in range and that the answer whether this is a bull or bear market will ultimately have to be proven out by price:

My view fwiw:
Below 1800 $SPX & it’s a bear market.
Above 2060 $SPX and it’s a bull market.
In between: It’s a big, fat, tradable range.

— Northy (@NorthmanTrader) February 23, 2016

Maybe we will know more after OPEX.


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Trump Blames “Organized Thugs” For Violence, Establishment Blames Trump

Amid confusion over the cancellation (due to more security concerns) of today’s rally in Ohio – since denied by Trump campaign officials – the finger of blame for last night’s violent protests is wending its way through the mainstream media. First Cruz, then Rubio, followed this morning by Hillary, Kasich, and even Bernie (among various talking heads and ‘spinners’) all point to Trump’s campaign “for creating an environment of division.” Trump (and his supporters) see the sudden eruption of 1000s of well coordinated protesters as oddly coincidental ahead of Super Tuesday 3 next week noting that, rather against the establishment’s hopes, “The organized group of people, many of them thugs, who shut down our First Amendment rights in Chicago, have totally energized America!”

Following Chicago’s chaos, it appears, as Reuters reports, today’s Ohio rally was also under pressure from security concerns, but the cancellation has been denied:

A spokeswoman for U.S. Republican presidential front-runner Donald Trump on Saturday denied a media report that he had canceled an Ohio rally because of security concerns.


The Cincinnati.com news website had quoted Eric Deters, a local spokesman for Trump’s campaign, as saying the candidate’s Secret Service security detail could not complete preparations in time to hold the event on Sunday at Cincinnati’s Duke Energy Convention Center.


But Trump spokeswoman Hope Hicks said in an email: “We don’t know Eric Deters. There has been no cancellation.”

Trump says on Twitter that, “The rally in Cincinnati is ON. Media put out false reports that it was cancelled.”

“Will be great — love you Ohio!” he adds.

Trump had said in an interview with MSNBC on Friday that, “You can’t have a rally in a major city in this country anymore without violence or potential violence.”

However, the squabbles continue – over who is to blame (as Slate.com reports)

Five people were arrested Friday night and two officers were injured in skirmishes that broke out after Donald Trump abruptly canceled a Chicago rally on Friday.


Rivals quickly pointed the finger at Trump, saying that the violence at his rallies reflect the tenor of the frontrunner’s campaign.


“A campaign bears responsibility for creating an environment,” said Ted Cruz. “The predictable consequence of [Trump’s comments] is it escalates. Today is unlikely to be the last such instance.”


Sharp words from Marco Rubio about Donald Trump and the mess at Trump’s canceled rally in Chicago: “I believe Donald Trump as our nominee is going to shatter and fracture the Republican Party and the conservative movement,” Rubio says that some of the blame for what happened Friday night in Chicago lies with the protesters, but he says much of the divisiveness is in Trump’s hands. Rubio says Trump is feeding into some voters’ anger and bitterness and is manipulating that for votes…“You saw those images last night of people … often divided up on racial lines in many cases. Police officers bleeding from the head reminiscent of images from the ’60s. I mean, we’re going backwards here. This a frightening, grotesque, and disturbing development in American politics.”


John Kasich also criticized Trump along the same lines: “Tonight the seeds of division that Donald Trump has been sowing this whole campaign finally bore fruit, and it was ugly.” He said during a stop in Cincinnati that there’s “no place for a national leader to prey on the fears of people.”


Sen. Bernie Sanders also got in the game and tweeted a thinly veiled shot at Trump:

We do things a little different in this campaign: We bring people TOGETHER. #BernieInIL

— Bernie Sanders (@BernieSanders) March 12, 2016

And Hillary issued a statement: Violence has no place in our politics. We should use our words and deeds to bring Americans together.

Violence has no place in our politics. We should use our words and deeds to bring Americans together. pic.twitter.com/FofjognpIA

— Hillary Clinton (@HillaryClinton) March 12, 2016

But as Fusion reports, several things about the statement left people with a bad taste in their mouths. Chief among them were her invocation of the Charleston massacre and her lack of stated support for the protesters challenging Trump in Chicago.

The Associated Press chips in

Since casting Mexicans immigrants as rapists and criminals in his June announcement speech, Trump has encouraged supporters to embrace anger tinged with xenophobia. In recent weeks, his rallies have featured several minor incidents of violence involving protesters, almost all of them minorities, with Trump repeatedly encouraging his supporters to fight back—and to do so with violence if necessary.

But Donald Trump had no doubts about who was to blame for the shocking violence: organized “thugs.”

