Gold books highest settlement in a month, 3rd straight weekly rise


MarketWatch/Myra P. Saefong & Rachel Koning Beals/05-26-17

Gold on Friday closed at its highest level of the month, lifting prices for a third week in a row as a fresh round of geopolitical jitters offset expectations for higher U.S. interest rates, which would otherwise be bearish for gold prices.

Investors were watching North Korea, this weekend’s Group of Seven meeting, the coming U.K. elections, and developments surrounding the Trump administration—all helping to boost gold’s appeal as a hedge against uncertainty.

“At the moment it’s increasing political uncertainty that is driving the gains rather than [Federal Reserve] speculation,” Colin Cieszynski, chief market strategist at CMC Markets, told MarketWatch.

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Posted in Gold News, Gold Views |

Week in Review (Video) – May 26, 2017

Link to Special Report: A Crisis in the Making and What it Means for Gold

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Posted in USAGOLD TV | Tagged , , , , , |

The Daily Market Report: Gold Jumps By More Than 1% Ahead of Holiday Weekend


USAGOLD/Peter Grant/05-26-17

Gold surged to pressure the four-week high 1270.38, buoyed by ongoing political and geopolitical concerns. These gains further improve the near-term technical picture and may be prompting short covering ahead of the long holiday weekend.

Geopolitical tensions ratcheted higher after President Trump pledged to solve the “Big problem” that is North Korea. NBC news is reporting that Jared Kushner, the president’s son-in-law and a senior advisers, has “come under FBI scrutiny in the Russia investigation.” With the FBI now probing the President’s inner-circle, the political uncertainty is on the rise as well.

The China Gold Association recently reported a 9.3% decline in Q1 gold production to 101.197 mt, versus 111.563 in the previous year. China is of course both the world’s largest producer and consumer of gold.

The production decline was attributed to China’s plan to consolidate and modernize its mining industry. China’s Ministry of Industry and Information Technology says they plan to shutter 150 mines by 2020, which would equate withe a reduction in capacity of about 40 mt.

However, China’s official news agency Xinhua contends that annual gold output will rise to 500 tonnes over that same period. Presumably as assets are shifted from lower producing and higher cost mining operations, new efficiencies will be achieved.

In the interim it appears that China is prepared to bridge the gap by increasing imports. Gold imports surged 64.5% to 10.467 mt in Q1, almost exactly matching the annualized drop in mining output.

Chinese gold demand was robust in Q1 at 304.14 mt, a 14.7% increase over Q1-16. If demand remains strong, but domestic production continues to be suppressed, the Chinese will have to increasingly turn to global markets for supply. That dynamic would likely have a positive impact on the price of gold.

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

Gold Rises to Four-Week High

WSJ/Stephanie Yang/05-26-17

Gold prices rose to a four-week high Friday, boosted by increased demand for haven assets amid uncertainty about economic and political stability.

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Posted in Gold News, Gold Views |

The story behind continuing strong bullion coin demand

2016 was a very good year for both gold and silver in aggregate global mint sales

by Michael J. Kosares

I have always considered sales of modern gold and silver bullion coins a bellwether on the general health of the global precious metals market. In reality, though, bullion coin sales comprise only a very small portion of the physical gold and silver markets. According to the World Gold Council, modern gold coins make up only about 13% of investment demand and a little less than 5% of overall demand.* Yet, as is often the case in statistical inquiry, it is the small and often unobserved, sometimes even ignored, that can accurately tell the larger story – particularly when it reflects the net effect of human action within the greater economy and financial markets.

So how is it that such a small aspect of the global gold market in terms of the overall volume can at the same time be so important?

In a nutshell, it is because the demand among ordinary private investors is telling us something very important: The level of confidence people have in the economy and the plan being carried out by the central planners in charge. Twentieth-century economist Joseph Schumpeter (1883-1950), most famous for his theory of creative destruction in capitalist economies, said it best: “The modern mind dislikes gold because it blurts out unpleasant truths.” I am quite certain that the “modern mind” to which Schumpeter referred was a collective term for the social and economic planners responsible to this day for the construction and maintenance of the fiat money economy.**

With that for initial spade work, let’s take a look at the demand for modern gold and silver bullion coins to see what they might be “blurting out” at this juncture in economic history. First and foremost, the numbers tell us that though Washington and the mainstream media may have recovered psychologically from the 2007-2008 crisis, the investing public has not. In fact, by implication the numbers tell us that concerns about a repeat, or better put, an extension, of that crisis still run high among investors.

