Where Swiss gold exports go ?

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                                                      precious metals picture

Swiss ProfilInvest would be pleased to meet you and to debate on alternative investments, on risk, especially on precious metals and gold miners. 

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Volkswagen : from diesel to electric cars

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Volkswagen AG secured 20 billion euros ($25 billion) in battery supplies to underpin an aggressive push into electric cars in the coming years, ramping up pressure on Tesla Inc. as it struggles with production issues for the mainstream Model 3.

The world’s largest carmaker will equip 16 factories to produce electric vehicles by the end of 2022, compared with three currently, Volkswagen said Tuesday in Berlin. The German manufacturer’s plans to build as many as 3 million of the cars a year by 2025 is backstopped by deals with suppliers including  Chem Ltd, and Contemporary Amperex Technology Ltd, for batteries in Europe and China.

 Matthias Mueller on March 13.
Photographer: Krisztian Bocsi/Bloomberg

With the powerpack deliveries secured for its two biggest markets, a deal for North America will follow shortly, Volkswagen said. In total, the Wolfsburg-based automaker has said it plans to purchase about 50 billion euros in batteries as part of its electric-car push, which includes three new models in 2018 with dozens more following. 

Volkswagen’s battery plans compare to Tesla’s $17.5 billion worth of purchase obligations as of last year, including $15.4 billion in deals through 2022, primarily related to buying lithium-ion cells from Panasonic, according to a recent filing. Volkswagen called its battery tender one of the biggest purchasing initiatives in the auto industry.

As of next year, the 12-brand group will roll out a new battery-powered model “virtually every month,” Chief Executive Officer Matthias Mueller said at the company’s annual press conference. “This is how we intend to offer the largest fleet of electric vehicles in the world.”


To read the full article, written by Chris Reiter and Christoph Rauwald/Bloomberg on March 13th, 2018, please click on

Total US consumer credit

There is no translation available.

A picture strikes much than a thousand words...

The following graph shows total consumer credit in the USA as of 2017 compared to 2008. It is composed of automobile loans, student loans, credit cards, consumer credit mainly.

Would you say that US household revenues have climbed 45 % during the same period ? Or that demography in the USA has grown impressively to sustain a consumer credit growth of 45 % in a nine-year period of time ?

Or, is this the result that US households think they feel richer than nine year ago ?


You Can't Cheat The Business Cycle - from Centaur Investments

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This article is very interesting and help understand in depth the risk of recession and the probable future change in the economic cycle.
Unfortunately, it is a bit long and only for professionals or QI clients. But it worths reading it !
Feel free to ask questions on our website This email address is being protected from spambots. You need JavaScript enabled to view it.
Swiss ProfilInvest - Jean-Pierre Riepe 
Centaur Investments
From :       January 30th, 2018


Only the 1914-1929 stock market period parallels what we see today in both the Dow Jones Industrial Average and S&P 500 Indexes.

U.S. Real Gross Domestic Production may likely see a few more quarters of robust expansion, before contracting for the first time in years.

Historical yield curve, volatility, and consumer sentiment link directly to higher unemployment, implying that a meaningful pattern exists.

Economic expansions may be accelerated, but not prolonged.

What we see right now across financial markets is likely the last gasp for air by those “last to climb up the ladder.”.


In September of 2017, Centaur Investments published an article titled:“Predicting the Direction of the Stock Market and the U.S. Economy.” The article discussed a number of key developments posing risks to U.S. financial markets. The article was well-received by the Seeking Alpha community. For those who have not yet read it, the article is available here.

The timing is perfect for a follow up article because as of December 2017, the “Tax Cuts and Jobs Act” has finally become an economic reality. Following the bill’s passing, the market continues repricing in response to the effects this bill will have on the U.S. economy. Some may have believed the advent of tax reform was already fully priced-in. Yet, all major U.S. stock market indexes continue to reach record highs. The extension of this rally has turned out to be quite a surprise for both the investor and bystander. Per The Wall Street Journal, onlooking individual investors have finally started to “dive-in” to financial markets.

At the start of the month, the SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 Trust ETF (SPY), and PowerShares QQQ Trust ETF (QQQ), continued to build momentum on top of last year’s record highs. These ETF's closely track the three major stock market indexes which underlie the funds; Dow Jones Industrial Average, S&P 500, and NASDAQ, respectively. The index performance is illustrated in the next graph.

