Introduction
Michael Howell, the founder and CEO of Crossborder Capital, a renowned London-based independent research and investment company, has provided an intriguing perspective on the current state of the economy. Contrary to popular belief, Howell challenges the prevailing narrative of monetary tightening by highlighting the rise in liquidity. In this article, we will explore Howell's analysis and its implications for stocks, gold, and cryptocurrencies.
Michael Howell: A Veteran in Global Finance
With over $1 billion assets under management, Crossborder Capital is an FCA registered investment company led by Michael Howell. Howell's extensive experience in international finance and economics, including his previous roles as Head of Research for Baring Securities and Research Director of Solomon Brothers, has made him a prominent figure in analyzing global liquidity trends and their impact on markets.
A Rise in Global Liquidity
Howell emphasizes that global liquidity has been steadily increasing, contrary to the prevailing narrative of monetary tightening. Despite a reduction in the Federal Reserve's balance sheet, he points out that Fed liquidity actually increased by 12 to 15% last year. This observation challenges the notion that central banks are solely focused on tightening monetary policy.
Shadow Quantitative Easing and Yield Curve Control
In addition to the covert injection of liquidity by the Federal Reserve, Howell highlights the global trend of shadow quantitative easing and shadow yield curve control. This pattern of monetary inflation, practiced by central banks worldwide, further contributes to the overall rise in liquidity.
The Role of Reverse Repo and Bank Term Funding Program
Howell identifies the draining of the Reverse Repo (RRP) facility and the Bank Term Funding Program (BTFP) as significant contributors to the increase in Fed liquidity. He anticipates that central bank liquidity will continue to unlock, especially once the RRP is fully drained. Additionally, Howell suggests the possibility of renewing the BTFP, further adding to the liquidity in the market.
The U.S. Treasury's Strategic Decision
Howell sheds light on the U.S. Treasury's decision to shorten the maturity of its debt issuance. This strategic move mechanically reduces the private sector's liquidity needs, particularly benefiting the banking sector in managing its overexposure to duration. This decision adds another layer of complexity to the current economic landscape.
Transition to a Calm Phase
Based on his analysis, Howell suggests that the economy may be transitioning from a rebound phase to a calm phase. In such calm phases, the financial sector and high-beta securities, including cryptocurrencies, tend to perform well. This insight provides valuable guidance for investors looking to navigate the market.
The Rise of Cryptocurrencies
Howell also discusses the potential positive impact on cryptocurrencies. He suggests that cryptocurrencies may be the preferred hedge against monetary inflation for the younger generation, aligning with the increasing interest in digital assets among younger investors. If this trend continues, cryptocurrencies could surpass gold as the preferred investment vehicle for younger investors.
Conclusion
Michael Howell's analysis challenges the prevailing narrative of monetary tightening by highlighting the rise in global liquidity. As central banks engage in covert measures to inject liquidity, stocks, gold, and cryptocurrencies are expected to benefit. Investors should consider these insights when making investment decisions in an ever-evolving and competitive digital world.
Frequently Asked Questions
What are the pros & cons of a Gold IRA?
An Individual Retirement account (IRA) is a better option than regular savings accounts in that interest earned is exempted from tax. An IRA is a great option for those who want to save money, but don't want tax on any interest earned. However, there are disadvantages to this type investment.
You may lose all your accumulated savings if you take too much out of your IRA. The IRS may prevent you from taking out your IRA funds until you reach 59 1/2. A penalty fee will be charged if you decide to withdraw funds.
A disadvantage to managing your IRA is the fact that fees must be paid. Many banks charge between 0.5% and 2.0% per year. Other providers may charge monthly management fees, ranging between $10 and $50.
Insurance is necessary if you wish to keep your money safe from the banks. Insurance companies will usually require that you have at least $500,000. You might be required to buy insurance that covers losses up to $500,000.
If you decide to open a gold IRA, it is important to know how much you can use. Some providers limit how many ounces you can keep. Others allow you the freedom to choose your own weight.
Also, you will need to decide if you want to buy physical gold futures contracts or physical gold. The price of physical gold is higher than that of gold futures. Futures contracts, however, allow for greater flexibility in buying gold. They let you set up a contract that has a specific expiration.
You will also have to decide which type of insurance coverage is best for you. The standard policy doesn't include theft protection or loss due to fire, flood, or earthquake. The policy does not cover natural disasters. You may consider adding additional coverage if you live in an area at high risk.
In addition to insurance, you'll need to consider the cost of storing your gold. Insurance won't cover storage costs. Banks charge between $25 and $40 per month for safekeeping.
You must first contact a qualified custodian before you open a gold IRA. A custodian helps you keep track of your investments, and ensures compliance with federal regulations. Custodians aren't allowed to sell your assets. Instead, they must keep your assets for as long you request.
Once you've decided which type of IRA best suits your needs, you'll need to fill out paperwork specifying your goals. Your plan should include information about the investments you want to make, such as stocks, bonds, mutual funds, or real estate. It is also important to specify how much money you will invest each month.
After completing the forms, send them along with a check or a small deposit to your chosen provider. Once the company has received your application, they will review it and send you a confirmation email.
Consider consulting a financial advisor when opening a golden IRA. Financial planners have extensive knowledge in investing and can help determine the best type of IRA to suit your needs. They can also help reduce your costs by suggesting cheaper options for purchasing insurance.
Can the government seize your gold?
You own your gold and therefore the government cannot seize it. You have earned it by working hard for it. It is yours. This rule may not apply to all cases. Your gold could be taken away if your crime was fraud against federal government. Also, if you owe taxes to the IRS, you can lose your precious metals. However, even though your taxes have not been paid, you can still keep your precious metals, even though they are considered the property of United States Government.
