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Friday, March 7, 2014

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China: Bubble Trouble May Be Brewing

Money Supply and Lending Growth Decline Sharply

Both the growth rate of China's narrow M1 money supply and the broader M2 measure have recently declined to levels not seen in many years. Here is a recent chart showing both:

Annualized growth in China's narrow money measure M1 (currency and sight deposits) has collapsed to just 1.5%, a level not seen in at least the past 15 years (and probably a good while longer). M2, which includes savings deposits, corporate time deposits, deposits in trusts and a few other smaller items grew at 13.2% year-on-year, but even that is one of the lowest growth rates of the past decade – click to enlarge.

We're not 100% sure if China's M1 is a good proxy for money TMS, as there is a paucity of readily available monetary data from the PBoC (its web site is basically useless, at least it was when we last looked) and we don't know whether savings deposits are available on demand in China or not, but it is a fairly good bet that it actually is at the very least a good proxy for TMS-1.

As such we would expect it to be more volatile, which it indeed is. As you can see, its growth rate has peaked at nearly 39% year-on-year in the post Lehman push by the Chinese authorities, when they took steps to reliquefy the system by ordering China's banks to lend as much as possible to all comers. It's a good thing we have fiat money and these central planners everywhere, as that sure lowers the monetary system's volatility a lot! Steady as she goes!

Looking at M1 in absolute numbers, we can see that the sharp drop-off in the annualized growth rate was the result of a very big monthly contraction in M1 early this year. This suggests the authorities are deliberately stepping on the brakes, or are at least not trying to counter a case of private sector loan contraction.

China's M1 money supply in absolute numbers. There have been several instances of month-on-month contractions, but the most recent one was unusually large – click to enlarge.

It is no wonder in light of these developments that China's economic data have lately been on the weak side. We understand the authorities are trying to restore some balance to the system after the credit binge of 2009-2010, but there is a not inconsiderable chance that this time, they will end up producing a major bust in the process. That is not a problem per se, but we are wondering how much capital malinvestment it will actually reveal. It could be a lot, judging from the anecdotal evidence of entire cities standing empty, vast stock piles of industrial metals securing loans that are in turn invested in dubious 'wealth management' products, the extremely large capacities in heavy industry, and so forth. A chart showing bank loan growth and 'total social financing' further buttresses the idea that a major slowdown and perhaps even a recession could be close at hand:

China: Bank loan growth, 'social financing' growth (includes shadow banking channels) and nominal GDP growth – click to enlarge.

Stocks Are Already in the Dumps – Is It Real Estate's Turn Next?

2013 was a year of brisk price rises for real estate in China's major cities. These cities are experiencing the by far greatest urban population growth, and in previous years, China's authorities were targeting them for a selective reining in of property speculation. These selective curbs were lifted by the new government in late 2012, leading to a price explosion in 2013.

Admittedly, China's property market is difficult to decipher from afar. One often wonders how it is possible for prices to remain as sky high as they are (especially relative to incomes) in view of so much supply coming on stream over the years. Partly the supply is probably soaked up by ongoing urbanization, and partly the resilience of prices is probably due to the country's closed capital account. Many people evidently don't know how to best invest their savings in light of interest rates that are often negative in real terms, and real estate is regarded as a 'sure thing' (and so far, it has been).

However, the rate of price increases in the large cities has begun to turn down lately:

New home prices, year-on-year percentage change in large Chinese cities – click to enlarge.

One thing is clear, there are many signs that economic activity in general is possibly on the verge of contraction. PMI data have been consistently weak for instance, especially in the manufacturing sector. If a more widespread decline in real estate prices were to happen, banks could soon be forced to admit to more NPLs than they have so far done.

Miscellaneous Charts – Bank Loans, NPLs, Trust Products, Steel Production …

We found the following 'all is well'(?) chart published by the Economist magazine a while back, that compares loan and NPL growth in China:

all is well It does not look very credible, but there it is …

According to estimates by China's Banking Regulatory Commission, NPLs will rise a tiny little bit in coming years, but by and large there is nothing to worry about…(note that the 2012 low in NPLs for listed banks only was even lower at just 0.93%!)

NPLs across the entire banking system, actual and estimated (official estimate) – click to enlarge.

But looking at a few other charts, we can just not bring ourselves to actually believe it …

Wealth management products up for redemption every month until January 2016, via BAC – click to enlarge.

China's steel production – evidence of malinvestment? We think so – click to enlarge.

And lastly, the Shanghai stock index – still in a downtrend – click to enlarge.