Stock Index Charts

Looking back at history for patterns of similar trends to what we see today in the Dow Jones Industrial Average and S&P 500 Indexes, only the 1914-1929 stock market period is similar. For comparison, below you will find a chart of the "Dow Jones Industrial Stock Price Index" from December 1914 to December 1939, as sourced from the St. Louis Federal Reserve FRED Database.

Dow Jones Industrial Average from 1914-1939, see a resemblance?

The financial system has proven extremely resilient and well-insulated following the Dodd-Frank Act’s mandates for stress testing and increased capital requirements. Does this mean that financial crises, recessions, and depressions are simply a thing of the past? The answer is no; absolutely not. This fact is well stated in post-financial-crisis-era memoirs written by first responders such as former Treasury Secretary Hank Paulsen, New York Fed Governor (and later Treasury Secretary) Tim Geithner, and Fed Chairman Ben Bernanke. Though the literature serves well in communicating the improvements made to strengthen the financial system from crises, it likewise proves that even the most qualified and experienced regulatory body cannot fully prevent an all risks-off fire-selling event. Consequently, it is still impossible to prevent the economic downturns that follow these events.

To build a case, the next few sections will dive into economic data that will illustrate beyond financial markets, what history appears to tell us. Along with graphical illustrations, this article includes some comments on the current political climate. The idea is for the reader to grasp the reality of what is happening today, and hopefully walk away with a better understanding of the inner-workings of the macroeconomy.

The remainder of this article is organized as follows. First, we look at gross domestic production, and follow up with a brief sector analysis. In later sections we review credit markets and present separate views on corporate and household debt. Some critical evidence is used here to argue that economic expansions may be accelerated, but not prolonged. The view concludes that even with business-friendly public policy action, the current economic expansion is unlikely stretch beyond ten years. If the expansion does stretch beyond that horizon, it would be wildly at variance with the data, at least, from the last four decades.

Reflections on Digital Currency and Economic Indicators

It is the opinion of the writer that what we are seeing right now across financial markets is the "last gasp for air by those last to climb up the ladder.” This opinion was shaped by a variety of sources of information, some of which are presented in this article. The other sources of information are subjectively based on passive observation of user comments on social media platforms such as Stocktwits and Twitter. These social media outlets now resemble a cyber version of the conversations held in dive bars and barber shops of America, at the peak of the dotcom bubble. Like the typical stock market ‘aficionado’ of the 2000’s bubble, there are many who now speculate on stock prices moving higher for reasons no other than “all boats must rise.” This sort of speculation was observable for months, before a series of events took down the valuations of blockchain-based digital currency. Setting aside this subjective observation, let us now take a random walk through time.

To best project what will happen in credit markets, one must first understand gross domestic production which has expanded for nine years now. The International Monetary Fund (NYSE:IMF) recently upped their outlook for the global economy, backed by compelling changes to U.S. tax laws. The consensus seems to be that U.S. economic output will influence global economic output. Have a look at the graph of current U.S. real gross domestic product.

U.S. Real Gross Domestic Product

The most recent reading of real GDP came in at $17.2 billion for Q4 2017 (Seasonally Adjusted, Real GDP, Chained 2009 Dollars). This figure is now roughly 14.5 percent above the Q3 2008 peak of $14.9 billion (Seasonally Adjusted, Real GDP, Chained 2009 Dollars). What is striking here is that the past two measures of GDP annualized growth were above 3.0 percent. Despite the almost parabolic trend in U.S. real GDP over time, one can observe the minor contractions in the graph, during recessions. U.S. real GDP annualized growth rate is further detailed in the image below.

One widely-discussed argument is that with the U.S. economy already near full employment, things may soon start to overheat. Still, an absence of inflation or significant wage growth has some continuing to question the Federal Reserve’s credibility. Studying the annualized growth rates for real gross domestic output following the bursting of the dot-com bubble, an overheating economy appears consistent with readings above 3.0 percent. In recent times, a reading above 3.0 percent had not observed since the oil market collapsed in 2014, as global output slumped. That has all changed now with the last two quarters of GDP measures reaching 3.0 and 3.2 percent during Q2 and Q3 of 2017, respectively. All else equal, if the past serves as evidence we may be able to see more measures above 3 percent over the next few quarters. However, there are a few caveats which will be discussed later. For now, let us take a look at sector performance this year.

