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  • Why China really needs to step up its gold purchases

    Alexander Gloy

    Central banks own most of the world’s gold (30,562 tonnes compared to 2,158 tonnes in ETF owned by private investors). Why? Our entire monetary system is based on fiat currencies (the paper is not worth anything – the value stems from the trust someone else will accept this paper for the value printed on it).…

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  • How Dr. Ben Copperfield makes trillions disappear – twice

    Alexander Gloy

    Fed Chairman Ben Bernanke is a magician. He can make trillions of debt disappear. Impossible? Let me show you how: Please take a look at the following table[1]. We are only going to look at the total marketable public debt[2]. Broken down into categories by instrument I compared the latest data (July 2011) with the…

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  • Road Map to Ruin

    Alexander Gloy

      Budget deficits in “good” times, build-up of government debt Few countries’ (GER, NED) exports lead to trade deficits for others (GR, ESP, POR) Costly bank bail-outs and fiscal “stimulus” Monetary stimulus (0% interest rates); useless Rating agencies finally wake up (downgrades) PIIGS unable to sell more debt as yields rise IMF/EU (read: taxpayers) step…

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  • Greece: Two Bail-outs and a Funeral

    Alexander Gloy

    Here we go again. Another bail-out. [Sigh.] I’ll try to make this as entertaining and easily readable as possible – but first the details of the bail-out agreed on July 21st: Fresh EUR 109bn EFSF/IMF loans until mid-2014 Private sector (read: banks) participation of EUR 37bn EUR 12.6bn from bond repurchases at below par (100%)…

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  • Merkel to Sinn: “In my office. NOW.”

    Alexander Gloy

    Hans-Werner Sinn, head of German research institute Ifo, has just put his life into peril. He had to pick a Swiss magazine (“Bilanz”) to express what nobody else is allowed to mention in Germany: “Greece is a bottomless barrel”. Hans-Werner Sinn, Ifo Institute Picture: Handelsblatt For those who remember, Sinn was the only one among…

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  • Investment choices in a world of incompetent central bankers

    Alexander Gloy

    Much of the following next is an excerpt from the May 2011 “Letter to investors”. This is supposed to be”big-picture thinking” and will only be updated if warranted. 1. As the economy is artificially inflated so are company profits and stocks. The party might continue – until someone like Paul Volker gets installed at the Fed. It…

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  • Looking back: “We are buying Greek government bonds!”

    Alexander Gloy

    May 3, 2010. The EU and the IMF have just announced a EUR 110bn bail-out for Greece. Greek 10-year government bonds are yielding below 9%. German financial newspaper “Handelsblatt” launches a multi-page call to lure unsuspecting citizens into buying Greek government bonds. You can (and should) still read this master piece here. Gabor Steingart, editor-in-chief, opens…

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  • Hungarian adventures in CHF: Laszlo wasn’t alone drinking CHF-laced Kool Aid

    Alexander Gloy

    In 2006 and 2007, more than 90% of new Hungarian mortgages were denominated in foreign currencies. Many foreign banks (KBC, Bayerische Landesbank, Erste Bank, Intesa Sanpaolo, Raiffeisen, Unicredit) were luring Hungarians with low interest rates. At the time, Hungarian mortgage rates were around 9%, while Euro-mortgages cost around 4.5%. But those cheapo Swissies were to…

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  • Greece: What I learned from a Vietnamese Rickshaw Driver

    Alexander Gloy

    Traveling through Vietnam provided a few valuable lessons for life. You arrive, armed only with a copy of the Lonely Planet. Any map turns out to be pretty useless, as street names are frequently changed or the street layout completely altered (this is mid-1990’s). You are being inundated with offers from “cyclo-” (bicycle rickshaw) drivers.…

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  • Is this a buying opportunity?

    Alexander Gloy

    The earthquake and nuclear situation in Japan has triggered a sell-off in the equity markets. Is this a buying opportunity? I say “no”. Two reasons: 1. The Japanese situation is likely to trigger many “unintended” consequences we cannot anticipate right now (for example a strong Yen will hurt profits of Japanese exporters, hence depress their…

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