名家踢爆美狂印銀紙真相

坊間仍對美元的信用議論紛紛之際，辛思維想起有兩位名家對美元的走向頗具預知能力。其中一個是諾貝爾經濟學獎得主、著名經濟學者佛利民（Milton Friedman），另一位是《貸幣戰爭》作者宋鴻兵，後者最近更為經濟把脈，認為美元弱勢難改，着投資者買白銀對抗風險。

佛利民的貨幣理論揚名天下，對於美元的貨幣手法亦有深刻見解，佛老是少數在金融海嘯前便指出美國財政部購買債券的行為，實際是增加貨幣供應的掩眼法。

佛利民在《貨幣的禍害──貨幣史片段》早提到，在金本位制度瓦解後，本身貨幣並沒有資產抵押，所抱者是大家對美國政府的信任。佛老亦在書中提到，美國通過公開市場操作，以美國政府內不同部門名義發行和購買債券，只需在兩者賬目中加上一些會計處理，便能從零變出銀紙。

美國在金融海嘯後推出的QE1及QE2，正是美國容易地增加貨幣供應後，以會計賬印銀紙的又一演繹。雖然佛老成名已久，但在美元危機出現前，大部分投資者對佛老的警告置若罔聞，如今的走勢證明佛老的分析準確。

白銀魅力大增

宋鴻兵在《貨幣戰爭》中，對於美國亂印銀紙這一時弊提出深刻的針砭。他預言美國前總統尼克遜於1972年完全取消金本位制度後，美鈔將過量發行，令美元陷入危機。最近他接受香港一家電台訪問時提到，在如今風起雲湧之際，正是擁抱黃金的時候。

與佛老的著作相似的是，宋鴻兵亦從歐美貨幣史的角度入手，帶出歐美貨幣體系由金本位或金銀複本位制開始，過渡至講過信字的貨幣制度，令美國政府有過度印鈔的傾向，最終埋下美元貶值的伏線。

宋鴻兵指出，長遠來看，白銀和黃金一樣，都是老百姓維持家產配置中不可缺少的部分，並認為黃金白銀又名「金銀細軟」，就是一旦發生什麼變故時可以背着就跑，在資產配置中有重要地位。

坊間不少市場人士認為，白銀的市場小，作工業用途的形象濃厚，將不如黃金般熱炒，宋鴻兵卻呼籲大家把眼光重新放在2001至2010年這十年，白銀的市場回報率達900%，高於股票。

宋指出，黃金對白銀相對歷史價位為1比16，現處於1比40左右，相對價格仍屬偏低，引發上升動力。

金本位簡史

美國廢除金本位制已差不多40年，不過，自從1776年立國以來，聯邦政府大部分時間採用與貴金屬（黃金及白銀）掛鈎的貨幣政策。2008年金融海嘯後，聯儲局利用寬鬆貨幣政策刺激經濟不但成效不彰，國債急升更令美國主權信貸評級有降級之虞，近期美國不少重量級政經人士提出恢復金本位制，但金本位制真的是穩定經濟的靈丹妙藥？

去年11月11日G20於南韓召開環球金融及經濟會議之前3天，世銀行長佐利克（Robert Zoellick）在《金融時報》撰文呼籲，各國應考慮建立以黃金作為通脹、通縮及貨幣參考指標的國際貨幣體系。佐利克的建議無異於重返金本位制（gold standard）。總部在華盛頓的Peterson Institute for International Economics的Edwin Truman批評佐利克的提議沒有建設性兼不可行，Truman並取笑佐利克是活在歷史尤其是1980-92時代的人物。歐洲央行行長特里謝亦間接回應表示，各國央行早前在瑞士巴塞爾會議並沒有商討金本位制，據他記憶，上次提出類似意見的是1980年代的美國財長貝克（James Baker）。

不過，特里謝這次很快便聽見有人提到金本位制，著名雜誌《福布斯》總裁、1996及2000年兩度競逐共和黨總統候選人的商業大亨福布斯（Steve Forbes）今年5月初預測，美國將於5年內恢復金本位制，以改善日漸惡化的財政及貨幣失衡。他指出，在金本位制約束下，早年的樓市泡沫──寬鬆貨幣政策的部分產品──便不致那麼嚴重，因為政府要想如現在這般過度借貸將「困難得多」，聯儲局也受到限制不能任意印鈔；總之，恢復金本位制將有助穩定美元，重建外國投資者對美國政府債券的信心。

18日巴士巡遊

更高調鼓吹金本位制的行動接踵出現，6月13日，艾奧瓦茶黨（The Iowa Tea Party）和美國原則行動（American Principles in Action，APIA，非牟利民間組織，理念為宣揚及維護美國服膺的普世價值原則，例如人人生而平等，生命、自由、幸福不容剝奪）聯合贊助的18日巴士巡遊之旅啓程，駛經艾州多個城市宣揚金本位制，共和黨有意角逐2012年總統大選的6位最熱門人選亦參與巡遊，其中有前眾院議長金里奇（Newt Gingrich）、前新墨西哥州長Gary Johnson、前明尼蘇達州長Tim Pawlenty和前賓夕法尼州參議員Rick Santorum等，大會並安排金里奇和Santorum於7月2日在終點站Des Moines發表演說。

美國國會亦不時有提議恢復金本位制，有國會智囊團之稱的Congressional Research Service的Craig K. Elwell，今年6月23日特地就美國宏觀經濟政策發表題為Brief History of the Gold Standard in the United States報告（CRS報告）；Elwell表明對金本位制並沒有預設立場，報告只是陳述美國的貨幣系統歷程作為政策參考資料。

CRS報告指出，美國早期採用金銀並行的雙金本位制（bimetallic standard），最早的《鑄幣法案》（Coinage Act of 1792）規定了面值1美元的銀幣純銀含量（重416 grains的銀幣含純銀371.25 grains），而黃金與白銀的兌換率法定為1比15。

