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With USAGOLD’s new mobile gold and silver market monitor

USAGOLDmobilerWe were among the first in the industry to offer a gold and silver live pricing page specifically designed for smartphones. It quickly became our highest volume web page.  Now, with our newly introduced one-stop mobile portal, we are among the first to offer a complete mini-site purposely designed for smartphones.

Included –

• Live spot prices for gold, silver, oil and the euro

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• Daily, live gold chart

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• Introductory gold and silver purchase information

We invite you to explore smartphone friendly USAGOLD Mobile.  Don’t forget to bookmark.

And please remember: It is your purchase of gold and silver from USAGOLD that makes services like this possible.

Posted in all posts |

Bank of China’s Cao: Yuan ‘Maybe’ in IMF Basket by 2016

16-Apr (Bloomberg) — Bank of China Chief Economist Cao Yuanzheng talks about the likelihood of the yuan winning reserve status by being included by next year in the International Monetary Fund’s basket of currencies and the benefits of such status for global currencies and China’s new institutions, the New Silk Road Fund and Asian International Investment Bank. Cao, speaking with Bloomberg’s Flavia Rotondi in Rome, also discusses prospects for a potential withdrawal of Greece from the euro.

[video]

Posted in all posts |

On April 16, the Atlanta Fed’s GDPNow model forecast for real GDP growth in Q1 2015 was 0.1%

16-Apr (Atlanta Fed) — The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2015 was 0.1 percent on April 16, down from 0.2 percent on April 14. The decline came after Wednesday morning’s industrial production release from the Federal Reserve Board.

[source]

Posted in Economy |

Don’t be a Mr. or Mrs. Unicorn

unicorn by Michael J. Kosares

From this morning’s Financial Times:

“It is quite easy for one to introduce QE policy, as it is little more than printing money.  When QE is in place, there may be all sorts of players managing to stay afloat in this big ocean.  Yet it is difficult to predict now what may come out of it when QE is withdrawn.”  – Li Keqiang, China’s premier

Sticking with the oceanic theme, here is a similar sentiment from Warren Buffet:

“Only when the tide goes out do you discover who’s been swimming naked.”

And another sea-faring allusion from the International Monetary Fund (also recorded in today’s Financial Times):

“The Federal Reserve’s first interest rate hike risks triggering a jolt to bond markets that could surpass the turmoil the central bank inadvertently set off in 2013, the International Monetary Fund has said. José Viñals, the director of the IMF’s monetary and capital markets department, warned of a ‘super taper tantrum’ and spiking yields as the US central bank gets nearer to lifting rates from near-zero levels. ‘This is going to take place in uncharted territory,’  he told the Financial Times in an interview.”

Then we have warnings from a couple of well-known commentators on the potential for a liquidity crisis in the bond market.

Jamie Dimon (JPMorgan CEO):

“The banking system is far safer than it has been in the past, but we need to be mindful of the consequences of the myriad new regulations and current monetary policy on the money markets and liquidity in the marketplace—particularly if we enter a highly stressed environment.”

Larry Summers (former Secretary of the Treasury):

“I thought regulatory authorities made a mistake when they looked at each institution, and said, ‘You’ll be safer if you withdraw from the markets a bit,’ and then forget that if all institutions withdraw from the markets a bit, the markets would be less liquid. The markets themselves would be less safe. That would, in the end, hurt all institutions. I think there is a real issue there. Frankly, a lot of the effort that’s going into macro prudential should be into making sure we have liquidity.”

There have been a number of other prominent figures registering similar sentiments in the public venue.  Stanley Fischer, though, the Fed’s vice chairman, is seen swimming against the tide:

“Markets can’t depend on the Fed staying on hold forever, says Fed Vice-Chair Stanley Fischer, speaking at an economic forum. Yes, the first quarter was a weak one for the U.S. economy, he says, but a rebound in Q2 is already underway.” [Seeking Alpha, 4/16/2015]

So, you might ask, what does all of this have to do with the demand for gold in international markets?