What is the best way to hold physical gold?
Not only is gold paper currency, but it's also money. It is an asset that people have used over thousands of years as money, and a way to protect wealth from inflation and economic uncertainties. Gold is a part of a diversified portfolio that investors can use to protect their wealth from financial uncertainty.
Today, Americans prefer precious metals like silver and gold to stocks and bonds. Even though owning gold is not a guarantee of making money, there are many reasons why you might want to add gold to your retirement savings portfolio.
Another reason is that gold has historically outperformed other assets in financial panic periods. The S&P 500 dropped 21 percent in the same time period, while gold prices rose by nearly 100 percent between August 2011-early 2013. Gold was one of the few assets that performed better than stocks during turbulent market conditions.
Another benefit to investing in gold? It has virtually zero counterparty exposure. Your stock portfolio can fall, but you will still own your shares. You can still own your gold even if the company where you invested fails to pay its debt.
Finally, gold is liquid. This means you can easily sell your gold any time, unlike other investments. It makes sense to buy small quantities of gold, as it is more liquid than other investments. This allows you to take advantage of short-term fluctuations in the gold market.
How to Open a Precious Metal IRA?
First, you must decide if your Individual Retirement Account (IRA) is what you want. You must complete Form 8606 to open an account. To determine which type of IRA you qualify for, you will need to fill out Form 5204. This form should not be completed more than 60 days after the account is opened. Once this has been completed, you can begin investing. You can also contribute directly to your paycheck via payroll deduction.
If you opt for a Roth IRA, you must complete Form 8903. Otherwise, the process is identical to an ordinary IRA.
You'll need to meet specific requirements to qualify for a precious metals IRA. The IRS requires that you are at least 18 years old and have earned an income. You can't earn more than $110,000 per annum ($220,000 in married filing jointly) for any given tax year. Additionally, you must make regular contributions. These rules will apply regardless of whether your contributions are made through an employer or directly out of your paychecks.
You can use a precious metals IRA to invest in gold, silver, palladium, platinum, rhodium, or even platinum. You can only purchase bullion in physical form. This means you won’t be able to trade stocks and bonds.
Your precious metals IRA can be used to directly invest in precious metals-related companies. This option may be offered by some IRA providers.
There are two main drawbacks to investing through an IRA in precious metallics. First, they are not as liquid or as easy to sell as stocks and bonds. They are therefore more difficult to sell when necessary. Second, they don’t produce dividends like stocks or bonds. Also, they don't generate dividends like stocks and bonds. You will eventually lose money rather than make it.
Who owns the gold in a Gold IRA?
The IRS considers gold owned by an individual to be “a type of money” and is subject taxation.
You must have at least $10,000 in gold and keep it for at most five years to qualify for this tax-free status.
While gold may be a great investment to help prevent inflation and volatility in the market, it's not wise to keep it if you won't use it.
If you plan to sell the gold one day, you will need to report its worth. This will affect how much capital gains tax you owe on cash you have invested.
You should consult a financial planner or accountant to see what options are available to you.
What are the fees associated with an IRA for gold?
Six dollars per month is the fee for an Individual Retirement Account (IRA). This fee covers account maintenance fees, as well any investment costs that may be associated with your investments.
If you want to diversify, you may be required to pay extra fees. The fees you pay will vary depending on the type of IRA that you choose. Some companies offer free checking, but charge monthly fees for IRAs.
Many providers also charge annual management fees. These fees range between 0% and 1 percent. The average rate per year is.25%. These rates can often be waived if a broker, such as TD Ameritrade, is involved.
Can I buy gold using my self-directed IRA
Although you can buy gold using your self-directed IRA account, you will need to open an account at a brokerage like TD Ameritrade. You can also transfer funds from another retirement account if you already have one.
The IRS allows individuals up to $5.500 annually ($6,500 if you are married and filing jointly). This can be contributed to a traditional IRA. Individuals can contribute up to $1,000 annually ($2,000 if married and filing jointly) directly to a Roth IRA.
If you do decide to invest in gold, you'll want to consider purchasing physical bullion rather than investing in futures contracts. Futures contracts can be described as financial instruments that are determined by the gold price. You can speculate on future prices, but not own the metal. But, physical bullion is real bars of gold or silver that you can hold in one's hand.
Statistics
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
External Links
finance.yahoo.com
forbes.com
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
investopedia.com
law.cornell.edu
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement funds
How To
The growing trend of gold IRAs
As investors seek to diversify their portfolios while protecting themselves from inflation, the trend towards gold IRAs is on the rise.
The gold IRA allows owners to invest in physical gold bullion and bars. It is tax-free and can be used by investors who aren't concerned about stocks and bond.
Investors can have confidence in their investments and avoid market volatility with a gold IRA. The gold IRA can be used to protect against inflation or other potential problems.
Investors also have the benefit of physical gold, which has unique properties such durability, portability and divisibility.
Additional benefits of the gold IRA include the ability to quickly pass ownership to heirs. Additionally, the IRS does not consider gold a money or a commodity.
Investors looking for financial security are increasingly turning to the gold IRA.
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By: David Sencil
Title: How Liquidity Trends Impact Stocks, Gold, and Cryptocurrencies: Insights from Michael Howell
Sourced From: news.bitcoin.com/michael-howell-predicts-continued-surge-in-global-liquidity-benefiting-stocks-gold-and-crypto/
Published Date: Tue, 23 Jan 2024 05:00:09 +0000
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