黃金白銀輪番外流

就在1792年鑄幣法案通過後沒有多久，國際銀價兌黃金即貶值至15.5比1，結果導致黃金外流，換取更多白銀回國使用，因而1792至1834年美國基本以銀幣為主要流通貨幣。1834年，國會通過調高金銀兌換率至16比1（當時國際市場約為15.7比1），方法是減少金幣的純金含量，但這次雙金本位「滙率」改制令原本10美元相當於3712.5 grains白銀的債務，在美國本土用較少黃金便足以償付，於是大量白銀流向國際市場以較低滙價兌換黃金回國使用，其後三藩市和澳洲陸續發現新金礦，黃金供應大增令白銀更加「奇貨可居」，到1850年，金幣在美國成為主要貨幣，銀幣幾乎消失無蹤。1853年，政府修訂法案批准鑄造1美元以下的小額銀幣應市。

美國在南北戰爭（1861年4月12日至1865年4月9日）之前並沒有法定鈔票，但市面卻流通包括政府票據和銀行本票（bank notes）等紙貨幣，最早期例如1812年對抗英國的「第二次獨立戰爭」（War of 1812），政府為了籌募戰爭經費發行有利息的票據，並承諾將來憑票兌換黃金或白銀；銀行則利用「硬幣」資產槓桿發行持有人可以兌換黃金或白銀的本票，不過，部分銀行由於「商譽」問題，其發行的本票會以票面值折扣易手，事實上，銀行擠提（金或銀幣）亦時有發生。無論如何，政府票據和銀行本票的出現有若貨幣雙金本位制。

然而，由於內戰造成的財政壓力，政府很快發覺無法兌現以黃金或白銀贖回票據的承諾，銀行亦不再以黃金或白銀兌換本票。1862年，政府根據《法定貨幣法案》或《綠背法案》（Legal Tender Acts或Greenback Acts）首次發行鈔票，市民可以利用這些法定貨幣（fiat money）在市場購買黃金或白銀，但政府不會向鈔票持有人兌換黃金或白銀，變相取消了雙金本位制。

真正的金本位制

內戰結束後，國會決定重新採用金本位制，經過1870年代連串辯論，聯邦政府在1878年通過為綠背設定約3.47億美元的發行上限，並釐定鈔票與金幣（不包括銀幣）的兌換價；1900年，政府通過的《金本位法案》（Gold Standard Act）再次確定黃金的地位，CRS報告將1879至1933年名為美國歷史上唯一的真正金本位制（A true gold standard）年代。

19世紀末，另一形式的紙幣——支票日漸通行全國，銀行只需存入少量現金於票據交換所（clearing agent）便可以簽發支票，而大多數支票交易都是在交換所收支互相沖銷，甚少涉及現金交易，而銀行內只會準備少量硬幣和鈔票以備客戶兌現，結果類似上世紀的擠提時有發生（尤其是現金需求特別緊張的農作物收成季節），有些銀行更被擠提而致倒閉。有見及此，政府於1913年成立聯邦儲備局，取代票據交換所的功能並負責調節貨幣供應。CRS報告強調，聯儲局的出現對金本位制無大影響，反而1930至1933年的銀行擠提浪潮使聯儲局也無法維持金融市場秩序。

羅斯福總統1933年3月入主白宮後，政府即推行多項新措施，包括取消鈔票兌換黃金權利，並將黃金國有化，以每盎斯20.67美元官價收購全國黃金後，嚴禁市民私藏黃金；羅斯福又運用1917年的《與敵通商法》（Trading With the Enemy Act of 1917）禁止銀行外滙交易或對外輸出黃金，同時將美元兌黃金大幅貶值40%，外國政府透過國際貿易只能以新的兌換價向美國政府換取黃金；其後羅斯福總統又根據Thomas修訂案（Thomas Amendment）賦予的權力，下令聯儲局加印鈔票至30億美元，1934年1月，金價升上每盎斯35美元。黃金只限於政府與政府之間的官方交易，CRS報告稱之為半金本位制（quasi-gold standard）的開始。

1944年，環球多國達成布列頓森林協議，外滙管制愈來愈寬鬆，各國貨幣可以自由兌換，黃金的地位進一步受到限制，國際貿易主要兌換為美元交收，國基會（IMF）的成立就是協助各國維持本國貨幣兌美元的穩定性，黃金已絕少用作國際貿易貨幣媒介。隨着國際貿易愈趨蓬勃以及各國經濟不同程度發展，貨幣危機經常發生，由於美元是穩定外滙市場（間接與黃金掛鈎）的主角，愈來愈多美元流入國際市場，1968年3月，美國政府廢除了聯儲局以黃金儲備作為印鈔的限制；而部分國家透過貿易賺取大量美元，美國金庫有被兌換一空的危機，聯邦政府迫得不明文禁止外國政府以美元兌換黃金。1972年12月，各國政府達成協議讓美元貶值，黃金官價由每盎斯35美元升至38美元，但美國從未以這價錢買賣黃金；1973年2月，財政部同意金價再升值至42.22美元，美元至此其實已變成自由浮動貨幣。1976年10月，美國正式宣布一項早已成為事實的法令：美元不能兌換黃金。

回復金本位的兩難

CRS報告回顧金本位制歷史指出，政府可以隨時利用行政命令改變金本位的定義，例子有1834年的金銀兌換價，甚至強制沒收黃金，例如羅斯福1933年的「新政」，而事實證明金本位制亦難以抵禦戰爭及國際或本土金融危機的衝擊。格林斯平於1981年9月（他當時是Townsend-Greenspan經濟顧問公司的合夥人，尚未被委任為聯儲局主席）在《華爾街日報》回應市場有聲音要求恢復金本位制的文章指出，重新實行金本位制即時要面對定價難題，財政部不論將金價定得太高或太低（或者其後證明太高或太低），都會造成一是大量黃金等着兌換美元，一是金庫被提空的隱憂。

看來福布斯、金里奇以至APIA等的言行即使沒有政治因素，但透過金本位強化美國經濟體系顯然是不切實際的期望。

香港金飾商的溢價

傳媒廣泛報道，本港著名珠寶零售集團周大福申請上市，已開始物色保薦人，最快於4月份便可以招股，近日金飾股板塊亦相當熱鬧，其中景福（280）昨日股價就有異動。香港金飾商有品牌上的溢價，成為拓展內地的重要本錢，小型品牌亦有機會被併購。

