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Jordan Eliseo

Chief Economist at ABC Bullion, Australia's oldest and largest private bullion dealer. Author - Dire Straits: Money for Nothing--Debt for Free (2015) and Gold for Australian Investors (2016)

Gold on the Ropes as Markets Hit All Time Highs

Jordan Eliseo
Jordan Eliseo ABC Bullion

Precious metal prices have been in full retreat the past few weeks, with the price of gold declining toward USD $1300oz. This pullback has had a number of drivers including an easing of the ‘safe haven’ bid as markets fade the rhetoric to do with Korea, the USD catching a... Show More

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The Millennials are Coming!

Jordan Eliseo
Jordan Eliseo ABC Bullion

On Friday the 9th June, the AFR ran an excellent article on the new breed of superannuation funds hitting the Australian market place, most of whom are targeted towards Gen-Y and millennials, Australia’s most populous generation. “Inside the multi-billion dollar battle for Millennials’ super”, which you can access here, looked... Show More

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Sell Gold: Buy Bitcoin?

Jordan Eliseo
Jordan Eliseo ABC Bullion

The financial markets news story of the week most definitely has to be Bitcoin. The price has gone parabolic in the past few trading days, hitting daily all time highs, with some “analysts” now “forecasting” a 2030 price of $500,000 per coin for infamous crypto-currency. Show More

Gold - Q1 Review.....More Upside to Come?

Jordan Eliseo
Jordan Eliseo ABC Bullion

Today’s rally notwithstanding, gold has had a relatively low profile start to 2017. This is in stark contract to a year ago, when a volatile stock market and the surprise implementation of NIRP in Japan led to range of optimistic forecasts and proclamations of “a new bull market in precious... Show More

Exter’s Pyramid and the End of “Easy Money”

Jordan Eliseo
Jordan Eliseo ABC Bullion

Over the last 40 years, investors have enjoyed a golden era, able to generate returns of close to 7.50% p.a. in investment grade credit, and over 10% p.a. in equities, with this historical outperformance driven by a handful of factors including rising debt, huge increases in female labour force participation,... Show More

Trump or Clinton, Gold goes higher

Jordan Eliseo
Jordan Eliseo ABC Bullion

The last minute re-opening of investigations by the FBI into the affairs of Hillary Clinton as regards her private email servers was unquestionably the key event that has swung the polls and driven gold’s turnaround in recent days. Yet both candidates support policies that would drive higher gold prices through... Show More

OMFIF, Sticky Inflation, and the table to end all tables

Jordan Eliseo
Jordan Eliseo ABC Bullion

The Official Monetary and Financial Institutions Forum (OMFIF) recently released a research report titled “The Seven Ages of Gold”, which looked at central bank activity in the gold market, over the last two centuries. It noted that net purchasing/selling patterns fell into seven distinct periods, each lasting an average of... Show More

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Weaker AUD to support local precious metal investors

Jordan Eliseo
Jordan Eliseo ABC Bullion

Precious metals are my primary focus, and short-term I’m neutral with a downside bias, a position unchanged from our pre-Jackson Hole outlook here at ABC Bullion. The greater focus on a potential rate hike in either September or December of 2016 that came out of Jackson Hole reaffirms this view.... Show More

An upper limit on what monetary policy can achieve

Jordan Eliseo
Jordan Eliseo ABC Bullion

One of the more interesting developments was the reticence from the Fed to move toward negative rates, something their counterparts in Europe and Japan are obviously more comfortable with. Yellen didn’t mention negative rates when discussing steps future policymakers may add to their toolkits, but it was telling that she... Show More

Anniversaries, Smart Money, and Regulation: It’s all about Trust!