The charts depict two different eras for gold and silver bullion coins – the one before the crisis and the one after. The strong consumption in 2016, in that respect, is decidedly a continuation of a well-established trend that began in 2008. For gold, 2016 was the fifth best year on record in terms of sales and in a virtual dead heat with 2015. For silver, 2016 was the fifth best year on record coming after last year’s record sales. Since 2016 was a relatively calm year in financial markets, the question arises how high demand might go if another crisis were to suddenly ignite.

Another lesson in these charts, and one that should not be overlooked, is that the record performances in both precious metals since 2008 did not occur in an inflationary environment, but in a distinctly disinflationary one. The strong and continuing post-crisis demand, running consistently at five to nine times pre-2007 levels, belies the mainstream media’s unremitting mantra that the precious metals are an inflation hedge and inflation hedge only. In that regard, silver is the big surprise. Prior to the current period, silver was generally viewed as an industrial metal with some investment potential and rarely a safe-haven or crisis hedge. Now investors give silver nearly the same credence they do gold for asset preservation purposes.


FREE SUBSCRIPTION and access to this month’s edition of News & Views.  This month we explore the big issues in Washington and how they are likely to affect gold in the months ahead; the mechanics of how algo-trading might create a stock market panic and much more.   Several timely charts are included. We invite your free subscription at no obligation.


* These totals include only current year bullion coins and does not include the large volume in previous mintages traded in the secondary market globally. There is no accurate accounting available for the secondary market, but it would add significantly to the annual turnover demand if it were tracked.
** Complete quote: “In the first place, the ‘classic’ writers, without neglecting other cases, reasoned primarily in terms of an unfettered international gold standard. There were several reasons for this but one of them merits our attention in particular. An unfettered international gold standard will keep (normally) foreign-exchange rates within specie points and impose an ‘automatic’ link between national price levels and interest rates. The modern mind dislikes the this automatism, as much for political as for economic reasons: it dislikes the fetters this automatism clasps on government management of the economic process – dislikes gold, the naughty boy who blurts out unpleasant truths. But most of the economists of the period under survey liked it for precisely the same reasons. Though they compromised in practice as in theory and though they admitted central-bank management, the automatism – a phrase beloved by Lord Overstone [Samuel Jones Loyd, 1st Baron Overstone] – was for them, who are neither nationalists nor etatistes, a moral as well as an economic ideal.” –– Joseph Schumpeter, History of Economic Analysis (1954) Published posthumously
Charts compiled and designed by USAGOLD’s Jen Dentry with the assistance of the mints surveyed.
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Posted in all posts, Author, MK |

Here’s What It Would Take for Gold to Hit $2,000

Madison.com/Scott Levine/05-26-17

Uncertainty in Washington, the absence of interest rate hikes, and a fall in the dollar are all factors tied, individually, to the rise in the price of gold. Should these three factors all occur concurrently, however, it could create a scenario which results in market participants racing to increase their positions in gold — a scenario that could very reasonably result in the metal breaking new ground, reaching $2,000.

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Posted in Gold News, Gold Views |

University of Michigan sentiment (final) revised down to 97.1 in May, below expectations of 97.5, vs 97.7 prelim and 97.0 in Apr.

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Posted in Economic Data |

Gold Up, At 4-Week High, On Weak Greenback, Some Risk Aversion


Kitco News/Jim Wyckoff/05-26-17

Gold prices are posting decent gains and have hit a four-week high in early U.S. trading Friday. A weaker U.S. dollar index on this day is helping out the gold market bulls. Also, there is just a bit of risk aversion in the marketplace heading into a long U.S. holiday weekend. News that President Donald Trump’s son-in-law is being investigated by the FBI regarding Russia’s involvement in the U.S. presidential election is also adding some uncertainty to the marketplace.

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Posted in Gold News, Gold Views |

Morning Snapshot: Gold surges to 3-week highs

USAGOLD/Peter Grant/05-26-17

Gold charged to a new 3-week high amid resurgent geopolitical concerns. This seems to be overriding this morning’s better than expected U.S. economic data.