本港最大的珠寶零售商周大福，啟動了上市計劃，已邀請了投資銀行「選美」作保薦人，宣布最快4月便可以招股，市傳招股金額達到20至30億美元。香港的金飾珠寶商品牌深受內地經營商的歡迎，原因是香港經營者累積了數十年的經營信譽，內地人傾向選擇香港品牌，令到周生生（116）、六福（590）等經營者生意相當暢旺，兩者2010年度中國部分的生意額，分別增長了47%及55%。

周大福珠寶業務一直由鄭裕彤家族持有，家族對於把珠寶業務上市，一向不大熱衷，但現時宣布上市計劃，相信是看到了現時同業的股價表現理想，令到彤叔改變主意。周大福的分店網絡龐大，在全球的分店數目達到1000間，多數以特許代理模式經營，每年的生意額達到300億元。

你若問，香港金鋪股的投資價值何在，就是信譽的經營溢價。至少，內地經營者在信譽這方面是亦未能追上，好像內地有一間公司以「周六福」作品牌，與香港公司周大福的名字相當接近，在2009年就被廣東省工商部揭發，有數款產品的含金量不足。另外，周六福在香港的熱線電話沒有人接聽，電話轉駁到位於深圳的辦事處。有內地不法之徒使用擬似香港金鋪的名字，魚目混珠賣假貨，此風不可長。從另外一角角度去看，內地零售商改一個類似香港商戶的名字，亦反映香港品牌有價，而這種溢價，相信不只在大型金鋪股身上體現，小型金飾股景福（280）昨日也大升，昨日股價升了30%。

景福近年的金飾業務不太耀眼，截至9月底止半年相關業務溢利僅得千多萬元，遠不及周大福及周生生，但其在香港多年來的經營信譽，卻是可居的奇貨。筆者翻一翻景福年報的資料，集團除了金飾業務外，持有資產亦相當豐厚，例如在紅磡持有若干投資物業，另外又持有港交所（388）等股票的投資，有一定價值。筆者始終認為，港產經營商在內地人心目中，享有一定溢價，像景福這類小型金飾商，有可能會成為被收購合併的對象，從而展現應有價值。

是時候購買金融災難保險

索羅斯1992年狙擊英鎊為他的量子基金贏得10億美元，沽神保爾森2008年金融海嘯之前沽空美國次按產品，據報他的Paulson & Co.利潤高達150億美元；相比起索羅斯和保爾森，信奉價值投資法的克拉曼雖然沒有單項的一鳴驚人之作，但他的Baupost基金自1983年創立以來，度過金融海嘯直至2010年維持每年平均投資回報達19%。且聽克拉曼如何在「QE年代」進行安全空間投資部署。

---

克拉曼（Seth Klarman）在他的《安全空間》（Margin of Safety—Risk Averse Value Investing Strategies for the Thoughtful Investor）提醒投資者，務須注意你的理財顧問是否投資於他自己建議的項目，如果一間飯店的廚師也外出用餐，你大概不會幫襯這間飯店。克拉曼去年5月出席CFA周年大會時接受《華爾街日報》駐紐約的著名財經專欄作者施維格（Jason Zweig）訪問強調，他的對沖基金Baupost Group整個陣營會傾盡私人荷包所有押在認定的投資項目。

克拉曼透露，Baupost不但有一班推心置腹共同進退的合夥人，並且建立了包括高級知識分子和資深機構的忠實客戶基礎。價值投資法採用的是長線投資策略，並不期望投資項目很快會有收益，所以很多時候比大市或其他投資者表現失色，但平均每年會跑贏大市，長期複式計算下來便為客提供頗為可觀的投資回報。而Baupost所謂忠實客戶有兩個特點：其一是Baupost若告訴客戶今年成績理想，他們都認可基金的表現而不會對回報表示不滿；若全年努力爭取的成果不被認同會多麼令人洩氣。其二是當我們通知客戶發現一個前所未有的投資機會時，客戶即使不同意Baupost的投資建議而無意注資，但最低限度也不會提出贖回；擔憂客戶贖回已足以影響基金經理的表現，尤其是基金手上的投資組合愈來愈便宜的艱難時期。

有膽有錢趁低吸納

價值投資法創始人格拉罕（Benjamin Graham）1932年在《福布斯》的一篇文章說道：「當股票跌至價格低廉時，有些人有膽但無錢，有些人則有錢但無膽」；Baupost因為與客戶長期以來建立深厚的互信關係，在2008年第四季以至2009年首季成功集資買貨，錢的問題是解決了，但當時大部分投資者仍處於金融海嘯餘悸中，施維格要求克拉曼略述他大舉入市的膽量從何而來。

克拉曼回答說，更正確的說法是自傲（arrogance）而不是膽量，因為價值投資者每次作出投資行動時都等於在宣示：我比市場了解得更多，所以才會與其他投資者作出相反的買賣決定。但必須確定你買入的股票並非基於一閃而過的樂觀，而是經得起壓力測試的透徹分析，即使買入後股價短期下跌也不會削弱我們的信心。他強調，我們亦不會目空一切，知道市場上有不少高明的競爭對手，對自己的分析有充分信心的同時亦明白其中可能有機會出錯，因此隨時準備作出對沖或其他補救行動；而且我們從不會過度投資於單一項目，經常保留一定比重的現金以應付任何意外轉變，嚴格遵守安全空間原則令我們有足夠膽量去面對逆境。最後，多次的錯誤投資決定、巨大的投資損失經驗都會摧毀你的自信心，市況短期波動也會令你驚惶失措，投資者應盡量避免短線買賣，謹守買賣紀律，買入具潛在價值的投資項目，在市價合理時則毫不猶疑地沽出套利，逐漸培養良好心理質素。

