Global Asset Allocation: A Quiet Dollar Devaluation

Global Asset Allocation: A Quiet Dollar Devaluation Thanks to a subscriber for this report from Jeffries which may be of interest. Here is a section:  Without much fanfare, a second global monetary easing was unleashed in May as the dollar fell without anyone appearing to notice.


Comments of the Day

04 June 2020



Video commentary for June 3rd 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: bitcoin at the upper side of a six-month range, gold weak, oil steady, Stock markets firm, bonds and dollar weak, 



Global Asset Allocation: A Quiet Dollar Devaluation

Thanks to a subscriber for this report from Jeffries which may be of interest. Here is a section: 

Without much fanfare, a second global monetary easing was unleashed in May as the dollar fell without anyone appearing to notice. The fact that the greenback fell of its own volition suggests that the unprecedented risk aversion seen in March is really beginning to unwind. If so, then the US$1.2trn sitting in US money market funds since February will be itching to find a home or asset class that can hold its value (see Global Asset Allocation: Too Much Money Chasing Too Few Assets). Throughout 2019, US money markets only accumulated US$555bn.

As fears of the COVID-19 pandemic recede, the Federal Reserve is continuing to add dollars to the global monetary system at an unprecedented rate (see RHS chart). Just as importantly, US implied inflation expectations, as measured by the 10-year breakeven inflation rate, are rising after lurching into deflation. Coincidentally, this is occurring as the futures markets price in the probability of negative US rates. One of the most important turning points for the direction of equity markets is the shift into inflation (see US: Market Bottoms).


Eoin Treacy's view

The upwelling of emotion that has poured out onto the streets of the USA, and elsewhere, is a symptom of a much larger issue. The reality is that globalisation has hollowed out the middle classes of most OECD countries. Simultaneously, the evolution of technology means we can do even more with less which is dehumanising the economy. That also concentrates the benefits of globalisation in the hands of the well-connected, wealthy and/or highly educated individuals, but also leaves millions of people behind with a degraded standard of living.



Email of the day on DRD gold long base formations.

Can you add DRD Gold (ADR) to the library. It is priced just under 10 $. There is overhead resistance from the early 2000s; is this still relevant 20 years on? Can you do a comparative review of the N. American, Australian and South African gold mining sector?


Eoin Treacy's view

Thank you for this question which may be of interest. DRD’s South African and US listing are already in the library just search for DRD. The company has focused on processing South African mining tailings for the last couple of decades. It did have a brief foray into mining in Papua New Guinea but to the best of my knowledge it fell foul of resource nationalism, along with a number of other large international companies. As you point out the share has been ranging mostly below $10 for twelve years.



Latest Satoshi Nakamoto Candidate Buying Bitcoin No Matter What

This article by Olga Kharif for Bloomberg may be of interest to subscribes. Here is a section:

One reason is, Back believes Bitcoin will go to $300,000 from the current approximate price of $10,000 within five years -- without any additional adoption by institutional investors. Retail investors, who’ve carried the torch for the last 10-plus years, since Bitcoin’s debut, will continue to show support as institutions remain cautious, he said.

“It might not require additional institutional adoption because the current environment is causing more individuals to think about hedging,” Back said. “And retaining value when there’s a lot of money printing in the world.”

With more people working from home amid the Covid-19 epidemic, real-estate investments are more risky, he said. Bonds may be overvalued. And so some investors may be turning to Bitcoin, even though it too could see some headwinds as more people lose jobs, he said.

“It is causing people to think about the value of money and looking for ways to preserve money,” Back said. “It’s a difficult environment to get any yield.”

One reassuring sign of demand is that Grayscale Investments alone has bought more Bitcoin in the past few weeks than the amount of new coins that has been mined, Back said.


Eoin Treacy's view

The rationale for owning bitcoin is it is a resource with limited supply. Much of that supply is held outside the market and the mining of new supply has just become twice as difficult. The price has increased substantially following previous having of the mining reward but on this occasion that has yet to happen.



Eoin's personal portfolio: profits taken in commodity longs June 2nd


Eoin Treacy's view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided.


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