Bloomberg Sector Returns, Year-to-date

Overall stock market performance, as broken down by sector in the above image, show Consumer Staples, Telecom, and Utilities as the three lagging sectors so far, year-to-date. Indeed, these are the sectors which investors tend to rotate into during a bear market. Though, Telecom is starting to quickly close that gap. Recall that last year, telecom companies such as AT&T Inc. (T) and Verizon Inc. (VZ), suffered from falling mobile data and plan prices amidst increased competition. Sales of premium smartphones from companies such as Apple Inc. (AAPL) and Samsung Electronics Co. Ltd., appear to be doing well. Further, cellular service prices appear to have bottomed, and competitive factors have subsided for now. Following the T-Mobile US Inc. (TMUS) and Sprint Corp. (S) tie-up which fell-through in late 2017, expect for telecom companies to focus more on investment and building out their new 5G networks. Conversely to what most analysts predict, it is likely that these added costs will keep mobile plans from declining further.

Utility companies on the other hand, are not doing so well in an increasing interest rate environment. It should be noted that utilities may stand to benefit from rising natural gas and overall energy price levels. Companies such as Exelon Corp. (EXC) and NextEra (NEE) have invested heavily to diversify generation capacity. Exelon for instance, has increased its exposure renewable energy such as solar and wind. Though it remains unclear how tariffs on imported solar panels will to impact the cost of solar energy generation, moving forward. Nevertheless, the current political environment continues to demonstrate preference to business-friendly policies. A notable example is the recent decision by the FCC to repeal neutrality.

On a more positive note, the top-performing sectors year-to-date are: Health Care, Energy, Consumer Discretionary, Tech, Financials, Materials, and Industrials. These are obviously the sectors which stand to gain the most from continued global economic expansion; nearly all of them.

Financials is the sector which continues to worry some investors. More specifically, the consumer lending industry is one that worries some investors the most, as household debt continues to climb. Looking at year-to-date returns versus industry benchmarks, such as the NYSE Financial Index, shows that performance of some of these risky lenders has started to outpace the rest of the sector. The rate of credit card delinquencies, new account charge-offs, and higher loan-loss provisions seems to be signaling something.

The idea here is that riskier lending in the consumer credit market might just offset the benefits from lower corporate taxes, and any respective increase in aggregate demand associated with the expected economic boom. If this turns out to be the case, earnings will likely be muted and market participants may not like that outcome. A few consumer lenders worth watching are: Ally Financial Inc. (ALLY), Capital One Financial Corp. (COF), Synchrony Financial (SYF) and Discover Financial Services Inc. (DFS). The shares of these companies may start to pull back if further deterioration in consumer credit continues to impact earnings. Further, as Capital One’s recent earnings recently demonstrated, increased competition from non-bank lenders may continue to weigh on top-line growth, adversely impacting the valuations of these companies.

NYSE Financial Index YTD Returns Vs. DFS, SC, SYF, ALLY, and COF

Source: WSJ

Let’s move on now to an outline of the ramp-up in debt, following years of low interest rates. The information presented in these final sections may serve as a warning for investors looking for an exit strategy, as the market rally continues into the earnings season.

The Ramp-up in Corporate Debt

The illustration below represents the market capitalization of commercial paper accumulated during the current business cycle. The cycle follows efforts by the Federal Reserve Bank to spur economic activity, as the nation’s unemployment rate hovered stubbornly above seven percent. Years of easy money policy incentivized companies to start borrowing again. While some companies used this as an opportunity for expansion, others simply took advantage of cheap debt to fund lucrative share repurchase plans. If your income was pegged to the appreciation your employers stock price, wouldn’t you do the same?

Commercial Paper of Non-financial Companies, Billions of Dollars, Weekly, Not Seasonally Adjusted

Source: St. Louis FRED Data

This is just commercial paper; approaching levels far higher than they were during the crisis. Longer-term unsubordinated corporate debt levels are also hovering at historic highs, just as the Federal Reserve starts to unwind its nearly $4.5 trillion balance sheet. What is even more worrisome, is the amount of subordinated corporate debt, particularly in the high-yield credit market. Following the drying up of credit markets in August 2007, politicians and central bankers scrambled to stimulate the flow of credit. Once lending confidence was regained, credit markets began to flow again. However, an unintended consequence of these new policies was this: it became even easier to borrow. The image below represents just the tip of the iceberg.