Jordan Eliseo
Jordan Eliseo ABC Bullion

It’s been a quiet month for gold, with the yellow metal up slightly, despite a reduction in net longs, minor ETF outflows, and a rally in risk assets. Sentiment has definitely turned though, with a buy-the-dips mentality emerging amongst banks, including UBS and Credit Suisse, whilst Peter Grandich thinks “the... Show More

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Good article Chris - though i personally think REITS are a bit flaky on the half back line........history says they don't stand up to finals pressure - i'd swap them for precious metals - which not only tend to hold up when the going gets tough, but can actually pop up with a few goals against the tide (disclosure: long gold, and a massive Adelaide Crows and Andrew Mcleod fan)!

On Who's in YOUR portfolio backline this Grand Final? -

hi Patrick - thanks for the comment. There is no doubt the potential for countries in Africa (and other parts of the world for that matter) to increase their gold production. I wouldn't worry too much about the potential impact on prices though, as that additional production will do little to increase total gold supplies, nor the annual rate of increase in total gold supply. Have a quick look at this article i wrote for the Gold Industry Group a year or so ago on this subject, and look forward to any feedback you have. Cheers http://www.goldindustrygroup.com.au/news/2016/7/7/gold-investor-series-stock-to-flow-why-gold-is-not-a-commodity

On Gold on the Ropes as Markets Hit All Time Highs -

Interesting and thought provoking read Chris......i'd think a lots of the newer entrants to the super space could do this easier as they won't have the legacy tech issues.....definitely something to watch

On Renters and Owners Need Different Super Solutions -

Really enjoyed this piece Daryl, and agree with the view you've articulated re the change of focus for the government, and the profound shift that represents from the 'push prices higher' approach of the last 30 plus years.........

On Government's profound shift in thinking on property -

Was at the conference too.....very much enjoyed it.....definitely agree with the CE forecast on Aussie rates, though I'm not as bullish as they are re the United States!

On The Outlook for Global Growth -

Brilliant Alex - couldn't agree more........the pessimism on display by some commentators regarding this dynamic (and supposed requirements for UBIs etc) is not at all supported by historical observation

On Why the technology eats jobs argument is wrong -

Great note Patrick - one of the obvious questions that springs to mind in light of the potential with driverless cars is the merit of huge infrastructure spending plans (particularly for roads)! Big question on whether we really need to spend money in that area given the potential productivity/efficiency dividend this technology will bring!

On What’s on Hamish Douglass’ mind? -

I'm obviously in the medium-long term bull camp Rudi, but thats an excellent piece covering the major headwinds! Enjoyed the read!

On Fool's Gold? Know Thy Enemy! -

Spot on Chad re the comment about Demoncrats losing more than Trump winning - the Swing States in the Mid-West in particular were only +1m for Trump v McCain in 08, Clinton was -2m v Obama....Good Read!

On This is Big(ly): Our Trump musings (part I) -

Superb read.........interesting to consider gold performance in light of above chart considering the strong run since 2000 and fact its typically considered an inflation asset

On How central bank policies hurt savers and investors -

Great read Steve - couldn't agree more re the challenges ahead for the sector

On Fuzzy Future for Fundies -

I agree with Patrick's sentiments - though the alternative way of looking at this is that Financial Markets are entirely unconfused. Market participants now fully expect further Monetary Policy Extremism - in that environment - it is somewhat logical to trade dollars/euros/yen/pound for anything more tangible - be that ownership of productive businesses or gold.........whilst it is true that there is minimal CPI in the developed world right now, why wait for the money to die - better to trade it for something more tangible now

On Financial markets in a state of confusion -

Great post Patrick (and comment Steve). The Dalbar reports are a must read. Thats the thing about volatility - investors should ride it out (or use it as a gift at times) but they just don't - locking in losses at worst possible times/overpaying etc.......if markets were easy though i guess it would be boring

On Buy high, sell low? -

I agree wholeheartedly John re the comment regarding the mistake of treating gold like any other commodity. In reality, the supply of gold is largely fixed (grows slowly over time), - but i think the WGC point re ETF demand was/is a valid expression of Western investor interest. Of course the ETF gold was purchased from other investors (predominantly unallocated gold held at HBSC/JP which are the major custodians outside of the BoE) so you could argue its a "rotation" of demand from one investor type to another. Enjoyed your article

On Too Many Gaps in Unreliable Gold Council Market Data -

couldn't agree more - i'd add democracy (or actually just BIG GOVERNMENT) to the list, though I'm not sure disruptive technology is anything other than a positive

On Headwinds: Debt, demography & disruptions -

not surprised by these findings for broader commodities - the returns on gold in rising rate environments is something we've long spoken to clients about. This, coupled with USD returns post rate hikes, and the extreme bearishness toward metals right now can't help but whet a contrarians appetite.

