U.S. Consumer Credit Ballooned in March at Fastest Pace Since 2001

06-May (WSJ, via NASDAQ) — Borrowing by U.S. consumers ballooned in March at the fastest pace in more than a decade.

Outstanding consumer credit, a measure of non-real estate debt, rose by a seasonally adjusted $29.67 billion in March from the prior month, the Federal Reserve said Friday. The 10.0% seasonally adjusted annual growth rate was the fastest growth pace since November 2001.

Consumer credit rose at a 4.78% pace in February, revised down from an earlier estimate.

Revolving credit outstanding, mostly credit cards, increased at a 14.16% annual pace in March, the fastest pace since July 2000. Revolving credit rose at a revised rate of 3.72% in February.

Nonrevolving credit outstanding, including student and auto loans, increased at a 8.50% annual pace in March compared with February’s revised 5.17% growth rate.

The sharp increase in consumer borrowing follows months of modest economic growth. While the economy has been producing jobs at a healthy pace, overall economic activity has slowed.

[source]

PG View: A huge surge in consumer credit in March, and yet, Q1 GDP was a mere 0.5% . . . What happened?

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Posted in Debt |

U.S. consumer credit surged $29.7 bln in Mar, nearly twice expectations of +$15.7 bln, vs downward revised $14.1 bln in Feb. That’s the biggest rise in series history.

Posted in all posts, Economic Data |

Week in Review (Video) – May 6, 2016

06-May (USAGOLD) — Unfortunately we experienced some technical difficulties in filming the Week in Review Video this morning.

We’ll catch up with you next week.

Jonathan and Pete

Posted in USAGOLD |

The Daily Market Report: Gold Jumps on Weak U.S. Jobs, Fading Rate Hike Prospects


06-May (USAGOLD) — Gold jumped back into the high end of the recent range, boosted by a weaker than expected April jobs report. With a June rate hike pretty much off the table now, the stage may be set for the uptrend in gold to resume after the past week of consolidation.

U.S. nonfarm payrolls for April came in at +160k, well below expectations of +208k. That was the weakest gain since last September. The unemployment rate remained at 5.0%, where a downtick back to 4.9% was expected.

Perhaps more concerning is the potential reversal in recent U.S. labor force growth. The labor force participation rate fell by 0.2% to 62.8%. The number of Americans not in the work force surged by 562k to just above 94 million, back within striking distance of the record high of 94.6 million.

If anyone still thinks the Fed is going to raise rates in June, this should settle the issue. “If June is on table it’s June 2017,” said Brean Capital’s Peter Tchir.

The CME’s FedWatch tool reacted accordingly, with odds for a June hike tumbling to 4% in the moments following the NFP report. While the odds improved somewhat in subsequent trading, they remain below 10%, which pretty much means the Fed can’t tighten.

The dollar and stocks have been surprisingly resilient in the wake of the NFP miss, which are probably the only things keeping gold below $1300. However, as we eluded to earlier in the week, the gold market seemed to be consolidating recent gains. The dominant trend is pretty clearly positive.

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

One Of Richard Russell’s last and most amazing predictions is now unfolding

King World News/5-3-2016

“I’m afraid that we’re in the early stages of a primary bear market. Each bear market has its method of attack…Bear markets are sneaky beasts and they like to do their damage as secretly and as unobtrusively as possible. I hate to say it but somewhere ahead, the bears going to get it all together and the innocent little stream is going to turn into a waterfall.

What can you do about it? Stay out of the market? Protect yourself by remaining in pure wealth, gold. For thousands of years, silver and gold have been treated as pure wealth. As the standard measures of wealth (stocks and bonds) have deteriorated, veteran investors have forgone profits and moved their assets into pure wealth.”

MK note:  King World News goes on to call Richard Russell “the greatest financial writer in history.” Russell himself might have blanched at being accorded such high praise, though I would have to say that he ranks right up there near the top.  I know I miss him and his practical, common-sense approach to the markets.  I find myself wondering what the great one, as many thought of him, might have said about the Trump phenomena, negative interest rates, the Fed’s inability to kick-start this economy, et al.  . . . . . .The King World News article is well-worth the quick visit.

