The key benchmark rates for gold as collateral in borrowing US dollars are the gold forward rates (GOFO). Like LIBOR, GOFO is a “fix”; a survey of LBMA “contributors” of the cost at which they proclaim to exchange gold for dollars. There is no transactional information which accompanies GOFO, so it is often misconstrued as a “market” rate. The appearance [...]
For a moment last week it seemed like 2010 all over again. The euro crisis has been officially declared dead and buried, but Portugal’s rumblings on top of Greece’s renewed and further financial insecurity certainly made it seem otherwise. Only certain markets seem to care, however, as investor attention no longer seems transfixed by European dysfunction the way it was [...]
The contentious drop in gold prices is parallel to so many other assets at the moment that it cannot be anything but a liquidity event. At this point, the proximate cause is really academic; Bank of Japan, China, taper, etc. However, despite protestations, and vehement at that, that the euro crisis has been buried, the opposite is again becoming reality. [...]
With everything going on in Japan and the US credit markets, Europe has slipped somewhat from the headlines. Part of that is now universal recognition of the durable depression facing the entire continent, no more denials about containment or rapid rebounds. But politicians and policymakers have still maintained that the currency portion of the crisis is over, and that the [...]
Gold prices seem to have settled in around the $1,400 range recently. Whether or not that price is a psychological attractor for both buyers and sellers, there does seem to be some degree of market stability around that level currently. While it is impossible to say how long this illusion of stability will last, there seems to be a confluence [...]
First ECB head Mario Draghi hinted at discussions of an ABS plan at his press conference. Now we get word from Die Welt that not only is it more than a rumor, it has been discussed by the ECB’s governing council. The German paper also notes that it seems likely that the governing council is far more in favor than [...]
The rumors of the ECB rate cut had become rather ubiquitous in the past few weeks. Confidence in the European economy has been indirectly proportionate to those rumors, particularly as Germany seems to be heading south again after a short-lived reprieve. France is just a downright mess. But the rate cuts that were just announced will have no impact on [...]
Ever since the first warning of crisis in August 2007, indications of global banking health and liquidity have been turned upside down. Nowhere is that more evident than European banking, especially in the periphery. Observers have been looking for lower interest rates and reduced reliance on the ECB as evidence of “normalcy”. Starting with the chief interbank rate in Europe, [...]
Following up on yesterday's post about ECB interventions, I had noted the ELA accounting under the line item “Other Claims on Euro Area Credit Institutions Denominated in Euros”. For the most part, ELA usage has dropped since December 19, 2012, when the ECB reinstated Greek debt as eligible collateral for financing programs. The ELA was supposed to be a last resort [...]
Getting into the arcane accounting of central banks is a chore, but, in an uncertain world with every central bank “doing something” at exactly the same time, it is a vital task that requires patience. A lot of patience. Central banks all have familiar financial disclosures and statements. The Fed, ECB, SNB, Bank of England, Bank of Japan, et al, [...]
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