Incrementum Advisory Board Discussion of 23 Oct 2019

In late October the Advisory Board of the Incrementum Fund held its quarterly meeting (a transcript is available for download at the end of this post). This time the board was joined by special guest Dan Oliver, the manager of Myrmikan Capital and president of the Committee for Monetary Research & Education.  Myrmikan inter alia publishes excellent and quite original research on gold which we hereby highly recommend.

 

Dan Oliver of Myrmikan Capital

 

A few weeks before the Advisory Board meeting, the repo market quake had struck and the Fed had already formulated and announced its response. Obviously this was one of the topics that came up for discussion. The Fed has now become a major counterparty in the repo market and provides the liquidity primary dealers need to fund their inventory. Concurrently it is rolling back a significant portion of the previous “QT” effort via a new QE program – although we are not supposed to call it that.

Whatever the asset purchases are called, they have precisely the same effect on bank reserves and the money supply as previous QE programs and money supply growth is accelerating accordingly. Since the Fed’s new interventions increase financial market liquidity, they indirectly affect the stock market as well (there is a reason why the market seemed utterly impervious to news of declining earnings growth and weakening economic data recently).

 

A chart showing the weekly level of the Fed’s outstanding repurchase agreements. This is quite a sizable operation (especially compared to the previous level of zero).

 

Dan Oliver also had quite a few interesting comments on gold to share with us. Consider for example the following fascinating chart – it shows something not too many people are aware of (at least we haven’t seen it mentioned anywhere else):

 

The history of commodity prices relative to the US dollar and gold since the late 18th century. In the long term, gold is becoming ever more valuable relative to other commodities – the same can evidently not be said of the dollar.

 

The rising real price of gold essentially reflects the fact that the supply of gold has increased at a slower pace than economic productivity. Combine sound money with a progressing economy, and this is the outcome – the purchasing power of the sound money will increase over time. As the chart also indicates, this long term trend is frequently interrupted – and these interruptions tend to coincide with major credit and asset bubbles.

Gold may be officially demonetized – but the market certainly seems to know it is money and is treating it as such.

For more from Dan Oliver, Jim Rickards and the rest of our regular participants, click the link below to download the transcript – enjoy!

 

Incrementum Advisory Board Meeting 23 Oct. 2019, Transcript (PDF)

 

Charts by St. Louis Fed, Myrmikan Capital

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

One Response to “Repo Market, QE4 (a.k.a. Not QE), the Fed and Gold”

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Silver “Scarcifies” – Precious Metals Supply and Demand
      On Monday, Silver got Scarcer – and Simpler On 23 July, we said:   “Well, it’s complicated.”   The action on 27 July was not.   Silver spot price vs. September basis   Notice the big drop in the basis starting around midnight (London time). It falls from over 7% to under 2%. To refresh: Basis = Future(bid) - Spot(ask) For the first two and half hours, the spot price is not moving. So, the only way the basis can drop is if the price...
  • Silver Explodes — But Why? Precious Metals Supply and Demand
      Explosive Days in Silver The silver market witnessed another explosive day! At midnight (in London), the price of the metal was $26.90. By 9pm, it had rocketed up to $28.95, a gain of 7.6%. This is not normal. But then, we are not in a normal world.   After several years of going nowhere and a downside fake-out in March this year, silver has come to life rather dramatically... [PT]   The Republicans are spending like drunken Modern Monetary Sailors. And...
  • Best Laid Schemes
      A Really Neat Bridge   But, Mousie, thou art no thy-lane, In proving foresight may be vain; The best-laid schemes o’ mice an’ men Gang aft agley, An’ lea’e us nought but grief an’ pain, For promis’d joy! – Robert Burns, To a Mouse, on Turning Her Up in Her Nest With the Plough (in extract), 1785     Installation of the final cable support pipes on the Gerald Desmond bridge replacement. Here is a drone video of the project. [PT] Photo by...
  • The Dollar Is Dying
      Insulting the Captive Audience This week, while perusing the Federal Reserve’s balance sheet figures, we came across a rather curious note.  We don’t know how long the Fed’s had this note posted to its website.  But we can’t recall ever seeing it.  The note reads as follows:   “The Federal Reserve’s balance sheet has expanded and contracted over time.  During the 2007-08 financial crisis and subsequent recession, total assets increased significantly from $870...

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

     
    Buy Silver Now!
     
    Buy Gold Now!