I will take you back to the quote at the top from Li Keqiang about printing money.  The financial markets are between a rock and a hard spot.  Print with abandon and eventually runaway inflation is inevitable.  Stop the printing presses and the markets and the economy are pulled into a vortex of illiquidity (which translates to a downward stock and bond price spiral and all it portends for financial institutions).  In either eventuality, gold is the one asset that stands apart from the potential maelstrom of counterparty risk and/or runaway inflation – an ark of sorts, a weighty portfolio anchor and an asset in which China, and anyone concerned about contemporary monetary policy, takes an abiding interest.

As for Mr. Fischer, one wonders how fifteen days into the second quarter he might be so certain of its outcome.  Such boldness might raise an eyebrow or two among Wall Street’s more seasoned travelers . . . .

One last watery reference – a note in cuneiform recorded on an ancient tablet dug up somewhere in Mesopotamia:

Dear Noah,

We could have sworn you said the ark wasn’t leaving till 5. 

Sincerely,
The Unicorns

Talk about missing the boat. . . . . . .MK

______________________________________________________________

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A little USAGOLD history. . . . Pictured are News & Views hard copies from 1999 just before gold began its secular bull market. News & Views was Review & Outlook’s popular predecessor at a time when gold-based publications were few and far between. The “Big Breakout” headlined in the November, 1999 issue refers to a price jump from $260 to $330 per ounce.  Your editor sees a good many similarities between that period and now.

Posted in all posts |

Gold slides after Philly Fed beat, but the preponderance of economic evidence of late has been suggestive of weakness.

Fed vice-chair Fischer also said that the central bank can’t be on hold forever, while simultaneously reiterating that Fed action remains data dependent.

Posted in Gold News |

Bernanke Suggests Fed Abandon Fed Funds Rate, Keep Balance Sheet Large

16-Apr (Wall Street Journal) — The Federal Reserve may want to change the way it controls short-term interest rates and maintain a larger asset portfolio than it did before the financial crisis, former Fed chairman Ben Bernanke said Wednesday.

Control of monetary policy “might be more, rather than less, effective” if the Fed moved away from targeting a benchmark interest rate called the federal funds rate, Mr. Bernanke said in remarks during a panel discussion hosted by the International Monetary Fund in Washington D.C.

…There would be a number of advantages, he said, and even with a large balance sheet, the Fed should be able to effectively adjust policy.

“Most other major central banks have permanently large balance sheets and are able to implement monetary policy without problems,” Mr. Bernanke said.

[source]

PG View: This is an interesting call in light of today’s announcement that Bernanke has joined hedge fund Citadel as an adviser. Keep the balance sheet big, keep the liquidity flowing.

Posted in Central Banks, Monetary Policy |

US Philly Fed index rose to 7.5 in Apr, above expectations of 5.5, vs 5.0 in Mar.

Posted in Economic Data |

The Daily Market Report: Gold Consolidates Above $1200 Amid More Economic Weakness


16-Apr (USAGOLD) — Gold is consolidating above $1200, underpinned by further evidence of U.S. economic weakness. A softer dollar is providing additional support.

Initial jobless claims jumped 12k last week to 294k, above expectations of 280k. Housing starts rebounded somewhat in March, but not nearly as much as expected in light of the dismal February figure. Housing Wire said the data reflect “deep weakness in March”.

With each and every data miss, Fed rate hike expectations get pushed further into the future. If things deteriorate to the point that a recession becomes likely, not only would a rate hike be off the table, but talk of QE4 would intensify.

Q1 GDP expectations have been dropping steadily of late. At their March meeting, FOMC members were expecting Q1 growth between 2.1-3.1%. Since then, consensus among private forecasters has dropped to about half what the FOMC thinks. The Atlanta Fed’s GDPNow indicator has been hovering just above 0%, it may just flip negative after the data that have come out this week.

As the dollar has trended higher over the last 4-years, gold rose in terms of euros and yen. However, if the Fed forestalls rate ‘lift-off’ again, the greenback is likely to rotate lower and gold will once again shine in terms of dollars.

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

IMF knocks Greek debt rescheduling hopes

16-Apr (Financial Times) — Greek officials have made an informal approach to the International Monetary Fund to delay repayments of loans to the international lender, highlighting the parlous state of Greek finances, but were told that no rescheduling was possible.

According to officials briefed on the talks by both sides, Athens was persuaded not to make a specific request for a delay to the Fund, which is owed almost €1bn in two separate payments due in May.

