LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

COT Gold, Silver and US Dollar Index Report - September 20, 2019
By: GoldSeek.com

Fed’s Gold-Bull Impact
By: Adam Hamilton, Zeal Research

GoldSeek Radio Nugget: Michael Pento Ph.D.
By: Chris Waltzek Ph.D., GoldSeek Radio

Panicky Fed Flooding Overnight Markets with Cash
By: Mike Gleason

Semiconductor Sector; a Market & Economic Leader
By: Gary Tanashian, NFTRH

Gold Consolidates As The Fed Loses Control
By: Stewart Thomson, Graceland Updates

Precious Metals Update Video: Gold consolidating, watching recent lows
By: Ira Epstein

Serious Inroads, But Still Unfinished Business
By: Ted Butler

A Message to My Former Colleagues at Overstock
By: Patrick Byrne

Repo Rates And Gold: Something Big Is Happening
By: Dave Kranzler

 
Search

GoldSeek Web

 
The Tertiary Bubbles Have Burst, Now Let’s Watch the Secondary Ones


 -- Published: Tuesday, 6 February 2018 | Print  | Disqus 

By Graham Summers

 

The markets just changed.

 

Few understand what happened to the financial system after 2008. What happened was that the debt based financial system began to implode as debt deflation took hold. The scary thing is that it wasn’t even a large amount of debt deflation.

 

Remember the 2008 Crisis? That time when everyone thought the world was literally going to end? It’s that small dip in the dotted line below:

 

 US Gross Domestic Product vs. US Total Debt Securities, Trillions US Dollars (1945-2016).

http://www.goldseek.com/news/2018/2-6gs.png

Note: Data adapted from Federal Reserve Bank of St. Louis (2017).

To stop a full-scale collapse, Central Banks attempted to corner the sovereign bond market via interest rates and QE programs. I realize that many will fail to grasp the significance of this so let me explain.

 

In our current financial system, in which no major currency is backed by Gold or any other finite asset, sovereign bonds represent the bedrock for the system. They are the “risk-free” rate of return or the standard against which all risk assets are valued.

 

Put simply, Central Banks attempted to corner ALL risk by controlling the baseline against which it was valued.

 

This created bubbles in literally EVERYTHING: corporate bonds, state bonds, stocks, commodities, real estate, and even tertiary items like passive investing and shorting volatility.

 

Those who went “all in” on “free money” trades like shorting volatility or risk-parity funds, were in fact simply investing in a derivative of The Everything Bubble: a tertiary bubble in the idea that investing came without pain and was the equivalent of a free lunch.

 

Here’s the breakdown:

 

1)   Central Banks created a bubble in the risk-free rate or sovereign bonds, which lead to…

 

2)   A bubble in stocks as money was forced into risk to find higher returns (the “There Is No Alternative” or TINA) bubble, which lead to…

 

3)   A bubble in passive investing and shorting volatility… two sides of the same “stocks are never going to fall thanks to Centrals Banks” coin.

 

Yesterday, two these tertiary bubbles (the passive investing in risk-parity fund bubble and the short volatility bubble) blew up.

 

This is the beginning of a major market change.

 

I’m not saying that The Everything Bubble burst yesterday, I’m saying that volatility is back and that the tertiary bubble in passive investing and shorting volatility is over.

 

We now have to see how the secondary bubble in stocks holds up.

 

http://phoenixcapitalresearch.com/

 


| Digg This Article
 -- Published: Tuesday, 6 February 2018 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.