Mystery Of New York Fed Robbery Has Central Banks Asking Who’s Next

Bangladesh has learned a valuable lesson over the past two months: Do. Not. Trust. The. New. York. Fed.

On a quiet Friday morning in early February, a series of instructions using authenticated SWIFT codes was sent to 33 Liberty allegedly from the Bangladesh central bank requesting the transfer of nearly $1 billion from the country’s FX reserves. Continue reading

“Fasten Your Seatbelts”: Kyle Bass Previews The Collapse Of China’s $34 Trillion Banking Sector

Earlier this month, Kyle Bass asked a funny question in a discussion with CNBC’s David Faber. To wit: “If some fund manager in Texas is saying that your currency is dramatically overvalued, you shouldn’t care on a $10 trillion economy with $34 trillion in your banks. I have, call it a billion –  it’s so small it should be irrelevant and yet somehow it’s really relevant.”

Bass was referring to China’s penchant for firing off hilariously absurd “Op-Eds” in response to anyone who suggests that the country may indeed be experiencing the dreaded “hard landing” or that a much larger yuan devaluation is a virtual certainty. The People’s Daily literally laughed at George Soros when the aging billionaire said he was short Asian currencies in Davos. “Declaring war on China’s currency? Ha ha,” PD wrote. Chinese media also called Soros a “crocodile,” a “predator,” and said his yuan gambit “cannot possibly succeed.” Continue reading

Will China Dumping US Bonds Undermine Global Finance?

China, Russia and Brazil have recently been selling US Treasuries, hedging their fiscal risks and stirring volatility on Wall Street, potentially signaling a more significant slowdown in the global economy coming up.

Kristian Rouz — Several emerging markets, including China, Brazil, Russia and Taiwan, previously among the biggest buyers of US governmental bonds, have recently been selling them at the fastest pace since 1978. US bonds, commonly referred to as ‘Treasury notes’ or ‘Treasuries’ are, however, widely regarded as being among the most ‘safe haven’ assets in the financial world, meaning the emerging markets must have serious reason to cash those out for the more volatile money liquidity. Continue reading

How Central Banks Use Gold Swaps To “Boost” Their Gold Holdings

With the specter of a “yes” outcome to the Swiss gold referendum finally being priced in by the market, and the frontrunning of the SNB’s potential 1,500 tons of gold purchases starting to move the price of gold higher, a question has emerged: is there enough physical gold to satisfy Swiss gold demand in case of a favorable outcome to the referendum. Well, as Deutsche Bank reports, that may not even be an issue. Because as the following step by step explanation demonstrates, the SNB may simply “window dress” its balance sheet with gold swaps.

So for anyone curious how banks “represent and warrant” that they have thousands of tons of physical gold when in reality they have far less if not zero physical in storage and all in “synthetic” form, here is the blow by blow. Continue reading