Posted in all posts, Author, MK |

Why the jobs report could spur ‘the next bull market in gold’

CNBC/Alex Rosenberg/5-6-2016

“Based on what the April number indicates about the Fed’s policy path, ‘the next bull market in gold is starting,’ predicted RJO Futures senior market strategist Phillip Streible.”

Posted in all posts |

The global economy is like the Titanic – about to sink ‘below the icy waves’

Business Insider/Will Martin/5-5-2016

“The dollar’s recent rapid slide has been accompanied by a constant backdrop of dovish cooing from the Fed. Until this week, both equity and commodity markets had embraced the weak dollar as the elixir to solve all their ills. That relief has now proved fleeting as fear of weak economic activity has reasserted its influence on investors. The weak dollar should be seen as merely a shuffling of deckchairs on the Titanic before the global economy sinks below the icy waves.

–– Albert Edwards, Society Gernerale, economist

MK note:  Who knows if we are going to experience anything quite so titanic as Mr. Edwards suggests.  Let’s just call his assessment a worst case scenario and leave it at that.  Though I do not see the dollar index-gold as the be-all, end-all correlation, the relationship of late is apparent as you can see directly below. (The dollar and gold can rise together, for example, in times of global turmoil when both are viewed as safe havens.)

At the moment, the markets believe that the Fed is acting against the dollar with respect to its safe-haven status, in fact, doing what it can to undermine that thesis with its dovish cooing, as Edwards refers to it, make that ultra-dovish cooing.  Reports like today’s employment numbers will likely send the Fed into a fit of cooing – at least for the interim.

dollarindex-gold

Posted in all posts, Author, MK |

Today’s Shanghai and London Benchmarks

London PM benchmark: $1,289.00

Shanghai PM benchmark: $1,279.53 (8,320.80 yuan/oz; 267.52 yuan/gram)

China yuan exchange rate at time of Shanghai fix = 6.5030/$1

We will be posting the London and Shanghai benchmarks daily here at our Live Daily Newsletter page.

Comment: Both gold and the yuan were pretty steady into the Shanghai fix. However, weak jobs data in the U.S. prompted a rally in gold ahead of the London fix.

starFor an introduction on the possible effects of the new Shanghai Fix on the overall gold market, please see “Will the Shanghai Fix “fix” the gold market?”. Also, if you are looking to gain an in-depth understanding on how China might influence the gold market now and in the future, please see “The China Syndrome”.

American Eagle gold and silver bullion coinsReader note: Worried about the negligible return on your savings? The speculative risks in the stock and bond markets? The possibility of negative rates? Perhaps a hedge in gold and silver makes sense in your long-term investment plan. We invite your call to discuss the right portfolio mix for you. We have helped thousands hedge the on-going financial crisis. We can help you.

ORDER DESK
1-800-869-5115
Ext#100

 

Posted in Gold News |

Gold Rallies In Aftermath Of Downbeat U.S. Jobs Report


06-May (Kitco News, via Forbes) – Gold prices are solidly higher in early U.S. trading Friday, in the aftermath of a U.S. employment report that did not meet market expectations. June Comex gold futures were last up $20.80 an ounce at $1,293.30. July Comex silver was last up $0.158 at $17.48 an ounce.

The U.S. jobs report for April from the Labor Department showed the key non-farm payrolls number up 160,000. The consensus forecast was for a rise of 205,000. Gold prices popped on the report, with U.S. bonds and notes prices also popping and U.S. stock indexes weakening a bit. The report falls into the camp of the U.S. monetary policy doves who do not want to see the Federal Reserve raise interest rates any time soon. Today’s jobs report probably nixes any FOMC rate hike at the June meeting.

Wednesday’s weak ADP jobs number (up 156,000) had called into question whether the Friday jobs number could meet expectations.

