Paris shooting casts shadow over French vote

FT/Michael Stothard, Anne-Sylvaine Chassany & Harriet Agnew/04-21-17

The murder of a policeman in the centre of Paris has dominated the final day of France’s volatile presidential election campaign, fuelling security fears and sparking concern that undecided voters would be influenced by the terror attack.

…Bernard Cazeneuve, the prime minister, called on the French people not to let the attacks shift their vote, saying they should “not succumb to fear, manipulation, division”. He added that “nothing must hamper this democratic moment, essential for our country”.

Posted in Markets, Politics |

Week in Review (Video) – April 21, 2017

Posted in USAGOLD TV |

The Daily Market Report: Gold Firms Into Weekend and French Election


USAGOLD/Peter Grant/04-21-17

Gold has rebounded intraday to approach the 5½-month highs set early in the week. Silver on the other hand remains defensive below $18, pushing the gold/silver ratio to a 14-week high approaching 72.

Gold is being underpinned by persistent geopolitical risks and uncertainties associated with the French election this weekend. Silver may be suffering from renewed worries over disinflation as oil gives back most of the gains accrued over the over the previous 3-weeks.

Crude has plunged more than 7% this week after gains earlier in the month stalled ahead of the important $55 level. Rising U.S. production and concerns that the OPEC production cut agreement — and perhaps OPEC itself — will fall apart, have all weighed on oil.

A sustained drop in energy prices will further temper inflation expectations, that are already on the ropes in the wake of the weak CPI data that were reported last week. The dimming of price risks has tempered rate hike expectations, driving U.S. yields lower and contributing to a weaker dollar over the past two weeks.

Fed Vice Chair Fischer told CNBC today that he still sees three rate hikes this year, but added “we’re not tied to three.” He expressed concern — as Janet Yellen has recently — about the slowing economy. The Atlanta Fed’s GDPNow forecast for Q1 is a scant +0.5%.

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

Past few days a fractal event for the gold market. . . .

OPINION

by Michael J. Kosares

“In the absence of a credible monetary standard, we expect no escape from the treadmill of rising debt, both US and globally, that outpaces economic growth. Income inequality, wage stagnation, overvaluation of financial assets, and speculation instead of productive investment are likely to be prolonged under the current monetary regime. Whether or not policy makers take a proactive approach to address monetary reform, the fact remains that gold is massively underpriced in all paper currencies. It would be preferable if the necessary adjustments could occur without a repeat of a 2008-like financial crisis. We give this possibility a chance, albeit slim. In any event, we expect a significant repricing of gold higher during the current administration, either by design or because of market events. Whenever a repricing happens, we expect broad grassroots support for that outcome.” – John Hathaway, Tocqueville Funds
____________________

The past few days illustrate an important event in the gold market that both beginning and accomplished investors should try to understand thoroughly. I say that because by such an understanding you will become a more educated, patient and successful gold owner.

On April 19th, over $3 billion in paper gold was sold in the London over-the-counter market dropping the gold price by $14 per ounce in a matter of minutes. Just as quickly, the cries of foul play rose among gold punditry across the internet. Just before the “hit,” gold was trading in the $1286 range. It plunged to $1272. Since this morning’s AM London Fix, gold has been in recovery mode and it is now trading again in the $1286 range. Except for those who took the drop as a buying opportunity, these events will be seen essentially as a sound and fury signifying nothing.  At the same time, quietly the notion of gold’s indestructibility has been reinforced – not so much with respect to its physical qualities, but with the place it occupies in the minds of investors across the globe. The recovery today in a certain sense is a fractal event in both amplitude and duration – a hint of a greater manifestation that might be coming down the road in the not too distant future.

More. . . . .

The gold price is determined in the futures markets, but the effects of that determination are in the physical market, i.e., the price for bullion, coins, jewellery, etc. Those who feel that the gold market price is controlled solely by forces within the paper market do not fully understand the constraints on paper imposed by physical supply and demand.

In a nutshell, if the paper market is successful in suppressing the price for too long and at too low a rate, the physical demand globally will eat up the physical supply and threaten the existence of the primary source of the metal – the mines. That is why top-level analysts like John Hathaway (Tocqueville Funds) often talk about the inevitability of one-off repricing events. As long as gold can be freely owned, the market at some point finds the real price of gold, reconciles the books and exposes the power of price manipulators for what it is – a temporary, staying action rather than a successful long-term program. It is the time period before that happens which presents the best buying opportunities – times like the present. The events of April 19th through today illustrate the point in a microcosm.