Conclusion:

There is plenty of scope for a financial/economic 'accident' in China now that money supply growth is slowing down sharply. Like nearly every year, we wonder once again if the mandarins in Beijing will be able to pull yet another rabbit out of the hat. One of these days, the wizards will come up empty.

See the original article >>

Copper Collapses Most Since Dec 2011 On China Credit Fears

by Tyler Durden

We noted last night that Iron Ore futures prices were in free-fall as the vicious circle of China's commodity-collateral-backed shadow banking system unwind hits home amid fears of contagion from the Chaori Solar default. The first domestic Chinese corporate bond default has retail investors running scared as surprise spreads that the local government did not come to the rescue. The deleveraging is now spreading to copper prices (remember the massive cash-for-copper schemes of last year) as borrowers are forced to sell to meet cash calls which in turn drops copper prices, reducing collateral values and tightening credit conditions even more. This is the biggest copper price drop since Dec 2011...

5 Things To Ponder: Serious Stuff

by Lance Roberts

There was so many good things to read this past week that it was hard to narrow it down to a topic group. After a brief respite early this year, the markets are hitting new highs confirming the current bullish trend. As a money manager, this requires me to increase equity exposure back to full target weightings. After such an extended run in the markets, this seems somewhat counter-intuitive. It is, but as Bill Clinton once famously stated; "What is....is."

However, while the current market "IS" within a bullish trend currently, it doesn't mean that this will always be the case. This is why, as investors, we must modify Clinton's line to: "What is...is...until it isn't." That thought is the foundation of this weekend's "Things To Ponder." In order to recognize when market dynamics have changed for the worse, we must be aware of the risks that are currently mounting.

1) Fisher Warns Fed's Bond Buying Could Be Distorting Markets via Reuters

While this article falls in the "no s***" category, Dallas Fed President Richard Fisher points out areas that we should be paying closer attention to for signs of change.

"There are increasing signs quantitative easing has overstayed its welcome: Market distortions and acting on bad incentives are becoming more pervasive," he said of the asset purchases, which are sometimes called QE.

"I fear that we are feeding imbalances similar to those that played a role in the run-up to the financial crisis."

Here are his main points:

1) QE was wasted over the last 5 years with the Government failing to use "easy money" to restructure debt, reform entitlements and regulations.

2) QE has driven investors to take risks that could destabilize financial markets.

3) Soaring margin debt is a problem.

4) Narrow spreads between corporate and Treasury debt are a concern.

5) Price-To-Projected Earnings, Price-To-Sales and Market Cap-To-GDP are all at "eye popping levels not seen since the dot-com boom."

"We must monitor these indicators very carefully so as to ensure that the ghost of 'irrational exuberance' does not haunt us again,"

In order to make it in professional sports, you have to be an elite athlete. What is amazing, is that among all of the elite athletes, there are always one or two that rise above all others. Players like Michael Jordon, Tiger Woods, Nolan Ryan and many others have elevated their game to inexplicable levels. In the investment game, there are a few individuals that have done the same. The follow three pieces are views from some of these men Howard Marks, Jeff Gundlach and Seth Klarman.

2) Howard Marks: In The End The Devil Usually Wins via Finanz Und Wirtschaft

"Our mantra at Oaktree Capital for the last few years has been: «move forward, but with caution». Although a lot has changed since then I think it’s still appropriate to keep the same mantra. Today, things are not cheap anymore. Rather I would describe the price of most assets as being on the high side of fair. We’re not in the low of the crisis like five years ago."

"Let’s think about a pendulum: It swings from too rich to too cheap, but it never swings halfway and stops. And it never swings halfway and goes back to where it came from. As stocks do better, more people jump on board. And every year that stocks do well wins a few more converts until eventually the last person jumps on board. And that’s the top of the upswing."

"But there actually are two risks in investing: One is to lose money and the other is to miss opportunity. You can eliminate either one, but you can’t eliminate both at the same time."

"There are two main things to watch: valuation and behavior."

3) Seth Klarman: Downplaying Risk Never Turns Out Well via Value Walk

"“In the face of mixed economic data and at a critical inflection point in Federal Reserve policy, the stock market, heading into 2014, resembles a Rorschach test,” he wrote. “What investors see in the inkblots says considerably more about them than it does about the market.”

"If you’re more focused on downside than upside, if you’re more interested in return of capital than return on capital, if you have any sense of market history, then there’s more than enough to be concerned about.”

“We can draw no legitimate conclusions about the Fed’s ability to end QE without severe consequences.”

