As we kickoff the early stages of what promises to be another rowdy week of trading, gold “contrarians should be comforted by this.”
BoJ Will Shift Asset Purchases
July 31 (King World News) – Here is a portion of what Peter Boockvar wrote today as the world awaits the next round of monetary madness: The Bank of Japan took a crawl instead of a walk towards an eventual steepening in their yield curve. Instead of explicitly altering the complexion of yield curve control they said QE will be done in a more “flexible manner” and they will tolerate a 10 yr yield to move by 20 bps around zero rather than the previous range of 10 bps. They also said less reserves will be subject to the negative 10 bps deposit rate to help the banks.
The BoJ will shift some ETF purchases from Nikkei based to Topix based because they are now huge owners of many of the top Japanese companies. Lastly, they are utilizing ‘forward guidance’ which is just another way of telling us rates will stay low for a while. With Japan, shocking I know…
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“We took steps so we can continue our powerful monetary easing longer, because it is taking more time than expected to achieve our price target. I think that with these steps, we can continue with our massive stimulus program.”
By the way, they pushed out again when they think they’ll achieve their inflation goals.
For those gold watchers, the CFTC on Friday reported that non commercial shorts, aka specs, are the largest on record dating back to 1993.
“Contrarians Should Be Comforted By This”
Also reflecting how out of favor gold is, on Friday Vanguard announced that they are renaming their Vanguard Precious Metals and Mining Fund to Vanguard Global Capital Cycles Fund which will allow them to add names outside of just metals and mining. Contrarians should be comforted by this. Meanwhile, the US dollar has stalled out and the dollar index at 94.2, a three week low and remains well below the late 2016 peak of 103.3. I remain positive on the precious metals.
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