…Yields on Greek bonds soared on Thursday following the news, with yields on three-year paper rising 134 basis points to 25.10 per cent, the highest since the country’s restructuring. Its 10-year yields climbed 45 basis points to 12.18 per cent.

[source]

PG View: CDS spreads suggest the default risk has risen to 75%. Capital Economic’s Jennifer McKeown warns that “Greece might resort to IOUs and/or capital controls to avoid a disorderly default.” Bad news all the way around.

Posted in European Debt Crisis |

US initial jobless claims +12k to 294k in the week ended 11-Apr, above expectations of 280k, vs upward revised 282k in previous weeks.

Posted in Economic Data |

Gold better at 1206.72 (+1.95). Silver 16.46 (+0.079). Dollar lower. Euro higher. Stocks called lower. US 10yr 1.88% (-1 bp).

Posted in Markets |

Egon von Greyerz on Gold, QE and Capital Controls in France

15-Apr (24hGold) — The brilliant broadcaster Max Keiser interviews Egon von Greyerz, founder of MAM and board member of Goldbroker.com, about capital controls in France, QE, gold and the economic and financial disasters wrought by central banks.

“We will have worldwide capital controls.” — Egon von Greyerz

[video]

Posted in Central Banks, Currency Wars, Gold News, Gold Views, Monetary Policy, QE |

Economic growth “slight,” manufacturing “weak,” but autos, housing gain: Beige Book

15-Apr (CNBC) — Federal Reserve officials painted a mostly uninspiring picture in their latest economic assessment, calling growth overall “slight” or “moderate” across most of the country.

Overall, the Fed’s 12 districts did report strength in real estate and housing. However, manufacturing in recent days has been “weak” and retail sales “mixed,” according to the latest Beige Book account.

District observers blamed much of the weakness on a West Coast port strike, inclement weather and lower oil prices. There were oil-related layoffs across several districts and only “modest” or “moderate” wage pressures.

Manufacturing profits were “down significantly.”

[source]

Posted in all posts, Central Banks, Economy |

Daily Market Report: Gold Rebounds on Latest Evidence of Waning Economic Momentum

15-Apr (USAGOLD) — Gold rebounded from earlier modest pressure, regaining the $1200 level. The yellow metal is presently trading more than $9 higher on the day.

The latest evidence of waning economic momentum in the U.S. caused the dollar to give back its earlier gains. The NY Empire State index collapsed to -1.2 in April, well below expectations of 6.8, versus 6.9 in March. Industrial production fell 0.6% in March, below expectations of -0.3%, versus +0.1% in February and -0.4% in January.

The March decline was the biggest drop since 2009. Not surprisingly, Q1 GDP expectations continue to erode, which in turn is weighing on expectations that the Fed will initiate the first rate hike in nearly a decade at some point this year.

Some Fed hawks continue to suggest a June ‘lift-off’ remains on the table, but there are abundant concerns that such a move would trigger major volatility in financial markets.

While the Fed continues to say 2015 rate hike, Fed funds futures suggest the market is thinking 2016. However, if the market moves more in line with the central bank’s expectations, the IMF warned this week that a sudden rise of 100 bps in 10-year Treasury yields is “quite conceivable,” resulting in negative global shocks.

Meanwhile, Deutsche Bank warned that if the Fed starts raising rates, it could create a “perfect default storm” for global corporate bonds.

The German bank said that the low level of defaults had sunk further since the financial crisis “with QE and zero interest rate policies conducted around the world”. Mr Reid said: “Defaults will stay unusually low so long as current artificial conditions continue.” — Telegraph

“Artificial conditions” is an interesting turn of phrase. We have frequently categorized government bond buying with printed currency as “artificial demand,” which has grossly miss-priced risk in recent years. I think the Fed and other central banks would much prefer to just remain in the fantasy world of their own creation.

St. Louis Fed President Bullard said today that if ‘lift-off’ creates a shock to the economy, the Fed could just cut rates again. That’s true, but it’s also just silly in terms of maintaining credibility. If there is legitimate potential for a shock, the Fed will just keep rates at zero.