As it is, annual mine production has leveled out over the past several years and there has not been a major gold find anywhere in the world for decades. Meanwhile global demand for the physical metal has not only sustained itself in recent years, it has grown rapidly, and clearly at a rate that far exceeds the rate of growth in mine production. Just this past week, we have seen reports of renewed strong demand in China and India – two traditional powerhouses when it comes to physical ownership of the precious metals. Generally speaking, the East buys on price while the West buys on momentum, thus one might conclude that anecdotal evidence shows that the price has been “right” in recent months. This time around, as reported here previously, professional money managers have positioned themselves as buyers in concert with the East, something that happens only on occasion. The two together though are currently an imposing presence the global gold marketplace.


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The only way the gap between mine production and physical demand can be made-up is from above-ground sources, or by trading paper to the extent that it masks the wide gap between physical demand and physical supply. At some point, the paper price will succumb to reality of shortages as it always does. Those short the metal will need to find it and deliver on the price promises made previously, a process that usually excites the price discovery process in the paper market. If the pressure exerted by the traders of gold paper were powerful enough to overcome these realities in the physical gold market, the price never would have traversed the enormous gap between $250 per ounce in 2000 and $1850 per ounce in 2011, and roughly $1300 per ounce at present.

So no matter how much we lament the impositions of paper traders, i.e., their corruptions of the market and restraints to the upside, gold’s opponents can only win the occasional battle; they will never win the war. As I have said before, the paper traders must equally curse the ever-present power wielded by physical buyers of the metal, and over the years, the true believers in the precious metals, have only viewed episodes of price suppression as buying opportunities.

Ultimately, the end result might be another unprecedented price explosion, as Mr. Hathaway suggests, when the impotence of the controls becomes apparent on a far larger scale than what occurred in the gold market over the past few days. At a time, as has been the case since 1971, when the production of fiat money rules the roost, gold’s natural inclination will always be to rise in price in terms of that currency. In fact, if that were not the case, it would be unnecessary for anyone to attempt controlling the price. That affinity to rise is only compounded in the end by attempts to restrict the natural price level.

USAGOLD –  Celebrating our 43rd year in the gold business and 20th on the world wide web

Posted in all posts |

Hedge fund legend Paul Tudor Jones says this ‘terrifying’ chart should freak out the Fed

CNBC/John Melloy/04-21-17

[Paul Tudor Jones], who made a large part of his fortune by calling the infamous stock market crash in October 1987, referred to a chart of the market’s value relative to the country’s economy and said it should be “terrifying” to central bankers, namely Federal Reserve chief Janet Yellen, according to the report.

…The trader said that low interest rates instituted by central bankers around the world have ballooned U.S. stock market valuations back to 2000 levels, right before the dot-com bubble burst and shares plunged.

This chart is sometimes called the “Buffett Indicator” because the Berkshire Hathaway chairman once referred to it in an interview as one of the key measures of valuation he tracks.

Posted in Economy, Markets |

Oil falls below $50 a barrel as OPEC cut doubts put oil on pace for big weekly drop


Reuters, via CNBC/04-21-17

Oil prices fell more than 2 percent on Friday and were on course for their biggest weekly drop in a month due to doubts that an OPEC-led production cut will restore balance to an oversupplied market.

…The chief executive of France’s Total warned this week that prices could fall further due to rising U.S. production.

Posted in Markets |

U.S existing home sales +4.4% in Mar to 5.710M pace, above expectations of 5.550M, vs negative revised 5.470M in Feb.

Posted in Economic Data |

U.S. Markit flash manufacturing PMI fell to 52.8 in Apr, below expectations of 53.8, vs 53.3 in Mar; services 52.5 on expectations of 53.2.

Posted in Economic Data |

Gold steady as investors turn cautious ahead of French polls


Reuters/Sethuraman N R/04-21-17

Gold held steady on Friday, with safe-haven demand remaining intact as investors kept an eye on the upcoming French presidential vote that is seen as too close to call.

…”I would expect investors to stay on the fence… they would likely be market-watching rather than market-trading ahead of the French elections on Sunday, especially when there is no clarity,” OCBC analyst Barnabas Gan said.

“Into the near term, if the geopolitical tensions intensify, there is a chance that gold prices will reach $1,300 or more.”

Posted in Gold News, Gold Views |

Grab Your Pitchforks, America, Your 401(K) May Need Defending from Congress

WSJ/Jason Zweig/04-21-17

The lucky participants in one of the best retirement plans around are coming after yours with a meat cleaver.

In the early stages of negotiating tax reform, Congress is already considering whether to reduce the benefits of contributing to a 401(k) and similar retirement plans — even as U.S. representatives and senators bask in the safety of the pension system that taxpayers fully fund for federal employees.