[source]

Posted in Gold News, Gold Views |

U.S. payrolls gain in April smallest in seven months

06-May (Reuters) — The U.S. economy added the fewest number of jobs in seven months in April and Americans dropped out of the labor force in droves, signs of weakness that cast doubts on whether the Federal Reserve will raise interest rates before the end of the year.

Nonfarm payrolls increased by 160,000 jobs last month as construction employment barely rose and the retail sector shed jobs, the Labor Department said on Friday.

That was the smallest gain since September and below the first-quarter average job growth of 200,000.

Employers added 19,000 fewer jobs in February and March than previously reported. While the unemployment rate held at 5.0 percent that was because people dropped out of the labor force.

Economists polled by Reuters had forecast payrolls rising 202,000 last month and the jobless rate unchanged at 5 percent.

[source]

Posted in Economic Data |

Jobs report doesn’t help the cause for a June hike

By Jon Hilsenrath
06-May (WSJ) — The jobs report will keep the Fed in standby mode as it considers whether and when to push short-term interest rates higher again.

Officials in recent days have warned a June rate increase is possible if the economy regains momentum after a slow first quarter. But last month’s downshift undermines that argument. A downtick in labor-force participation does as well. Still, today’s data have some silver linings, including the increase in average hourly earnings.

Fed officials are looking for signs of wage increases as slack in the labor market diminishes. Taken altogether, the report doesn’t eliminate the possibility of a June increase, but new rounds of data on consumption, inflation and hiring will need to show improvement to build conviction in the central bank. Later action now looks more likely.

[source]

PG View: Odds for a June hike tumbled to 4% on the heels of the jobs report based on Fed funds futures, down from 13% yesterday. I’m not out on much of a limb in declaring the Fed is not going to tighten in June . . .

Posted in Central Banks, Economic Data, Monetary Policy |

Gold surges on NFP miss, presently trading 1291.36 (+13.95).

Posted in Gold News |

U.S. nonfarm payrolls +160k in Apr, below expectations of +208k, vs negative revised 208k in Mar; jobless rate held at 5.0%, on expectations of 4.9%.

Posted in Economic Data |

Gold better at 1280.26 (+2.60). Silver 17.35 (-0.051). Dollar lower. Euro higher. Stocks called lower. U.S. 10yr 1.74% (-1 bp).

Posted in Markets |

2016 GFMS World Silver Survey shows strong growth in silver coin and bar demand

silvercoinbardemandgfmsMK note: GFMS released its 2016 World Silver Survey this morning and for the most part verified trends we have talked about here at USAGOLD for the past few years.  In reviewing the supply-demand table, though, the data set that  jumps out at you is the growth in coin and bar demand – the proxy for private investment demand.  All the other data sets on both sides of the fundamentals’ table are rather mundane, but not silver coin and bar demand.

In my view, that growth represents an important and deep-seated change in investor psychology with respect to silver that began just after the 2008 financial crisis.  Now it is seen by many private investors as the junior partner to gold and purchased for the same reasons – more as portfolio insurance than a vehicle for speculative gain.  It doesn’t hurt too that silver has a history of rising faster than gold in times of economic stress.  (It also has a history of dropping faster on corrections, it should be added.)  Keep in mind that a good many investors believe that we never exited the crisis launched in 2008, hence the ascent to high levels of demand from which the data has never retreated.

GFMS World Silver Survey 2016 (Download window)

Posted in all posts, Author, MK |

The Daily Market Report: Gold Remains Corrective/Consolidative Ahead of Jobs Report


05-May (USAGOLD) — Gold remains choppy at the high end of the recent range. While the yellow metal has been unable to sustain probes above $1300 thus far, downticks appear to be corrective in nature.

Gains in the dollar index over the last three sessions appear to be corrective as well, although the trend in the greenback is not quite as clear. The DX has fallen about 8.5% from the late-2015 peak at 100.51.

