Next move for gold: RBC expert

24-Apr (CNBC) — Gold bounces of a 10-week low. Can Ukraine save gold? Is there a bullion surge coming? With George Gero, RBC Capital Markets, CNBC’s Dominic Chu and the Futures Now Traders.

[video]

PG View: Gero has a pretty bullish view, noting specifically that “There is an inflationary wind coming.”

Posted in Gold News, Gold Views |

Gold Rallies as Ukraine-Russia Tensions Spur Demand

24-Apr (Bloomberg) — Gold rebounded from a 10-week low in New York as tensions between Ukraine and Russia escalated, spurring demand for haven assets.

President Vladimir Putin warned Ukraine against continuing its anti-separatist offensive after government troops killed five rebels and prompted Russia’s military to begin new drills. The metal reached a six-month high in March after Russia annexed Ukraine’s Crimean region. The news today prompted traders to unwind bets on a drop, said Steven Scacalossi, the head of global metals sales at TD Securities in Toronto.

“It was several Russia/Ukraine headlines that lit the short-covering fuse,” Scacalossi said in an e-mailed report. “Risk appetite is being hit with expectation that the West will introduce more aggressive sanctions against Russian interests.”

[source]

Posted in Gold News, Gold Views |

Ukraine ‘ready to fight Russia’

24-Apr (BelfastTelegraph) — Ukraine’s foreign minister has blasted the Russian decision to start military manoeuvres along Ukraine’s border and said his country will fight any invading troops.

Andriy Deshchytisa said Russia’s decision to launch the military exercises “very much escalates the situation in the region”.

Mr Deshchytisa said his country has been taught a lesson by Russia’s annexation of Ukraine’s Crimean Peninsula. He said “having this experience, we will now fight with Russian troops if … they invade Ukraine”.

[source]

Posted in Geopolitical Risks |

Physical Gold as “Unsure-ance Policy”


24-Apr (MauldinEconomics) — In this brief 13-minute interview, Grant calls physical gold your “Unsure-ance Policy.”

That is, if you’re 20% unsure about the future, you might consider putting 20% of your assets in gold…

[video]

PG View: It seems like this was perhaps recorded earlier this year, but definitely worth 13-minutes of your time!

Williams says of gold, that “right now it’s an important part of everybody’s portfolio.” He goes on to discuss in interesting detail how Asians view gold differently than westerners. The former prefers real physical gold, the latter tends to invest in paper representations of gold. The demand right now is for physical gold in east, and Asian buyers are happy to relieve western investors of the physical behind their paper at these discounted prices.

Here are a couple key quotes:

“…countries in that part of the world [Asia] have had their savings destroyed by inflation, they’ve had them confiscated by governments, and so owning physical gold outside the banking system is a way that these guys protect their wealth.”

“I think this difference between paper and physical gold is starting to be more understood by more people, and that’s important”

Posted in Gold News, Gold Views |

The Daily Market Report: Gold Rebounds from Earlier Losses on Safe-Haven Bid


24-Apr (USAGOLD) — Gold slipped below short-term support at 1277.00 in overseas trading on Thursday, but rebounded sharply on short covering and a safe-haven bid upon a further escalation of tensions in Ukraine. The yellow metal quickly surged to new three-day highs and at one point was more than $20 off the intraday low, before easing back into the range.

Ukrainian military forces moved once again against pro-Russian protesters in eastern-Ukraine. Reportedly five were killed. That prompted a threat of retaliation from Russia. “If the regime in Kiev has begun using the army against the population inside the country, then this is undoubtedly a very serious crime,” said Russian President Vladamir Putin.

Russia did announce yet another new military “exorcize” on the Ukrainian border, this one to include aircraft. However, they may now have their pretext for a Crimean-style military incursion into eastern-Ukraine.

Russia accused the United States of directing the new Ukrainian military actions, noting that they occurred the day after U.S. Vice-President Joe Biden visited Kiev and pledged America’s support. Russian Defense Minister Sergei Shoigu also reacted to the arrival of a small contingent of U.S. troops in Poland, saying “Planned exercises by Nato forces in Poland and the Baltic countries do not foster normalisation of the situation surrounding Ukraine.”