Asset-backed Commercial Paper Outstanding, Billions of Dollars, Weekly, Seasonally Adjusted

Source: St. Louis FRED

The graph above illustrates the trend in asset-backed commercial paper. These are short-term credit assets, backed by physical assets other than the good intentions of a company. The amount of asset-backed commercial paper available is pretty low compared to the total market value of commercial paper, as illustrated in the first chart. Holders of most of these credit instruments may stand to lose in an all-risks-off event, as credit markets start to freeze. This also means that the next credit crunch may potentially be worse than the last one.

Who are the holders of commercial paper? In 2007 it was mostly money market funds and other larger funds, such as, insurance and mutual funds. During an economic downturn, credit markets will dry up. When the next one happens, the U.S. Treasury will have little firepower to help boost demand. Recent U.S. corporate tax reform is generating a giant hole (a $2.5 trillion hole) for the Treasury department, which will have to fill by borrowing from financial markets, again, just as the cost of borrowing starts to rise.

When you think a debt problem cannot get any bigger; there’s household debt.

In November of 2017, the New York Federal Reserve Bank’s Center for Microeconomic Data published its latest Quarterly Report on Household Debt and Credit. The report revealed that:


As of September 30, 2017, total household indebtedness was $12.96 trillion. This increase put overall household debt $280 billion above its 2008 Q3 peak, and 16.2 percent above the 2013 Q2 trough.”

While many argue that these fears are “baked” into financial sector stock prices, it is the opinion of the writer that the pace in household debt accumulation in unsustainable. The record level of household debt will eventually start to adversely impact the financial sector. This research continues to be largely ignored by market speculators. Revenue growth and record payouts to shareholders on behalf of financial firms, has helped support the bullish take on the sector. Most analyst continue to see financial stocks heading higher.

Breaking down household debt into subsections, it becomes more apparent that value of student loans outstanding, is a severe problem. One situation worthy of monitoring, is precisely how business-friendly the current administration becomes. As an example, the Trump administration tussled with regulators to appoint a new head of the Consumer Financial Protection Bureau (CFPB). Some believe the CFPB now appears less likely to actually protect consumers from predatory lending practices. To further build this argument, the CFPB is the same bureau tasked with overseeing nonbank student loan servicers. The same people that overhauled the CFPB may look to do the same to other government agencies such as the U.S. Department of Education. The concern here builds further. A small footnote in the New York Fed’s CMD research refers readers to a 2013 study of student loans.

“As explained in a previous report, delinquency rates for student loans are likely to understate effective delinquency rates because about half of these loans are currently in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle. This implies that among loans in the repayment cycle delinquency rates are roughly twice as high.”


It is difficult to avoid speculation but imagine, if the political environment proved to be business-friendly enough to pressure borrowers of student loans currently in deferral. What would happen to credit markets then? Closing off on the developments across credit markets, let us now take a look at more economic indicators. These indicators appear to reveal some interesting patterns found in history.

Evidence from Yield Curves, Volatility, and Consumer Sentiment

Prior to writing this article, the author embarked on search for patterns in data from over 30 economic indicators. The image above shows there is suggestive evidence that the treasury yield curve (shown in orange) is an important predictor of economic cycles. The four datasets graphed above, follow the peaks and troughs of the U.S. economic cycles dating back to the early 1970’s. The data has been tested for statistical significance and predictive modeling power, but the reader of this article is cautioned to do the same. As implied by the data, a flattening of the treasury yield curve (spread between the 10-year and 2-year treasuries), does in fact precede an economic downturn. Specifically, once this spread falls below zero, an increase in the number of weekly unemployment claims tends to follow.

The spread has come its closest to zero since 2006; long before the start of the Great Recession.

Source: St. Louis FRED

When you start getting into spread data from these yield curves, history tells us that significant changes in these spreads tend to indicate changes in economic conditions are coming. Naysayers throughout the last two major downturns argued that signals from the spreads were broken, and they are saying the exact same thing about the spread right now. The charts below, generated quite a bit of interest in the comments section of the article linked in the introductory paragraph. Initially, some believed the yields on longer-term treasuries were repricing geopolitical risk. However, the persistence of this trend now questions that argument. 

Note the trend in 10Y and 30Y treasuries...

