Trump comments on ‘too strong’ dollar send shivers through stock market

MarketWatch/Mark DeCambre/01-17-17

In a Friday interview with The Wall Street Journal, Trump said the U.S. currency, which touched a more-than 14-year high about two weeks ago, has gotten “too strong,” especially considering the China’s yuan is “dropping like a rock.” “Our companies can’t compete with them now because our currency is too strong. And it’s killing us,” he told WSJ.

Trump’s remarks about the dollar underscore the soon-to-be president’s unconventional political style, and could threaten to roil stocks, which have enjoyed a healthy run higher in recent months. Sitting presidents rarely offer their direct view on the strength or weakness in U.S. currency for fear of influencing the market.

PG View: Today’s weakness in the dollar has pushed gold to an 8-week high and silver is back above $17 for the first time in 5-weeks.

Posted in Markets, U.S. Dollar |

Morning Snapshot: Gold surges to 8-week highs

USAGOLD/Peter A. Grant/01-17-17

Gold continues to charge higher, buoyed larger by renewed weakness in the dollar. The yellow metal has pushed to a new 8-week high of 1218.90. Silver has reclaimed the 17-handle.

In a Wall Street Journal interview, President-elect Trump said the dollar was “too strong,” adversely impacting the ability of U.S. companies to compete globally. Mr. Trump seemed to be particularly concerned about the Chinese yuan “dropping like a rock.” Unvarnished rhetoric like that ought to strike fear in the hearts of dollar bulls and monetary policy hawks alike.

Easier policy is a sure-fire way to knock the dollar lower. There are two vacant seats on the Federal Reserve Board of Governors that President Trump will be able to fill immediately and they will presumably contribute to the shaping of monetary policy moving forward.

The dollar was further weighed by a rebound in the British Pound in the wake of Theresa May’s Brexit speech. While there will apparently be a hard-Brexit, assurances that Britain was not turning inward and that Parliament will get to vote on any deal struck with the EU seemed to temper pessimism somewhat.

Posted in Gold News, Gold Views, Snapshot |

Brexit: UK to leave single market, says Theresa May


Theresa May has said the UK “cannot possibly” remain within the European single market, as staying in it would mean “not leaving the EU at all”.

But the prime minister promised to push for the “greatest possible” access to the single market following Brexit.

…And Mrs May promised an end to the UK’s “vast contributions” to the EU.

But Labour said there were “enormous dangers” in the prime minister’s plans.

PG View: Sterling rebounded, encouraged by Ms. May’s assurances that Britain was not turning inward and that Parliament would get to vote on any deal stuck with the EU.

Posted in Geopolitical Risks, Politics |

NY Empire State index fell to 6.5 in Jan, well below expectations of 8.1, vs negative revised 7.6 in Dec (was 9.0).

Posted in Economic Data |

Gold higher at 1212.99 (+9.19). Silver 17.05 (+0.241). Dollar lower. Euro higher. Stocks called lower. U.S. 10-year 2.37% (-3 bps).

Posted in Markets |

Gold up again sharply in overnight trade

Bloomberg/Thomas Seal and Ranjeetha Pakiam/1-17-2016

“As the inauguration of Trump draws close, I think people are realizing that potentially this could be a very stormy Presidency and gold may well benefit from that,” said David Govett, an analyst at Marex Spectron Group Ltd. in London. “There is new money at the beginning of each year looking for a home and a lot of this seems to find its way into gold.”

USAGOLD note: Trump calls US$ “too strong” in WSJ interview released late last night. Presidential advisor Scaramucci at Davos conference says “we must be careful of a rising dollar.” CNBC cites safe-haven buying on “hard Brexit.”  Gold is up 5.8% in 2017; 7.8% from December cyclical low ($1128).  It was up 8.7% in 2016.  See chart below for annual returns since 2001.

For more detailed information:  The Gold Owner’s Guide to 2017.

Posted in all posts |

How the national debt could lead to another economic collapse

The Hill/Justin Haskins/01-14-17

The current economic picture looks eerily similar to the one in 2008: Economic growth is sluggish, personal debt is extremely high, the government is running massive annual deficits, and riskier investments are being encouraged by the current market conditions, although this time it’s being caused by excess cash in the monetary supply.

President-elect Trump enters the White House at a crucial moment in U.S. history. If the economy does not grow rapidly in the coming years, allowing market distortions to correct and the Fed to safely increase interest rates to bring the monetary supply back to its historical norm, there could be another large-scale economic collapse in the not-so-distant future.