Gold on the other hand is pretty clearly in a bull market. Even with the recent modest setback, the yellow metal is up nearly 22% from the December low of $1046. That gold was able to mount such a rally, even in the face of a still relatively strong dollar, is encouraging.

Gold demand remains pretty robust. The U.S. Mint reported that they sold 105,500 ounces of gold eagles in April. That’s an increase of 177% over the 38,000 ounces sold in March. As we noted in yesterday’s DMR, GLD saw inflows of 20.8 metric tons of inflows just on Monday.

The market may just be reluctant to press the attack on the upside ahead of tomorrow’s April jobs report. Median expectations for nonfarm payrolls is +208k, although there may be some downside risk. The April ADP employment survey released yesterday came in at +156k, below expectations of +200k. March was revised lower to +194k, from +200k.

A downside miss on NFP would end the silly talk about the June FOMC meeting being “live.” With Fed funds futures putting the odds of a hike at just 13% . . . that ship has sailed.

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

Today’s Shanghai and London Benchmarks

London PM benchmark: $1,280.25

Shanghai PM benchmark: $1,281.94 (8,334.80 yuan/oz; 267.97 yuan/gram)

China yuan exchange rate at time of Shanghai fix = 6.5017/$1

We will be posting the London and Shanghai benchmarks daily here at our Live Daily Newsletter page.

Comment: Yuan weakened somewhat, pushing the USD-CNY rate to a 5-week high of 6.5085. The Shanghai fix was ever so slightly lower than Wednesday’s fix. Gold retreated into the London fix and extended lower in the minutes afterward.

starFor an introduction on the possible effects of the new Shanghai Fix on the overall gold market, please see “Will the Shanghai Fix “fix” the gold market?”. Also, if you are looking to gain an in-depth understanding on how China might influence the gold market now and in the future, please see “The China Syndrome”.

American Eagle gold and silver bullion coinsReader note: Worried about the negligible return on your savings? The speculative risks in the stock and bond markets? The possibility of negative rates? Perhaps a hedge in gold and silver makes sense in your long-term investment plan. We invite your call to discuss the right portfolio mix for you. We have helped thousands hedge the on-going financial crisis. We can help you.

ORDER DESK
1-800-869-5115
Ext#100

 

Posted in Gold News |

Gold Rebounds On Bargain Hunting Following Recent Pressure

05-May (Kitco News) – Gold prices are higher in early U.S. trading Thursday, on a “buy the dip” bounce following the recent profit-taking selling pressure. Gold bulls are encouraged today as their precious metal is higher even as the U.S. dollar index also trades higher. June Comex gold futures were last up $7.80 an ounce at $1,282.40. July Comex silver was last up $0.249 at $17.545 an ounce.

Global stock markets were mostly higher Thursday, as crude oil prices rebounded smartly from losses seen earlier this week. Japan’s markets remained closed for a public holiday. U.S. stock indexes are pointed toward higher openings when the day session begins in New York.

The key “outside markets” on Thursday find the U.S. dollar index again higher on more short covering and bargain hunting after prices hit an eight-month low on Tuesday. If the greenback can post a weekly high close on Friday that would be an early clue that the dollar index has put in a near-term bottom. The rebound in the dollar index has put some selling pressure into raw commodity markets. Meantime, Nymex crude oil prices are solidly higher in early U.S. trading Thursday and hovering just above $45.00 a barrel. As goes crude oil, so, too, will likely go the raw commodity sector.

[source]

Posted in Gold News, Gold Views |

Druckenmiller: Get out of the stock market, own gold


04-May (CNBC) — Legendary billionaire investor Stanley Druckenmiller told Sohn Investment Conference attendees to sell their equity holdings Wednesday.

“The conference wants a specific recommendation from me. I guess ‘Get out of the stock market’ isn’t clear enough,” said Druckenmiller from the conference stage in New York. Gold “remains our largest currency allocation.”

The billionaire investor expressed skepticism about the current investment environment due to Federal Reserve’s easy monetary policy and a slowing Chinese economy.

