Month: April 2013

By Bill Bonner

We are delighted to see gold getting smacked down. From the International Business Times:

Gold prices posted their biggest
two-session drop in 30 years Monday as retail investors and large
institutional speculators capitulated to a six-month downdraft that
accelerated in the last week into bear market territory. The violence of
Monday’s plunge reinforced the view that the 12-year bull market in
gold is finished.

In New York trading, a troy ounce of gold closed at $1,360.60, a more than 9% plunge and the most extreme drop since 1983.

By the close of trading Monday, the
price was off more than 13%, or more than $200 per ounce, from last
Thursday’s closing price of $1,564.90.

Why is this good news? It settles our nerves. And gives us an opportunity to buy more.

If you’re in a card game and you look around the table… if you
can’t figure out who the fool is, he might be you. Then you get nervous.
You start rubbing your hands or scratching your forehead. The other
players will see that you’ve lost your nerve.

Then you’re finished…

We’ve been looking around the table of the investment world, too, wondering who’s the fool. The people who are buying stocks? Probably, but maybe not. The folks who are buying bonds? Yes. But who knows?

Then who is it? Are we the fools?

A lot of people think so. It was beginning to make us nervous.

Maybe there really is a recovery… however weak. Maybe the feds
really do have the situation under control. Maybe the central banks are
right to print money. Maybe it will be clear sailing from now until
kingdom come. And we’ll be fools not to be on the boat along with all
the other stock buyers and gold dumpers.

Why is the price of gold falling? The papers say it’s because
speculators fear that China is slowing… or that Cyprus will dump its
holdings. From British newspaper The Guardian:

The price of gold
fell to its lowest level in more than 18 months on Friday night amid
fears that sales of the precious metal forced on Cyprus by its desperate
financial plight would lead to wholesale dumping by hard-pressed
countries in the coming months.

At the end of a week dominated by the
plight of the troubled Mediterranean island, gold slid below $1,500 per
ounce for the first time since July 2011 in anticipation that Cyprus
would seek to raise 400 million euro by offloading a chunk of its
reserves.

The False Premise

“Find the trend whose premise is false,” says George Soros, “and bet against it.”

And today, behind the drop in the gold price
is a very foolish notion. The premise is that real money (financial
reserves) can be replaced by credit and debt. People who believe this
must be the real fools in the market. Which takes some of the pressure
off us.

Imagine you are a major holder of, say, antique Buicks. Imagine you
are in financial trouble. The market for antique Buicks anticipates the
upcoming supply. Prices of old Buicks drop.

OK… but are Buicks the same as gold?

Imagine that, instead of Buicks, you held cash — a big wad of cash
in your vault. Then, in financial trouble, you need to open the vault,
get out your cash and use it to pay your creditors. Does the market for
cash go down? Does the value of your cash decline because people know
you will have to give it to someone else?

The premise is false. Real cash does not become less valuable when
people find themselves in financial difficulty; it becomes more
valuable. People scramble to get it. They need to pay their debts…
settle their accounts… reduce their illiquidity by raising cash. They
need cash. The demand for cash goes up, not down.

But wait. Today’s bills are payable in paper cash… not gold.
Debtors must raise paper cash by selling their gold for paper. It’s
paper they need… not real money.

That’s what makes this business so interesting, isn’t it? And so
funny. The system runs on paper money. People spend it. People borrow
it. Now people need more of it to pay their bills. So they sell their
valuables — namely, gold — to get more paper money. Gold goes down,
while central banks print up more paper money — just to make sure
there’s plenty to go around.

But one day… and we won’t say when… (saying “what” seems like
more than enough to ask from a free publication)… people will stop
worrying about the quantity of the paper and begin worrying about the
quality of it.

They will find that they have plenty of paper… and that more is
coming all the time. They will look in their vaults and wonder what they
will do with all this paper money.

They will have bills to pay then too… and creditors with sharper
eyes and tougher standards. When they offer these new creditors more of
their paper money, they will say, “Uh-uh.”

They’ll want some better cash. Gold, in other words.

Regards,

Bill

To learn more about Bill visit his Google+ page or Bill Bonner’s Diary

By Justice Litle

Gold and virtual currency bitcoin crashed in recent days. The crashes have something in common.

