Vince Lanci: Chinese Gold Buying and the Yen Carry Trade

Tom Bodrovics welcomes back Professor Vince Lanci, MBA Finance and Publisher of the Goldfix Substack, for a discussion on recent market events. The primary focus is on the past week's stock market drawdowns, which started on August 2nd, possibly influenced by the Yen Carry Trade collapse. Despite no clear catalyst at the time, it's now believed that the Federal Reserve's reluctance to ease, coupled with Buffett's Apple share sale and Citibank's prediction of multiple interest rate cuts, put pressure on banks, leading them to reconsider their stance. The unexpected end to Japan's yield curve control policy caused a blow-up in the Yen Carry Trade as hedge funds were forced to refinance at higher rates, triggering a wave of selling across various markets. Tom asks about possible tensions between Federal Reserve chairman and the Treasury's roles in managing U.S. economic policy. Janet Yellen's handling of monetary policy during her tenure as Fed Chair is critiqued for misallocating funds, creating a false signal about an economic recession, and potentially leading to inflation and higher stocks. Vince shares an intriguing story about a Chinese gold trader causing significant damage to bullion banks. This trader, not typically known for gold trading, had been buying large quantities of futures from Western bullion banks over the counter, leading to losses. The conversation delves into the impact of Yellen's actions on the shape of the yield curve and discusses the sale of the Strategic Petroleum Reserve (SPR) during the Biden presidency and its implications. They explore whether we still need the same level of oil reserves as in the past, considering changing energy policies and difficulties in producing and storing refined products. The conversation touches on China's growing influence, the importance of ensuring a deflationary crisis for China, discovering new oil and energy sources, and securing global dominance through innovation and geopolitical considerations. Timestamp References:0:00 - Introduction0:53 - Talk About Markets13:49 - Easy Money Addiction22:55 - Fed Vs Yellen & Mandates30:44 - Yellen & Wrong Signals38:47 - Gold Trader Story46:38 - Banks & Positioning49:22 - SPR & Politics57:23 - Oil Reserve Needs1:00:09 - Gold and the Dollar1:04:40 - Thorium & Oil1:07:56 - American Innovation?1:10:20 - BRICS & Japan1:12:47 - Policy, Energy, & Votes1:14:50 - Wrap Up Talking Points From This Episode The past week's stock market drawdowns were influenced by the collapse of Yen Carry Trade. Despite no clear catalyst at the time, Federal Reserve reluctance to ease led banks to reconsider their stance. China's gold trader caused significant damage to bullion banks due to excessive futures trading over OTC. Guest Links:Special Discount: https://vblgoldfix.substack.com/TomPalisadesWebsite: https://vblgoldfix.substack.com/Twitter: https://twitter.com/SorenthekZeroHedge: https://tinyurl.com/3x72ndfcLinkedIn: https://www.linkedin.com/in/vincentlanci/Boobs & Bullion: https://twitter.com/boobsbullion Vince Lanci, a seasoned finance professional, has served as Managing Partner at Echobay Partners LLC since 2008. His expertise spans over three decades in metals trading, option analysis, and technology development. In recent years, Mr. Lanci's insights have been sought after by industry legends. He was invited to be a resident expert on precious metals and option analysis for Larry Benedict's Opportunistic Trader project. In 2017, he co-authored a paper on Energy Volatility with Professor Robert Biolsi at the University of Connecticut. Prior to his current role, from 2004 to 2008, Mr. Lanci served as Co-Head of Metals & Energy Trading for CiS Options LLC. During this tenure, he managed the long-short and volatility arbitrage portfolios for the parent Limited Partnership fund. From 1993 to 2003, Mr. Lanci was the proprietor of Berard Capital LLC, where he led a team of option marketmakers.