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Is Draghi Playing a Shrewd Game with the EUR/USD Rate?

August 2 2017

No, it did not surprise me that Mario Draghi, President of the European Central Bank (ECB) sounded rather hawkish at the important annual ECB meeting in Sintra (Portugal). His speech could be best interpreted as a clear signal that monetary policy in the Eurozone will soon be less expansionary.

That did not surprise me. Not because of Draghi´s eagerness to tighten monetary policy, but because I can very well imagine that more and more of his colleagues who are part of ECB board are beginning

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Edin Mujagić

The Exit Strategy of the ECB Amounts to a $54 Billion Dollar Subsidy to Banks

July 26 2017

Much has changed since the beginning of “quantitative easing” (QE), the large-scale asset purchase programs conducted by all major central banks. The ECB is one of them. Ever since the start of these programs, central bank balance sheets were massively expanded. One of the problems with QE is that bank reserves are no longer scarce. Before the crisis, central banks used to adjust the supply of bank reserves to manipulate (both upward and downward) the interest rate on these reserves (which

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Olav Dirkmaat

5 Charts That Prove That the US Economy Is Weakening Fast

July 19 2017

Every quarter I write a report for UFM Market Trends of Universidad Francisco Marroquín (Guatemala), backed by the John Templeton Foundation, about the likelihood of a recession in the US. This week, we published our latest report on the US economy which included several surprising statistics (you

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Olav Dirkmaat

Gold Price Back to $1,220/Troy Oz, Below $1,200?

July 12 2017

I write a lot about central banks, commercial banks, the economic cycle (the likelihood of a recession), valuations of other financial assets (particularly stock prices) and interest rates. All this, of course, for good reason. Every single one of these factors is of great importance to understand how gold prices will perform in the future. For clarity sake, I will just go ahead and answer the question I posited in the main title: gold prices will most definitely go below $1,200 per troy ounce. We currently find ourselves in a sideways market. And that means that the recent price rallies are mostly based on thin air. Of course: the current (global) debt levels are unsustainable and the Fed has no viable exit strategy (the same goes for all other major central banks). A painless way out

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Olav Dirkmaat

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