This whole argument may be mute, as the Fed has always maintained that ‘lift off’ is data dependent. And the data have been rather ominous of late.

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

Gold jumps back above $1200 (now up more than $8 on the day), as dollar gives back earlier gains on latest evidence if U.S. economic weakness.

Posted in Gold News |

Gold update. . .

Gold pops on weak U.S. industrial output – down .6% in March – and reports that Germany is preparing for a Greek default.  Back over $1200 and trading strong . . . . .Also CityAM reports Greece finance minister Varoufakis is meeting with heavy-weight U.S. sovereign debt bankruptcy lawyers at Cleary Gottlieb.  Both sides appear to be structuring contingency plans (not a good sign).

Posted in all posts |

BoC holds steady on rates, in line with expectations; cuts Q1 growth forecast to flat on oil.

Posted in Central Banks, Economy, Monetary Policy |

World faces ‘perfect default storm’ when Fed hikes rates – Deutsche Bank

15-Apr (Telegraph) — A series of interest rate increases by the US Federal Reserve could create a “perfect default storm” for global corporate bonds in 2018, Deutsche Bank has warned.

Expectations that the US Federal Reserve will begin to hike its interest rates, perhaps as early as this year, could trigger a “default cycle”, the bank said.

…The German bank said that the low level of defaults had sunk further since the financial crisis “with QE and zero interest rate policies conducted around the world”. Mr Reid said: “Defaults will stay unusually low so long as current artificial conditions continue.”

[source]

PG View: …and therein lies the rub: Once markets become addicted to “artificial conditions,” a return to reality becomes very problematic. It becomes far easier to just perpetuate the fantasy in perpetuity (see Japan).

Posted in Central Banks, Markets, Monetary Policy, QE |

Greek default would be ‘catastrophic:’ Politician

15-Apr (CNBC) — A debt default in Greece would be “completely catastrophic” and a scenario that Athens should avoid at all costs, an opposition member of the Greek parliament told CNBC Wednesday.

The clock is ticking for Athens to propose a package of reforms agreeable to its international lenders, which would see them release loans that the country desperately needs to stay afloat.

“I cannot assume or imagine this would be a conceivable option for Greece at the moment,” Kyriakos Mitsotakis, a Greek politician with the conservative New Democracy Party, in response to a question about who would be to blame if the country defaults on its loans, told CNBC on Wednesday.

“It would be a completely catastrophic scenario and I’m sure that the government would want to avoid that at all costs.”

[source]

Posted in European Debt Crisis |

IMF warns of ‘super taper tantrum’

15-Apr (Financial Times) — The Federal Reserve’s first interest rate hike risks triggering a jolt to bond markets that could surpass the turmoil the central bank inadvertently set off in 2013, the International Monetary Fund has said.

José Viñals, the director of the IMF’s monetary and capital markets department, warned of a “super taper tantrum” and spiking yields as the US central bank gets nearer to lifting rates from near-zero levels. “This is going to take place in uncharted territory,” he told the Financial Times in an interview.

In its Global Financial Stability Report, released on Wednesday, the IMF argued that risks have not only risen worldwide but that they have rotated to parts of the financial world that are harder to monitor — including to the non-bank sector.

…In the report, the IMF said a sudden rise of 100 basis points in 10-year Treasury yields was “quite conceivable” once the market wakes up to the possibility of the first rise in official rates in nearly a decade. “Shifts of this magnitude can generate negative shocks globally, especially in emerging market economies,” the IMF said.

[source]

Posted in Central Banks, Markets, Monetary Policy |

Gold sets new intraday highs as Empire State index and industrial production are latest data misses

Posted in Gold News |

Asia set to muscle out Europe in gold trading – ICE’s Ho

15-Apr (Bullion Desk) — Asia can surpass Europe as the centre of gold trading, Intercontinental Exchange’s John Ho told delegates at the Dubai Precious Metals Conference, with Dubai potentially integral to this shift.

“People believe that the Asian time has come, that trading in Asia is now and it needs to happen in an Asian time zone,” he said. “Europe is over, Asia is now.”

Ho, director of Asia Pacific at ICE, was speaking ahead of the exchange’s launch of a Singapore-based, physically settled kilobar gold futures contract.