Posted in Debt |

Gold price boosted by hard Brexit fears

The Week UK/01-16-17

Reports indicate that Theresa May will tomorrow signal the UK is to quit the European single market when it leaves the EU. This has worried the markets, with traders concerned about the destabilising consequences for the UK, EU and, ultimately, the world’s economies.

PG View: Gold surged back above £1000, setting a 10-week high of £1006.73.

Posted in Gold News, Gold Views |

Gold rises to 8-week high as traders focus on Trump and Brexit

MarketWatch/Victor Reklaitis/01-16-17

Gold briefly touched “an eight-week high of just shy of $1,210 per troy ounce as the new week of trading gets underway,” said Commerzbank analysts in a note. “This is due among other things to strong statements made by U.S. President-elect Donald Trump just a few days before his inauguration, and to new developments with regard to Brexit.”

Posted in Gold News, Gold Views |

Gold only safe asset against political central bank bashing

Bloomberg/Natasha Doff and Eddie Van Der Walt/1-12-2016

“Baring’s Mahon, who bought his exposure through ETFs, says that while 2017 is a watershed, his conviction on the politicization of central banks is one that will play out over several years, making gold a safe bet for the long term.”

Posted in all posts |

Morning Snapshot: Gold Rises to 8-Week High

USAGOLD/Peter A. Grant/01-16-17

Gold rose in overseas trading to set a new 8-week high of 1208.58, despite a higher dollar this morning. The yellow metal remains underpinned by safe-haven demand, amid uncertainty ahead of the Trump inauguration and rising concerns over a hard-Brexit.

U.S. markets are closed today in observance of the Martin Luther King Jr. holiday. Look for trading activity to be muted after the European close as a result.

Posted in Gold News, Gold Views, Snapshot |

Gold higher at 1203.34 (+5.86). Silver 16.82 (-0.029). Dollar higher. Euro lower. U.S. markets closed for MLK holiday.

Posted in Markets |

Gold up sharply overnight on hard Brexit concerns, pound sterling drop

Bloomberg/Svenja O’Donnell and Timothy Ross/1-15-2017

“Government officials expect sterling to take another hit when May sets out her vision for leaving the bloc in a speech on Tuesday, and the Treasury is preparing to speak to major banks in London to try to smooth the reaction, said the people, who declined to be named as the plans aren’t public. While Treasury officials often reach out to banks to explain policy, it’s unusual for the prime minister’s office to anticipate a bad market reaction, they said.”

USAGOLD note:  Gold upside originating in Asian trading as of this writing. China New Year physical demand also a factor.

Posted in all posts |

Gold in five easy lessons

by Michael J. Kosares

1. Don’t buy it because you need to make money; buy it because you need to protect the money you already have.

2. Don’t look at price as a barrier; look at it as an incentive.

3. Don’t buy its paper pretenders; buy the real thing in the form of coins and bullion.

4. Don’t fall prey to glitzy TV ads; do your due diligence instead.

5. Don’t allow naysayers to divert your interest; allow yourself the right to protect your interests as you see fit.

Mr. Kosares is the author of The ABCs of Gold Investing – How To Protect and Build Your Wealth with Gold, the widely-read introduction to gold ownership.

Posted in all posts, MK |

Week in Review (Video) – January 13, 2017

Posted in all posts, USAGOLD TV |

The gold market in 2017

World Gold Council/01-13-17

In 2016, investors around the world returned in large numbers to the gold market, as a combination of macroeconomic drivers and pent up demand kept interest in gold high. As we start the new year, there are some concerns that US dollar strength may limit gold’s appeal. We believe that, on the contrary, not only will gold remain highly relevant as a strategic portfolio component, but also six major trends will support demand for gold throughout 2017:

1. Heightened political and geopolitical risks
2. Currency depreciation
3. Rising inflation expectations
4. Inflated stock market valuations
5. Long-term Asian growth
6. Opening of new markets.

Posted in Gold News, Gold Views |

Physical Will Trump Paper Gold

Tocqueville Asset Management/John Hathaway/01-05-17

[T]here is a shortage of physical metal at current prices that promises to deepen, masked only by the supply of synthetic gold not backed by physical. Given full transparency, the shortage would argue for a much higher gold price based on price discovery unimpeded by synthetic-gold trading. The progressive hollowing out of the (mostly Western) synthetic price-setting mechanisms and institutions is not a headline-grabbing process. The only clue is the steady seepage of bullion from Western storage vaults into Asian hands, where it is welcomed at bargain prices and utilized within a far friendlier institutional and political context. Advocates of this point of view must have been cheered (as were we) by the fact that GLD, the largest gold ETF, resorted to borrowing 29 tonnes in Q1 2016 from the Bank of England to connect the inflow of money flows with the physical metal necessary to back the trust instrument (from the Q1 10Q). As Trump might tweet, “Not good!!!” With the passage of time, the disparity between real (physical) and imaginary (speculative) fundamentals continues to widen. The longer it persists, the greater the likelihood that it will be resolved in epic fashion. In the end, we fully expect physical gold to trump its feeble paper facsimile.