靈活調校投資組合

施維格質疑克拉曼既然主張長線投資，但2008年Baupost在短短幾個月內動用基金的三分之一買入大量不良債務（distressed debt）和住宅按揭抵押證券（Residential Mortgage-backed Securities，RMBS），表現活脫脫的一個短線機會主義者。克拉曼指出，其實到了2009年初，相關投資增至基金的百分之五十，我們的分析團隊不會放過市場上一切錯誤定價的投資工具和證券，只要該項目的升值機會大過我們持有投資組合，我們便立刻轉換目標。2007年次按泡沫和2008年金融海嘯令不少資產被恐慌性拋售直線下跌至非常吸引的低價，製造了大量前所未有的投資機會。

克拉曼舉福特汽車（Ford Motor）的債券為例：福特債券當年的折扣高達60%，即是面值1美元的債券以40美仙便可以買得到，而克拉曼認為，福特是三大陷入財困車廠（其餘兩家為通用汽車General Motors和佳士拿Chrysler）其中最大機會存活的汽車企業。根據克拉曼計算，假如福特的壞賬率增加8倍，那麼整個企業資產40%將化為烏有，即使如此，福特的債券淨值仍相當於60美仙，安全空間何其吸引；而汽車企業又並不像次按資產會有多重槓桿，資不抵債的風險小得多。

至於Baupost的基本目標雖說是長線投資，一般會持有債券直至到期為止，但克拉曼表示，我們若以50美仙買入債券，預期3年後升回面值1美元，如果買入1年後債券已升到90美仙，我們不會為了未達預期利潤的10美仙再等兩年，漠視已累積可觀升幅的債券價格掉頭下跌的風險，Baupost絕對不是不識變通的呆頭鵝。

時移世易，克拉曼指出，現今的金融市場結構比格拉罕創立價值投資法和安全空間理論時複雜得多，例如2008年之前流行的槓桿收購（Leveraged Buy-out，LBO）活動，雖然現實是不會每個行業都有機會被收購，但差不多所有股票都炒高兩成等待其他人接棒，安全空間策略已無用武之地，幾乎沒有一隻股票的潛在價值不被反映，換言之幾乎沒有股票是便宜的。而AAA評級的公司或投資工具也不是完全可靠，建築股的表現並不確切反映按揭和樓市的實際狀況。施維格補充指出，問題就因為傳統的股票投資者只着眼於股市泡沫，忽略了信貸泡沫其實同時形成，後來終於發生了克拉曼所說的次按問題惡化引起的連鎖反應，樓市、股市、金融機構按揭三個泡沫爆破危機。

QE措施埋下危機

克拉曼批評，金融海嘯後政府的處理方法埋下了美元和美國主權危機，他矛頭所指主要是聯儲局的QE措施。他指出，大約6至12個月前（2009年4月至10月）開始金融市場到處都看見聯邦政府干預之手，利率壓低至零息，通過問題資產救市計劃（Troubled Asset Relief Program，TARP）悉數購入所有不良按揭證券，等於慫恿投資者好趁零利率（毋須考慮資產質素）購買股票或高息的垃圾債券。眾所周知世上並沒有免費午餐，克拉曼擔心，聯儲局利用寬鬆貨幣政策救市和刺激經濟，最終難免造成美元貶值和通脹失控；更可怕的是，美國最後將失去財長蓋特納認為理所當然的AAA主權評級。古老諺語說：「你是怎樣破產的？」答案是：「慢慢地，然後突然發生。」克拉曼認為，除非選出一個有魄力的政治人物力挽乾坤，否則美國正走上破產的不歸之路，臨界點可能是忽然有一日美國政府拍賣國庫債券發現乏人問津之時（這與《黑天鵝》作者塔利布的觀點如出一轍）。

至於對沖高通脹的投資策略，克拉曼建議買入對利率變化敏感的債券認沽期權，付出的期權金就當作買一個災難保險。另外，黃金長久以來受到廣泛認同具有保值作用，站在價值投資者的角度，黃金屬於內在價值無法評估的商品之一，然而，由於擔心美元潛在貶值危機，不得不將黃金納入投資組合之列。股票方面，克拉曼一向認為深入認識少數投資項目勝過對多種投資一知半解，因此Baupost不會持有太多隻股票。

克拉曼表示，歷史不會重複發生，但歷史的韻律卻會不時重奏，我們都清楚知道狂印鈔票必將引致的危機，雖然無法預知危機何時出現。

AIG ready to discuss Treasury exit plan

AIG’s board is set to finalise a restructuring plan on Wednesday that would increase the US Treasury’s stake in the insurer to about 90 per cent as a step toward an eventual government exit.

People close to the situation said AIG directors were expected to formally discuss for the first time the Treasury’s plan to convert $49bn in preferred shares into common stock. This would raise the government’s stake from the current 80 per cent, while diluting the holdings of existing shareholders.

People familiar with the situation said the plans were fluid but added that issuing warrants, rather than common stock, would enable AIG to keep its share count down while offering some solace to diluted shareholders.To make up for this dilution, the government would offer the outside shareholders warrants giving them the right to buy AIG shares in the future at a discount to the current price.

“This would give other people the chance to buy shares on the cheap as well,” said a person familiar with the deal. A second person familiar with the plan said the warrants would pay off only after the government had made money.

The Treasury is expected to sell its AIG stock in the market over a period, as it has with its investment in Citigroup. AIG and the Treasury declined to comment.

Approval of the plan by the AIG board would mark a significant step in freeing the insurer of government control and repaying taxpayers for the $182bn of public money used to buttress the group at the peak of the crisis in 2008.

Official estimates of the government’s ultimate loss range from $36bn to $50bnbut AIG executives and officials hope the plan will deliver a better outcome. The restructuring includes the repayment of loans to the New York Federal Reserve Bank, partly with proceeds from next month’s planned initial public offering of Asian subsidiary AIA.

The plan comes as the Treasury this week prepares to end payments from the $700bn troubled asset relief programme and announce that it now expects a much lower loss, and perhaps even a profit, on the investments that helped shore up the financial system in 2008 and 2009.