On What happens to commodities when rates go up? -

i'd add a 'mistake' often made at this age too is mistaking fortune for brains in the investment market. Its almost better if your first couple of share investments lose money, to teach you humility. Not a hard rule obviously - but it can sometimes be a bad thing if you are a 20 year old who "invests" in some dot.com or junior miner which 5 bags - youngster then thinks they're Warren Buffett

On 8 biggest money mistakes to avoid when you’re young -

Hi Peter - no question that there'd be a few punters caught up in the latest volatility in China that would have had to liquidate gold holdings in order to raise much needed cash. That's very different from China as a sovereign itself, who've made it fairly clear that higher levels of gold holdings are needed to balance out their foreign exchange reserves etc....

On China Gold? -

No arguments from me on the different mechanics at play mate - agree totally

On Its Super watching Buffett -

One could argue that the latest shenanigans in Greece suggest loans to governments are not in fact free of credit risk.....nearly risk free is not the same as risk free

On Its Super watching Buffett -

No question weather affected the results, but it still fell way below expectations - which should have 'priced in' the weather to a larger degree. It's consistent with the broader rolling over of US Macro data too.

On Ignore the US GDP numbers -

Roger agree 100% at the smaller end. Not hard to see why ETFs popular though when so many large cap managers can't beat indexes regularly. On the Buffett question - A Wolf advising others to remain Sheep should always be looked at with a skeptical eye.

On Roger Montgomery: Tees off on index funds -

yeah gold in JPY has done fine of late - but short term its not looking great (in USD at least). The problem for the BOJ and Abe only compounded by the fact most of the debt is held internally and they're demographics are so bad. If the BOJ steps away from market and domestic pension funds need to sell, how does it not implode? You get the feeling a few decades from now financial history books will have a chapter focused specifically on Japan!

On So the BOJ think they will exit its QQE (easing) program -

Hi James - yes - definitely growing momentum - in part due to lack of transparency around fix, Barclays fine, and also the fact silver fix is ending (new process expected to be announced as soon as next week i think). Gold is highly liquid with tens of billions trading per day - pricing it is no problem at all - be interesting to see what market ends up agreeing on as a replacement - but anything to improve transparency is a good thing for the gold market (or any market for that matter). cheers

On If we have an 'average' third quarter for gold, we should expect to see a gold price of around USD $1400oz by the time we get to October. Looking at Q3 data... -

This is true - though it would be worth pointing out that our massive homes are filled with spare bedrooms - probably 6 million in total across the nation. In any other industry we'd refer to that as excess capacity, and makes one wonder about the so-called 'housing shortage'. But great graph on the square metres.

On Australia is not facing a housing bubble - in fact, when it comes to prices we get more than what we're paying for, says BT Financial Group's Chief Economist... -

Hi Rudy - agreeing, disagreeing, and even fiercely disagreeing is part of what makes Livewire such a great platform for sharing views and debating. The major point i was expressing in this post was the fallacy that rising rates = falling gold prices.The late 70's proves that - as nominal rates more than doubled, and gold prices flew as well (which even you acknowledge). Happy to debate all pros and con's on gold investing, but not actually sure what point of mine you disagree with? Am i missing something?

On If its obvious, its obviously wrong, is one of my favourite sayings when it comes to markets. On that score, perhaps nothing is more pertinent to the gold... -

Really good read - interestingly, in the earlier periods highlighted by Fidelity (1973-74 and 1978-80), gold outperformed even commodities by a significant amount (129% vs 50%, and 167% vs 4%), though in the 3 periods after - its been more of a wash. Good to see these guys picking up a broader basket of commodities though either way.

