Vince Lanci: Blinkens Trip To China Bidens Call For Tax Hikes | Arcadia Economics
Summary
Transcript
Financial companies are getting punished. Technology companies are getting punished. Mining companies are getting awareness raised about them. Welcome to the morning markets and metals with Vince Lancy, where each day he brings you the precious metals in financial news to get you ready for your day. And now, here’s Vince. Good morning. I’m Vince Lancy. And today’s market rundown we’re going to talk about three things. It’s kind of like a three important things to talk about today or just to keep on your radar, and that is miners, china sanctions and Bidens tax height proposals.
We’ll look at some market driving news as well. But first, let’s look at the markets themselves. The dollar is down 22 at 1. 59. The ten year bond is essentially unchanged at 465. Yield s and P 500 is 50 40 down three handles. The VIX is 16 and change up 27. Gold is up 14 on the highs of the evening at 23. 29. Silver 27. 43 up $0.
30 over a percent. Copper is again up 1. 7% at 452. Oils up fourteen cents at eighty three point five eight. Natural gas, 176. Bitcoin and ethereum are down a little bit. 63. 737,463, 740 and 30 99. Palladium platinum are mixed. Platinum is strong up $5 at 09:07 and palladium is mildly weaker at almost 1000. Even grains are wheat is very strong up five up four cents. And soybean and corn are mixed on either side of unchanged.
All right, so what do we need to touch on today? We need to touch on three different things. So rather than do a deep dive, we’re going to touch on them and then we’ll come back to them as time warrants. All right, so china sanctions Biden, tax hike, mining catalyst on the homepage. We have a lot of metal stories lately. Two on silver. One is the zero hedge post.
Here at the lower left hand side, we have an excerpt of that, which is really amalgamation of the Bloomberg and FT post on precious metals, which are decidedly bearish. And zero hedge puts a different kind of angle on it. All right, so here we go. Let’s start with an excerpt from the premium section, which will be at bottom. And that is about miners we all know. Reading from my own notes here, we all know miners are undervalued.
The key to getting love for chronically undervalued assets is to find a catalyst. We can complain all we want about them, but other people have to care. And to get other people to care, they have to be awakened to it. Catalysts can come in event form, a war. But more frequently they come in narrative form. Now that sounds like a dirty word, narrative form. But what it really means is that people are thinking about it when the opportunity strikes.
So the old their time has come concept applies here. So what we want to touch on here is that China is influencing not just bullion prices now, but mining prices as well. And mining may be a narrative whose time has come. Now. I dont mean us being sold by banks, I mean banks figuring out that once again, mining is an important, mining is an important asset class. And the reason their awareness is being raised on that is simply because China.
So China had a gold ETF, a mining ETF, and it went 30%, up 30% since March 28. They had to stop trading in it. It was trading above net asset value. It was trading above everything. So in China, the natural resource indexes are trading above the benchmark, whereas in the US they’re trading below. And I think banks are noticing that specifically european banks first, but not small banks, european banks are saying, hey, there’s an appetite for these things.
Let’s see if we can do some of that for our own investors. And I think you’re at the beginning of this concept taking hold, and we think we’re kind of breaking it in terms of the concept in summary, so we can move on to the next sections in summary and premium at the bottom, we talk about China is now influencing miner prices as well as bullion itself. Western analysts are taking note.
As I just said, one of them has made a comment today on that topic. We’re talking like point of the spear, bleeding edge, really just coming out of the box here. No one else is talking about this. The world may start to wake up to mining sector valuations. We have the name of the bank and they’re almost offhanded blurb, but we feel like we know what to look for in these things.
And they’re probably at the cutting edge in investor perception on mining shares. They’re pretty responsible banks when it comes to investor interest. So people are waking up to mining. That’s it. And we go through it as well, as well as our own investments in the bottom. And we also discuss the risks and rewards of that. Next, China sanctions. Okay, Blinken is in China right now. Three day visit.
Wednesday, Thursday, Friday will be the most important day. But we’re just going to read a little bit here. Anthony Blinken has landed in China and made a worsening rift between the world’s two most powerful countries that threatens to overshadow otherwise improving relations the US secretary of state arrives with a warning that the US and its european allies are no longer prepared to tolerate China’s sale of weapon components and dual use products to Russia, which are helping Vladimir Putin rebuild and modernize his arms factories.
Okay, I have like 13 points here I want to make just going through my initial take on this. Blinken’s trip to China is about hurting Russia. The US is threatening sanctions against China if they don’t abide. And those sanctions would be finance and banking. China likely knew this was coming in some form. China has been preparing for this for years with gold purchases and stockpiling of key materials.