[source]

Posted in Gold News, Gold Views |

US industrial production -0.6% in Mar, below expectations of -0.3%, vs +0.1% in Feb.

Posted in Economic Data |

Gold Falls Back into Investor Favor

15-Apr (CommodityHQ) — Gold was one of the hottest commodities of the 2000’s, as its insatiable bull run was cheered on by commodity investors. But its good fortune finally broke in 2013 as the precious metal declined nearly 30% and fell another 2% in 2014. Now, as the Fed toys with a rate hike in 2015, gold has begun to fall back into favor with investors.

…The second, and more significant, factor playing into gold’s price this year is the Fed’s interest rate decision. It is generally accepted that the market does not want the Fed to raise rates, but it is an inevitability that stocks will eventually have to face. For the time being, many believe that raise will happen later this year at which point some expect markets to correct. A market correction favors gold as investors scurry to the safe haven commodity. And that trend has already shown some signs of life in 2015.

[source]

Posted in Gold News, Gold Views |

China’s First-Quarter Growth Slowest in Six Years at 7%

15-Apr (Wall Street Journal) — China’s economy started the year on a downbeat note with its slowest quarterly growth rate since 2009, pointing to a further loss of momentum for the world’s second-largest economy.

The 7% first-quarter year-over-year growth rate marks a slowdown from 7.3% in the fourth quarter. It puts more pressure on economic planners to ease fiscal and monetary policy even as they try to avoid excessive stimulus that could boost debt and fuel more overcapacity in real estate and heavy industry.

The growth figure — the second-lowest since 2001 – affords Beijing little cushion in hitting its 7% annual growth target. Other figures released on Wednesday suggest further weakness in the economy, which economists say could prompt Beijing to act further. “They still have plenty of ammunition left,” said IHS Global Insight economist Brian Jackson.

[source]

Posted in Economy |

ECB held steady on rates, in line with expectations. Draghi presser underway.

Posted in Central Banks, Monetary Policy, QE |

NY Empire State index sank to -1.2 in Apr, well below expectations of 6.8, vs 6.9 in Mar.

Posted in Economic Data |

Gold easier at 1192.87 (-1.04). Silver 16.16 (-0.023). Dollar higher. Euro lower. Stocks called higher. US 10yr 1.91% (+1 bp).

Posted in Markets |

The Daily Market Report: Gold is a Logical Diversification Option With Stocks and Bonds Seen as Overvalued


14-Apr (USAGOLD) — Gold fell in overseas trading, weighed by persistent expectations that the Fed is still going to raise rates at some point this year. However, the yellow metal has snapped back in early U.S. trading to probe back above $1200.

Yet another disappointing U.S. retail sales number raised renewed doubts about the likelihood of that rate hike. Both the dollar and shares fell on the news, while bonds and gold rebounded.

A Bank of America Merrill Lynch survey of fund managers shows a record number of participants see both stocks and bonds as overvalued. The perceived stark and simultaneous overvaluation of these two markets can be directly attributed to the policies of the world’s central banks, which have flooded the world with liquidity in the years since the financial crisis (even longer for the BoJ).

Trillions of yen, pounds, dollars and now euros have been printed, providing massive artificial demand for bonds. Cheap money then also flows into shares in the never ending quest for yield that can no longer be found in the bond market. Both markets are so distorted now, that 13% of those surveyed by MLBofA see the potential bubble in equities as the biggest tail-risk facing markets right now, according to the FT.

Bubble bubble toil and trouble.

A rising number of investors believe bonds and equities are overvalued, with fears climbing that a bubble could be forming in the latter, according to a Bank of America Merrill Lynch fund manager survey released on Tuesday. — Financial Times

Investors that think they are properly diversified with a classic allocation to both stocks and bonds based on their risk tolerance and time to retirement may be sadly — and dangerously — mistaken. If only their were some alternative asset that were presently perceived to be undervalued. . .

Now may be the ideal time to lighten exposure to shares and/or bonds and add some protection in the form of physical gold. With the yellow metal still in the lower fifth of the corrective/consolidative range, it is a relative bargain compared to the more traditional asset classes.

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

US business inventories +0.3% in Feb, in line with expectations, vs unch in Jan.

Posted in Economic Data |