“The Fed has borrowed from future consumption more than ever before. It is the least data dependent Fed in history. This is is the longest deviation from historical norms in terms of Fed dovishness than I have ever seen in my career,” Druckenmiller said. “This kind of myopia causes reckless behavior.”

[source]

Posted in Gold News, Gold Views |

ECB ends production and issuance of €500 banknote

04-May (ECB-Eurosystem) — Today the Governing Council of the European Central Bank (ECB) concluded a review of the denominational structure of the Europa series. It has decided to permanently stop producing the €500 banknote and to exclude it from the Europa series, taking into account concerns that this banknote could facilitate illicit activities. The issuance of the €500 will be stopped around the end of 2018, when the €100 and €200 banknotes of the Europa series are planned to be introduced. The other denominations – from €5 to €200 – will remain in place.

[source]

PG View: This move was telegraphed by the ECB. While the removal of large notes will make it harder for criminals to operate anonymously, it makes it harder to conduct legal business anonymously as well, or simply have some cash outside the banking system. Fortunately, you can still accomplish that with gold.

Posted in Central Banks |

U.S. initial jobless claims +17k to 274k in the week ended 30-Apr, above expectations of 256k.

Posted in Economic Data |

Gold steady at 1282.46 (-0.73). Silver 17.54 (+0.078). Dollar higher. Euro lower. Stocks called higher. U.S. 10yr 1.80% (+2 bps).

Posted in Markets |

Gold falls further away from 15-month high as dollar climbs

04-May (Reuters) — Gold fell 1 percent on Wednesday, falling further away from a 15-month high on pressure from the strong U.S. dollar, which retreated from recent lows against the yen and euro as U.S. trade and factory order data eased some worries.

Spot gold was down 1 percent at $1,272.66 an ounce at 2:29 p.m. EDT (1829 GMT), extending losses below Monday’s 15-month high above $1,300.

The U.S. futures contract for June delivery settled down 1.3 percent at $1,274.40 an ounce.

“It’s a lot of dollar strength,” said Anthem Blanchard, chief executive of Anthem Vault, precious metals dealer in Austin, Texas.

“You have people running to Treasuries because of Fed speak. We’re not really sure what the Fed is intending to do.”

[source]

PG View: Losses were tempered somewhat late in the day, as dips continue to be viewed as buying opportunities.

I don’t think the Fed itself really knows what it intends to do . . .

Posted in Gold News, Gold Views |

U.S. National Debt $19,171,815,928,698.82

Posted in Debt |

The Daily Market Report: Gold Remains Mildly Corrective, But the Trend is Up


04-May (USAGOLD) — Gold is maintaining a mildly corrective stance, dipping to new lows on the week in overseas trading before rebounding within the day’s range. A second day of dollar gains may be temporarily impeding a sustained move in the yellow metal above $1300.

However, the tepid growth, low/no inflation, and hence easy monetary policy scenario continues to dominate. As growth and inflation prospects erode, the world’s central banks are forced to pile on ever-more extraordinary accommodations in an effort to stop the bleeding; even though there seems to be no evidence that these measures are achieving their goals.

“These increasingly aggressive and counterproductive monetary policies are bullish for gold,” says Greenlight Capital’s David Einhorn. I concur: These factors are likely to underpin gold until we see some sign of reinvigorating growth, or higher inflation. What’s interesting, is that if the inflation goals are met, that too should be favorable for gold.

Another tailwind for the gold market continues to be central bank gold demand. China and Russia are the main actors at this point, but other central banks have been active as well. Famed economist Kenneth Rogoff recommended this week that emerging market countries step up their gold purchases even more.

“I am just proposing that emerging markets shift a significant share of the trillions of dollars in foreign-currency reserves that they now hold (China alone has official reserves of $3.3 trillion) into gold.” — Kenneth Rogoff

Rogoff believes “there is a good case to be made that a shift in emerging markets toward accumulating gold would help the international financial system function more smoothly and benefit everyone.” He seems to believe that emerging countries would benefit from the the reserve diversification and being less dependent on the bonds of rich countries, which happen to (surprise, surprise!) own a lot of gold!

