Comments of the Day
05 May 2020
Video commentary for May 4th 2020
Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: stock markets short-term overbought but still steady, gold, oil and bitcoin steady, India and China pull back, Turkish Lira at a new low.
Leave no dark corner
Thanks to a subscriber for this article by Matthew Carney for Australia’s ABC news. Here is a section:
The Party is using the system to win back some of the control it lost when China opened up to the world in the 1980s and rapid development followed.
It’s a way to silence dissent and ensure the Party’s absolute dominance.
Already, about 10 million people have been punished in the trial areas of social credit.
Liu Hu is just one of them.
Hu lost his social credit when he was charged with a speech crime and now finds himself locked out of society due to his low score.
In 2015, Hu lost a defamation case after he accused an official of extortion.
He was made to publish an apology and pay a fine but when the court demanded an additional fee, he refused.
Last year, the 43-year-old found himself blacklisted as “dishonest” under a pilot social credit scheme.
“There are a lot of people who are on the blacklist wrongly, but they can’t get off it,” says Hu.
It’s destroyed his career and isolated him, and he now fears for his family’s future.
The social credit system has closed down his travel options and kept him under effective house arrest in his hometown of Chongqing.
In an apartment above the streets of Chongqing city, Hu tries to use a phone app to book train tickets to Xi’an. The attempt is rejected.
“[The app] says it fails to make a booking and my access to high-speed rail is legally restricted,” he explains.
Hu’s social media accounts, where he published much of his investigative journalism, have also been shut down.
Hu claims his combined Wechat and Weibo accounts had two million followers at their peak but are now censored.
Eoin Treacy's view
Safety and stability are bywords for control. Personal prestige as a means of improving one’s living standards is the tool used to ensure compliance. The confluence of social media primping is hardly a coincidence. That is not something China has a monopoly on. The difference, however, is democracy and rule of law ensures a check on the overarching ambitions of governments to exert control over their citizens.
Email of the day - on gold volumes
Like you, I follow the PMs, particularly gold and silver. I noticed a remarkably consistent pattern in spot gold trading volume. Going back 10 years, the volume has picked up and dropped back on alternate months. During the summer doldrums there is a hiatus, as one would expect. The alternating pattern then resumes around the end of October each year. I am very interested to hear your explanation for this.
Eoin Treacy's view
Thanks for this question which others may have an interest in. Spot gold does not have volume data because it is an indicative price rather than a traded price. Volume data is available on futures contracts.
Email of the day on junior gold miners
Is there any chance you can add Market Vectors Junior Gold Miners (GDXJ) LONDON quote to the chart library please? It seems to trade at a $5-$6 difference to the US quote. I assume this is the same underlying fund - I hope it’s not too dumb a question to ask why the difference? However, it looks like an interesting ETF but I can only by the London listed entity in my fund and therefore I'd like to be able to track it in your superb chart library. Thanks so much.
Eoin Treacy's view
Thank you for this question and it is certainly not a dumb question. The fund is now available in the Chart Library and I will make a guess at the answer. Both funds do track the same index which is the MVIS Global Junior Gold Miners Total Return Index.
India Offers Land Twice Luxembourg's Size to Firms Leaving China
This article by Shruti Srivastava for Bloomberg may be of interest to subscribers. Here is a section:
Providing land with power, water and road access may help attract new investments to an economy that was slowing even before the virus hit, and is now staring at a rare contraction as a nationwide lockdown hit consumption.
The government has hand-picked 10 sectors -- electrical, pharmaceuticals, medical devices, electronics, heavy engineering, solar equipment, food processing, chemicals and textiles -- as focus areas for promoting manufacturing. It has asked embassies abroad to identify companies scouting for options. Invest India, the government’s investment agency, has received inquiries mainly from Japan, the U.S., South Korea and China, expressing interest in relocating to the Asia’s third-largest economy, the people said.
The four countries are among India’s top 12 trading partners, accounting for total bilateral trade of $179.27 billion. The foreign direct investments by the four nations between April 2000 and December 2019 stands at over $68 billion, government data shows.
Making unused land available in special economic zones, which already have robust infrastructure in place, is also being examined. A detailed scheme for attracting foreign investments is expected to be finalized by end of the month, the people said.
Eoin Treacy's view
India has the most favourable demographics of any large population country in the world. May people speak English and it has a democratic imperative to deliver on improving standards of living. The missing link has always been the corrupt bureaucracy which stands in the way of infrastructure development and industrialisation. If that is finally starting to change companies will have the benefit of lower labour costs to lure them away from China.