First, let’s talk about gold…

The yellow metal plunged by more than $100 per ounce on Monday
following talk that Cyprus would be forced to sell gold to pay back its
debts. Although Cyprus is small in the scheme of things, the move
suggests a precedent of forced sales from larger euro-zone countries
(such as Portugal, Spain and Italy).

This comes on the heels of increasingly bearish outlooks from major investment banks such as SocGen and Goldman Sachs.

Worse, the faster and farther gold falls,
the more likely a mass investor exodus becomes, forcing even heavily
committed hedge fund managers to sell. Fears of a vicious feedback loop
thus lead to self-fulfilling prophecy, as investors rush to the exits.

Gold had already been in an extended downtrend based on the perception that (1) central bankers
have won the battle against further financial contagion and (2) a lack
of meaningful price inflation on the horizon. (It is hard to get real
and sustained inflation when wages are suppressed.)

Gold has long been billed as the only alternative currency not
subject to a printing press. As such, gold is used by many investors as a
form of “crisis insurance” — a sort of credit-default swap for the
entire global financial system. The greater the risk to the system the
more desirable gold becomes.

But now it seems that a continuation of the crisis in the euro zone
could see the market flooded with gold. There are 11,000 tons of the
metal in euro-zone vaults. Gold is a bastion of safety and a shelter of
value in times of monetary and geopolitical crisis. But what happens if
governments are forced to dump their gold to pay back debts?

A major crisis event such as a euro-zone breakup thus becomes an unknown, rather than a positive, for gold.

Bitcoins crashed too in recent days, albeit more severely. Last week, the value of bitcoins fell by more than 50% in one day.

Bitcoins have the same “hard to value” problem as gold, but to an even more serious degree. Whereas gold pricing
has decades and even centuries of history, coupled with a mature market
to buy and sell into, bitcoins are brand-new (relatively speaking) with
no intrinsic value benchmark at all.

In this respect, gold and bitcoins have both the same core virtue and
the same core flaw. Both represent an alternative to government-managed
fiat currencies. Both are hard, if not impossible, to assign intrinsic
value to.

So does the crash in fiat alternatives mean the central bankers have
truly “won”… and that there will be no challenge to fiat’s reign?

Hardly. Neither history nor economics argues that.

It simply means the road to a 21st-century post-fiat world contains
more twists and turns than many expected… so don’t be surprised to see
more serious volatility ahead.

To be continued…

Carpe Divitiae,

Justice

By www.CentralBankNews.info     Canada’s central bank kept its target for the benchmark overnight rate steady at 1.0 percent, as widely expected, and said the current “considerable monetary stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required.”
    The Bank of Canada’s (BOC) statement signals that it is pushing back the time frame for a rate rise even further than currently expected, continuing its move since February toward a more neutral policy stance and reflecting another downward revision in its growth forecast.
    In its latest Monetary Policy Report, the BOC forecasts annual average growth of 1.5 percent in 2013, down from a January forecast of 2.0 percent, 2.8 percent in 2014, up from a previous 2.7 percent, and 2.7 percent in 2015.
    “The economy is expected to reach full capacity in mid-2015, later than previously anticipated,” the bank said in its policy report. In its January policy report, the BOC had expected the economy to reach full capacity in the second half of 2014.
   Headline and core inflation is expected to remain subdued in coming quarters before gradually rising to the BOC’s 2 percent target by mid-2015, also later than it forecast in January when it expected inflation to return to its target in the second half of next year.
   
   
   

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 17 April 2013, 08:00 EST

WHOLESALE MARKET gold prices hovered around $1380 an ounce Wednesday morning in London, little changed from a day earlier, as European stocks continues to fall along with most commodities and US Treasuries gained.

Silver hovered around $23.50 an ounce for most of the morning, also little changed from the previous day.

“In truth the gold market is still in shock,” one London-based trader said this morning.

“A lot of damage has been done,” agrees Dominic Schnider, head of commodities research at UBS Wealth Management.

“[But] if you look at the fundamentals, the drop was excessive and does not correspond to the reality that we still have a lot of troubles out there – debt monetization, real interest rates will remain in negative territory and the Dollar in the long run still is a currency that won’t be that strong.”

The world’s biggest gold exchange traded fund SPDR Gold Trust (ticker: GLD) continued to see outflows yesterday, with the volume of its bullion holding dropping 8.4 tonnes to 1145.9 tonnes, 15% down on where it started the year.