The US, among other things, believes this will weaken China’s ties to Russia. That’s a mistake. The US should have bluffed this two years ago with gold at 1600. China only sees it as weakness now. The likely effect is to accelerate China’s work towards multipolarity and divorcing themselves from western influence typos there as an accelerational event. That’s how I view this. One cannot help but think this is all theater or already scripted.
Certainly this is no way to slow the loss of a close friend, even with the Taiwan stuff going on as well. The US election and the demonizing of China is now front and center with gold as a tool of accusations of trade manipulation. The FT Bloomberg metals daily all are noting that there is a tie between the gold rally and China. Were about, were a meme away from saying China is a manipulator.
China suffers as well. Youre seeing foreign capital accelerate its exit from China, and thats a big deal for them. But the chinese currency is, I would say, well protected right now. Their problems are domestic, not international. But well see about that. Perhaps we, perhaps we feel they will cry uncle. We meaning the US. Perhaps we feel China will cry uncle and come back into the fold. Given their own economic woes, the United States actually had the objective of reducing chinese resistance to Russia.
They would not be taking these steps. So part of me wants to call this a bluff. But you don’t bluff this late in the game. I mean, this is only going to push them into the arms of the BriCs. You’re past the halfway point now. You either want to slow down the change that’s coming or you want to speed it up. I don’t know why you would want to speed it up, but there you have it.
Next piece of news. Democrats will likely prove successful in raising individual income taxes and in strengthening audits of wealthy Americans as they work on overhauling the US tax code. In coming months. Now, you can read that, but this is the key piece here. They’re proposing to raise the capital gains tax to approximately 45%. And that’s what MMT is about. MMT is about raising taxes and spending money, which is tax and spend, which is what happened in the seventies.
And the last time taxes were approaching this high, they were actually lower, was in 1976 under Jimmy Carter. Taxes get raised to subsidize the spending and the wealthy get taxed at a higher rate. Unfortunately, the money never really gets to where it’s supposed to go anyway. So that’s what’s going on. Just a side note in terms of how this affects bullion directly. Well, if bullion is taxed at 20% and stocks are taxed at 15%, then you’re incentivized at the margin to own stocks.
If stocks are taxed at 45% and bullion is taxed at 20%. I’m not saying it is. Depends on what state you’re in, how you’re using it. You are taking away a reason to not own bullion. If real rates, real rates are 5% or whatever they are 2%, they’re 2%. Then why would I own gold when I can earn 2% on that? Well, capital, not necessarily you or me, but capital looks at the market and says, wait a minute, I’m going to have a 40% haircut when I sell this stock.
And I’m going to have a no percent haircut when I sell this gold. Well, that’s a 40% difference in rate of return right there. So this is going to incentivize, I promise you, if this happens. Stagflation, why would you put your money in stocks? Right. This is what’s going to happen. We’re headed towards stagflation. And the Democrat, and I’m not even political about this. Democrat policies are driving us there.
Just like they did in the seventies. Monetize the debt, tax the people that are stupid enough to stay or loyal enough to say stay or nationalistically proud enough to stay at the same time abusing them for it anyway. And the other news. BHP is proposed to take over of Anglo American in a deal that will bring together two global mining giants. Okay, we’ll stop right there. The industry is drawing attention to itself.
That’s just going to make miners go up in general. Okay, meta shares plunged 16%. But these stories here, here we go. Financial companies are getting punished. Technology companies are getting punished. Mining companies are getting awareness raised about them. Geopolitics, nothing new, nothing special. There. You can take a look at that. Okay, so on data today, GDP, it’s a big day. GDP, I don’t really have a number handy there, but it’s, I think it comes in at about, I don’t know, but I’m focused on the unemployment number today of 212,000.
But the GDP number is going to be looked at in context of the previous GDP’s revisions as well. Friday’s the really big day. Pce okay, State golden is the title of the premium piece that I have in here. There’s a summary of it and you could see the rest. I’m Vince. Have a great day. Thanks for watching this morning’s markets and metals update with Vince Lancy, brought to you each day by Miles Franklin precious metals, where this week’s special is junk silver for only $2.
75 over spot. Junk silver is the pre 1965 dimes and quarters, and one of the products where we did see premium spike in the past couple of years. So find out more by calling us at 833326 4653 or emailing arcadiailesfranklin. com dot. Please note that this video is not intended as legal license financial trading advice and is to be used for informational purposes only. Please contact your financial advisor before making any decisions.
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