Empirical Signals from CBOE's VIX and the University of Michigan’s Survey of Consumer Sentiment

Another interesting observation is found by studying at the relationship between the CBOE Volatility Index (VIX) and the University of Michigan’s Survey of Consumer Sentiment. While not exactly a closely held secret, the data are inversely correlated. More specifically, consumer centiment tends to start into a downward trend just before volatility starts to trend higher. This is a key piece information to tuck away because more recently, consumer sentiment has started to pullback from record highs set just last year. Further, volatility as measured by the VIX has stabilized indicating the VIX short trade may be over, perhaps ahead of increased stock market volatility. It is important to note that lower consumer sentiment does not actually start to become a problem until the measure falls below 80. This is when volatility spikes the most, as financial markets react to the information. Observe spike in the date from June 2008, in chart above.

The CBOE Volatility Index’s (VIX) recent downtrend appears to have stabilized.

The Writing on the Wall

In the months preceding the economic contraction which began in December of 2007, the Federal Reserve System was already conducting monetary policy experiments that went unnoticed. For instance, the Fed extended swap lines with European banks, to help avoid the start of a panic. During the same period that CNBC’s Jim Cramer was ranting on about the Fed Chairman Ben Bernanke’s ignorance, economists at the Fed were working hard to understand the systemic panic that was unfolding. Deciphering mixed signals to predict an economic downturn was just as challenging back then as it is today.

Despite efforts and rare cooperation across federal agencies, the Federal Reserve was unable to limit the all risks-off series of fire selling panics in 2008. The Federal Reserve is tasked with achieving maximum employment and price stability. Certainly, Fed officials would be reluctant to communicate information that may trigger panic selling, even in the midst of another economic contraction. To expect the Fed to accurately predict and communicate when financial assets become too risky, is a far-fetched assumption to make. Just as it is to expect the Fed to smoothly weather-out the next threat to the stability of the financial system.

In reality, actions taken by regulators during the crisis were not much different from President Roosevelt's declaration of a Federal “Bank Holiday,” during the bank runs of the Great Depression. Yet the world today is vastly different from what it was back then. For instance, just 10 years ago the term block-chain was non-existent and digital bytes of data hold the Fed’s excess reserves. The Fed is now on the brink of downsizing its balance sheet of nearly $4.5 trillion in U.S. treasuries and asset-backed securities. During this same period, the U.S. Department of Treasury's accumulated debt increased to just under $1 trillion.

No one can say with high degree of certainty precisely when we will start to see an economic downturn, However, one could say at least with some certainty, that the Federal Reserve, Dodd-Frank Act, and all the CCAR and stress testing requirements in the world will not be able to hold off a market-wide attempt to derisk a balance sheet of unhealthy, rapidly depreciating financial assets. If financial regulation, monetary and fiscal policy is indeed able to prevent it, it would be the first time in our world’s history.

Can the aggregate amount of debt continue to rise further? Certainly. If you don’t believe that then you should read up on the history of the Greek sovereign debt crisis. It seems whomever is running the U.S. Treasury these days, must have taken a lesson from Goldman Sachs and Greece’s Minister of Finance, in the early 2000’s. More recently, corporate executives are extremely bullish despite earnings losses driven by tax-related one-time charges. Why wouldn’t they be? Aside from these one-time charges affecting companies in every sector of the market, from a business stand point things are looking up.

The charges, however, beg the question: What if corporate tax cuts are not permanent? Well, these charges might just prove to be very expensive. This is a rational argument to propose. The GOP appears to be losing the stranglehold the party has had over Washington, since 2010.

We'll conclude with a quote ripped off the profile bio-description of Twitter user,@DonDraperClone:

“Debt is future consumption denied. Excessive debt is economic stagnation ensured.”

Don't miss the next breaking macro investing idea! Seeking Alpha's premium research subscribers get early access to top macro investing ideas.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


2018, a tumultuous year ?

There is no translation available.


Historic volat 02.2017

First, we posted alerts on August 7th and November 23rd 2017 (French part of the Website) where we emphasized the low volatility on a long period of time.

Here we are ! Beginning February, votality regained momentum for the first time since beginning 2016 and stayed high.

                  What does it mean ?

It means that for an unexpected reason stock markets were surprised and an emotional reaction ensued, like the reaction a human being would have.

                  What was the main reasons ?