Alongside several million U.S. government workers, members of Congress participate in the Federal Employees Retirement System, which wraps their current savings and future pensions in a cushion of comfort that most American workers can only dream of.

PG View: The war on saving continues . . .

Posted in all posts |

A ‘disaster for France’ if Melenchon, Le Pen go head-to-head in presidential runoff

MarketWatch/Mike Bird & Christopher Whittall/04-19-17

With the start of the French election just days away, investors are contemplating their nightmare scenario: a choice between far-left and far-right candidates.

In recent days, a surge in opinion polls has placed Jean-Luc Mélenchon, a left-wing firebrand who promises higher wages and fewer working hours, as a potential candidate to move past this Sunday’s first round of voting. That could set up a second-round vote in May 7 with Marine Le Pen, an economic nationalist who wants to pull France out of the euro.

…A runoff between Ms. Le Pen and Mr. Mélenchon “would be a disaster for France…[and] a disaster for Europe,” said Patrick Zweifel, chief economist at Pictet Asset Management.

Under that scenario, investors would dump the debt of France and of weaker European economies and send the euro sharply lower, analysts say.

PG View: Apparently some people are thinking about this possibility . . .

Posted in Politics |

Morning Snapshot

USAGOLD/Peter Grant/04-21-17

Gold is maintaining a consolidative tone as the week comes to an end. Geopolitical concerns continue to offer support, as does uncertainty surrounding the French election on Sunday.

French election polls have narrowed considerably in recent weeks, turning it into a close four-way race. With anti-euro candidates on both sides of the political spectrum that have pledged Frexit referendums, nobody seems to be considering what happens if those candidates — Le Pen and Melenchon — advance to the May run-off election. That would certainly shake things up on the Continent, and give the eurocrats in Brussels a case of the vapors!

Flash Markit PMIs for both manufacturing and services are out later this morning, along with existing home sales for March.

Posted in Gold News, Gold Views, Snapshot |

Gold better at 1282.93 (+1.50). Silver 17.97 (-0.074). Dollar higher. Euro lower. Stocks called higher. U.S. 10-year 2.23% (unch).

Posted in Markets |

House Republicans near potential breakthrough on health care, source says

CNN/MJ Lee, Deirdre Walsh & Lauren Fox/04-20-17
Top House Republicans may be nearing a significant breakthrough among some key players on efforts to repeal and replace Obamacare, one month after a Republican health care bill was pulled from the House floor.

The leader of the conservative House Freedom Caucus, North Carolina Rep. Mark Meadows, and the head of the moderate Tuesday Group, New Jersey Rep. Tom MacArthur, are working toward a deal that could bring 18 to 20 new “Yes” votes from the conference’s conservative wing, according to a source familiar with the talks. But it’s not clear there would be enough votes in the broader GOP House conference to pass the bill.

PG View: Stocks seem to like this news as it fosters some hope that the broader Trump agenda has not stalled completely.

Posted in Politics |

Larry Fink: ‘Warning Signs Are Getting Darker’ for the U.S. Economy

Bloomberg/Charles Stein/04-19-17

Laurence D. Fink, chief executive officer of BlackRock Inc., said the lackluster growth of the U.S. economy and uncertainty around the Trump administration’s ability to quickly pass key reforms pose a risk to markets.

“There are some warning signs that are getting darker,” said Fink, in an interview Wednesday on Bloomberg Television. Fink, who runs the world’s largest money manager, mentioned a pullback in car sales and a slowdown in merger and acquisition activity as indications that uncertainty is rising. The slowest economy among the G-7 nations is the U.S., he said.

Posted in Economy |

Markets Start to Ponder the $13 Trillion Gorilla in the Room

Bloomberg/Enda Curran, Liz McCormick & Eric Lam/04-18-17

After heading into the uncharted territory of quantitative easing, the world’s central banks are starting to plan their course through the uncharted waters of quantitative tightening.

How the Federal Reserve, European Central Bank and — eventually — the Bank of Japan handle the transition could make the difference between a global rerun of the 2013 “taper tantrum,” or the near undetectable market response to China’s run-down of U.S. Treasuries in recent years. Combined, the balance sheets of the three now total about $13 trillion, equating to greater than either China’s or the euro region’s economy.

“You know what they say about mountaineering right? The descent is always more dangerous than the ascent,” said Stephen Jen, London-based chief executive of hedge fund Eurizon SLJ Capital Ltd. “Shrinking the balance sheet will be the descent.”