Trump tweeted on Saturday: “The organized group of people, many of them thugs, who shut down our First Amendment rights in Chicago, have totally energized America!”


Protesters at planned Chicago rally yesterday were “very professionally done,” Donald Trump says in Dayton, Ohio.


Says his supporters were “harassed” by people backing Bernie Sanders


“Bernie should tell his people to ‘stop’”


“When they have organized, professionally staged wise-guys, we have to fight back”

We are sure this is not the last time “organized” protesters will suddenly appear en masse to provoke reactions and vioently protest Trump’s freedom of speech – don;t they know that a Trump rally is not a “safe space”? There is anger in America.

Finally, this:

Donald Trump plans to call his future campaign rallies “Job Fairs” in order to keep the liberal protesters away.

— Walter Cronkite (@CronkiteSays) March 12, 2016

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Gold Is The Only Sound Money

Submitted by Alasdair Macleod via GoldMoney.com,

This article notes that the technical situation for the gold price has sharply improved, to the evident surprise of many mainstream analysts. It discusses possible reasons behind the turnaround, and implications for the future.


The technical situation is shown in the chart below.


Golden Cross

A “golden cross”, with the 55 day moving average crossing above the 200 day moving average with both of them on a rising trend, and the share price above both these moving averages, has now occurred. This is generally taken by traders to indicate the bear trend has reversed, and a bull market is now in place.

More interestingly, this change of direction is combined with a bullish pennant pattern, which commenced on 11th February and completed on 3rd March, taking precisely three weeks. This is shown by the dotted lines. The intraday price movements (not shown) conform exactly to the pattern, and the break-out on 4th March saw high volume with an increase to a record amount of outstanding Comex contracts.

The other technical qualifications for a pennant are also fully satisfied. It follows a sharp rise, is a consolidation lasting no more than three or at most four weeks, volume diminished while the pattern played out (taking Comex volumes as proxy), and the break-out was a resumption of the trend. It therefore appears to be a text-book example.

Pennants give us a price objective, which equates to the preceding rise from its breakout point. This yields a minimum price target of approximately $1400, which with pennants can happen quite quickly. And that helps explain, from a purely technical point of view, the seemingly unstoppable strength in the gold price.

Technical analysis is the justification for investors to consider and take action in capital markets, without having to understand the underlying reasons why prices change. Indeed, in these days of seemingly infinite quantities of bank credit being applied to financial speculation, price trends are being driven day-to-day by charts, making prices dependent on the application of credit rather than fundamental appraisals of prospective values.

Technical analysis is notoriously fallible, encouraging action independent from rational thought. We are told that flows into gold ETFs have been positive for the last forty days. But if we ask the question, whether or not the buyers of physical gold represented by paper entitlements are doing so for financial protection, or alternatively are energised by the hope of rising prices, one must conclude that it is most probably the latter.

Put another way, technical analysis is justified on the basis that by encouraging the madness of crowds, it works, and there is plenty of loose money slopping around the markets to ensure it might. This really is not good enough. A reasoned understanding of what gold actually is, an appreciation of vested interests, and an analysis of the practical consequences of investment flows, is vital for us as individuals if we are not to be whipsawed in volatile markets.

The gold price started 2016 with all the big investment firms bullish of the dollar and bearish of commodities and gold. It is from such extremes in sentiment that sharp reversals take place: it’s a case of everyone having sold all for dollars and there being no material sellers left to sell. If this is all that’s involved this time, the previous trends for a rising dollar and therefore a falling gold price could well resume when these positions are sufficiently unwound.

To establish whether or not this is the case we must turn to fundamentals, which requires us to discard the conventional analytical approach. We must stop thinking gold is rising, when what is actually happening is that the dollar is falling. Nearly all economists and market traders have it back to front. Gold has no variable fundamentals, the condition that qualifies it uniquely as sound money. It is the currency it is measured in that has all the variable fundamentals, and that is where we must look.


When we look at the dollar price of gold, we naturally think that it is gold that is moving. But we are comparing two forms of money, gold that is not in general circulation, against the dollar that has supplanted it. And given that it is the dollar that is issued in any quantity desired by both the US Government and through fluctuations of bank credit, it is the dollar which ultimately depends on the market’s assessment. The constant in this comparison for anything other than short-term trend-chasing is simply gold. Economists who argue otherwise are slaves to macroeconomic fashion rather than rational price theory.

Understanding that measured in gold it is the price of the dollar falling makes sense of what is happening. It points us to the dollar’s fundamentals, not so much against other currencies that share many of the dollar’s characteristics, but against commodities. And in Table 1 we can see that the dollar’s purchasing power has been falling against other key commodities as well against gold.

