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Market Morning: Gold Breaks $1,500, World Watches Yuan, Bezos Sells, Fed Chairs Unite

ME Staff

Gold Briefly Breaks Through $1,500, JPMorgan Says Buy

JPMorgan (NYSE:JPM) is coming out as a gold bull, though a little late in the game since gold (NYSEARCA:GLD) has been rising for nearly 4 years now since bottoming at $1,045 in December of 2015. The big bank had some choice words about the US dollar (NYSEARCA:UUP) as well. Quoted by Kitco, JPMorgan said, “There is nothing to suggest the dollar dominance should remain in perpetuity,” the note said. “In fact, the dominant international currency has changed many times throughout history going back thousands of years as the world’s economic center has shifted,” making them sound like a typical gold bug newsletter.

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Overnight, December gold futures briefly broke the $1,500 mark. This is the first time any gold futures contract has risen above that line since the gold crash of April, 2013, when gold collapsed 15% in two days from $1,564 to $1,335. From a technical perspective, gold is racing for that gap to possibly fill it, which means the next resistance zone is somewhere around $1,560 or so.

World Watches With Baited Breath Over Four Ten Thousandths Of a Yuan

Markets had a minicrash on Monday when the People’s Bank of China, by the People’s Bank and for the People’s Bank, briefly set the Yuan (NYSEARCA:CNY) fix above 7 per USD. The daily Yuan fix gives a general midpoint target of where They The People are going to manipulate exchange rates for that day. The Yuan was fixed about 1.65% lower than the day before, and everyone started yelling about currency wars. Yesterday, however, markets breathed a sigh of relief because the fix was set at just below 7, which everyone thinks is important for some reason. Perhaps because 7 is a lucky number.

Today, the PBOC set the daily fix at 6.9996 per dollar, which is confusing traders because they don’t know if that means there’s a currency war or not, since it’s still technically below 7. It all hangs in the balance of 0.0004 Yuan, or about 5.7 ten thousandths of a cent. Talk about a razor’s edge. If Max Planck were an economist rather than a physicist, that amount may have been considered the Planck monetary unit, at the point of which quantum economic reality as we know it breaks down.

Bloomberg, however, wants to take it even further, saying that Wednesday’s level “gives the People’s Bank of China little headroom if it wants to track the spot rate lower while staying on the strong side of 7.” Well, the Planck length is 1.6 X 10-35 meters so there are still 30 decimal places of wiggle room, if money and length are equivalent, which they’re not. Anyway, that’s plenty.

Speaking of China, Hong Kong Situation Deteriorates Further

Hong Kong is quickly and not very quietly descending into chaos, with China threatening to respond and punish rioters directly in a threat that could spell the end of the island as a semi-autonomous sort of part of China sort of not, and instead just become part of China, which wouldn’t be good for people who like to say things and do things that the government doesn’t like. Some of the hard core protesters have said that they are ready to die to protect Hong Kong from a total Chinese takeover, according to the Wall Street Journal. The Hang Seng is getting closer to 52 week lows, though is quiet this morning, mostly unchanged. Hong Kong has a bit more at stake though than four ten thousandths of a Yuan.

Jeff Bezos Sells A Bunch of Amazon Stock

Jeff Bezos, the world’s richest man and CEO of Amazon (NASDAQ:AMZN), has sold about $2.8 billion worth of Amazon shares from July 30th to August 2nd, in 80 tranches, with the biggest order coming in at 43,327 shares sold on July 31st. Word has it he is using the proceeds to fund his space company, Blue Origin, which probably refers to his planet, Earth. Amazon shares had been down for 9 days straight until yesterday’s Yuan Fix Bounce.

Past Fed Chairs Tell Trump To Lay Off

Paul Volcker, Alan Greenspan, Ben Bernanke, and Janet Yellen have all signed a letter in the Wall Street Journal advising President Trump to back off from criticizing the Federal Reserve. “We are united in the conviction that the Fed and its chair must be permitted to act independently and in the best interests of the economy, free of short-term political pressures and, in particular, without the threat of removal or demotion of Fed leaders for political reasons,” said the four people. In an admission as to how weak of a reed braces the monetary policy of the world’s reserve currency, “Even the perception that monetary-policy decisions are politically motivated, or influenced by the threats that policymakers won’t be able to serve out their terms of office, can undermine public confidence that the central bank is acting in the best interest of the economy. That can lead to unstable financial markets and worse economic outcomes.” Sounds comforting.

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