On How to protect yourself from stagflation by Daniel Weston, CIO, Aimed Capital -

Perhaps the better way to describe it would be turnover John? As in - there was 16% less gold traded, as less owners were willing to sell at the price buyers were willing to pay this year compared to last. Important to remember last year was a record for physical (bars/coins) and jewellery - so not surprised with these numbers (am encouraged by them actually). Also obvious turnover/demand not correlated to price short-term. 2013 price movement v turnover/demand conclusive evidence of that

On The World Gold Council has said today that total gold demand in Q2 stood at 964 tonnes, 16% lower than the same period last year as consumers and investors... -

This is a really good piece guys - but surely it should not be a political/central bank issue as to whether companies invest/buy-back stock/pay out higher dividends. This should be something boards are more than capable of working out for themselves. As for the AUD - yes - pushing it lower will help some industries, but will hurt others - and import higher inflation. Furthermore - what can the RBA do other than slash rates further - with deleterious effects for savers - who will then in turn be forced to buy more stock - which they'll only do if the boards pay out higher dividends. Catch 22 no?

On A debate has begun over whether Australian companies are paying out too much cash in dividends to shareholders, and not enough capital is being reinvested -

Not surprising - though must admit i wasn't expecting the sell off to be quite so violent this morning (especially silver which just got 'oiled') Could be a counting crows (long december) for precious metal bulls if this morning sets the tone!

On Swiss vote no to gold referendum -

couldn't agree more with Charlie there. if the RBA don't cut they're going to have to most dovish of language. All the risk is to the upside (unless they cut 50bps of course), which they won't

On Implications of no rate cute.. -

Yep - it's precisely the kind of thing that in a rearview mirror people will say 'how didn't we notice that' - good call James

On The race to $100 on the ASX.. -

Interesting comment James - i can remember that happening when the NASDAQ bubbling along 13 years - the more things change the more they stay the same hey. Henry - you've to think long term - $654k per job is nothing - they'll mostly be part time earning $30k a year - will pay themselves off in no time :-)

On Afternoon report and something to ponder.. -

Good article, but strange not one major bank or property group mentioning ABS Housing and Occupancy Costs report. At least 5 to 6 million spare beds in this nation today - not convinced at all on major housing shortage. Also, latest census shows for first time in 100 years, we saw an INCREASE in number of people living in each house. Thats what happens when times get tougher, people compromise on housing wants, and settle for housing needs. Thats a trend that will continue!

On ANZ: the housing shortage could bump prices by up to 20% - the bank notes two key themes (1) house prices are rising substantially, 15-20% in the next few... -

That's right James / Matt - and not sure if you guys saw this one from Gallup - but looking like it's going to be an unhappy Xmas for retailers with American's planning to cut back on the retail spending cheer. http://www.gallup.com/poll/165872/americans-trimming-holiday-spending-plans.aspx Not to mention the fact that news about WalMart store doing a food drive for it's own staff who can't afford to celebrate Thanksgiving. Sad sign of the way America is heading.

On US retailers are fast approaching their most important weekend of the year: Thanksgiving! -

Fear not - if it's unsustainable, it won't be sustained - and Aussie housing clearly fits the bill. I think we'll see a fairly significant correction (in real terms) over the next decade, although i think the market still has a ways to run, especially in NSW. Lower rates in 2014 will add impetus too. Crazy anecdote btw James - i live in Balmain and it's a similar story there

On Records continue to fall faster than England wickets.Gonna be a long summer for this POM..Another record close in the US will propel us higher -

Very interesting post Tom - interesting two of their short trades involve betting against commodity currencies - hard to see logic in that unless you aren't bullish global growth (which i'm not personally but not sure that's the GS 'house' view), and would also make the 1900 target for the S&P strange, unless they have a no/minimal Fed tapering stance.