Table 1. Selected commodities: fall in US$’s purchasing power

chart gm insights

The turnaround in the dollar’s fortunes has been sudden, taking less than three months. The US dollar has been excessively overbought, predictably followed by a subsequent fall in its purchasing power against many key commodities. And there are good reasons for it to fall even further. They centre on the damage being inflicted on the dollar’s position as the world’s reserve currency. China and Russia are leading the charge to do away with the dollar, and China in particular is deliberately promoting the yuan as the dollar’s substitute for international settlements with all her trading partners. The dollar’s role in pricing commodities is becoming an anomaly, because China does more international trade than America by far.

That helps explain the long-term prospects for the dollar, which has yet to discount a reduction of the quantity of dollars in international circulation. Unless it is balanced by a contraction of credit on the American banks’ balance sheets, a reduction in offshore dollars will inevitably result in the dollar’s purchasing power tending to fall. But there is also renewed demand for commodities to add to the mix, coming from China.

China is about to embark on a colossal programme of infrastructure spending. Not only will this fill out many of the deficiencies in China’s domestic infrastructure, but it is also earmarked for a vast course of industrialisation involving the whole of Asia. Cynics are sure to be correct in decrying the wasteful inefficiencies of state spending of this sort, but they are missing the point.

The point is that China has told us she values the dollar less than she does the commodities required to satisfy her thirteenth five-year plan, and the ones that will follow. This plan commenced with the Chinese new year, so she will already be looking to swap most of her stockpile of dollars for stockpiles of the required raw materials. Last year, China carefully laid down the groundwork for this action.

It was vital for China to control the risks to her own currency that would arise from the planned disposal of the majority of her dollar reserves. This was always her primary motivation for lobbying the IMF to include the yuan in the SDR, and also for her recently declared policy of managing it against a trade-weighted basket of currencies. So long as the yuan is measured against the dollar alone, it is an invitation for foreign speculators to attack it against their preferred unit of account. Attacking a currency where foreign exchange policy is more widely defined introduces great uncertainty into a speculative trade. The change in foreign exchange policy simply gives China the cover to sell her overvalued dollars for undervalued commodities.

China’s actions are likely to lead to a major shift in macroeconomic expectations over the coming months. With the dollar’s purchasing power continuing to fall relative to energy and industrial commodities, China’s commodity suppliers will find the burden of their dollar-denominated debt relative to their output rapidly swinging in their favour. Gone, or at least deferred, will be the nightmare of commodity-related debts undermining the global financial system. There will, of course, still be bad debts, such as in the US shale-oil industry, and also problems for some resource-rich countries, such as Brazil, where the financial damage has already been considerable and may be ongoing. But for western investors, their current preference for safety in low, or even negative-yielding government debt, will be replaced by the opportunities offered in recovering emerging markets.

Standing back from the day-to-day introspection of western capital markets, it has been interesting to watch this financial train-wreck begin to materialise. Western central banks by debasing their currencies have produced little more than financial ammunition for speculation on a grand scale. We saw the effect of a flood of this accumulation into the dollar over the last eighteen months, and we are about to see the opposite effect as it ebbs away. And as speculative flows reverse, the dollar will increasingly be sold by stale bulls in preference for commodities. Much of China’s dollar stockpile, along with increasingly redundant petrodollars from the Middle East, will also be sold, putting further downward pressure on the dollar’s purchasing power.

A weakening dollar will become the next headache for the Fed, because the fall in its purchasing power will feed into a revival of price inflation without a pick-up in economic activity. Current market expectations of negative interest rates will inevitably switch to an anticipation of rising interest rate to contain the fall in the dollar’s purchasing power. And as the dollar’s fall in purchasing power against commodities progresses, the solvency of many domestic borrowers and even of the US government itself will become an additional risk to the dollar.

While we can now see reasons emerging for the US dollar’s future loss of purchasing power, we can see the same conditions broadly affecting the other major currencies. Like the dollar, these currencies are all valued on the basis of their government promises, but it is not the purpose of this article to compare their merits. Gold alone does not suffer the disadvantage of having a government issuer, its above-ground stock increasing at an estimated rate that is similar to global population growth. Gold is not required to rise, as the term bull market suggests. Its purchasing power is likely to be considerably more stable than that of paper currencies over the long term. We do not have to make guesses over gold’s future purchasing power.

Instead, the future price of gold depends on what happens to the purchasing power of the paper currencies in which it is measured. No case needs to be made for its usefulness or even its value, because it is the only sound money there is, no more and no less than that.

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