President Trump acknowledged to Japanese PM Abe that North Korea is a “big problem” and pledged that that problem will be “solved.” The markets seem to have interpreted that as a threat.

“It is very much on our minds… It’s a big problem, it’s a world problem and it will be solved. At some point it will be solved. You can bet on that.” — President Donald Trump

The first revision to Q1 GDP came in better than expected at +1.2%. Durable goods orders for April also beat expectations, falling 0.7% on expectations of -1.1%. March saw a significant upward revision to +2.3%, versus +0.7% previously.

This certainly keeps the June rate hike on the table. Minutes of the last FOMC meeting revealed that the Fed waffled a little in May. Today’s should renew confidence that there’s another 25 bps hike coming in several weeks.

The dollar firmed accordingly, but gold is maintaining its gains. Given the political and geopolitical uncertainty, traders may be reluctant to carry short gold positions into the long holiday weekend.

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Posted in Gold News, Gold Views, Snapshot |

U.S. Q1 GDP revised to +1.2%, above expectations of +0.8%, vs +0.7% preliminary print.

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Posted in Economic Data |

U.S. durable goods orders -0.7% in Apr, above expectations of -1.1%, vs positive revised +2.3% in Mar (was +0.7%); ex-trans -0.4%.

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Posted in Economic Data |

Gold higher at 1265.09 (+9.49). Silver 17.25 (+0.109). Dollar higher. Euro lower. Stocks called lower. U.S. 10-year 2.23% (-2 bps).

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Posted in Markets |

Gold prices rebound as U.S. dollar weakens

NASDAQ Daily Forex/Walker England/5-25-2017, 8:55 AM EDT

“Gold prices are rebounding and trading to new weekly highs today, as the US Dollar continues to decline. Technically gold prices may now be seen as trending higher in both the short and long term. Yesterday’s bullish breakout saw gold closing back above both the 200 day MVA (simple moving average) and the 10 day EMA (exponential moving average). Currently the 10 day EMA is found at $1,235.74, and should be referenced as a value of support if prices continue to advance.”

USAGOLD comment:  Something else might be going on.  We will keep an ear to the rail.  G-7 meetings in Europe have been less than positive and that might be weighing on markets.

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The Daily Market Report: Gold Remains Confined to Last Thursday’s Range


USAGOLD/Peter Grant/05-25-17

Gold is trading modestly lower, well within the recent range. Price action has been contained to the 1265.01/1245.10 established last Thursday. This consolidation has taken the form of a symmetrical triangle, which is a continuation pattern. The takeaway is that gold should breakout in the direction of the trend . . . which remains positive.

Today’s wounding of former Greek prime minister and ECB VP Lucas Papademos in an Athens bombing is certainly tragic. So too is the overall economic situation there. The latest negotiations to secure the release of the next tranche of bailout funds collapsed and a new deadline of 15-Jun was set.

“Hopes for a breakthrough in negotiations for cash-strapped Greece were dashed again,” reported the AP. “Again” is the operative word here; this all feels very familiar, because it is. Greece has been in this position numerous times since the financial crisis, with their fate being largely decided by distant policymakers at the EU and IMF.

The Greek economy has shrunk by more than a quarter since the crisis and the keepers of the bailout funds want even more concessions. More austerity. As it is, Greece fell back into recession in Q1.

After nearly a decade of perpetual crisis, limping from bailout to bailout, Greek debt remains at €300 bln (179% of GDP). One has to wonder if Greece might be in a far better position had they initiated a Grexit.

That of course was unthinkable at the time, and yet Greece had far more to gain from leaving the EU than the Brits ever did. Will the Greek’s realize this at some point and try and extricate themselves from this seemingly endless cycle? If so, what are the broader European and global implications?

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

The stock market should be more worried about the hard economic data

MarketWatch/Howard Gold/05-25-17

Stocks have moved up based on two things—a big earnings recovery and hopes the Trump administration would cut taxes, slash regulations and build big infrastructure projects. The earnings recovery is still intact, but the Trump agenda is floundering amid Congressional gridlock and the investigation of the Trump campaign’s ties to Russia, which is sucking the oxygen from the room.

