Gold and Bonds Rally Overnight

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OVERNIGHT RECAP: Stocks stable while Gold and Bonds Benefit from CB Rescue

ECB will be changing rules for asset purchasing to add more eligible securities- merkel is buying Apple now because bonds too high?
GOLD overnight high is 1340.9, currently up $15.80- Kitco
ChinaYuan lowest level since 2010- bberg- implies that last 6 months of Gold purchases were in anticipation of devaluation now.
Bonds rally-10 year (1.4%), 30 Year (2.20%) hit record highs on QE expectations- mkts front running expected QE
Oil Stable after big gains last 2 days
UK Conservative Party plays musical chairs- MS
BOE likely to Ease from 050 to 0.00% rate over summer- Street, bberg, MS

Summary

Markets reacted to hopes that central banks will act to limit the Brexit vote and all its implications. Gold and Silver rallied with Bonds while stocks were lightly bid. It is apparent that the stock rally of the last few days was in anticipation of Central Banker stimulus coming to the rescue of the EU markets in the form of easier money. Buy while stocks rallied, the markets did not see the "risk-off assets" of Gold and Bonds sell off. Quite the contrary. They not only held but rallied in some instances. Silver caught up to Gold yesterday, and Gold took the lead last night.

24 Hour Chart- A Risk-On Rally?

- Interactive Chart courtesy of Kitco.com

Brexit creates Panic::Banks create Inflation

Gold and Bonds enjoyed capital inflow duting Brexit because of a panic to safety. But now the panic is over and both are rallying even as stocks erase their gains. Why? Because the real reason to buy bonds is that Central Bankers will likely do another QE program wherein they buy their own bonds back. it is more Central Banker magic. Print currency to buy your own bonds. the result is a bigger money float with the illusion of low inflation.

What Central Bankers Really Do: CTRL-P

Central Bankers not in Gold Buying Business (publicly)

Gold is the real barometer of safety here. It is telling you that all currencies: the EU, the USD the GBP, and the Yuan are about to start a coordinated round of debasement. If everybody is debasing their currency, what is the measuring stick to compare them to? Gold is the one currency that cannot be created by simply hitting CTRL-P on your screen. And so it rallies in the panic of failed policies. And now it rallies in the expectation of bankers doubling down on those policies.

Risk On, Risk Off is Wrong

We think that the Risk on trade of buying stocks in the hopes all will be well and the Risk-Off trade of buying Gold and Bonds is no longer a valid description of what is happening. We are now seeing stocks rally on the backs of stimulus expectations. We are seeing Bonds rally on the expectations of QE type Gov't bond repurchases. Finally we are seeing Gold and Silver rally as an unintended ( to the Bankers) consequence of these actions.

Easy Money- The Illusion of Safety

That consequence is that inflation is here and has been for some time. Printing money is inflationary. We have just seen Central Banks do all they can to steer that extra money to assets they can live with like Stocks and Bonds. But now, we are seeing Gold, its own currency, benefit more quickly adn wit hless hesitation than in the past. Gold is now the beneficiary of easy money as people become disillusioned with stock volatility, and the omniscience of Central Bankers

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