capital flight Archives - the patient investor

July 6, 2016

Gold surges as the Pound and Yuan fall

The Yuan is sliding against the Dollar, with USDCNY breaking through resistance at 6.60. Expect further capital flight, both from residents and offshore investors. Borrowers will also seek to repay Dollar-denominated loans and replace them with facilities in the local currency, adding further pressure on the Yuan.

USDCNY

The PBOC has been encouraged by fading prospects of further rate rises from the Fed, with 10-year Treasury Yields falling to a new all-time low of 1.37 percent, compared to 1.40 percent in 2012.

10-Year Treasury Yields

….And the Pound falling to a 30-year low.

GBPUSD

Falling currencies and lower long-term interest rates are both good news for gold bugs, with spot gold surging to $1370/ounce. Expect retracement to test the new support level at $1300/ounce. Respect of the band of support at $1280/$1300 is likely and would signal another advance, with a target of $1400/ounce*.

Spot Gold

* Target calculation: 1300 + ( 1300 – 1200 ) = 1400

May 18, 2016

Treasuries fall and Dollar strengthens on latest Fed minutes

Treasury yields rose and prices fell sharply after release of minutes from the Fed’s latest monetary policy meeting. The April minutes reveal that policy makers see a June interest-rate hike as appropriate if labor markets and economic growth continue to strengthen. The 10-year Treasury yield jumped 12 basis points, suggesting a rally to test resistance at 2.0 percent.

10-year Treasury yield

The Dollar strengthened against China’s Yuan, testing medium-term resistance at CNY 6.55. Breakout would force the PBOC to further deplete foreign reserves in support of the Yuan. The alternative of an uncontrolled descent would instill panic and encourage capital flight to gold and the USD.

USDCNY

September 1, 2015

China: It just got worse

China: It just got worse – more bad news and more policy mistakes: http://t.co/h6pwguOJl9 #China #PBoC #EndOfTheDollarBloc @bill_easterly

— Lars Christensen (@MaMoMVPY) September 1, 2015

August 29, 2015

China’s conundrum: Capital flight or deflation

China's conundrum: Selling FX reserves to support the yuan threatens deflation. But falling yuan fuels capital flight http://t.co/XGz6S4HPz6

— Colin Twiggs (@Colin_Twiggs) August 29, 2015

AND capital flight causes collapsing stock and real estate prices, which could lead to…… deflation.

March 11, 2014

Sanctions nerves ripple through Moscow | FT.com

The Financial Times quotes Igor Yurgens, a former Kremlin adviser:

He added that capital flight was likely to soar. He said his bank had received “a huge number of calls” into his bank’s Swiss offices from Russian clients over the past two weeks and a number of wire transfers into Swiss bank accounts out of Russia. Clients, he said, would prefer to keep money outside the country despite the risk of asset freezes.

October 30, 2012

Dirty money cost China $3.8 trillion | Reuters

By Stella Dawson

China has lost $3.79 trillion over the past decade in money smuggled out of the country, a massive amount that could weaken its economy and create instability, according to a new report. And the outflow — much of it from corruption, crime or tax evasion — is accelerating. China lost $472 billion in 2011, equivalent to 8.3 percent of its gross domestic product…..

via Dirty money cost China $3.8 trillion 2000-2011: report | Reuters.