One thing seems certain, the four-party agreement reached in Geneva last week to deescalate the situation in Ukraine, is pretty much dead.

U.S. durable goods orders rose 2.6% in March, beating expectation. However, initial jobless claims surged 24k to 329k.

There was some monetary saber rattling today as well. ECB President Draghi once again threatened that the central bank would engage in broad-based asset purchases as the euro remained resilient near 2-1/2 year highs. Draghi worries that the strong euro could derail the eurozone’s fragile economic recovery.

ECB governor Luc Coene chimed in too, saying that weak April inflation data may prompt policy action. Coene advocated for a cut to the refi rate as well as moving the deposit rate into negative territory. Eurozone CPI fell to just 0.5% y/y in March, and the the trend is pretty clearly negative.

Posted in Daily Market Report, Gold News, Gold Views |

Gold Posts Solid Price Rebound on Safe-Haven Demand, Short Covering

24-Apr (Kitco News) — Gold prices in morning trading Thursday have made a solid recovery from a 2.5-month low scored in overnight trading. Safe-haven demand amid new violence in Ukraine has helped to fuel the rally in gold. Short covering from the shorter-term traders is also featured following recent selling pressure in Comex futures.

[source]

Posted in Gold News, Gold Views |

QE: New York Fed purchases $0.558 billion in Treasury coupons.

Posted in Central Banks, Monetary Policy, QE |

Rick Sharga: Is this the end of the housing recovery?

24-Apr (HousingWire) — The double whammy over the past few days of flat existing home sales and a disastrous drop in new home sales appears to have dimmed many analysts’ views of the housing market recovery.

I’ve been saying for months that I thought home sales in 2014 would be flat compared to 2013. It appears that I may have been too optimistic.

[source]

Posted in Economy |

Russia orders exercises after Ukraine moves on separatists

24-Apr (BBC) — Russia has ordered new military exercises on its border with Ukraine in response to an operation by Kiev against pro-Russian separatists.

Russian Defence Minister Sergei Shoigu said Moscow had been “forced to react” after Ukrainian commandos moved on the separatist stronghold of Sloviansk.

President Vladimir Putin had earlier warned Ukraine of “consequences”.

[source]

ukraine jolt

PG View: This serious escalation of the situation in Ukraine corresponded closely with today’s sharp intraday rebound in gold.

Posted in Geopolitical Risks |

Russia threatens retaliation as Kiev orders military moves in eastern Ukraine

23-Apr (Washington Post) — — Russia warned Wednesday that it was prepared to retaliate against any attack on its citizens or interests in Ukraine, as the Kiev government resumed military operations against pro-Russian militants in the eastern part of the country.

The escalation came as U.S. paratroopers landed in Poland to begin training exercises intended to demonstrate support for American allies in the region.

[source]

Posted in Geopolitical Risks |

Gold rebounds smartly to new 3-day highs, attempts to regain $1300 level. Now more than $20 off intraday low.

Posted in Gold News |

CME plans to launch physically settled Asia gold futures

24-Apr (Reuters) — CME Group Inc plans to launch a physically deliverable gold futures contract in Asia, three sources familiar with the matter said, as the world’s No.1 futures exchange targets rising hedging and investor demand in the top gold-consuming region.

An Asian contract from CME could help set a pricing reference for gold futures in Asia, much like its U.S. COMEX gold contract sets the benchmark for bullion futures globally.

The move may also help CME boost flagging revenues from its precious metals futures and comes as its rivals are expanding their presence in Asia to tap demand from China, the world’s biggest consumer of commodities, including gold.

CME is most likely to launch the gold contract in Hong Kong, with Singapore also an option, two sources briefed on the matter said, adding the contract is likely to be launched this year.

[source]

PG View: Recent suggestions that demand for gold in Asia may be waning, is complete nonsense.

Posted in Gold News, Gold Views |

US durable goods orders +2.6% in Mar, above expectations of +1.9%, vs +2.1% in Feb; ex-trans +2.0%.