AIG has warned investors in filings that the conversion of the government’s preferred stock into common equity could result in a severe dilution in the value of the holdings of non government shareholders. The plan for warrants represents an attempt to cushion the blow.

People involved with the restructuring plan, developed over several months by AIG, the New York Fed and the Treasury, have been surprised at the resilience of AIG stock.

When to sell gold?

Posted by Neil Hume on Mar 23 10:31. 48 comments.

Now, there’s a question, and it’s one that Societe Generale’s Dylan Grice has attempted to answer on Tuesday:
JP Morgan once said he’d made his fortune by selling too soon. We spend much time thinking about what to buy and when to buy it, More…

Now, there’s a question, and it’s one that Societe Generale’s Dylan Grice has attempted to answer on Tuesday:

JP Morgan once said he’d made his fortune by selling too soon. We spend much time thinking about what to buy and when to buy it, when in fact knowing when to sell is more important. The case for owning gold is clear enough, but when should we look to sell?

His conclusion is not yet:

The reason I own gold is because I’m worried about the long-term solvency of developed market governments. I know that Milton Friedman popularised the idea that inflation is “always and everywhere a monetary phenomenon” but if you look back through time at inflationary crises – from ancient Rome, to Ming China, to revolutionary France and America or to Weimar Germany – you’ll find that uncontrolled inflations are caused by overleveraged governments which resorted to printing as the easiest way to avoid explicit default (whereas inflation is merely an implicit default). It’s all very well for economists to point out that the cure for runaway inflation is simply a contraction of the money supply. It’s just that when you look at inflationary episodes you find that such monetary contractions haven’t been politically viable courses of action.

Ultimately, the time to sell gold will only come, Dylan says, when heavily indebted governments face up to their problems and start taking their fiscal medicine:

The political winds in countries with central banks are a long way from blowing in the direction of fiscal rectitude. And while it’s true that more people are at least talking about it, talk is very cheap and no one is yet close to walking the walk. Such steps remain politically unpopular because we haven’t had our crisis yet. Given the clear unsustainability of government finances and the explosive path government leverage is on, a government funding crisis is both inevitable and necessary. and DubaiGreece are merely the first claps of thunder in what is going to be a long emergency.

Although that won’t happen any time soon:

But governments aren’t ready to take that step at the moment (the chart above shows just how painful the required measures could be). Indeed, the pressing fear among policy makers today remains that stimulus might be removed too soon. In the UK, policy makers refused to “risk the recovery we’ve fought so hard for” to quote PM Gordon Brown (“fought so hard for”!). In the US, lawmakers have just expanded the most inefficient health care system on the planet (according to ft.com there are five times as many CT scans per head in the US as there are in Germany, and five times as many coronary bypasses as in France). It has been promised that the increase will be deficit-neutral (which I doubt) but even if it is, current period deficits aren’t the correct way to look at health and pension obligations which should be examined on an actuarial basis (and if expanding the program is so difficult, wait until they try contracting it!).

But it will happen some day:

Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain, as will economists with spurious mathematical rationalisations as to why such inflation will make everything OK (witness the IMF’s recent recommendation that inflation targets be raised to 4%). Until it does, the outlook will remain favorable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold.

Related links:
‘Japan’s brewing fiasco’ – FT Alphaville
‘Some useful things I’ve learned about Germany’s hyperinflation’ – FT Alphaville

`There's no bubble in gold,’ CIBC says

Posted by Tracy Alloway on Dec 18 08:46.

The idea of a `gold bubble’ went stratospheric in recent days, as economist Nouriel Roubini blasted the “barbarous relic” and the gold bugs who followed it.

And indeed, on Thursday it seemed Roubini was somewhat vindicated, as the shiny stuff dropped below $1,110 for the first time since early November.

But there are (clearly) those who disagree with the gold bubble theory.

Wading into the debate on Friday, for instance, are the commodities analysts at Canadian bank CIBC, with a research note titled “Bubble, bubble, are we in trouble?” The subtitle, for those who can’t bear the suspense, is “Precious metals to continue their Royal Ascent”.

And the reasoning:

Gold has been exhibiting significant correlation to the U.S. dollar, yet we believe other fundamentals will support continued strong performance of the metal, including stronger investment demand, the market’s need for a safe haven investment, and the absence of growing mine supply.

. . .

The rationale for accelerated reactions to dollar-led gold price movement lies in the additional factors contributing to the strength in the metal. Currency movements may be important but they are not the only factor propelling the price of gold. Uncertainty of many factors has led to strong investment demand for the metal as one of the prime drivers to gold price increases. Whereas jewelry demand accounted for about 82% of metal purchases a decade ago, that figure has dropped with investment demand rising to as much as 73% of total demand in some recent quarters. Aside from the safety protection offered by bullion, we suspect that investors have sought to limit volatility within their holdings by diversification into traditionally counter cyclical vehicles such as gold.

The desire for diversification is not limited investors. In ever increasing amounts, Central Bankers have also joined the party that arguably they were responsible for its demise 12 years ago. Whereas back in 1997, there was selling pressure on bullion brought about first by the governments of the Southern Hemisphere (Argentina, Australia), followed by Switzerland, Netherlands and the United Kingdom, now there is net buying taking place among Central Banks. Key among the buying group of late is China and India. We think this trend to broader purchases by Central Banks will continue leading to a new source of demand that hitherto was a source of supply as Central Bank selling intensified at the turn of the millennium.

In the absence of growing mine supply, we anticipate that bullion will continue to perform well over the next few years and possibly longer. Short-term gyrations however will also be the norm and in the past two weeks we have seen what we consider to be a normal (and arguably healthy) correction to the upward phase of a continued long-term bull market for gold.

The bank is accordingly raising its gold price forecast for 2010 and 2011 from $1,100 and $1,200 an ounce respectively, to $1,200 and $1,400.

And just in case you’re still concerned gold might be in something of a bubble:

We do not believe gold has experienced a bubble with the recent pullback of about 8% in prices, any more than the pullback in May-June of 2006 signaled the end of bull market for bullion. We continue to expect that investors will continue to add to positions or more likely start to build positions for gold exposure. It is our belief that at least in Canada, generalists are well underweighted gold equities relative to the 13% weighting of the precious metals sector on the TSX. For the rest of the world, the holdings are less than in Canada and therefore may also need to be adjusted upwards to compensate for higher risk levels for alternative investments.

