However it was with much trepidation when it was learnt that the Bank of Japan now owns over half of the equity ETFs listed in Japan. This would be a departure away from the conventional process of using instruments such as bonds, physical gold and hard currencies as means to control the monetary supply. But this experimental method has left many academics concerned that this may be sending out the wrong message about the true state of financial markets worldwide.
Further investigation would reveal that the BOJ isn't the only central banker engaging in these reckless and manipulative actions which could cause a grand crisis that would overshadow the worst of our times. This story from August 2015 states that the Swiss National Bank had increased its holding in Apple Inc. by 5.5% from 8.9 million shares to 9.4 million and is amongst the largest shareholders of the company.
If I recall correctly, wasn't the job of central bankers to ensure the stability of the monetary system by implementing various policy measures and tools to aid it in reaching its objective?
The SNB holds such a significant stake in the technology company, although not as large as some investment institutions, it would give them a considerable amount of voting power that could be used to elect management or steer the direction of the company, but we talking about a central banker, not an institutional investor making a decision based on properly researched information whose job is to make the right call for clients.
It seems as if Apple Inc. isn't the only holding by the SNB as the article states that its investment in US equities at the time (5th August 2015) which happened to be right before uncertainty exploded on global markets, stood at $38.6 billion split among 2500 companies...for diversification stake. Who would've thought that central bankers would feel propelled to open shop in the field of investment management.
One begins to wonder how much confidence is being lost in these imposed monetary bodies whose mandate is to create price stability and reduce the harmful effects resulting from fluctuations of inflows and outflows of money into the economy. It does beckon the question if this is why we've seen a sudden surge in buyers of gold over the past few weeks."Swiss National Bank grows stake in Apple by 500,000 shares in June quarter" https://t.co/gTBAdqY0h2— StockCats (@StockCats) February 18, 2016
In times of uncertainty, the yellow metal is often used as a place of safety but over the past three years we've seen a dislike for the commodity as interest rates were kept artificially low and policymakers singing the tune of prosperity for the future. Fast forward a few years later and the grand scheme which central bankers thought would've proven effective is now deemed a failure and resulted in policymakers digging deeper into the hole they've created.
Investors jump from equities to gold this year signalled a declining confidence in central bankers to contain the sorry state of affairs currently being felt worldwide. I've said it a number of times that continuously printing money and pumping it into the system is merely a short term solution to a long term problem. Government's need to tackle the structural problems confronting their nations, not central bankers.
By participating in equity market central bankers are merely fanning the overvalued nature of the market thus illusively leading participants to believe that all is well and far from the worries that may keep them up at night. The problem with this train of thought is reality often hits home and the bubble of illusion bursts with an enormous splat against the wall of confidence built up over the period, all but defeating the trust in these institutions.
When will the market reflect the true nature of what's happening on the ground?
#Gold Veteran sees loss of faith in Central Banks as prices soar. https://t.co/WaVT6TslSo pic.twitter.com/WVBC7ItCKm— Holger Zschaepitz (@Schuldensuehner) February 18, 2016
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