“Fiscal stimulus, in the form of sizable deficits, has propped up the consumer, thereby inflating corporate revenues and earnings. But what is the right multiple to pay on juiced corporate earnings?”

“There is a growing gap between the financial markets and the real economy,”

“Our assessment is that the Fed’s continuing stimulus and suppression of volatility has triggered a resurgence of speculative froth.”

“In an ominous sign, a recent survey of U.S. investment newsletters by Investors Intelligence found the lowest proportion of bears since the ill-fated year of 1987,” he wrote. “A paucity of bears is one of the most reliable reverse indicators of market psychology. In the financial world, things are hunky dory; in the real world, not so much. Is the feel-good upward march of people’s 401(k)s, mutual fund balances, CNBC hype, and hedge fund bonuses eroding the objectivity of their assessments of the real world? We can say with some conviction that it almost always does. Frankly, wouldn’t it be easier if the Fed would just announce the proper level for the S&P, and spare us all the policy announcements and market gyrations?”

4) Jeff Gundlach & Howard Marks: Beware Of Junk Bonds via Pragmatic Capitalist

"There’s been some cautionary commentary in recent months from some bond market heavyweights. Most notably, Howards Marks and Jeff Gundlach. In a Bloomberg interview today, Marks said you need to be cautious about low quality issuers:

'When things are rollicking and the market is permitting low-quality issuers to issue debt, that’s when you need a lot of caution,'

And just a few weeks before that Jeff Gundlach referred to junk bonds as the most overvalued they’ve ever been relative to Treasury Bonds."

5) Bernanke Unleashed: What He Can Say Now That He Couldn't Say Beforevia Zero Hedge

Now that Ben Bernanke is no longer the head of the Fed, he can finally tell the truth about what caused the financial crash. At least that's what a packed auditorium of over 1000 people as part of the financial conference staged by National Bank of Abu Dhabi, the UAE's largest bank, was hoping for earlier today when they paid an exorbitant amount of money to hear the former chairman talk.

"The United States became 'overconfident', he said of the period before the September 2008 collapse of U.S. investment bank Lehman Brothers. That triggered a crash from which parts of the world, including the U.S. economy, have not fully recovered.

'This is going to sound very obvious but the first thing we learned is that the U.S. is not invulnerable to financial crises,' Bernanke said.

"He also said he found it hard to find the right way to communicate with investors when every word was closely scrutinised. 'That was actually very hard for me to get adjusted to that situation where your words have such effect. I came from the academic background and I was used to making hypothetical examples and ... I learned I can't do that because the markets do not understand hypotheticals.'

“The complexity though arises because in order to help the average person, you have to do things -- very distasteful things -- like try to prevent some large financial companies from collapsing. The result was there are still many people after the crisis who still feel that it was unfair that some companies got helped and small banks and small business and average families didn’t get direct help. It’s a hard perception to break.”

I guess the real question is now that the markets are once again over confident, over extended and excessively bullish - have we actually learned anything?

See the original article >>

The Secret History of the Financial Crisis

by Harold James

PRINCETON – Balzac’s great novel Lost Illusions ends with an exposition of the difference between “official history,” which is “all lies,” and “secret history” – that is, the real story. It used to be possible to obscure history’s scandalous truths for a long time – even forever. Not anymore.

Nowhere is this more apparent than in accounts of the global financial crisis. The official history portrayed the US Federal Reserve, the European Central Bank, and other major central banks as embracing coordinated action to rescue the global financial system from disaster. But recently published transcripts of 2008 meetings of the Federal Open Market Committee, the Fed’s main decision-making body, reveal that the Fed has effectively emerged from the crisis as the world’s central bank, while continuing to serve primarily American interests.

The most significant meetings took place on September 16 and October 28 – in the aftermath of the collapse of the US investment bank Lehman Brothers – and focused on the creation of bilateral currency-swap agreements aimed at ensuring adequate liquidity. The Fed would extend dollar credits to a foreign bank in exchange for its currency, which the foreign bank agreed to buy back after a specified period at the same exchange rate, plus interest. This gave central banks – especially those in Europe, which faced a dollar shortage as US investors fled – the dollars they needed to lend to struggling domestic financial institutions.

Indeed, the ECB was among the first banks to reach an agreement with the Fed, followed by other major advanced-country central banks, including the Swiss National Bank, the Bank of Japan, and the Bank of Canada. At the October meeting, four “diplomatically and economically” important emerging economies – Mexico, Brazil, Singapore, and South Korea – got in on the action, with the Fed agreeing to establish $30 billion swap lines with each of their central banks.