In Asia by contrast, “people are actually buying everything, gold bars, gold coins,” says Brian Lan, managing director of Singapore’s GoldSilver Central

“People are rushing to get a hand on it…it’s the same for silver. So far sentiment seems to be improving. Even the price has more or less stabilized.”

Some stores in mainland China, the world’s second-biggest gold buying nation, ran out of small gold bars Tuesday, Hong Kong’s Standard newspaper reports.

In world number one India however, “we don’t see a rush even though the price has come off,” one Singapore wholesale dealer told newswire Reuters this morning.

Shares in India’s two biggest gold loan companies, Muthoot Finance and Manappuram Finance, saw 10% drops in both Monday and Tuesday trading. Both companies allow people to borrow money posting physical gold as collateral.

“High LTVs [loan-to-value ratios] leave limited cushion for correction in the value of security,” says a note from consultancy India Research.

“An additional 10 percent correction in gold prices in the near future could result in a majority of outstanding loan amounts being higher than the realizable value of collateral, resulting in increased possibility of losses.”

Manappuram said last month that it expects to lose some of the interest it owes as a result of lower collateral values, expressing particular concern about loans made towards the end of 2011.

Stock markets in Europe meantime extended their losses of the last two days during Wednesday morning’s trading, with some money managers suggesting substitution into other territories.

“Fund managers in Europe are switching guns because they are seeing on the one side Japan with positive momentum and Europe just getting deeper and deeper into a recessionary environment,” says Didier Duret, chief investment officer at ABN Amro.

The International Monetary Fund yesterday cut its 2013 growth forecast for the Eurozone, projecting a slightly sharper contraction, while also revising down Britain’s growth rate.

Cyprus will sell some of its gold during the next few months, the country’s finance minister confirmed Wednesday, contrary to an official denial last week.

“The exact details of it will be formulated in due course primarily by the board of the central bank,” Haris Georgiades told Bloomberg TV.

Cyprus has 13.9 tonnes of gold, according to the latest World Gold Council figures. The European Commission said last week that the country has committed to selling around €400 million worth of so-called “excess” gold as it tries to raise enough to secure a €10 billion bailout. Since gold’s price drop however, Cyprus’s entire gold reserve is now worth around €470 million.

The government of Singapore, home to BullionVault’s newest vaulting location, is in talks with the Singapore Bullion Market Association about launching a gold fix along the lines of the twice-a-day London Fix, where major bullion banks set a clearing price.

“While nothing concrete has been formed yet, we will continue to work with the SBMA to collate ideas on how to make the Singapore gold hub work for the industry,” said a spokesman for International Enterprise Singapore.

Ben Traynor

BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben can be found on Google+

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By www.CentralBankNews.info     Sweden’s central bank held its benchmark repo rate steady at 1.0 percent, saying economic prospects were gradually brightening but monetary policy needs to remain “very expansionary” until the second half of 2014 because it will take longer time for inflation to start to rise toward the bank’s target.
    Although the Riksbank raised its forecast for economic growth this year, it cut its forecast for inflation, saying inflation was low due to weak demand, the stronger value of the Swedish krona in recent years and because companies have more difficulty in passing on higher costs to consumers.
    “Gradual increases in the repo rate are not expected to begin until the second half of 2014, which is around a year later than earlier forecast,” the Riksbank said.
    The Riksbank, which cut rates by 75 basis points in 2012, forecast an average repo rate of 1.0 this year and in 2014, down from its February forecast for a 1.5 percent repo rate in 2014. For 2015 the repo rate is now forecast to rise to 1.9 percent, down from a previous forecast of 2.2 percent.
    An even lower repo rate today would help inflation speed up toward the bank’s 2.0 percent target but “at the same time it would further increase the risk of imbalances building up,” the bank said.
    “The monetary policy conducted is expected to stimulate the economy and inflation at the same time as taking into account the risks linked to households’ high indebtedness,” it added.
    The decision to hold rates steady was widely expected by economists.
    The Riksbank forecast that Gross Domestic Product would rise by 1.4 percent this year, up from February’s forecast of 1.2 percent, then by an unchanged forecast of 2.7 percent in 2014, and then by 3.5 percent in 2015, up from a previous forecast of 3.1 percent.
    Earlier this month, the Swedish finance ministry forecast 2013 growth of 1.2 percent and 2014 growth of 2.2 percent. It also forecast that the repo rate would remain at 1.0 percent through 2014 and then rise to 1.75 percent by the end of 2015.
    In 2012 the Swedish economy expanded by 0.8 percent and in the fourth quarter of last year, GDP stagnated from the third quarter for annual growth of 1.4 percent, up from a rate of 0.7 percent in third quarter.
    Consumer price inflation is forecast by the Riksbank at only 0.1 percent on average this year, down from a previous forecast of 0.4 percent, and then rise by 1.4 percent in 2014, down from a previous forecast of 2.1 percent, before inflation rises to 2.7 percent in 2015.
    Deflation has started to take hold of Sweden with consumer prices unchanged in both March and January and down by 0.2 percent in February. In both November and December, inflation was a negative 0.1 percent, respectively.
    The Riksbank said the global economy was growing “at a relatively good pace,” with growth in the U.S. continuing and Asian developments strong. This is in contrast with economic crises in the euro area along with uncertainty and weak growth.
    “After a weak outcome at the end of last year, the Swedish economy is now showing a gradual recovery,” the Riksbank said, adding that sentiment among households and companies is picking up, and consumption and investments is expected to increase more quickly in the coming period.
    But the Riksbank cautioned that these brighter prospects, together with low interest rates, had boosted house prices and this is “expected to continue and to contribute to a faster increase in household debt in the coming period than was forecast earlier.”
    As at its previous meeting in February, two of the Riksbank’s board members had wanted the bank to cut rates. Deputy Governor Karolina Ekholm again wanted to cut the rate to 0.75 percent while Deputy Governor Lars E.O. Svensson again wanted the rate cut to 0.50 percent.
   