PG View: A thorough year-end look at the fundamentals by Hathaway that generally bode well for gold — particularly of the physical variety — over the longer-term. Once again, it would behoove investors to carefully consider the vehicle they choose to gain exposure to the gold market.

Posted in Gold News, Gold Views |

The Daily Market Report: Gold Poised For Third Consecutive Weekly Gain

USAGOLD/Peter A. Grant/01-13-17

Gold dipped modestly in early New York trading, but has since adopted a more consolidative tone just below $1200. The yellow metal appears poised to gain just over 2% this week, which would be its third consecutive weekly gain.

The surge earlier in the week to a 7-week high of 1206.93 lends considerable credence to the bullish technical tone that is developing. Gold is now comfortably above the 20- and 50-day moving averages, as well as the 20-week moving average. Momentum remains clearly to the upside.

We like the fundamentals as well: Physical demand in both the east and west is back on the rise. Recent U.S. economic data have been mixed, which is tempering the post-election optimism. This is also weighing somewhat on expectations that the Fed will hike 3 times this year.

The World Bank is forecasting 2.2% GDP growth this year. Atlanta Fed President Dennis Lockhart thinks it will be more like 2%, noting that it is difficult to predict what impact any fiscal stimulus might have at this point. That’s pretty anemic more-than 7-years into the recovery.

President-elect Trump chose not to elaborate on infrastructure spending during his highly anticipated press conference earlier in the week. That seemed to really disappoint investors.

The Dow has failed to satisfy the 20,000 objective, even as the national debt continues its unstoppable march to $20 trillion. Expansion of the money supply is accelerating as well.

It all paints a generally favorable picture for gold and hearkens back to January of 2016, where we saw a similarly impressive start to the new year. The 2016 rally lasted until midyear, wracking up gains in excess of 30% before the corrective pressure emerged.

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

University of Michigan consumer sentiment ticked lower to 98.1 (prelim) in Jan, below expectations of 98.4, vs 98.2 final in Dec.

Posted in Economic Data |

U.S. business inventories +0.7% in Nov, above expectations of +0.5%, vs -0.1% dip in Oct.

Posted in Economic Data |

Central-Bank Bashing Has Gold Only Asset Safe From Meddling

Bloomberg/Natasha Doff and Eddie Van Der Walt/01-12-17

Baring Asset Management’s Christopher Mahon has one major conviction about 2017: it will be the year in which central-bank bashing by politicians becomes the new normal, so he’s seeking shelter in gold.

“This year is the turning point,” Mahon said in an interview on Monday. “For seven years or so, central banks have largely escaped critique even though one could argue that their policies have been pretty inadequate in many senses. It’s very plausible now that politicians stand up and throw stones at central bankers.”

PG View: If faith in central banks is further eroded, gold is likely to be buoyed. “It retains its appeal as an asset that once underwrote the monetary system and it can’t be created at will like currencies and bonds,” said Matthew Turner, a Macquarie Group Ltd. economist.

Posted in Gold News, Gold Views |

Gold down from 7-wk high on dollar strength, technical swing

Reuters/Sethuraman N R/01-13-17

Gold fell on Friday after hitting a seven-week peak in the previous session as the dollar edged up and a technical correction set in, but it was still set to end higher for a third straight week.

…several Fed officials on Thursday cautioned that the fiscal and tax plans sketched out by the incoming Trump administration could spur a short-term economic boost that would result in longer-run inflation and debt problems.

Posted in Gold News, Gold Views |

Morning Snapshot: Gold consolidating recent gains

USAGOLD/Peter A. Grant/01-13-17

Gold is consolidating recent gains, trading slightly lower, just below the $1200 level. Even with the setback from yesterday’s 7-week high, the yellow metal is up more than 2% on the week.

December retail sales slightly missed expectations. The miss in retail sales ex-autos was more pronounced. PPI rose in line with expectations in December.

The dollar remains defensive as optimism over the Trump election has cooled somewhat more recently. If the dollar remains under pressure, it will likely provide a tailwind for gold.

Posted in Gold News, Gold Views, Snapshot |

U.S. PPI +0.3% in Dec, in line with expectations, vs +0.4% in Nov; +1.6% y/y. Ex-food/energy +0.2%, also in line; +1.6% y/y.

Posted in Economic Data |

U.S. retail sales +0.6% in Dec, just below expectations of +0.7%, vs +0.2% in Nov; ex-auto +0.2% on expectations of +0.5%.