Shareholders realised that interest rates would go higher with a global economic improvement, especially in the USA and Europe. This factor was taken into account in February instead of last year, probably, because of a high euphoria spreading into cryptocurrencies and stock markets. 

In this context, companies with high Price/Earnings ratios suffered the most. The sectors that outperformed in the last parabolic wave were on the top of the negative performance list. 

Strong economic factors, especially in Europe, might reassure shareholders in the next three to six months. 

But, following this strong alert in stock markets, we suggest to be cautious and opportunistic along the bumpy road in 2018.

We strongly advise clients to get information from trusted sources and to build their own view of the economic cycle in order to act accordingly and to avoid losses by the end of 2018.


Swiss ProfilInvest may help you understanding the current situation in order to give you a projection of the asset classes. If you need it, we would recommend to click on This email address is being protected from spambots. You need JavaScript enabled to view it. whether you have any specific question or wish any advice.

Written by Jean-Pierre Riepe

February 12th, 2018 

We wish you a prosperous year.

As Year of the Dog dawns China leads world gold demand

There is no translation available.

New year dog

China remains the world’s biggest gold market as consumers and investors alike get ready for the Chinese Lunar New Year of the Dog

Ahead of the Chinese New Year celebrations China’s demand for gold is predicted to be as strong as ever. The Middle Kingdom remains the world’s largest gold market, however, demand this year has the added boon of recent stock market volatility to potentially push up prices.

Commentators have said they expect “double-digit growth in demand in 2018”, as markets price in the Lunar New Year rise. Wavering demand in China’s housing market is seen as an opportunity for gold as a safe haven asset, as investors react to subsiding prices resulting from regulatory constraints being placed on the sector. The gradual revision of gold importing laws in China is also seen as a fillip for the yellow metal.

More broadly, as the traditional new year holiday approaches, China’s historic appetite for gold remains strong. According to the World Gold Council, China remains the world’s biggest consumer of coins and bars of gold, purchasing 306.4 metric tonnes in 2017. That amount is well above the five-year average of 248.8 and represents a rise in China’s gold consumption of 8% from 2016, according to the Council.

However, total gold consumption in China for 2017 has been estimated as considerably higher than these figures. Sharps Pixley analyst Lawrie Williams, cites the Chinese Gold Association (CGA), saying imports totalled 1,089.1 tonnes, but cautions such figures understate the true amount of gold bought by inside the world’s latest economic superpower.

“Chinese gold imports from Hong Kong in 2017, according to official figures, totalled 628.2 tonnes while imports from Switzerland totalled 299.8 tonnes,” wrote Williams. “China’s own gold output during the year was, according to the CGA, 426.14 tonnes, so from these sources alone China will have absorbed 1,354.1 tonnes of gold.” However figures of imports from the UK, the USA and Australia have not yet been revealed and there are suggestions of unreported imports made from Russia at a state level.

“It would thus not be unreasonable to put China’s gold ‘absorption’ at at least 50% above the CGA’s gold consumption figures – probably quite a bit higher,” says Williams.

The jewellery factor

Alistair Hewitt, head of Market Intelligence at the World Gold Council, pointed to the Chinese appetite for gold jewellery and its rise in line with Indian consumption through 2017. “Jewellery demand picked up as economic conditions improved in China and a policy change in India removed a barrier to demand, while next-generation smartphones boosted gold demand from technology companies.”

Despite a fall in production in China as environmental controls triggered a 9% fall in gold mined, 2017 was China’s 11th year in a row as the world’s biggest consumer of gold. reported last week on the strength of that market, citing the level of technological sophistication behind jewellery. Wang Lixin, the World Gold Council’s managing director in China told the newswire that “with the addition of AI-enabled tools, we believe the outlook for Chinese jewellery demand is positive.”

He Jingtong, a professor of business at Nankai University in Tianjin, emphasised how commonplace the buying of gold within China’s growing cities has raised competition and choice. “The shift in taste has pushed the industry to upgrade, as many Chinese jewellery producers have already adopted machines with computer-controlled programs to design not only 18-karat, but also 24-karat gold products for better and more personal designs.”

Copper : ten reasons to read this article from BHP

There is no translation available.

28 November 2017

Copper is an extremely attractive commodity.

A year ago, we outlined our Bullish Thesis for Copper. Here we build on that work by outlining why BHP remains committed to the pursuit of organic growth in the red metal.