    www.CentralBankNews.info

By www.CentralBankNews.info

By MoneyMorning.com.au

The gold price continued to tumble yesterday.

But it wasn’t the only market feeling the pressure. Most commodities slid too.

Most reports placed the blame on China’s weak GDP data. The people who write market reports have to find reasons for market moves, and that was as good a reason as any.

But China’s data was just the latest in a long line of hints that things are not as rosy for the global economy as perhaps markets have priced in.

In short, the recent sell-off could just be a sign that investors are finally experiencing a nasty wake-up call…

The ‘Fixes’ Start to Come Undone

In the first quarter of this year, China’s economy grew at an annual rate of 7.7%. That was less than the 8% expected. It also compared to 7.9% in the fourth quarter.

Now, 7.7% is hardly disastrous. But people are pretty sceptical of China’s data at the best of times. If 7.7% is what they’ll admit to, what’s the real data like?

More importantly, it’s all part of a bigger trend. The concern for markets is that a lot of the good news that was priced in at the end of last year is starting to unravel.

The real worry about China is that it was meant to be fixed. The Chinese leadership was meant to be doing ‘whatever it takes’ to prop up their economy. Instead, it looks as though they’ve decided that cracking down on property bubbles and corruption are a bigger priority than keeping the boom going.

That perhaps shouldn’t come as a surprise. In China, high and rising property prices only highlight the gap between the haves and the have-nots. If the ‘have-nots’ start to believe that there is no hope of ever becoming ‘haves’, that’s when people start to talk about revolution.

So there’s no sensible reason for China to encourage stratospheric property prices. And who cares about the stock market? Everyone knows it’s a big roulette game anyway. If China wants to generate a ‘wealth effect’, what it really needs is a better social safety net.

This is bad news for the mining sector and commodity prices in general. It’s not great for luxury goods producers either.

And there’s no guarantee that China will be able to ‘rebalance’ easily away from infrastructure, and towards consumers. A full-blown hard landing might be a necessary part of that. That wouldn’t be pretty for lots of companies – many US-listed – that have pinned their hopes on Chinese growth compensating for weakness everywhere else.

So it’s small wonder that the Chinese economic news rattled markets so badly.

Don’t Leave Out the Eurozone and the USA 

Of course, it’s not just China. Europe is another area that was meant to be fixed. Mario Draghi was meant to be doing ‘whatever it takes’ to save the euro. But life is more complicated than that. Draghi has to juggle the demands of many masters, and the Germans are in no mood for bailouts right now.

Draghi may have won breathing space for the eurozone last year. But instead of using it to find ways to help out troubled nations like Greece and Italy, Europe seems to be hoping that the mere promise of European Central Bank action will hold things together. The strict line taken with Cyprus shows that the idea of ‘sharing the pain’ with their fellow Europeans has not yet taken hold across the eurozone.