Posted in Economic Data |

Gold steady at 1197.09 (+0.51). Silver 16.77 (-0.084). Dollar lower. Euro higher. Stocks called better. U.S. 10-year 2.38% (+1 bp).

Posted in Markets |

The Daily Market Report: Gold Trades Above $1200 For First Time Since November

USAGOLD/Peter A. Grant/01-12-17

Gold surged overseas to trade above the 1200 threshold for the first time since late-November. The yellow metal set a new 7-week high at 1206.93 as U.S. yields and the dollar fell and stocks continued to struggle ahead of the 20,000 level.

Risk appetite dwindled in the wake of yesterday’s Trump presser; which was long on protectionist rhetoric and short on fiscal stimulus details. This seems to have led to a repricing of the economic optimism that developed in the wake of the November election.

I posted a couple articles this morning that suggest that gold is actually undervalued, even with the yellow metal up nearly-7% since the mid-December lows that were notched just before the Fed initiated their second 25-bps rate hike in more than a decade.

The article that suggests gold is “cheap” insurance no matter what the Fed does is prescient. The author believes that if more robust economic activity is in the offing, the Fed will likely be behind the curve on inflation. That means that real rates will remain negative, “or at best near zero.” That will bode well for gold.

Alternatively, if the economy falters, the Fed will likely be quick to ease monetary policy in reaction. In fact, the two rate hikes — and almost certainly the first one — were implemented to give the Fed some clearance above the zero-bound should this very thing happen.

[T]he case for gold as insurance and also as a solid long-term investment is as strong as ever. — Olivier Garret

This is a risk that I’ve written about many times over the past several years. “We are in the seventh year of economic expansion. Historically, we are overdue for a broad-based market contraction,” warns Mr. Garret.

In today’s Precious Metals Update from Capital Economics, analyst Simona Gambarini says, “We think that the case for gold as a strategic reserve asset remains strong.” While she is speaking about the official sector, the same can be said for the individual investor.

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

Stock are getting crushed by gold in 2017

MarketWatch/Mark DeCambre/1-12-2017

“Perhaps one of the clearest signs that a rally inspired by President-elect Donald Trump is starting to stall is shiny and yellow and is outperforming other assets by a healthy margin.”

MK note:  Much of the gain thus far has been the result, in my opinion, of short covering, thus the direct effect on the price as determined on the COMEX and in the London over-the-counter market.  Meanwhile, demand is building again in both the West and East.  China is trying to contain imports but all that has done is to attach a high premium to the gold that is coming into the country.  Over the past several days, the steadily rising price in the West has carried over to the East during overnight trading hours – a sign that demand has been strong at the Shanghai Fix.  Shanghai demand is actual, physical demand as explained in detail here.  In the United States, as reported here a couple of days ago, demand as reflected in U.S. Mint bullion coin sales (a bellwether for the overall market) is strong.

Gold is up 4.5% thus far this year and 6.6% from the $1128 December bottom (12/15/16).

Posted in all posts, Author, MK |

Scotia Mocatta: Gold could benefit from asset rotation, value play

Metal Matters/Scotia Mocatta/January, 2017

“Although the prospects for higher interest rates, a stronger dollar and stronger growth (the latter should be good for equities), mean the opportunity costs of holding Gold are increasing, we do think a lot of the potential bullish outlook for growth has already been discounted by the strength of other markets. In addition, higher interest rates, bond yields and a pick – up in inflation run the risk of leading to a longer lasting correction in the  bond market.  As such,there may be some rotation out of bonds. Will investors park the money coming out of bonds in dollar denominated equities? Maybe not, given the already strong dollar and US equities. We would not be surprised if some moved into physical Gold since its prices have now corrected. Given the huge size of the global bond market, it would only take a fraction to rotate into the physical Gold market for it to have a big impact on demand for Gold.”

Posted in all posts |

Gold Is Cheap Insurance No Matter What the Fed Will Do

NewsmaxFinance/Olivier Garret/01-12-17

Years of loose monetary policy—coupled with Trump’s infrastructure, de-regulation, and fiscal plans—could unleash a time of economic expansion which would likely include inflation. Based on the Fed’s past behavior, we expect them to be slow to hike rates and catch up. Real rates may turn negative. It would be very favorable for gold prices.

…Either inflation or negative real rates would definitely be a plus for gold prices.

…we believe real interest rates will remain negative—or at best near zero—in both scenarios. This makes a very strong case for holding gold at current prices.

PG View: This article makes a nice supplement to the previous post. It is not too late to buy gold.

Posted in Gold News, Gold Views |