Posted in Economic Data |

US initial jobless claims jumped 24k to 329k in the week ended 19-Apr, above expectations of 313k, vs upward revised 305k in previous week.

Posted in Economic Data |

Gold lower at 1270.68 (-13.38). Silver 19.05 (-0.375). Dollar and Euro steady. Stocks called higher. US 10yr 2.71% (+1 bp).

Posted in all posts |

E-trading pulls gold into forex units as commodity desks shrink

Reuters 4-22-2014

“The increasing use of technology on financial trading floors is driving a trend for banks to roll precious metals operations into their forex businesses as a separate unit from other commodities activities.

Barclays on Tuesday followed similar moves by rivals Deutsche Bank, UBS, JPMorgan Chase & Co and Morgan Stanley by announcing that it would keep its gold trading business while hiving off most of its global commodities operations.”

MK note:   The fact that Barclays, Deutsche Bank, UBS, JPMorgan Chase & Co and Morgan Stanley (among others) are putting their commodities divisions to bed, but retaining their gold trading desks, tells us something. If the banks thought gold ‘just another commodity’ as its critics often claim, they would have discarded it with the rest of the commodities spectrum.  By retaining the gold trading desk and integrating it with foreign exchange operations, they vindicate a belief long professed by its advocates:  Gold is money first and a commodity second.  The rational investor does not treat a silo full of corn, or a storage tank full of oil, as means to wealth  preservation, but he or she does ten fifty coin rolls of old British sovereigns.

Posted in all posts |

The Daily Market Report: Gold Remains Defensive, but Cycles Suggest an Opportunity


23-Apr (USAGOLD) — Gold remains defensive amid expectations that the Fed will continue with its taper campaign next week and what seems to be a complete dismissal of the rising geopolitical tensions in Ukraine. Currency markets have been pretty well contained recently, providing little in the way of fresh directional clues for the yellow metal.

Jon Hilsenrath of The Wall Street Journal expects that the FOMC will hold steady on policy after their two-day meeting next week, scaling back asset purchases to $45 bln per month. As for an eventual rate hike, Hilsenrath believes the Fed will remain purposefully vague.

Of growing concern for the Fed has to be the housing market. New home sales plunged 14.5% in March to 384k, missing expectations of 450k homes by a wide margin. Analysts continue to blame the weather, but the Northeast — one of the hardest-hit regions as far as weather goes — actually saw new home sales rise by 12.5%. The more likely culprits are sluggish jobs growth, declining affordability, and rising mortgage rates.

Existing home sales in March, reported yesterday, fell for a third consecutive month. It was the seventh monthly decline out of the last eight and the lowest print since July of 2012.

In gradually tightening policy via the taper, the Fed risks completely derailing the already tepid housing recovery. If home values rotate lower once again, it could threaten to derail the broader economic recovery as well.

In an article yesterday, The Wall Street Journal called the recovery “one of the most lackluster in modern times.” Said “recovery” is also now approaching the mean duration of post-WWII recoveries. We risk falling into the next recession, before the country has fully recovered from the last one.

If that were to happen, arguably all bets would be off with the Fed. They would likely flood the market with dollars yet again, and ramp the QE back up in an effort to underpin asset prices and the economy.

And speaking of cycles: It would seem that the corrective pullback in the gold market is very long in the tooth as well.

The World Gold Council studied the twelve gold price pullbacks of 20% or more, going back to 1970. The average length of those corrections was 18 months. The most recent correction lasted 28-months, assuming that it ended in December 2013. The average rebound after these corrective periods has been 69%.

I encourage you to read our latest Review & Outlook entitled Pullbacks-retracements study points to solid gold buying opportunity to get our own Michael Kosares’ take on the topic, which is summed up in this quote:

“If we apply the 69% average retracement figure to the $1185 bottom that came in December, 2013, it would put the gold price back at the $2000 per ounce level sometime over the next two years.”

Posted in Daily Market Report, Gold News, Gold Views |

March new home sales plunge 14.5%

23-Apr (USA Today) — Sales of new single-family homes dropped sharply last month, falling 14.5% to their weakest level since mid-2013, the Census Bureau said Wednesday.