This looks likely to end in yet another crisis. And if that happens, either Draghi will have to deliver, or someone will have to leave the eurozone.

Finally, there’s the US. The US was meant to be fixed too. The housing recovery was turning back into boom. The discovery of shale gas meant lots of new jobs and new opportunities.

That’s all true. But nothing goes up in a straight line. Hopes have risen rapidly enough now that any economic data that fails to beat expectations is seen as disappointing.

That’s a problem, because recent data has been awful. The latest monthly jobless figures were woeful. Surveys on manufacturing and consumer confidence have been rotten too.

Investors were getting so used to being optimistic about the US economy that they didn’t even seem that worried about the prospect of quantitative easing (QE) being tapered off this year.

Now they’re having to re-evaluate. And even the prospect of more QE might not cheer them, if it seems that the results from this last batch haven’t achieved much in the ‘real’ economy.

Plenty of people have been waiting to ‘buy the correction’ in this market when it arrives. But now that it’s here, they might be tempted to hold off a little longer, to see how far it goes. If we don’t see some good news out of the US soon, I suspect we’ll see stocks fall further.

How does that affect you? It’s easy to get jittery at points like this. Particularly after 2008, it can feel like every slide in the markets is the forerunner to another epic crash.

But don’t panic. Stick to your plan.

John Stepek
Contributing Editor, Money Morning

Publisher’s Note: This article originally appeared in MoneyWeek

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From the Archives…

Australia: The Home of World Beating Dividend Stocks
12-04-2013 – Kris Sayce

Investors: Ignore Japan’s Yen Devaluation Game
11-04-2013 – Murray Dawes

What Japan’s Economic Disaster Means for Australia
10-04-2013 – Dr. Alex Cowie

Gold Bulls About to Win the War
9-04-2013 – Dr. Alex Cowie

A Better Inflation Bet Than Gold…Stock Market Investing
8-04-2013 – Kris Sayce

By MoneyMorning.com.au

Hello…

Is there anyone out there?

Just checking…talking gold stocks can be a lonely business at the best of times.

And after gold’s biggest tumble in more than thirty years, talking about gold stocks just got a whole lot lonelier…

Here’s how bad it is: the Gold Miners bullish percentage index just crashed to ZERO.

That’s the first time that’s happened in five years. Statistically there is not even a glimmer of love for gold stocks. Gold equities are officially at the point of maximum capitulation.

If that’s not enough to tempt your inner contrarian to rummage for bargains in the dumpsters…then I don’t know what is…

If sifting through dumpsters isn’t really your style, please let me pitch contrarian investing to you from a different angle.

A Reliable Signal

This chart shows how when the gold miners bullish percentage index (red line) crashes as it now has, it reliably predicts major upward moves in the gold stocks.

The Ultimate Contrarian Signal to Buy Gold Stocks…?

Source: StockCharts

I’ve circled in green to show how the low values for the bullish index precede significant rallies in the market vectors gold miners index (GDX), which measures a basket of small, mid, and large-cap gold stocks listed around the world.

But go back to late 2008. You’ll see I’ve put a rectangle to highlight when it last actually got down to zero.

The last time it hit zero, which is where it sits today, it marked a point where gold stocks started their transformation from pariah to the new must-have investor accessory.

This metamorphosis was born in the deepest scepticism, as bull markets always are. From this unlikely start, the market vectors gold miners index (GDX) went on a three-year bender that saw its value TRIPLE.

And of course that’s just the average across a whole selection of stocks. Many individual gold stocks saw far bigger gains than that.

Investing in this stuff takes guts. If you’re looking for a nice, reliable 6% yield … this ain’t the right game for you. This is a play for the battle hardened, high-risk-high-reward investor.

In the recent words of my colleague Dan Denning:

There’s no denying that today, gold stocks are certainly in the ‘dirty grimy things in the gutter’ category.

I’ve found (through experience) that in terms of after-dinner conversation, gold stocks currently rank alongside hearing about Aunty Mildred’s recent bowel operation.

It’s so tough to find willing listeners, that a major Australian gold conference was just cancelled for the first time in history due to lack of takers.

Now is the Time to Act

Gold stocks are a tough sell all around. But the irony is…this is exactly what makes now the right time to start looking.