Though the Fed acted as a kind of global central bank, its decisions were shaped, first and foremost, by US interests. For starters, the Fed rejected applications from some countries – whose names are redacted in the published transcript – to join the currency-swap scheme.

More important, limits were placed on the swaps. The essence of a central bank’s lender-of-last-resort function has traditionally been the provision of unlimited funds. Because there is no limit on the amount of dollars that the Fed can create, no market participant can take a speculative position against it. By contrast, the International Monetary Fund has finite resources provided by member countries.

The Fed’s growing international role since 2008 reflects a fundamental shift in global monetary governance. The IMF emerged at a time when countries were routinely victimized by New York bankers’ casual assumptions, such as J.P. Morgan’s assessment in the 1920’s that Germans were “fundamentally a second-rate people.” The IMF was a critical feature of the post-WWII international order, intended to serve as a universal insurance mechanism – not one that could be harnessed to advance contemporary diplomatic interests.

Today, as the Fed documents clearly demonstrate, the IMF has become marginalized – not least because of its ineffective policy process. Indeed, at the outset of the crisis, the IMF, assuming that demand for its resources would remain low permanently, had already begun to downsize.

In 2010, the IMF made a play for resurrection, presenting itself as central to solving the euro crisis – beginning with its role in financing the Greek bailout. But here, too, a secret history has been revealed – one that highlights just how skewed global monetary governance has become.

The fact is that only the US and the massively over-represented countries of the European Union supported the Greek bailout. Indeed, the major emerging economies all strongly opposed it, with the Brazilian representative calling it “a bailout of Greece’s private debt holders, mainly European financial institutions.” Even the Swiss representative condemned the measure.

As fears of a sudden collapse of the eurozone have given way to a prolonged debate about how the costs will be met through bail-ins and write-offs, the IMF’s position will become increasingly convoluted. Though the IMF is supposed to have seniority over other creditors, there will be demands to write down a share of the loans that it has issued. Poorer emerging-market countries would resist such a move, arguing that their citizens should not have to foot the bill for fiscal profligacy in much wealthier countries.

Even the original advocates of IMF involvement are turning against the Fund. EU officials are outraged by the IMF’s apparent effort to gain support in Europe’s debtor countries by urging write-offs of all debt that it did not issue. And the US Congress has refused to endorse the expansion of IMF resources – part of an international agreement brokered at the 2010 G-20 summit.

While the outrage that followed the appointment of another European as IMF Managing Director in 2011 is likely to ensure that the Fund’s next head will not hail from Europe, the IMF’s fast-diminishing role means that it will not matter much. As 2008’s secret history shows, what matters is who has access to the Fed.

See the original article >>

With Average House Prices At $6.8 Million In Central London, Is A Property Bubble Set To Burst!

by GoldCore

Today’s AM fix was USD 1,348.25 EUR 971.22 and GBP 805.16 per ounce. Yesterday’s AM fix was USD 1,334.25, EUR 971.57 and GBP 798.00 per ounce.

Gold rose $12.90 or 0.96% to $1,350.30/oz. Silver also rose $0.30 or 1.42% to $21.47/oz.

Gold has continued to edge higher and should achieve a fifth consecutive weekly higher close. This continued rise in gold’s price is bullish from a technical and momentum perspective.

Is London’s Property Bubble Set To Burst?

There are increasing signs that the London residential property market is displaying bubble like qualities.

Authorities such as the Bank of England have denied that a house price "bubble" is developing due to ultra-loose monetary policies.

However, if present trends continue, national house price inflation may rise above 10% within a few months, far higher than the current rate of CPI inflation, which stood at 1.9% in January.

UK Department for Communities and Local Government House Prices London – UK ONS via Bloomberg

Although it’s often argued that London is a unique property market fuelled by a buoyant London economy and continued international interest from overseas buyers, recent price appreciation has taken on a distinct frothy appearance.

This is not to say that London property prices may not keep rising in the short term – momentum is a powerful force. However, investors should tread carefully and evaluate evidence of a bubble.

“This time is different.”

These are the four most expensive words in financial history. Yet, this is the mantra regarding London property prices.

The same thing was said about Dublin property prices in 2006. Dublin? But Dublin is not a financial capital. That is correct, however it is worth remembering that the same things were said about Zurich and Tokyo before the property bubbles in these two financial capitals burst.