The annual sales rate was 384,000, down from February’s revised pace of 449,000. The original estimate was 440,000.

Economists had predicted an annual rate of 450,000 for March, according to the median forecast in Action Economics survey.

Harsh winter weather helped hold down sales in February and may have in March as well. March sales in the Midwest fell 21.5% from February, 16.7% in the West and 14.4% in the South. They rose 12.5% in the Northeast.

But affordability is also an issue as both sales prices and mortgage rates have ticked up over the past year. The Census Bureau said the median price of new homes sold last month was $290,000 — that’s 13% higher, or $32,500 more, than the median price in March 2013.

[source]

Posted in Economic Data, Economy |

US new home sales plunged 14.5% to 384k in Mar, well below expectations of 450k, vs upward revised 449k in Feb.

Posted in Economic Data |

US Markit flash PMI fell to 55.4 in Apr, below expectations of 56.0, vs 55.5 in Mar.

Posted in Economic Data |

Ukraine’s leaders say have U.S. backing to take on ‘aggressors’

23-Apr (Reuters) — Ukraine’s government relaunched a security operation to crack down on pro-Russian armed groups after an Easter pause on Wednesday and said it had the backing of the United States.

Prompted in part by the discovery of the body of a Ukrainian politician who appeared to have been tortured, officials in Kiev decided to renew what they call an “anti-terrorist operation” against separatist militias who have seized control of about a dozen public buildings in eastern Ukraine.

But it was unclear what steps, in reality, Kiev could take to restore its authority in the mainly Russian-speaking east, without wrecking an international deal, signed last week in Geneva, designed to defuse the stand-off.

[source]

PG View: Recent evidence suggests that the ‘aggressors’ in eastern-Ukraine includes the Russian military. So it seems the deal struck in Geneva has already been wrecked…

Posted in Geopolitical Risks |

Fed Looks Likely to Stick to Policy Path

By Jon Hilsenrath
22-Apr (The Wall Street Journal) — Federal Reserve officials are on track to reduce their monthly bond buying to $45 billion at their policy meeting next week and stick with a communications approach that leaves investors guessing about when the central bank will start raising short-term interest rates.

“While monetary-policy discussions naturally begin with a baseline outlook, the path of the economy is uncertain, and effective policy must respond to significant unexpected twists and turns the economy may take,” Fed Chairwoman Janet Yellen said in a speech at the Economic Club of New York last week, her last comments before the central bank’s one-week quiet period ahead of its April 29-30 policy meeting.

Her emphasis on uncertainty in the speech underscored a shift in Fed communications early in Ms. Yellen’s tenure as chief. For much of the economic recovery, the Fed has tried to provide concrete assurances to investors about the path of short-term interest rates. Officials now are trying to retain some flexibility on the interest-rate outlook as they try to resolve several mysteries about the recovery, which has generated surprisingly slow economic growth, low inflation and faster declines in standard measures of unemployment than expected.

[source]

Posted in Central Banks, Monetary Policy, QE |

US MBA mortgage market index -3.3% in week ended 18-Apr; purchases -2.6%, refis -3.7%.

Posted in Economic Data |

Gold Advances From a 10-Week Low on Ukrainian Tensions

23-Feb (Bloomberg) — Gold rose from a 10-week low in New York, climbing for the first time in four sessions, as the crisis in Ukraine spurred demand for a haven.

Bullion futures reached $1,275.80 an ounce yesterday, the lowest since Feb. 11, as a report showed manufacturing in the region covered by the Federal Reserve Bank of Richmond in Virginia expanded in April. Data due today may show U.S. new home sales increased. Fed Bank of San Francisco President John Williams said this week the central bank will probably continue paring its asset purchases and end them late this year.

While gold’s 12-year bull run ended in 2013 on expectations for less U.S. stimulus, prices have risen 7.1 percent this year, reaching a six-month high in March in part as unrest in Ukraine spurred haven demand. Ukraine resumed operations to oust militants from eastern cities as the U.S. said 600 troops will be sent for exercises in four countries bordering Russia amid signs an accord to reduce tensions in the region was unraveling.