Posted in Central Banks, Monetary Policy, QE |

The Daily Market Report: Gold Consolidates Ahead of French Election


USAGOLD/Peter Grant/04-20-17

Gold is consolidating after tests of the upside earlier in the week faltered ahead of $1300. The highs from Monday and Tuesday at 1292.30/1295.46 now provide intervening resistance.

The underlying bias remains positive, given heightened geopolitical tensions and the looming French elections. The first round is to be held this coming Sunday and the run-off between the two top finishers is slated for May 5.

Of the five candidates, two have pretty strong anti-euro leanings and have pledged to hold a Frexit referendum if elected. Those two candidates are Marine Le Pen and Jean-Luc Melenchon. The former has been a front-runner throughout the campaign, but the latter has made a late surge. Centrist europhile Emmanuel Macron has been the other front-runner and he would be the choice of those in Brussels . . . if they could vote.

Right now, the race is too close to call, which could make this a very exciting weekend. The European press and polling has pretty consistently believed that Le Pen and Macron will advance to the final and that Macron will ultimately prevail.

However, hearkening back to the U.S. election in November, we all know how wrong the press and polls can be. Perhaps even more-so than U.S. voters, the French are fed-up with the political status quo; both in Paris and in Brussels. This could be an exciting couple of weeks.

U.S. Secretary of State Rex Tillerson is reportedly considering putting North Korea back on the list of State-sponsors of terror. That would further isolate Pyongyang and either force them to negotiate, or prompt them to lash out.

“We are reviewing all the status of North Korea both in terms of state sponsorship of terrorism, as well as all the other ways we can bring pressure to bear on the regime in Pyongyang to re-engage, but re-engage with us on a different footing than the past talks have been held,” Tillerson said. That last part means that the U.S. is no longer willing to exchange aid for nuclear concessions.

North Korean responded by threatening a “super-mighty preemptive strike,” which suggests they are not ready to come to the bargaining table just yet.

In the case of our super-mighty preemptive strike being launched, it will completely and immediately wipe out not only U.S. imperialists’ invasion forces in South Korea and its surrounding areas but the U.S. mainland and reduce them to ashes.” — State-run newspaper, Rodong Sinmun
Posted in Daily Market Report, Gold News, Gold Views |

17 Reasons Why You Should Own Gold

GoldSeek/Gary Christenson/04-20-17

• Gold has no counter-party risk in a 2008-style crash.
• The continual devaluation of the US dollar is inevitable.
• Gold will eventually return to its true historic role as money.
• The destruction of government balance sheets, continual devaluations, and the widespread implementation of zero interest rate policies probably will result in hyper-inflation.
• Central banks are nearing an inflection point where they no longer can supply the gold necessary to prevent rising gold prices.
• Gold has survived governments, leaders, parliaments, central bankers, economic stupidity, graft, corruption, and wars.
• Investment demand for gold is rapidly accelerating. The western world is in the early stage of a panic and “gold rush.”
• There is growing recognition that many paper gold products are not backed by physical gold.

PG View: Follow the link to see the rest of the list. It’s a good one . . .

Posted in Gold News, Gold Views |

U.S leading indicators +0.4% in Mar, above expectations of 0.2%, vs +0.6% in Feb.

Posted in Economic Data |

Gold deepens pullback from 5-month highs but geopolitical jitters limit metal’s loss

MarketWatch/Rachel Koning Beals/04-20-17

Gold prices fell for a second straight session Thursday even as the dollar eased, pulling back after a five-day run had driven the safe-haven precious metal to five-month highs that failed to clear the closely watched $1,300 mark.

…“Gold remains steady, as traders are reluctant to short the market ahead of this weekend’s first round of French elections,” said Peter Hug, global trading director, with Kitco Metals, in a note.

“Physical buying has been prominent on the continent and in the Far East, as investors remain wary of geopolitical risks with North Korea, but North American demand remains anemic,” he said. “[I] would expect gold to trend firmer into the weekend…as investors digest the outcome of the first round of France’s election.”

Posted in Gold News, Gold Views |

Morning Snapshot: Gold consolidates below 5½-month highs

USAGOLD/Peter Grant/04-20-17

Gold is consolidating around the 1280 level, just off the 5½-month highs set earlier in the week at 1292.30/1295.46. A weaker dollar, as well as persistent geopolitical tensions are seen as supportive.

Initial jobless claims rebounded last week and the Philly Fed index missed expectations significantly. Leading indicators for March is out later this morning. Median expectations are +0.2%.

Fed Governor Powell is speaking on regulatory issues in Washington, DC this morning. He did mention in his opening remarks that while the economy has recovered from the financial crisis, he is concerned about weak growth.