Evidence Of A Property Bubble

Official house price reports from organisations such as the Land Registry for England and Wales and the Office for National Statistics (ONS), the Halifax House Price Index and from the Nationwide all show that property prices in most parts of the UK are rising. All these surveys are pointing in the same direction and show that London property prices have risen and are rising at a particularly fast rate.

Halifax House Price Index

According to the widely used Halifax house price index, annual house price inflation is currently running at 7.5% for the UK, but at 15.4% for Greater London, where the average house price has now reached £310,000.

House prices are continuing to accelerate across the UK, according to the latest snapshot from the Halifax mortgage lender.

HBOS UK Property Prices (Bloomberg)

Its latest survey, for February, shows that prices rose by 2.4% last month, leaving them 7.9% higher than a year ago. That was the fastest annual pace of increase since October 2007 and means the average UK home now costs £179,872.

However, record levels of debt and continuing pressures on household finances, as earnings fail to keep pace with consumer price inflation, are expected to remain a constraint on the rate of growth of house prices in the UK.

Sales have been picking up strongly too in the past year. In January, house sales in the UK had risen for the ninth month in a row. The number of mortgages approved for home buyers, but not yet lent, was 42% higher than a year ago, suggesting a further rise in sales is still to come.

At the top end, or prime, segment of the London market, which generally means the top 5-10% of properties, the average price of a property is now £4 million in central London, £1.8 million in Greater London and £1 million in the surrounding Home Counties. While overseas buyers investing in central London have long been credited to have pushed out the majority of other buyers, their impact is now starting to boost prices in the prime segments of Greater London and surrounding areas, as rich domestic buyers are also forced to buy further afield.

That overseas rich cash buyers are primarily responsible for driving up central London prime residential prices is not just hearsay. It is well documented. London’s Evening Standard recently highlighted at least 740 ‘ghost mansions’ worth £3 billion in total that are currently sitting empty and unused around central west London and a number of other enclaves. Even the current uncertainty in the Ukraine is adding to the mix, with London’s prime estate agents having noticed an increase in enquiries from rich Ukrainian and Russian clients over the last few weeks.

Knight Frank

According to Knight Frank, the reputable London estate agent, house prices in the prime central London segment rose for the 40th consecutive month in February, the longest consecutive rise since the firm began producing its London prime index in 2004. They note that 12 month price appreciation to February 2014 was 12.8% in the sub-£2 million category and 3.4% in the £10 million plus bracket. Knight Frank notes that the rate of increase at the very top end £10 million plus has slowed compared to the previous year, when it reached 6.1%, and the year prior to that, when it touched 10.7%. With central London so expensive, the ripple effect is going ever outwards.

Savills

Savills, a similar firm to Knight Frank, forecasts that London prices over the next five years to 2018 will still rise strongly with the larger gains outside the very centre. Savills predicts a 23.1% gain in central London over the five years to 2018, a 22% gain in ‘other London’, and a 25% gain in inner commuting belts. However there is evidence that these forward looking rosy forecasts by industry agents need to be tempered with the consideration of additional evidence.

Shiller

U.S. economist Robert Shiller recently warned that London property prices could be in a bubble. Shiller, the Yale based economist who shared last year's Nobel Prize in economics, is notably for his work on demonstrating that asset prices can become irrational and out of step with economic fundamentals. He is co-creator of the widely followed Case-Shiller Home Price Indices in the US. Last October, Shiller commented that the rapid price rises in London property looks like a bubble that is being fuelled by easy credit availability.

RICS

In its latest monthly survey of the UK residential market, the Royal Institution of Chartered Surveyors (RICS) confirms an overheating London market, finding that price rises are by far the strongest in London and the South East relative to the rest of the country. Every month RICs collates market feedback from its’ members into a blended net balance indicator of sentiment using factors such as house prices, new buyer enquiries, agreed sales, and new vendor instructions.

The overall net balance figure for the UK is now at +50 and has been so for five consecutive months. The last time this occurred was in mid-2002. Most strikingly though, the net balance figure is now +87 for London and +80 for the South East region. As a comparison, the same figure is +21 in Wales and +12 for the North of England.

Feedback from RICs members in London is nearly unanimous in highlighting “a lack of supply pushing prices higher”, “a dire shortage of new sales”, “most properties going under offer as soon as they hit the market”, and “international buyers still showing a good interest, particularly in new builds”. Commenting on the February report, RICs director Peter Bolton-King said that London prices may become unstable.

