Today one of the greats in the business stated we may have just witnessed the final washout in the gold market.
Did We Just Witness The Gold Washout?
October 7 (King World News) – Ole Hansen, Head of Commodity Strategy at SaxoBank: Did we just witness the washout before the Chinese bid returns on Thursday? Needless to say, it would be a strong signal of underlying demand if it manages to close back above USD 4,110 today. Speculative sellers have been gunning for a break all week and finally got it as yields and the USD continue to rise – but the key question now is whether it will stick.
BUCKLE UP: Yen Carry Trade Is Unwinding
Stern Drew: Japan’s Own Paper Nikkei Just Admitted: The Yen Carry Trade Is Unwinding and Volatility Won’t Stop
Japan’s own financial paper, Nikkei, just flagged it in black and white:
The massive yen carry trade is starting to come apart. The wild swings aren’t calming down. The people sitting on those positions are suddenly waking up to how fast one bad move can wipe them out.
This isn’t some random journal on the Japanese Wall Street. This is Nikkei.
And it lines up with what @yutokanzakireal revealed: The Bank of Japan has made the call to bring the Japanese wealth back to homeland by any means necessary.
Japan has already dumped $87 Billion worth of their U.S. Treasury holdings despite Scott Bessent‘s interventions and overseeing BoJ operations.
They want Japanese money brought back home. They’re done letting it sit overseas while the currency gets punished.
Every attempt to paper over it failed. The threats, the interventions, the coordinated statements from the U.S. and Treasury, none of it stopped the trade from getting bigger.
Scott Bessent overtook BoJ operations, called himself the house, dared traders to short the yen and now he says that he cannot control the bond market.
Now the bond market is doing whatever it wants and he’s reduced to telling people to slow down before it snaps.
Even the BoJ governor admitted that the hike cycle is not done whether the economy likes it or not.
When the officials who were supposed to keep this contained start sounding nervous, and Japan’s own paper starts describing the retreat, the exit door is already getting smaller.
Just one Tokyo fund broke the French debt market by selling their holdings to ZERO.
Imagine what happens when BoJ indeed dumps their $1.2 Trillion U.S. Treasury Holdings…
Listen to the greatest Egon von Greyerz audio interview ever
by CLICKING HERE OR ON THE IMAGE BELOW.
We Remain Long And Positive Oil & Gas
Peter Boockvar: With respect to oil and gas stocks, we remain long and positive, especially after hearing from the CEO of Saudi Aramco again who spoke Monday at the Energy Intelligence Forum in London. With the caveat that he’s talking his book, he said that we entered the conflict with Iran with about 10 billion barrels of oil inventory globally. We’ve lost 3 billion barrels of gross oil supply which is about half the crude and refined products that would have transited the Strait normally. Add in another 1 billion barrels that have been drawn down from commercial inventories and you have 6 billion barrels left but Amin Nasser, the CEO, said that those are not “practically available” and the supply cushion is “Scarily thin.” He believes that even if the Strait fully reopened today, it could take up to two years to normalize global inventories again.
The CEO of Vitol Group, the large trading firm, speaking at the same conference said “We need about 10,12, 14 million barrels to come out via the shipping route in order to keep things in balance as we go through the winter. Because there aren’t any more inventories to drain in the West.”
According to the Mortgage Bankers Association, the average 30 yr mortgage rate as of 10/2 jumped to 7.49% vs 6.85% one month ago and it sent purchase applications down by 2.1% w/o/w, lower for the 5th straight week and to the lowest since February 2025. Refi’s declined by 7.5% and lower for the 7th straight week and to the slowest pace since early 2025.
Overseas, Japanese wage earners saw another solid increase in base pay in August of 3.8% y/o/y, matching the best since the early 1990’s. The BoJ has every reason to raise rates again at the end of the month meeting but rate hike odds are only at about 10% as the market believes they will wait until the December meeting to hike again.
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