Posted in Gold News, Gold Views, Snapshot |

U.S. initial jobless claims +10k to 244k in the week ended 15-Apr, above expectations of 240k.

Posted in Economic Data |

U.S. Philly Fed index fell to 22.0 in Apr, below expectations of 25.0, vs 32.8 in Mar.

Posted in Economic Data |

Gold better at 1280.58 (+1.13). Silver 18.15 (-0.046). Dollar lower. Euro higher. Stocks called higher. U.S. 10-year 2.23% (+1 bp).

Posted in Markets |

IMF says debt binge leaves US corporates exposed

FT/Shawn Donnan & Gemma Tetlow/04-19-17

A debt binge has left a quarter of US corporate assets vulnerable to a sudden increase in interest rates, the International Monetary Fund has warned.

The ability of companies to cover interest payments is at its weakest since the 2008 financial crisis, according to one measure.

The IMF’s twice-yearly Global Financial Stability Report released on Wednesday highlights what economists at the fund see as one of the main risks facing President Donald Trump and his plans to boost US growth via a combination of tax cuts and infrastructure spending.

Posted in Debt |

The Daily Market Report: Gold Retreats Into Range, but Fundamentals Support


USAGOLD/Peter Grant/04-19-17

Gold took another dip right before the London fix, just as it did yesterday. Both sells were reported to be around 25,000 contracts, or $3 bln in notional value. Yesterday’s retreat was fully retraced and then some. So far today, gold is nearly $10 off the intraday low at 1273.20.

Technicians are watching a downtrend line drawn of the all-time high and someone may have a vested interest in not seeing that line breached. On the spot chart, the trendline has already been negated, although a move above $1300 would lend credence to the breakout.

Despite the intraday pullback, a plethora of fundamental factors continue to offer support to the yellow metal: Rising geopolitical tensions. New Brexit uncertainty associated with the snap election called yesterday. French elections. U.S. growth risk. Ebbing rate hike expectations. And calls for a weaker dollar by President Trump.

That all conspires to generate a rather considerable tailwind for the gold market.

There was more saber rattling from North Korea this week. “If the US is planning a military attack against us, we will react with a nuclear pre-emptive strike by our own style and method,” threatened DPRK Vice-Foreign Minister Han Song-ryol earlier in the week.

Without a delivery vehicle capable of reaching the U.S., presumably that nuclear strike would be against a U.S. regional ally; South Korea or Japan. Any such move would likely result in all-out war.

Certainly, we hope that the situation can be deescalated, but there seems to be a death of ‘cooler-heads’ at this point. Hopefully China can pressure Pyongyang to back down.

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

One pro explains why he thinks there’s upside to gold

CNBC/Vaibhavee Sinha/04-18-17

Juerg Kiener, managing director and chief investment officer of Swiss Asia Capital had presented an extremely bullish view on gold in a July 2016 interview with CNBC, predicting at the time that it could hit all-time highs in the subsequent 18 months.

…”from a fundamental point of view, I think we’re going to get a break out on the upside.” Still, he acknowledged that gold had been basically flat over the last year.

“Look, the markets don’t always move (too well) in the short term, but I think in the medium term it does,” he said, pointing to gold’s strong historical performance. “I think this trend will continue until we start seeing again stability coming into the financial system and government behavior.”

Part of the bullish case for gold, according to Kiener, is an emerging distrust towards U.S. geopolitical behavior, and accelerating physical gold purchasing in the rest of the world.

Posted in Gold News, Gold Views |

Gold retreats deeper into the range as dollar recovers modestly

Posted in Gold News, Gold Views |

Gold slides as dollar recovers, but geopolitics keep a floor under metals


MarketWatch/Rachel Koning Beals/04-19-17

Gold prices stumbled Wednesday as the dollar clawed its way up from the three-week low reached Tuesday.

Still, tensions over North Korea and looming French and U.K. elections that hold implications for the European economy supported some level of investor demand for safe-haven precious metals, keeping gold prices just below the November highs touched Monday.

Posted in Gold News, Gold Views |

Morning Snapshot

USAGOLD/Peter Grant/04-19-17

Gold is modestly corrective after Monday’s high at 1295.46 successfully capped gains yesterday. However, geopolitical tensions, growth risks, ebbing rate hike expectations and a weaker dollar all conspire to underpin the yellow metal. Gold is already off the intraday lows, as dips continue to be seen as buying opportunities.

The calendar is pretty light today with just the Fed’s Beige Book and EIA crude data. We’ll also hear Fedspeak from Boston Fed hawk Rosengren.

Posted in Gold News, Gold Views, Snapshot |