Now I’m not saying that gold stocks couldn’t fall further still. But after the last few days of historically wild market action, if we haven’t seen the bottom yet, then we’re as close as dammit to it.

Of course, we first need gold to lead the way. Yesterday, gold guru, Marc Faber said:

It may have happened already. Gold has bounced $50 in the last 24 hours. The traders that shorted gold on Monday will need to cover their trade soon, which could generate a strong rally in itself. Still, I’d expect a few more twists and turns to this story. A bounce is rarely as simple as all that. Volatility is the order of the day.

Gold is understandably getting all the attention, but…

What About Other Precious Metals?

Take palladium for example.

Palladium fell by a comparatively ‘modest’ 10%.

It’s not a precious metal you hear about very often, but is worth putting on your radar as it is facing one of the most fundamentally bullish set ups I’ve ever seen.

The palladium market is small. This table shows the value of palladium’s annual supply is just $35 billion.

Compare that to platinum’s which is ten times bigger, at $294 billion…

Or gold’s which is over three hundred times bigger at $10 trillion.

Palladium: the Metal Version of a Microcap Stock

Source: CPM, HK presentation

When the fundamentals stack up for microcap stocks, they’re capable of phenomenal moves as the market charges in to take a slice of the action, driving up the price quickly. You want to get in before that happens!

And palladium is the precious metal version of a microcap. It’s a tiny market, and when investors start looking for exposure, the price could move sharply higher.

It’s not just that it’s a small market. The fundamentals look excellent for palladium. One third of supplies comes from Russian stockpiles – which are about to run out; and a third comes from South Africa – from which supply has flat-lined and no increase is on the cards for years. Meanwhile demand is rising strongly. It’s a rocket waiting to take off.

Mark my words that palladium is a precious metal to keep an eye on. So while commentators focus on gold in the coming weeks, make sure you also keep an eye on the 10% sale going on in palladium!

Dr Alex Cowie
Editor, Diggers & Drillers
Join me on Google+

Ed Note: After the big hit taken by gold and gold stocks in recent days, your instinct is probably to buy gold stocks. There’s nothing wrong with that. But in today’s Money Morning Premium, Kris looks at another hot set of resource stocks that are set to rebound too…click here to upgrade now.

From the Port Phillip Publishing Library

Special Report: TORRENT SIGNAL 3

Daily Reckoning: Trees Don’t Grow Gold

Money Morning: Why this Historic Fall in the Gold Price Equates to a Historic Opportunity

Pursuit of Happiness: The Definition of a Stockbroker…

Diggers and Drillers:
Why You Should Invest in Junior Mining Stocks

USDJPY may be forming a cycle bottom at 95.83 on 4-hour chart. Further rise to test 99.94 previous high resistance would likely be seen, a break above this level will indicate that the uptrend from 77.14 (Sep 13, 2012 low) has resumed, then another rise towards 105.00 could be seen. On the downside, as long as 99.94 resistance holds, the consolidation of the uptrend could be expected to continue, and one more fall to 94.00 – 94.50 area to complete the consolidation is still possible.

Daily Forex Analysis

By www.CentralBankNews.info
   Global policy rates fell by a net 425 basis points during March as nine central banks – including four major emerging market central banks – cut rates, pushing the global average policy rate down to 5.79 percent at the end of the first quarter from 5.83 percent after the first two months.
    It was the size of the rate cuts by Mexico, Colombia and Poland – each by 50 basis points – that took observers by surprise, with the central banks attempting to give their economies a jolt to avoid disinflation becoming embedded.
    India was another major emerging market central bank that cut rates in March, though by an expected 25 basis points, as it is still struggling to dampen inflation amid a weakening economy.
    The cumulative 425 basis point cut in policy rates in March was sharply above February’s total  decline of 150 basis points and higher than January’s 342 points, signaling growing concern over the strength of global demand.
   Through March, global policy rates have fallen by 967 basis points, well below a cumulative fall of 2,162 after the first quarter of 2012, illustrating that rates are heading lower this year, though at a slower pace than last year, as many central banks take a wait-and-see approach to gauge the effect of last year’s substantial rate cuts, the depth of Europe’s recession and the impact of U.S. budget cuts.

INTEREST RATE CUTS, YEAR-TO-DATE IN BASIS POINTS, END-MARCH 2013:

    www.CentralBankNews.info