Adding to the evidence of a London bubble, EY Item Club, the independent economic forecast group sponsored by Ernst Young, released its own report last month, aptly titled “UK housing: no bubble to burst…except in London”. The EY report warns that housing bubble conditions are emerging in Greater London with the acceleration of prices now extending beyond the prime properties of central London and out to the broader London residential market.

EY notes that policy makers and regulators could attempt to cool demand by enforcing London specific lending limits on borrowers based on mortgage to income multiples, but the authors concede that without any real changes in government policy or market dynamics, London’s unique factors of a) super-rich cash buyers in the prime market and b) well paid London professionals in much of the rest of the market, appear to indicate that price appreciation is not going to cool off anytime soon.

Civitas

Independent social policy think-tank Civitas also released a property study last month and called for the imposition of controls on wealthy overseas buyers in the London property market. The authors refer to the “rampant house price inflation” in London, where the “global super-rich” are using London property as an investment vehicle and a safe haven shield from more volatile countries, while younger and less well-off London residents are being squeezed out of the market.

The report highlights that while the ratio of average income to average property prices across the UK has risen from 2.3 in 1980 to 4.6 in 2013, the same ratio for London hit 6.1 in 2013. As a supply boosting measure, Civitas calls for regulations that would only allow overseas investment buyers to acquire existing properties in London if they proved this would add to the available housing stock. Similar rules already exist in economies such as Australia, Switzerland and Singapore.

OECD

The most recent OECD semi-annual economic outlook warned that UK house prices might be experiencing a potential bubble since economic policy and supply constraints are causing an overheating market.

Government Policy

UK residential market prices are currently being supported by various favourable economic factors and government led schemes. The government’s ‘help to buy scheme’, supposedly structured for those who otherwise could not afford a property, offers an interest free loan of 20% of the purchase price of a house up to £600,000, with a 15% lender loan guarantee by the government. This scheme is helping to drive mortgage applications and has been criticised by the IMF and others for potentially stoking a property bubble, and for having specified an upper house price that, while realistic for London, is very generous for other parts of the country.

Historically low official Bank of England rates are feeding into relatively favourable mortgage rates. The official stance of the UK Treasury and Bank of England is not expected to change anytime soon since they require low interest rates to support an economic recovery. However external economic shocks are not unknown and can come when least expected.

Affordability of property in relation to earnings is an issue and is becoming a bigger issue as prices continue to rise, not just in London, but across the UK. There are also signs that various parts of the market are becoming choked as those who would otherwise move up can’t and so this impacts younger potential buyers who can’t get on the property ladder.

Asset bubbles don’t always announce themselves and can sometimes be violent when they begin. This then can create liquidity issues on the sell side as many participants rush to sell simultaneously.

Interest Rates

Interest rates are at historic lows. Given the precarious financial position of the UK it is highly likely that interest rates will only go higher in medium and long term. The ramifications for property markets and especially the residential sector should not be ignored.

Conclusion

London is a truly global city, as such its fortunes rise and fall on the tide of the global international marketplace.

Evidence clearly suggests the London property market is attracting safe haven funds from global investors seeking reprieve from a post financial-crisis world where the competitive devaluation of currencies, prolonged low interest rates, unorthodox monetary policy such as QE have all combined to make London an attractive haven for investment monies.

As monetary officials the world over wrestle with deep systemic imbalances, geopolitical uncertainties and the looming threat of bail-ins, investors will continue to seek shelter in assets that operate as a safe haven such as property but also more conventional safe haven assets such as gold.

We believe that ultimately these elevated asset price levels in London property are unsustainable and will be subject to violent correction. Given that interest rates are at historical lows, the London property prices will become increasingly sensitive to any upward movement in interest rates.

This Market Update is reprinted in full in Issue 7 of GoldCore's Insight Series. Download your copy here: Is London’s Property Bubble Set To Burst?

See the original article >>

Pages

Friday, March 7, 2014

SIMPLE STRICTS AND DIVERSIFIED RULES TO GENERATE SIGNIFICANT CAPITAL GROWTH WITH OUR SUPER COMMODITY

China: Bubble Trouble May Be Brewing

Money Supply and Lending Growth Decline Sharply

Stocks Are Already in the Dumps – Is It Real Estate's Turn Next?

Miscellaneous Charts – Bank Loans, NPLs, Trust Products, Steel Production …

Conclusion:

Copper Collapses Most Since Dec 2011 On China Credit Fears

5 Things To Ponder: Serious Stuff

The Secret History of the Financial Crisis

With Average House Prices At $6.8 Million In Central London, Is A Property Bubble Set To Burst!