On Goldman have named their top three long-short trades for the year ahead (many of you have likely read this already) -

Jay what is 'healthy inflation'. Surely if inflation is 'only 1%' then that's closer to 'price stability' than 2% or 3%. And as you say, the LFPR plunge is hiding the true state of unemployment in America (as is the lack of mainstream analysis on job quality vs quantity). Surely the average American is better off in inflation remains low, rather than high. Gallup poll just out showed a decent % of Americans see themselves in a worse position over last 12 months, despite 30% rally on Wall Street and +10% house price rise. http://www.gallup.com/poll/166850/americans-worse-off-financially-year-ago.aspx

On With so many Americans dropping out of the work force, the unemployment rate is not an entirely accurate metric of positive economic development -

Yep, a company with cash on its balance sheet has 5 options - keep it there, pay down debt, invest/hire, increase dividends or engage in buybacks Invest/hire if positive there is more growth to be had (hardly any of this is happening). Keeping cash on balance sheet or paying down debt is healthy too. Increasing dividends and buying back stock won't help future growth or keep balance sheet healthy, but a great way to push up stock price and boost EPS. Long term this is unhealthy

On Jim Chanos has a new investment thesis the focuses on company buybacks -

Hey James - i've seen plenty of this too - but i think the following article (and especially the graph on cashflow growth vs capex) puts a big question mark over what is now almost consensus opinion re higher business Capex. The article i've linked in is worth the read too http://www.businessinsider.com.au/us-profit-growth-weaker-than-reported-2014-3

On I have been consistently reading views that the growth estimates for the US over the next few years have been understated -

With earnings unsustainably high, hardly any bears left in the market, and with P/E's at 25 (using Shiller) - lots of potential downside in stocks from here. If last 4 years prove to be cyclical inside secular bear, and P/E's drop below 10, and earnings revert to more sustainable levels - 50% haircut would be conservative IMO

On US After tax Corporate Profits are at all time highs and while the inclination is to say this is driven exclusively by programs like QE and ZIRP, the... -

Great article James - similar feature occurring here in Oz with credit card balances declining. Problem of course is there friends in Washington are adding it in bucketloads. Additional $7 Trillion in debt - equivalent to an extra $48k in debt per taxpayer. Ouch!

On For all intents and purposes, the US has kicked its credit card addiction -

Good share Jay, but i would have take issue with some of this. Firstly, loan growth from the US banks has been non-existent (in fact i think lending to SME's in the US just turned marginally positive for the first time in 4 years), so his first point is highly questionable. His second point is true, but stock market wealth is highly concentrated, main street guys aren't getting much of that action at all.

On Has the Fed actually helped the average person with its policies, or just the privileged few on Wall Street -

Spot on - physical demand will top 1,000 tonnes this year - and thats just the official numbers being shipped through HK. Doesn't account for business people/tourists from Shanghai, Shenzen, Beijing etc who head to HK and buy jewellery/bullion bars and fly them home. Today, most will judge 2013 is the year the gold bull market died, but history will judge it as the year China took over the market.

On Good Morning Vietnam.........relatively quiet night for gold, as lower consumer confidence figures in the US were offset by a relatively strong Richmond Fed... -

Spot on Chris - i'm not trying to be partisan here (as i'm not) but we've gone from 'no more debt' to 'no more debt ceiling', 'stop the boats' to 'stop talking about the boats', and 'we will be a government of no surprises' to 'we will be a government with no shortage of surprises'. Not hard to see why people are quickly losing faith.