…In an economic recovery and bull market that are eight years old, there’s not much room for improvement. I think we’re in the final innings of both. And the S&P 500’s valuation, at 17.5 times projected 2017 earnings, is pretty high.

So when the soft data say buy, buy, buy, and the hard data say not so fast, I’ll trust the hard data. I’m not yet ready to bail on this market, but it’s surely time for caution.

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Posted in Economy, Markets |

Gold attempts rebound after back-to-back declines

MarketWatch/Rachel Koning Beals/05-25-17

Gold edged higher Thursday, after back-to-back losses, as a closely followed dollar index stalled. But gains could be limited in the lead-up to what’s widely expected to be another Federal Reserve interest-rate hike next month.

…“Traders made much of voting members saying it is ‘prudent to await evidence [that the first-quarter] slowdown is transitory,’ brushing off an otherwise familiar cautiously hawkish tone,” said Ilya Spivak, commodities and currency strategist with Daily FX. “The U.S. dollar dropped alongside front-end Treasury bond yields, boosting the appeal of anti-fiat and non-interest-bearing assets” including gold.

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Posted in Gold News, Gold Views |

Morning Snapshot: Gold consolidates within recent range

USAGOLD/Peter Grant/05-25-17

Gold continues to consolidate within the recent range, underpinned by political, geopolitical and growth risks, as well as a generally weak dollar. Capping the upside is persistently buoyant stocks and the belief that the Fed will still raise rates in June, despite the aforementioned risks.

Those rate hike expectations remain elevated above 80%, despite the FOMC minutes revealing that the Fed turned much more ambiguous at the May meeting. The Fed expressed concerns about weak growth, slowing inflation, elevated asset valuations and geopolitical tensions. While largely dismissed as transitory, they stressed the data dependency of further tightening.

Initial jobless claims edged higher to 234k last week, below expectations. The trade deficit expanded to -$67.5 bln in April. The Bloomberg Consumer Comfort Index and M2 are out later and we’ll hear FedSpeak from Brainard and Bullard.

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Posted in Gold News, Gold Views, Snapshot |

U.S. advance goods trade deficit -$67.5 bln for Apr, outside expectations of -$64.6 bln, vs -$64.2 bln in Mar.

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Posted in Economic Data |

U.S. initial jobless claims +1k to 234k in the week ended 20-May, below expectations of 238k.

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Posted in Economic Data |

Gold easier at 1256.67 (-1.36). Silver 17.22 (+0.001). Dollar better. Euro lower. Stocks called higher. U.S. 10-year 2.25% (unch).

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Posted in Markets |

Fed ties rate hike to economic rebound, sees balance sheet cuts in 2017

Reuters/Jason Lange & Howard Schneider/05-24-17

Federal Reserve policymakers agreed they should hold off on raising interest rates until it was clear a recent U.S. economic slowdown was temporary, though most said a hike was coming soon, minutes from their last policy meeting showed on Wednesday.

Nearly all policymakers at the May 2-3 meeting also said they favored beginning the wind-down of the U.S. central bank’s massive holdings of Treasury debt and mortgage-backed securities this year.

While investors continue to see a rate increase as highly likely next month, the minutes showed that the Fed’s rate-setting committee “generally” believed it hinged on the economy rebounding from its sharp slowdown in the first quarter.

“Members generally judged that it would be prudent to await additional evidence indicating that a recent slowdown in the pace of economic activity had been transitory before taking another step in removing accommodation.” — FOMC Minutes

PG View: The post release drop in yields and the dollar — and rise in gold — is reflective of modest ebb in June rate hike expectations. The Fed rightfully remains cautious.

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Posted in Central Banks, Monetary Policy, QE |

In Downgraded China, Echoes of Japan’s Boom and Bust

WSJ/Andrew Peaple & Peter Landers/05-24-17

Some economists have long warned that China faces the same fate as Japan, with a debt-fueled boom followed by years of stagnation as the country works its way through the hangover.

After Moody’s decision to downgrade China on Wednesday, the two countries at least now have sovereign credit ratings, at A1, to match.

…Concerns about China’s economy voiced by the likes of Moody’s have some echoes of the problems Japan faced by the early 1990s. As with Japan, heavy capital-spending levels have been central to China’s growth—investment accounted for nearly half of China’s annual growth by 2010, up from a third in 1990.