Ten reasons why we like copper

The ten reasons put forward – five supply related, five demand related - range across all aspects of our proprietary framework for assessing the attractiveness of commodities.

The supply side

1. Systematic grade decline and resource depletion. Primary output from currently operating mines is reportedly likely to decline over the coming decade. This is due to the long-anticipated decline in grade that is endemic to the porphyry resource base that currently dominates global supply. That is a geological fact. The implication is that new mines will have to be developed to offset this decline and to meet rising demand.1 Our view is that this will be no easy or inexpensive matter.

2. Lack of big bang exploration success. Global copper mine output is currently built on a foundation of giant deposits with low operating costs that were discovered and developed decades ago. By major region, the discovery of metals deposits peaked in the following decades:

Europe and central Asia    1960s 
High income OECD            1980s
East Asia and Pacific          1980s
Latin America                      1990s
Sub-Saharan Africa            2000s
Source: Minex Consulting & the International Monetary Fund.

To confidently predict that the industry wide cost curve will not steepen as today’s giants age, one would need to have observed a portfolio of like-for-like deposits being discovered and developed on the required timeframe. The reality is that this has not been the case. Analysis2 shows that Tier-I discoveries across the minerals sphere have become scarce in the new millennium, with an additional slowdown post GFC. Copper is no exception. Our view is that it is extremely likely that the copper cost curve will steepen in the 2020s, as the absence of a significant new generation of Tier-I assets will leave lower quality and/or higher cost deposits to fill the looming gap. The expansion of Olympic Dam is a likely exception to this rule.

3. Above ground risk. In our discussion of exploration success above (or more correctly, the lack of it), we noted the volume of metal discoveries in the OECD countries, where ‘above ground risk’- or challenges associated with bringing a product to market - is relatively low, peaked in the 1980s. The only region where the rate of metals discoveries increased in the 2000s over the preceding decade was Sub-Saharan Africa, where above ground risk is relatively high. All other things being equal, the higher the level of above ground risk, the lower the probability of a discovery proceeding to development and, ultimately, contributing to global production. Above ground risk has been shown to act as a curb on exploration success. A recent study by the International Monetary Fund3concluded that improvements in political risk are a powerful driver of the rate of metal discoveries. In terms of today’s copper market and its expected development in the second half of the 2020s, and beyond, this has major implications. If the most prospective areas for copper exploration now are in regions where above ground risk is materially higher, on a weighted basis, than in the 1980s and 1990s, then it is likely the probability of discoveries is now much lower, and the probability of developing what is discovered has also fallen.

4. Water constraints. According to the CSIRO, around 1600 litres of water is required to produce the copper used in a conventional internal combustion engine vehicle.4 Regions that are either arid or are projected to suffer high water stress5 and are also important copper producing regions, include the Atacama region of Latin America; the south west of the United States; Central Asia and southern Africa. Desalination plants can help provide water security for individual operations, but they require large capital outlay to install and considerable energy to run. Where desalination solutions are not pursued, competing with other commercial users and the broader community for resources in water scarce regions can be extremely challenging. In copper, as in mining more generally, effective, ethical water stewardship is expected increasingly to emerge as a competitive advantage for those operators that get it right. For those that do not, their ability to maintain their social license to operate may come into question.

5. Rational market dynamics. The copper mining industry has shown itself to be a relatively rational dynamic engine when under stress. The 90th percentile on the cash cost curve has served as an effective floor for copper prices during cyclical downturns. Not all commodities exhibit such dynamics, with sticky uneconomic supply in some markets allowing prices to fall below the 90th percentile, and sustain there, for years at a time. Copper prices bounced off the 90th percentile in the recent downturn, illustrating that even in a world of zero interest rates, with sticky supply evident in a number of other commodities, dynamic rationality was the order of the day in copper.

The demand side – traditional arguments

6. Chinese consumers. The increasing importance of household consumption in the Chinese economy should provide a boost to copper demand across a range of end-use sectors, including autos, technology products (e.g. smart devices), and household durable goods (e.g. air conditioners). While the residents of China’s Tier-I and Tier-II cities are already established in an urban consumer lifestyle, residents of lower tier cities (the vast majority of the ~53% of the population already living in urban areas) and the ~47% of the population still residing in the countryside, have a great deal further to go in this regard. Furthermore, the process of upgrading the quality of the urban dwelling stock is not just about raw living space - it is about wiring that space to best effect.