And so, CIBC also presents the below three charts.

The first showing, the current bull run in gold (from the low in circa 1999, when the UK, err, sold off its reserves) against the 1970s/1980s bull run that started in 1972:

The second shows the current gold bull run against that widely-known bubble, the tech boom of the early 2000s. The trajectory is a bit, umm, different:

Not to worry though, CIBC says. The picture is still very different between gold equities:

Related links:
A golden sell-off – FT Alphaville
Gold retreats on talk of bubble – FT

New S&P index does dollar weakness with gold

Posted by Tracy Alloway on Dec 03 15:30.

Is this the start of a deluge of retail investor-oriented financial products looking to cash in on gold mania and a potential dollar crisis?
From Standard & Poor’s on Thursday:
Standard & Poor’s Launches S&P 500 Gold Hedged IndexIndex to Serve as the Basis for new UBS Investment ProductsLONDON, December 3, 2009 - With the returns of gold rivaling that of the U.S. equity market, Standard & Poor’s, the world’s leading index provider, announced today the launch of the S&P 500 Gold Hedged Index. The Index seeks to simulate the returns of an investment strategy which is long the total return of the S&P 500 stock market index and long gold futures contracts, allowing investors to participate in the returns of the US equity market while hedging against a decline in the value of the U.S. dollar versus gold.Standard & Poor’s also announced that it has licensed UBS to create and launch investment products based upon the S&P 500 Gold Hedged Index.“In a gold-hedged strategy, investors are seeking to eliminate the risk of U.S. dollar fluctuations and are therefore willing to sacrifice potential currency gains against gold,” says Liz Taxin, Director of Strategy Indices at S&P Indices. “By holding long gold futures contracts, investors stand to gain when the U.S. dollar loses value as expressed in the dollar price of gold.”The S&P 500 Gold Hedged Index is calculated as a combination of a long S&P 500 position overlaid with a long position in COMEX gold futures. The hedge only protects against adverse movements in the relative value of the U.S. dollar, as expressed in the dollar price of gold. Stock market risk is not hedged in any way.The results of a gold-hedged index strategy, versus that of an un-hedged strategy, vary depending upon the movement of the gold futures contract and the U.S. dollar. By holding long gold futures contracts, investors may gain when the U.S. dollar loses value as expressed by gold. Conversely, they may lose when the opposite occurs.The S&P 500 Gold Hedged Index is rebalanced monthly to equalize notional exposure to equity and gold. The positions are rebalanced to equal weights on the day of rebalancing.
It looks like an almost pure play on (continued) US quantitative easing. You get to participate in a potential liquidity and stimulus-driven rally, while hedging yourself against the inflation/dollar weakness often associated with unconventional monetary policy, with that shiny metal (rightly or wrongly) .
Interesting.

Related links:
A Minskian roadmap to the next gold mania - FT Alphaville
A forward curve proposition - FT Alphaville
BNY Mellon’s fx team: Ultimately, buy gold - FT Alphaville

[Outlook 2010] Goldman Sachs up 12-mth gold forecast to $1350/toz

Posted by Izabella Kaminska on Dec 03 16:49.

The 2010 commodity outlook from Goldman Sachs has just landed in our inbox and a quick skim across the forecasts confirms the bank that previously liked to be bullish oil, is now also bullish gold.
Well relatively so, in so much as they’re raising their 12-month forecast to $1350 per troy ounce versus a previous $960.
Although they do warn that once the Fed reins in its unconventional policies and sets upon a tightening path, gold prices may come under pressure.
As they note (our emphasis):With the US Federal Reserve expected to keep its short-term nominal interest rate target near zero through 2011, we expect the low US real interest rate environment to continue to provide strong support for gold prices in 2010 and 2011. However, as we also expect US inflation to remain subdued, we expect gold prices to come under significant downward pressure once the US economic recovery strengthens and the US Federal Reserve begins to raise interest rates. Consequently, an earlier-than-expected tightening of US monetary policy is the primary downside risk to gold prices in 2010 and 2011, in our view. In the interim, however, we expect the low US real interest rate environment, continued gold-ETF buying and reduced Central Bank gold sales will allow gold prices to continue to move higher. We therefore raise our gold price forecasts to $1200/toz, $1260/toz, and $1350/toz on a 3-, 6-, and 12-month horizon, respectively, with a 2010 average price forecast of $1265/toz and a 2011 average price forecast of $1425/toz. While an earlier than expected tightening of US monetary policy presents a substantial downside risk to gold prices in 2010 and 2011, we believe the near-term risk to our gold price forecast is skewed to the upside.
Meanwhile, they have actually cut their 12-month forecast on WTI oil to $92.5 per barrel versus $95 per barrel — the forecast acknowledging that a slower than expected recovery in developed market demand will have “pushed back the clock on global inventory drawdowns”.
Although that’s not to say they’re more sanguine on the longer-term price outlook. The analysts have introduced a 2011 forecast of $110 per barrel based on strong demand from emerging markets. As they explain:
Our forecast rebound in US economic growth to 2.1% in 2010 and 2.4% in 2011 will likely push US total petroleum demand higher, albeit only slowly, reaching 19 million b/d by 3Q2010. However, although we expect the economic recovery to gradually increase total petroleum demand through 1H2011, we expect a global supply shortage in 2H2011 as strong emerging market demand runs up against anemic production growth, creating the need for demand cutbacks in the developed world (Exhibit 6). Furthermore, although distillate demand in the US will likely recover gradually, we expect demand to reach only 4 million b/d by 1Q2011 before sharing the same fate as US total product demand in the second half of 2011.
And here for your viewing pleasure is the bank’s view on the entire commodity complex:

Article Series - Outlook 2010
The deluge begins
Deutsche Bank ponders all things sovereign
Goldman sees 2010 as 'exciting, with risks!'
Goldman Sachs up 12-mth gold forecast to $1350/toz
JPM targets 20% gain for Euro equities
Thundering Herd bullish on Euro equities
How will analysts fare?
Moody's sees sovereign states a-suffering

China's Big Gold Story

China's latest slow of positive data "raises the prospect" of Beijing tightening its easy money and fiscal policies, or so the newswires claim. Currency strategist Steven Barrow at Standard Bank adds that China could be more significant for global liquidity than the United States, too.
Because the Fed's asset pile is nothing next to the People's Bank's hoard of cash, he says. So "the Fed's grip on the [easy-money] punchbowl is not as firm as the market might think," as shown by Barrow's chart below. The upshot for Gold investors? Given that China's foreign reserves are at least 50% held in US Treasuries, dollars and government-backed agency bonds...and given that gold has risen four-fold vs. the greenback inside 10 years...and seeing how the gold market is currently spooked by a whiff of improving US data, and the tang of non-zero Dollar rates it might imply...it might be worth a look.
So let's squint through our telescope...10,000 miles distant.
Since the start of 2000, China's official Gold reserves have grown by 167% to 1,054 tonnes, now the world's fifth largest central-bank hoard. That contrasts with the US Treasury sitting pat at 8,133 tonnes (the world's largest single hoard) and Western European banks selling around one-fifth of their "legacy" holdings so far this decade, (now down below 12,016 tonnes).
Beijing's style of reporting on gold also contrasts with Western announcements, made over the last 10 years within the precepts of the Central Bank Gold Agreement first signed in Sept. 1999 and renewed again this autumn. The CBGA sets a pre-declared sales ceiling of 400 tonnes per year, and also includes the International Monetary Fund's 403-tonne divestment (now half done thanks to the Reserve Bank of India buying 200 tonnes of IMF in October). Whereas the word "secretive" doesn't begin to describe China's official gold dealings.
The People's Bank only reports changes to its gold holdings occasionally and erratically. Pace the World Gold Council's numbers:
In 1981 China had 395 tonnes;
End-2001 that moved to 500.8 tonnes;
End-2002 it rose to 600 tonnes;
April 2009 saw China announce it held 1054 tonnes.
This spring's announcement from Hu Xiaolian of the State Administration of Foreign Exchange referred to buying since 2003, she said. The actual news apparently came due to an accounting shift, out of SAFE and into People's Bank reserves. That was significant in itself, perhaps, because it moved the 75% increase in gold bullion holdings from sovereign wealth management to central-bank ballast.
On hearing the news: "China's announcement signals a broader shift in central banks' attitude towards gold," said Philip Klapwijk, chairman of the world-leading GFMS precious metals consultancy. "[This is] reigniting gold's relevance as a monetary asset," agreed Suki Cooper, gold analyst at Barclays Capital.
But was it really the big story? April's announcement took Gold to around 1.6% of China's foreign currency reserves. Which was in fact lower than the 2003 level of 2%, courtesy of the 7-fold growth in China's foreign currency hoard...now around $2 trillion, up from $159 billion at start-2000.
Bear that slippage in mind below...and bear in mind that the real Chinese demand story, both comparatively and across the global gold market, continues to be private consumption. Basis the GFMS consultancy's data, Chinese households spent more on gold jewelry and physical investment during the third quarter of '09 than during all of full-year 2005. Spending a total of US$3.7 billion on the metal, Chinese consumers confirmed their world-beating demand for 2009-to-date, overtaking Indian households as the world's No.1 buyers.
Considering that jewelry taxes were only relaxed in 2002, and investment was allowed only from 2005, that's some move to now top the table, even for the world's most populous nation. And on our analysis – based on World Bank estimates and GFMS figures – private mainland gold demand now equals some 2.0% of China's famously massive household savings, up from 1.0% ten years ago...and even as annual household savings have more than trebled.
Most critically, private mainland demand over the last five years has been almost four times what the People's Bank acquired from 2003-2009, piling up a massive 1775 tonnes in private hands. Cumulative buying rose 16% by value in the first 9 months of this year versus the same period in '08. But how much Beijing's easy-money and fiscal stimulus is to thank – rather than cultural trust in gold and quasi-religious auspicion, both polished by private wealth accumulation – who can say?
(Adornment and investment motives, as an aside, are more difficult to separate in the East than here in the West. Hence the catch-all "investment jewelry" referred to by Wall Street and City analysts looking at Indian and Asian gold.)
Back at the People's Bank – which employs fewer staff per 100,000 of population than anyone else by the way, down at 0.19 compared to the Fed's 19.9 and Russia's staggering 71.2 according to the Economist this week – official opinion on gold is divided. What the European and North American financial pages typically see as a communist monolith in fact contains (and gives voice to) a diverse and often controversial set of views. But three aims seem clear:
Diversification: Beijing's wonks don't need to read the Journal of Portfolio Management to know gold's quadrupled vs. USD, Yen, Sterling, CHF (and Yuan) and trebled vs. Euro since 2000;
Domestic crowd-pleasing: See household demand above, and set next to the Reserve Bank of India buying 200 tonnes from the IMF...just as private Indian households slow their gold hoarding in the face of relentlessly higher prices;
Economic prestige: The golden rule (He who has the gold, etc) will suit even Beijing's longest long-term thinkers. The United States ended WWII with more than 21,000 tonnes of gold, some 70% of total monetary metal. Dollar rule came as a direct result. So if the Dollar's now toast, and power is truly shifting across the Pacific, the big picture would demand a big pile of bullion.
That's why (or so we guess) State Council advisor Ji Xiaonan believes Beijing should start investing in at least 1,000 tonnes of gold per year for its official reserves. Claiming to have led an expert 'task force' on the matter last year, "We suggested that China's gold reserves should reach 6,000 tons in the next 3-5 years and perhaps 10,000 tons in 8-10 years," the China Youth Daily quoted Ji in late November. Yet the Western media, typically, misread that quote, saying "That is in line with many officials' view that China should decrease the proportion of its $2 trillion foreign exchange reserves held in Dollar-linked investments and raise its gold holdings to diversify its portfolio."
Not quite. Because for central banks, gold is a politically-charged asset, not simply a portfolio hedge. "Germany in 1944 could buy materials during the war only with gold," as Alan Greenspan noted in 1999. "Fiat money in extremis is accepted by nobody." And look at the numbers Ji quoted – 6,000 tonnes would take China way above Germany, while 10,000 would trump Washington.
Gold is a safe haven for all investors because there is "no violation of contract" noted Zhang Bingnan, a senior member of the China Gold Association, at the Shanghai Gold Conference last week. "Gold is the only non-credit product in the financial market." These attributes only stand out more clearly for central bank policy wonks and long-term planners hoping to keep control of the fastest-growing economy on earth.
Still, the People's Bank can't avoid T-bonds entirely, even if it is cutting its agency holdings. There's simply not enough gold in the world, and too many Dollars, for that. That's why "We hate you guys," as Luo Ping, a director-general at the China Banking Regulatory Commission (CBRC) complained on a visit to New York in February.
"Once you start issuing $1-$2 trillion...we know the Dollar is going to depreciate. We hate you guys, but there is nothing much we can do."
One thing Chinese officials can do – if they're to try and keep pace with private gold demand and anchor the nation's money reserves with gold – is to buy directly from the minehead. That was how South Africa built its forex reserves during apartheid sanctions in the late 20th century. Back then, South Africa was the world's No.1 mining producer. It just so happens that China is today.
"It's cheaper for us to Buy Gold from the Chinese market," said an un-named People's Bank official to Western journalists last month, "but it doesn't help diversify our huge foreign exchange reserves. Even if China bought half the world's annual gold supply, it would only cost a few tens of billions of dollars, which is tiny compared to China's huge reserves."
"Even if it's sold at a market price, we should still buy," counters Xia Bin, head of a key Beijing think tank advising the State Council cabinet (and also making plain that this is his personal view).
"India's okay with it, why shouldn't we be? What's the use for so many dollars, whose purchasing power is weakening anyway? With so many foreign reserves in hand, I think China should buy, without doubt."
Either way, "China has the scope to step up gold purchases but should take a long-term approach, avoiding the open market," says Zhang of the China Gold Association. "If we adopt a too aggressive and rash manner, it is not practical." Because China-inspired surges in the gold price would only work to make buying gold more expensive, as the recent case of India's 200-tonne purchase makes plain.
India's move was "probably the most remarkable event in the gold market since the Central Bank Gold Agreement (CBGA) was announced in late September 1999," according to Matt Turner at the VM Group, writing in the latest Yellow Book. Glance at November's price chart and you've got to agree, at least short term. Gold cut a straight line from $1045 to $1226 an ounce.
Yes, it's come down sharply from there. But that's perfect for price-conscious consumers getting set for January's New Year celebrations...and it's just the thing for long-term strategic planners wanting to build their hoard.
Disclosure: Long physical gold

