David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Please note - next update will be on April 23rd.

    My mother died in Ireland yesterday from heart failure after a seven-week stint in hospital. I am flying back for the funeral. The site will next be updated on Monday April 23rd.

    Email of the day on the underperformance of the Topix 2nd Section Index

    The de-dollarization in China

    This article by Giancarlo Elia Valori for ModernDiplomacy.eu may be of interest to subscribers. Here is a section:

    As further sanction, the United States has removed Iran from the SWIFT network, the well-known world interbank transfer system, which is also a private company.

    Iran, however, has immediately joined the Chinese CIPS, a recent network, similar to SWIFT, with which it is already fully connected.

    Basically China’s idea is to create an international currency based on the IMF’s Special Drawing Rights and freely expendable on world markets, in lieu of the US dollar, so as to avoid “the dangerous fluctuations stemming from the US currency and the uncertainties on its real value “- just to quote the Governor of the Chinese central bank, Zhou Xiaochuan, who will soon be replaced by Yi Gang.

    In the meantime, Russia and China are acquiring significant amounts of gold.

    In recent years China has bought gold to the tune of at least 1842.6 tons, but the international index could be distorted, as many transactions on the Shanghai Gold Exchange are Over the Counter (OTC) and hence are not reported.

    Again according to official data, so far Russia is supposed to have reached 1857.7 tons.

    Both countries have so far bought 10% of the gold available in the world.

    Meanwhile, Saudi Arabia has already accepted payments in yuan for the oil sold to China, which is its largest customer. This is a turning point. If Saudi Arabia gives in, sooner or later all OPEC countries will follow suit.

    This section continues in the Subscriber's Area.

    Netflix Tops Estimates for Quarter, Projects Continued Gains

    This article by Lucas Shaw for Bloomberg may be of interest to subscribers. Here is a section:

    Netflix Inc. posted its strongest start to a year since the company went public 16 years ago, thanks to strong growth in markets across Latin America and Europe.

    The company added 7.41 million subscribers in the first quarter of the year, according to a company statement Monday, easily topping analysts’ projections of 6.35 million. Netflix now has 125 million paying customers, the most of any online TV network.

    The company, the best-performing stock in the S&P 500 this year, is proving one quarter at a time that investors’ confidence in its online TV service has been justified. Netflix is using its growing subscriber base and deep pockets to poach talent from the biggest program suppliers and build a Hollywood studio for the internet age.

    Shares of Netflix rose as much as 8.3 percent to $333.21 in extended trading after the results were announced. The stock fell 1.2 percent to $307.78 at the close in New York and is up 60 percent this year.

    Netflix said first-quarter profit rose to 64 cents a share, up from 40 cents a year earlier and meeting analysts’ projections of 64 cents. Sales for the quarter grew 40 percent to $3.70 billion, compared with Wall Street projections of $3.69 billion.

     For the current quarter, Netflix is predicting earnings of 79 cents and revenue of $3.93 billion. That compares with analysts’ estimates of 65 cents a share in profit and sales of $3.89 billion.

    This section continues in the Subscriber's Area.

    Historical charts of gold

    History is not repeated but it does tend to rhyme. One of the biggest factors behind gold’s advance from the early 2000s was because of a lack on faith in the ability of fiat currencies to hold their value. The growth of markets like China and India then contributed an additional demand driver.

    I am intrigued by the similarity in the saucering base formations gold put in during the early 2000s and what it is doing now. History need not repeat itself but these charts are certainly evidence that this is not the first-time gold has put in a lengthy period of ranging.

    Smaller gold miners like St Barbara, Evolution Mining are outperforming at present as production ramps up and costs are kept under control.