7. India rising. The development trajectory of India is expected to be a major boon for copper demand. India’s urban consumers are decades behind their Chinese counterparts in terms of all key end-use sectors important to copper (with the exception of televisions). The urban population share itself is also still low. Additionally, where India’s infrastructure endowment is concerned, both quantity and quality gaps abound. The long run demand opportunity presented by a successful development drive in India is huge in aggregate and broad based by sector.

The demand side – technological mega-trends

8. The electrification of energy demand. Our projections assume that the demand for electricity will outstrip the growth in total primary energy demand between now and mid-century. The production, distribution and transmission of all that power will require a great deal of copper.

9. The electrification of transport. The mega-trend within the mega-trend. As a battery powered electric vehicle (EV) contains four times as much copper as a conventional medium sized car (around 80kg versus around 20kg), the red metal is expected to be a big winner from the electrification of the light duty vehicle fleet. Among the range of possibilities that we consider, our mid case estimate is the EV fleet6 rises towards 230 million in 2035 and around three quarters of a billion in 2050 (i.e. roughly half of the fleet). Under a green scenario enabled by more rapid technological progress and an even more supportive policy environment, it is possible that we could hit half a billion EVs by 2035 and move well beyond the one billion mark by mid-century. And as EVs move into more and more segments of the light duty vehicle market, and those EVs carry more and more sophisticated onboard computer systems, it is unlikely that the current assumption of 80kg of copper per car will continue to hold, and the direction of change will be upwards. Indeed, researchers at UBS already put the figure at 90kg.7

10. Wind and solar. The growth of both wind and solar power generation capacity since the turn of the century has been nothing short of spectacular. So too have been the reductions in hardware cost associated with the rapid building up of new manufacturing capacity. Wind and solar are rapidly closing the unsubsidised cost competitiveness gap with traditional power generation across the world’s major markets. Attractive long run economics, plus the important role that renewables will need to play in the decarbonisation of the world economy, promise a sustained high growth path for wind and solar. From a copper point of view, the per megawatt hour demand coefficient associated with offshore wind generation is almost five times that associated with coal generation. For solar, the coefficient is around two and a half. Fast growing and copper hungry - that makes the wind and solar revolution a worthy conclusion to our catalogue of reasons to like copper.


1. In addition to new primary mine supply, we acknowledge that increased scrap supply is expected to play a role in meeting demand for copper semis and offsetting grade decline, with increased availability of secondary supply in China, the shadow of the copper intensive boom of the first decade of this century, the major force.
5. For more details, see The World Resources Institute’s Aqueduct database 
6. Here we use the EV definition as battery powered vehicles plus plug-in hybrids. The battery powered share of the 230 million is around 140 million, as indicated here
7.UBS Global Research, 29 August 2017, “Copper: Electric Vehicles & Charging Infrastructure to Accelerate Demand”, p. 2

GOLD in Swiss Francs over one and ten-year periods

There is no translation available.

Swiss ProfilInvest tries to make comments understandable by any investor.


A graph is the expression of demand and supply of a security in a chosen period of time.

For example, please look at these two graphs :

- the first one, representing GOLD in Swiss Francs over a period of one year;

- the second, same over a period of ten years;

Gold CHF 1253 oz 1 yr 19022018. Spot

On the above, we see a nearly perfect range, except its break-down in July 2017 followed by an opposite reversal. 

Gold CHF 1253 oz 19022018. Spot

On this graph, the trend remains positive since 2008 and every correction seems an opportunity to buy precious metals.

If you wish to meet one of our Partners, please send a short message to This email address is being protected from spambots. You need JavaScript enabled to view it.


Another M&A : QUALCOMM's take-over

There is no translation available.

Broadcom has proposed to buy its rival Qualcomm in a semiconductor deal that would be the largest-ever takeover in tech.

In a statement Monday, Broadcom said it offered Qualcomm shareholders $60 in cash and $10 a share in Broadcom shares. The offer represents a 28% premium to Qualcomm's closing price of $54.85 on Thursday, before initial reports of deal talks sent Qualcomm shares up 12% on Friday. It was valued at about $130 billion on a pro forma basis, including $25 billion of net debt.

From Business Insider / written by Akin Oyedele


In the past and for many years, Qualcomm had been one of our favorite stock in the US stock universe.

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