China's Gold Reserves (Part 2)

by: Erik Bethel December 13, 2009 about: CAF / FXI / GDX / GLD / PGJ

Last week I referenced gold-related comments made by Ji Xiaonan, a senior Chinese official at SASAC (the Chinese body governing state-owned companies). According to China’s Youth Daily, Mr. Ji stated that China had set up a task force to look into the country’s gold reserves. According to his comments, the task force recommended that China’s gold reserves hit 6,000 tons in 3-5 years and 10,000 in 8-10 years. This week, Hu Xiaolan, a Vice Governor of the People’s Bank of China (PBOC), took a more measured approach. He cautioned that the soaring gold price in recent months resembled a commodity bubble.
Irrespective of the various statements, let’s think through the implications of what it means to have 6,000 tons worth of gold reserves and whether or not it is feasible.
First, it is nearly impossible to purchase a few thousand tons of gold each year in the spot market. As a point of reference, the current demand for gold is around 4,000 tons per year while current mine production is around 2,500 tons. While China could purchase some amount of spot gold, it can’t purchase too much without massively moving the market price.
Where else could China get its hands on thousands of tons of gold? In theory, the PBOC could purchase gold swaps from other central banks. But which central banks have that much gold? Several thousand tons per year is still a huge amount. Currently only the U.S. (8,134 tons) and Germany (3,408 tons) have sizeable enough reserves. And why would they sell?
As mentioned in previous postings, China has US$2.3 trillion in foreign exchange reserves, and roughly US$1 trillion or so in dollar-denominated treasuries. It seems logical that China would want to diversify. However, if China were to increase its gold reserves, it would likely take the form of a multifaceted approach:
(a) Domestic mining: Last year, China surpassed South Africa as the world’s largest gold producer. Many large state-owned gold companies are steadily exploring, producing, and increasing their reserves. One example: China Gold Corp, a firm trading on the Shanghai Stock Exchange, has roughly 1,000 tons worth of reserves, including the “Yangshan Mine,” the single largest gold reserve in Asia, containing 308 tons of proven reserves. Scores of other firms are mining gold throughout the country.
(b) Overseas acquisitions: Chinese firms are increasingly going outbound. This week alone, Zijin Mining announced that it will acquire ASX-listed Indophil Resources for roughly US$500 million. Indophil is an important copper-gold operation in the Philippines. Its “Tampakan” copper and gold project contains estimated mineral resources of 2.4 billion tons including 13.5 million tons of copper and 15.8 million ounces of gold. Dozens of other Chinese firms are acquiring resources in Africa, Southeast Asia, and now in Latin America.
(c) Spot market purchases: While it may be difficult for China to purchase large quantities on the spot market as mentioned above, it is not inconceivable that China could opportunistically purchase spot on the dips.
6,000 tons of gold equates to roughly 190 million ounces. At US$1,200 per ounce this is worth US$230 billion dollars—an amount equivalent to roughly half the GDP of Switzerland. A lot of money, no doubt. While it seems unlikely that China will achieve the 6,000 ton figure in the next 3 years, those of us that live here note that the country has a remarkable ability to surprise even the greatest of skeptics.