How Argentina May Become the Freest Country on Earth - Mike Maloney & Alan Hibbard (Part 1)
Published: Tuesday, 07 January 2025 11:31 | 
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In this eye-opening deep dive, we explore Argentina’s astounding economic turnaround after one year under President Javier Milei.
China Signals Confidence in Gold with Fresh Reserve Purchases
Published: Tuesday, 07 January 2025 10:38 | |
| The People's Bank of China has demonstrated renewed commitment to gold accumulation, expanding its reserves for the second straight month in December despite historically high prices. The central bank's holdings increased to 73.29 million fine troy ounces from 72.96 million in November, marking a significant return to buying after a six-month pause during 2024's price surge. This move reflects China's persistent strategy to diversify its reserves, even as gold trades near record levels. The timing is particularly notable as gold's rally has cooled following Trump's election victory and its impact on dollar strength, with Goldman Sachs recently adjusting its $3,000 per ounce target due to expectations of fewer Fed rate cuts in 2025. The PBOC's continued buying, despite these market conditions, signals China's long-term confidence in gold as a strategic reserve asset.
Fed's Hidden Move: Key Rate Adjustment Could Extend QT into 2025
Published: Tuesday, 07 January 2025 10:34 | |
| Beyond the anticipated policy rate cut, the Federal Reserve is poised to make a significant technical adjustment to its market operations by reducing the reverse repo facility rate to 4.25%, eliminating a pandemic-era safety margin. This strategic move serves multiple purposes: it helps manage pressure on overnight repo rates, facilitates the transition of funds from the reverse repo facility to bank reserves, and could extend quantitative tightening into 2025. The Fed has been carefully managing its balance sheet reduction, slowing from an initial rapid pace to a more measured $25 billion monthly Treasury runoff. The timing is particularly relevant given year-end funding pressures and the Fed's broader goal of maintaining "ample" rather than "abundant" reserves. This adjustment, discussed in November's meeting minutes, reflects the Fed's ongoing efforts to fine-tune market liquidity and avoid the type of funding shock that occurred in September 2019, though some analysts, like Lou Crandall at Wrightson ICAP, suggest the Fed might delay the change until January to separate it from other policy decisions.
UK Government Faces Highest Borrowing Costs Since 1998
Published: Tuesday, 07 January 2025 10:30 | |
| The UK government is facing its highest long-term borrowing costs this century, with 30-year gilt yields reaching 5.22% - a level not seen since 1998. This surge comes amid a perfect storm of economic challenges: accelerating inflation at 2.6%, stagnant growth (with the Bank of England forecasting zero growth for Q4 2024), and concerns about President-elect Trump's tariff policies potentially exacerbating price pressures. The timing is particularly problematic as the UK Treasury needs to sell £297 billion in bonds this fiscal year, the second-highest amount on record. Unlike the US, where economic conditions remain relatively robust despite similar yield increases, the UK's stagflationary environment is deterring investors from long-duration debt. This was evident in the recent auction of £2.25bn worth of 2054 bonds, which commanded the highest yields this century at 5.20%, highlighting the growing cost of government borrowing in an increasingly challenging economic landscape.
Beyond Competition: Gold and Bitcoin as Complementary Assets
Published: Tuesday, 07 January 2025 10:28 | |
| As both gold and bitcoin achieved record highs in 2024, investment experts are making the case for including both assets in 2025 portfolios, emphasizing their distinct characteristics and near-zero correlation. Gold, with its 5,000-year history, maintains a 0.03% correlation with the S&P 500 since 1971, providing proven protection against inflation and currency depreciation. Bitcoin, despite Fed Chair Powell's comparison to gold, shows different market behavior with a 0.21 correlation to the S&P 500 since 2014. Investment professionals recommend conservative allocations: BlackRock suggests up to 2% for bitcoin, while portfolio managers like Thomas Martin advocate up to 10% for gold. The key distinction lies in their risk profiles - gold serves as a stable store of value, while bitcoin offers potential for exponential growth but with the risk of total loss. This complementary relationship, rather than competition, makes a strong case for including both assets in diversified portfolios, particularly given economic uncertainties ahead in 2025.