[source]

Posted in Gold News, Gold Views |

Gold steady at 1285.36 (+0.58). Silver 19.45 (+0.031). Dollar easier. Euro higher. Stocks called easier. US 10yr 2.70% (-1 bp).

Posted in all posts |

US sending 600 troops to Poland, Baltics for drills

22-Apr (AFP, via NBCNews) — The United States is deploying about 600 troops to Poland and the Baltics to underscore its commitment to NATO allies amid tensions with Russia over the crisis in Ukraine, the Pentagon said Tuesday.

A company of 150 soldiers from the US Army’s 173rd Airborne Brigade based in Vicenza, Italy will arrive in Poland on Wednesday and roughly 450 troops are due in Estonia, Lithuania and Latvia in coming days as part of a new series of exercises due to last at least through the end of the year, spokesman Rear Admiral John Kirby told a news conference.

“Since Russia’s aggression in the Ukraine, we have been constantly looking at ways to reassure our allies and partners,” Kirby said.

[source]

Posted in Geopolitical Risks |

QE: New York Fed purchases $1.018 billion in Treasury coupons.

Posted in Central Banks, Monetary Policy, QE |

The Daily Market Report: Gold Slips to Three-Week Low


22-Apr (USAGOLD) — Gold remains defensive, dropping to a three-week low of 1279.30. The yellow metal is being weighed by outflows from ETFs, as the stock market recoups recent losses and it looks increasingly like the west is not going to take any meaningful action to contain Russia.

Some speculators had moved into gold in recent weeks as a risk-aversion trade, after stocks became volatile and it looked increasingly like Russia might intervene in eastern-Ukraine. These specs regained some risk appetite following the four-party agreement reached in Geneva last week to deescalate the situation in Ukraine.

However, evidence surfaced subsequently that Russian forces are already active in eastern-Ukraine. They are basically following the same plan they used in Crimea. So, while in reality the situation is actually escalating, the market is already losing interest in the story. Many seems to be conceding that more Ukrainian territory will be lost to the Russians.

We noted in yesterday’s comment that gold coming out of the ETFs would likely follow the well-worn path to China. Much of the gold that has come out of the ETF vaults in London went to Switzerland to be re-cast into Asian friendly kilo bars and then went through Hong Kong to the PRC.

Those flows were pretty transparent, thanks to monthly export data reports from Hong Kong. However, Reuters reported yesterday that China is now importing gold directly through Beijing. This may be a purposeful effort to mask how much gold it is buying for official reserves.

China surprised the world in 2009 when it announced its official gold reserves had surged 76% in six short years to 1054 tonnes. Suddenly everyone took an interest in Chinese gold buying. Last year China imported about 1160 tonnes of gold through Hong Kong, with the whole world watching.

Reuters notes that estimates of China’s current gold reserves range from 3000 to 5000 tonnes. However, when and if China announce reserves again, I wouldn’t be surprised if we were all surprised yet again.

The motives behind China’s massive accumulation of gold seem pretty obvious. China wants to diversify its reserve asset holdings. They are over-allocated to dollars and U.S. Treasuries. In diversifying into gold, they not only seek protection from dollar debasement and ridiculously low yields on Treasuries, but they also look to simultaneously solidify their position as a global economic superpower. And possibly one day, the yuan might significantly erode the ‘exorbitant privilege’ the dollar enjoys as the global reserve currency.

The motives of the individual investors we service here at USAGOLD are very similar. They too are seeking to preserve the wealth they have accumulated. In light of dollar risks and the pitiful yields available on bonds and traditional savings vehicles, having some gold just makes sense.

Posted in Daily Market Report, Gold News, Gold Views |

Eurozone Consumer Confidence – Flash rose to -8.7 in Apr, above expectations of -9.0, vs -9.3 in Mar.

Posted in Economic Data |

US existing home sales -0.2% to 4.59M in Mar, above expectations of 4.565M, vs 4.6M in Feb.

Posted in Economic Data |