Dan Oliver – The end of the credit cycle will drive gold

December 28, 2016

Dan Oliver, Founder of Myrmikan Capital is one of my favorite guests and an expert on the history of markets and credit. In his latest letter (posted below) he shares a number of factors that he believes are playing out in the credit cycle globally. Here are some of this main points.

  • The credit cycle peaked along with the Chinese markets in mid 2015.
  • The Chinese government continues to print money to keep GDP high but the private sector is not playing along.
  • A Chinese businessman worth an estimated $14 billion recently defaulted on company debt worth $14.4 million citing “tight cash flows”.
  • The Chinese bubble is going to pop and this will severely impact global markets.

Click here to download the recent Myrmikan letter where Dan discusses the topics above.


    Dec 28, 2016 28:54 PM

    I can’t disagree with any of his contentions and it’s my belief that it’ll be the bond market that ushers in gold bonds in some manner.
    A major market disruption seems inevitable in China and if the yuan starts taking a big hit ( rmb breaks 8 and heads towards 9 in 3 years) because of higher U.S. rates and a strong dollar (and Trump import tarriffs) it seems possible that China/PBOC will need to intervene to give confidence in the yuan when doubt starts to creep in.

    I don’t think the bonds will be convertible to real gold but merely implied, kind of like the GLD etf is right now. People trust in it that trade in it even if all the gold might not be there at any one given time.

    If the PBOC thinks a crisis is close at hand and they have a real need to greatly expand credit and inject a lot more physical yuan in an attempt to jump start some growth and they feel they’re on the cusp of a crisia in confidence they’ll resort to gold to try and instill faith in the yuan.

    The U.S. might need to do the same thing at some point and it wouldn’t involve a gold standard necessarily and it would have more to do with optics/confidence.

    Of course if (a big if) gold becomes the new central pillar of the bond markets that’ll mean that most countries would need to nationalize whatever proven inground gold resources they have.
    And I suppose that private ownetship would then be challenged because they’ll WANT IT ALL if we’ve reached that point.

    Dec 28, 2016 28:56 PM

    This is moreorless what I was talking about…

    “With China Facing Currency, Liquidity Crises, Ex-PBOC Official Urges Use Of “Nuclear Option”

      Dec 28, 2016 28:51 PM

      nice link DPH. thanks

    Dec 29, 2016 29:38 AM

    No surprise here…

    “China Cuts Dollar Weight In FX Basket In Desperate Attempt To “Project Image Of Yuan Stability”