Consumer Protection

Mon, 2017/02/06 - 2:47pm | Your editor
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The gold price rise defies the Casablanca solution: “round up the usual suspects.” Adrian Ash, head of research at bullionvault.com writes that in 2016 the price of gold rose despite the following facts: “a 3-decade low in world jewellery demand”; a 7-year low in demand for gold coins and small bars; a 6-year low in central bank demand, which fell by a third from the 2000-2010 level; and industrial and dental demand down 3% to a new world low at under 7.5% of total gold use.

Adrian concludes that “if it's not jewellery, not coins, not small bars, not central banks, not industrial users that just leaves bigger investors, trading in and out with money which would otherwise go into stocks, bond, commercial real estate and the rest.” In fact the big money was going into exchange-traded gold funds in 2016 after big money exited in 2013, 2014, and 2015. That meant the largest mostly Western investors in gold bought net about 643 tonnes for settlement in London, where Adrian hangs out.

This reversal, in my opinion, will continue as people worry about trade and protectionism this year and because big users of gold as a haven—in India and China—will sneak out of yuan or rupees to get their hands on their favorite bolt hole after measures to stop foreign investment and currency recall respecitively.

While Adrian is the expert, my personal view is that political uncertainty in the US is also leading to more gold buying as Pres. Trump flails about trying to impose immigration bans.

 

Today I got a disappointing news release from Bristol Myers Squibb, a US drug firm whose shares I own. It said that phase 2 trial of Innate Pharma’s lirilumab in elderly patients with acute myeloid leukemia failed its primary endpoint. The BMS-partnered checkpoint inhibitor failed to improve leukemia-free survival by more than placebo. Innate had enrolled 150 oldsters for the trial and randomized them to receive one of two doses of the anti-KIR monoclonal antibody or a placebo. The clinical trial failed to find a statistically significant difference between either treatment arm and the placebo in leukemia-free survival or any other efficacy endpoint. The across-the-board failure is a stumble at the first major clinical efficacy hurdle faced by lirilumab.

Pres. Trump's plan to speed up US Food & Drug Administration approvals of new drugs by testing them only for safety but not for efficacy would eliminate such bad news. But as consumer I would prefer to have the FDA stop drug companies selling drugs which don't work, even if I am a shareholder in the pharma firm, as with BMY.

Regulations exist for a reason. Dismantling the Dodd-Frank Act and stopping the implementation of the US Dept of Labor's fiduciary standard for retirement investment advisors are similarly dangerous, in my view. The 2008 global financial crisis happened because of excessive deregulation. The DoL rule, due to come into force in May, stops financial advisors from putting retirement savings customers into inappropriate holdings which pay the brokers higher commissions.

In finance just as in pharmaceuticals, a free market doesn't work without brakes, because the buyer lacks information on how good the proposed investment will be..

Just trusting the broker or the drug-maker is not the right way to get help, based on past experience. While Pres. Trump also called for lower prices for drugs and more pharma jobs in the US, he thought he was balancing these demands with less regulation popular with the industry.

 

Today we pick another Trump stock and report on news from Finland, Russia, the Philippines, Israel, Britain, Spain, Mexico, Brazil, China, and a few other places.

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