Michael J. Kosares (USAGOLD) Gold a bargain in real terms For those you who like to break things down to the fundamentals, this chart should serve as an eye-opener. Why? Because it tells us gold’s value in real terms when adjusted to depreciation in the purchasing power of the dollar. Secondly, it tells us where gold stands today with respect to past peaks in the price – once again in real terms – thus providing an indicator whether or not it is a good buy at current prices.
MK Note: I will remind our readers that we at USAGOLD come at gold from the defensive side of the football – as a means to long-term asset preservation. None of this is posted to lure you into a sense that runaway profits are just around the corner. In the end, we view gold simply as portfolio insurance and an alternative savings vehicle rather than an investment for speculative capital gain.
Andrew Mayeda (Bloomberg) IMF greenlights yuan for international reserves currency basket IMF staff have recommended the yuan be included in the fund’s Special Drawing Rights reserve-currency basket, alongside the U.S. dollar, euro, pound and yen, IMF Managing Director Christine Lagarde said Friday. The staff nod makes approval by the fund’s board this month all but certain, as major IMF shareholders including the U.S. have said they will support inclusion if the yuan meets IMF criteria. It would be the first change in the SDR’s currency composition since 2001, when the euro replaced the German deutsche mark and French franc.
MK Note: The China/IMF linkage translates to a long-term positive for gold. Back in the late 1990s, the European Union advertised its gold reserves as part of the push to build confidence in the new euro currency, even though it was not directly backed by the metal.
Leika Kihara and Tetsushi Kajimoto (Reuters) Japan relapses into recession in July-September, a blow to ‘Abenomics’ Japan slipped into its fourth technical recession in five years between July and September – spotlighting how the government’s “Abenomics” policies have struggled to drag the economy out of chronic stagnation.
Official data on Monday showed the world’s third-largest economy shrank an annual 0.8 percent in July-September after a 0.7 percent contraction in the prior quarter, putting it firmly into recession – two consecutive quarters of declines.
PG Note: Abenomics has been an epic fail. Our Treasury Secretary thinks Japan should now focus on fiscal stimulus, which means more debt for a country already deeply in the red. Wonder what he thinks his own country should do . . .
John Ficenic (Telegraph) Gold remains the best insurance for a crisis [Fifteenth century Scholar-historian]Al-Maqrizi observed the effect of a liquidity crisis on the Mamluk dynasty in the early 15th century that caused money circulation to dry up. The solution was mass enforced currency devaluation through replacing the gold-and-silver-based Dinar, with copper coinage, or Fulus, and for a period the Mamluk economy recovered rapidly as trade once again flowed freely. However, inflation soon crept in and prices ran out of control as the currency was repeatedly debased. All the while gold hoarding was taking place behind the scenes.
MK Note: Some things never change. . . . . .”As central banks race to devalue currency,” says Ficenec, “private individuals are hoarding record amounts of gold.”
(Xinhua) Gold coins, hoofs found in 2,000-yr-old Chinese tomb Chinese archaeologists on Tuesday discovered 75 gold coins and hoof-shaped ingots in an aristocrat’s tomb that dates back to the Western Han Dynasty (206 BC – 24 AD). The gold objects — 25 gold hoofs and 50 very large gold coins — are the largest single batch of gold items ever found in a Han Dynasty tomb. They were unearthed from the tomb of the first ‘Haihunhou’ (Marquis of Haihun) in east China’s Jiangxi Province. The coins weigh about 250 grams each, while the hoofs’ weights vary from 40 to 250 grams, said Yang Jun, who leads the excavation team.
MK Note: These gold artifacts were found along with a portrait of Confucius, perhaps the oldest known. Wisdom and gold make easy company. Confucius once said something that has current applicability: “In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of.” Or at the very least, well-hedged . . . . . . . .
(Dubai-Mubasher) Gold prices rose on Wednesday as Paulson & Co. expected the precious metal to stage a strong comeback next year.
John Paulson, the hedge fund’s president, said prices will rise strongly in 2016, noting that gold will be a safe haven for investors especially after the occurrence of several economic challenges.
PG Note: There do indeed appear to be a number of “economic challenges” congregating on the horizon. Some may in fact be self-inflicted if the Fed decides to proceed with a rate hike in December.
(Bloomberg) Chinese savers turn to gold as the rest of the world exits holdings “Stung by a $5 trillion stock-market collapse, an overbuilt property market and a devaluation of the yuan, Chinese investors are adding to bullion holdings that have already made them the world’s largest consumers of the metal. A third straight annual decline in prices has failed to deter purchases, partly because there are few attractive alternatives for preserving assets.
MK Note: The writer of this article fails to understand the prevailing mindset of Chinese investors. They see a decline in prices as an incentive not a deterrent. The headline to this article is misleading as well. The World Gold Council recently reported record U.S. physical demand led by sales of American Eagle gold bullion coins. Demand, and this is well documented, is also very strong in India, the Middle East and Europe, so it is difficult to justify the contention that “the rest of the world” is exiting its holdings. That is simply not the case.