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Posted in Debt, Economy |

FOMC minutes show Fed views recent weakness in growth and inflation as “transitory.” Some concerns expressed about elevated asset valuations and “increase in geopolitical tensions.”.

Minutes of the Federal Open Market Committee

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Posted in Central Banks, Monetary Policy |

The Daily Market Report: Gold Consolidates Awaiting Fresh Impetus


USAGOLD/Peter Grant/05-24-17

Gold is consolidating within the recent range, buoyed by political and geopolitical concerns and a generally weaker dollar. Persistent expectations for a June rate hike are perhaps limiting the upside at this point.

As we’ve noted in the past, the yellow metal tends to soften into rate hikes and rally afterwards. Traders will be scouring the FOMC minutes of the May meeting later today in an effort to glean additional clues as to the likelihood of a June hike. Fed funds futures put the probability at 83%, which seems to make it a forgone conclusion.

Of course incoming data seems to suggest the Fed should be considering a pause. Minneapolis Fed President Kashkari noted yesterday that the inflation is going the “wrong way.” He wants to see more data before committing to further monetary tightening.

The PMI data that were released yesterday, suggested some downside risk to the May jobs data. Median expectations are presently for a gain of 190k nonfarm payrolls.

While there is some optimism about a Q2 rebound in growth. The Atlanta Fed’s GDPNow model is presently at 4.1%. Goldman Sachs just get their estimate to 3.0%. However, the last actual GDP print was 0.7% in Q1.

Gold may need some fresh impetus to extend the uptrend. That may come on the form of economic data, or new developments on the political/geopolitical front.

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

BoC holds overnight rate steady at 0.5%, in line with expectations, amid ongoing uncertainties.

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Posted in Central Banks, Monetary Policy |

U.S. existing home sales -2.3% to 5.57M pace in Apr, below expectations 5.65M, vs negative revised 5.70M in Mar.

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Posted in Economic Data |

U.S. FHFA home price index +0.6% to 246.2 in Mar, vs 244.8 in Feb; +6.2% y/y.

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Posted in Economic Data |

Gold stays firm, Fed policy minutes in focus

Reuters/Vijaykumar Vedala/05-24-17

Gold held steady on Wednesday, after slipping in the previous session, as investors awaited cues on the U.S. Federal Reserve’s rate hike stance from the minutes of its last meeting due later in the day.

…”My expectations are that the pace of interest rate hikes will be kept steady and stable regardless of the short-term fluctuations in the U.S. economic data,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.

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Posted in Gold News, Gold Views |

Be warned: $25 oil is coming, and along with it, a new world order


CNBC/Oriel Morrison/05-24-17

The world as we know it, will be no longer. The balance of power on a global scale will shift. All in the next decade.

…”Oil demand will peak 2021-2020 and will go down 100 million barrels, to 70 million barrels within 10 years. And what that means, the new equilibrium price is going to be $25, and if you produce oil and you can’t compete at $25, essentially you are holding stranded assets,” Seba said.

“At $25 a barrel, that means deep-water, sands, shell oil, fields, most are going to be stranded, and also all the refineries and pipelines associated with these expensive oils are also going to be stranded. And that is going to reshape worldwide oil, geopolitics and so on.”

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Posted in Deflation, Markets |

Morning Snapshot: Gold edges higher within recent range

USAGOLD/Peter Grant/05-24-17

Gold is edging higher within the recent range amid mixed fundamental inputs. While the underlying trend for the year remains favorable, a break of last week’s high at 1265.01 is needed to return focus to the high for the year at 1295.03.

The U.S. calendar features existing home sales and the minutes from the May FOMC meeting. We’ll also hear FedSpeak from Brainard, Bullard, Kaplan and Kashkari.

The Bank of Canada will announce policy today at 10:00ET. They are widely expected to hold the overnight rate steady at 0.5% based on ongoing concerns about “material excess capacity.”

Moody’s downgraded China from A1 from Aa3, citing concerns over growing debt and slowing growth. It was China’s first downgrade in 30-years.

“Looking ahead, we expect China’s growth potential to decline to close to 5% over the next five years,” said Moody’s. If that really happens, there will be considerable implications for the broader global economy.

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Posted in Gold News, Gold Views, Snapshot |