On Love this article -

Eye of the hurricane IMO James - 6 years ago the US 10 year yielded more than Greeces. Every major Euro nation was a worse govt debt to GDP ratio, loan growth is weak, economy barely growing. Banks still horribly over levered, and political dysfunction and tension on the rise. This story, sadly, is a long way from over

On European government bond markets are saying the euro crisis is pretty much over -

HI Guys. no doubt weather a factor, but latest ADP report showed +25,000 in construction (+30k and +32k in previous two). the BLS report had construction +48k (admittedly was neg in December). Hard to see the weather affect there. Zerohedge had a (typically sarcastic) article on it here. http://www.zerohedge.com/news/2014-02-07/biggest-job-winners-construction-and-losers-government-january

On Is the US economy faltering or is just the bad weather -

Hey Jay - nice post. I'm obviously a gold bull, although i wouldn't rule out another test of USD $1200 at least. Having said that, one thing all gold bulls and bears should agree on is that gold 'will last'. Whether it's in a bullish or bearish cycle (and i accept not everyone will agree with the bullish thesis) gold has no credit risk whatsoever and is highly liquid. The only risk investors take is volatility, which, viewed through a different prism, can also be seen as an opportunity. Jordan

On With macroeconomic conditions in flux, is gold back on the table as the go-to safe haven investment -

Ha - yeah a couple of stiff whiskies might be in order. Not trying to be doom and gloom, and there are some positives, but on balance things look very weak. Tough times ahead i feel.

On QANTAS sacks 5,000 and Capex numbers tank -

This is a very good read. Was at a Vanguard presentation last week and they thought CAPE was one of the better, if not best predictor of long term returns. If so, its going to be an ugly decade ahead, as in real terms - investors have NEVER made money in the following decade following valuations at these levels, and the drawdowns have on average been + 50%!

On GMO: The S&P is over-valued on every model -

Debt to GDP is only one metric - interest expenses vs taxation revenue a better one IMO. Any increase in borrowing costs will crush the US budget (and other sovereigns for that matter). Also - ageing population hurting now. Even the GAO forecast that Medicare/Medicaid etc would grow at 2-3 times the pace of GDP between 2007-2032. They are unprepared IMO.

On Is the new normal for US growth going to be just 2% -

Nice Tom - we are so China obsessed we conveniently forget just how important Japan is to our fortunes. +200% debt to GDP ratio consuming 30% of tax revenue with rates sub 1%, and a declining population. Not a good outlook for one our biggest clients!

On Is it also time to worry about Japan -

im a gold bull - not a gold bug (it is different i promise), but the Saxo report did touch on some important points. I think highly likely gold takes a year to bottom properly, which would put a final bottom around June 2014. Whether thats at $1180 or sub $1,000 remains to be seen, but there is no likely short term catalyst for higher prices right now.

On Tepid data from the US, Europe and China was not enough to halt golds slide yesterday. The move overnight brought back unpleasant memories of 2013 when sharp... -

Par for the course i think. Retail sales have been stronger than expected and the employment result was a standout. Having said that, they'd be well aware of weakening business and consumer confidence, which might get worse if Big Joe keeps talking tough re the budget. AUD will be worrying them too, so there's no chance of a hike, but i'll concede my call of further cuts now looking premature.

On RBA minutes just released, here are selection of quotes that stood out, interested to hear other peoples thoughts -

interesting - no doubt EPS growth has been impressive, but its not due to strong corporate growth to paraphrase the report. Stock buy backs have been a major factor in EPS growth, and other measures of corporate growth have been far less impressive, especially free cash flow, which is one major reason corporate capex is still so weak.

On UBS: Bull markets die from excesses - not old age: The fundamental growth in the current five-year old bull market can be attributed largely to an impressive... -

Pretty decent mate - volumes are solid, though not having a spectacular pick up like we did a year ago when the circa $200 drop occurred. More interest at the 'professional' end of town too, but people understandably nervous to increase allocations or introduce allocations with the market where it is right now

On At one point on Thursday the 24th April, it looked like the bottom was going to well and truly fall out of the precious metal sector. During European trading,... -

Hi Mate - something Dylan Grice wrote about a few years ago when at SocGen - the end game is pretty easy to predict - Default on a epic scale - just a question of its an honest default (ie telling Mr and Mrs Watanabe that their assets ie loans to the government) are worth a lot less than 'market value', or continued debt monetization. Entire Western world headed down this path. Question is how to protect (let alone profit) from whats about to unfold.

On So the BOJ think they will exit its QQE (easing) program -