Brave New World: Record gold delivery hints at significant dollar devaluation

Ritesh Jain, a Dalal Street veteran, trend watcher and Global Macro Investor, captures global macro investment opportunities and economic, business and financial trends with charts and commentaries in this space.

It’s something which has not happened in history. A stunning 2.8 million oz of gold was marked for delivery in last month's contract equating 88 tonnes worth $4-5 billion. Somebody is really taking a big call that the US dollar will be devalued significantly.

The Yield curve control: I believe the Fed will not allow yields to rise beyond even if recovery takes hold and will just cap the yields like 1942-51. During the initial period of YCC, the multiples just exploded.

The US treasury is looking to spend $1.6 trillion between now and the election. This should keep liquidity ample in the system in run up to the presidential election. Any correction of around 5% should be used to deploy cash.

Government handouts are becoming a bigger part of the personal income. I believe this is not temporary but will become a more permanent part of people’s income.

The sectors which are more aligned to the government spending will be a big beneficiary in the near to medium term.

Morgan Stanley has upgraded Prada with a simple 5-point thesis.

Morgan Stanley's Macro Outlook: In the longer term, inflation is more likely than disinflation.

Russell Napier believes that we are close to financial repression. Unlike GFC, fiscal policy will dominate monetary policy and hence we will see inflation.