“…there is a case to be made that gold is an extremely low-risk asset with average real returns comparable to very short-term debt. And, because gold is a highly liquid asset – a key criterion for a reserve asset – central banks can afford to look past its short-term volatility to longer-run average returns.” — Kenneth Rogoff

As Rogoff points out, emerging countries have trillions in FX reserves. Imagine the demand implications if these countries start shifting their reserve allocations even a little!

In addition, most of the physcial gold making its way to places east in recent years has been coming from London. The source is logically believed to be the ETPs backed by gold, which saw significant outflows as the price of gold was under pressure in recent years. Suddenly, with the price of gold back on the rise, there is renewed interest in these securities indexed to the price of gold.

Just this past Monday, GLD, the world’s largest exchange-traded fund backed by gold, saw 20.8 metric tons of inflows. It was the biggest one-day expansion since 2011.

If other emerging countries do indeed join China and Russia in bolstering their gold reserves, they may find that their primary source for physical is no longer available. That too would likely have a very positive impact on price.

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

Today’s Shanghai and London Benchmarks

London PM benchmark: $1,283.00

Shanghai PM benchmark: $1,282.81 (8,336.35 yuan/oz; 268.02 yuan/gram)

China yuan exchange rate at time of Shanghai fix = 6.4725/$1

We will be posting the London and Shanghai benchmarks daily here at our Live Daily Newsletter page.

Comment: Gold edged higher into the Shanghai fix, but the upside was limited by a weaker yuan today and gold fell to a new low for the week in subsequent trading. After gold rebounded in Europe, the yellow metal then retreated into the London fix, resulting in a fix modestly higher than the Shanghai benchmark.

starFor an introduction on the possible effects of the new Shanghai Fix on the overall gold market, please see “Will the Shanghai Fix “fix” the gold market?”. Also, if you are looking to gain an in-depth understanding on how China might influence the gold market now and in the future, please see “The China Syndrome”.

American Eagle gold and silver bullion coinsReader note: Worried about the negligible return on your savings? The speculative risks in the stock and bond markets? The possibility of negative rates? Perhaps a hedge in gold and silver makes sense in your long-term investment plan. We invite your call to discuss the right portfolio mix for you. We have helped thousands hedge the on-going financial crisis. We can help you.

ORDER DESK
1-800-869-5115
Ext#100

 

Posted in Gold News |

Gold slips further from 15-month peak as dollar steadies

04-May (Reuters) — Gold fell further from this week’s 15-month high on Wednesday as the dollar steadied after a slide to its lowest in over a year, with some investors cashing in gains after the metal failed to establish a foothold above $1,300 an ounce.

The metal has risen more than 20 percent this year as expectations faded that the Federal Reserve would push ahead with U.S. interest rate hikes.

It rallied sharply last week as the dollar slumped versus the yen, hitting its highest since January 2015 on Monday at $1,303.60 an ounce, but has struggled to maintain those gains.

[source]

PG View: The overseas losses have pretty much been retraced at this point, leaving gold essentially unchanged on the day.

Posted in Gold News, Gold Views |

Gold steady at 1287.22 (+0.22). Silver 17.38 (-0.077). Dollar easier. Euro steady. Stocks called lower. U.S. 10yr 1.78% (-2 bps).

Posted in Markets |

Gartman says gold is in a true bull market—and on its way to $1,500

CNBC/Stephanie Landsman/5-3-2016 (VIDEO)

“Gold has enjoyed a spectacular beginning to 2016, and one widely followed commodities expert believes the metal could be on the verge of going much, much higher. ‘I think it’s still a bull market,’ said Dennis Gartman, editor of The Gartman Letter, Monday on CNBC’s Fast Money.  He predicts gold could finish out the year 10 to 15 percent above current levels. With gold hitting a 15-month high Monday and breaching $1,300, that would represent a price as high as nearly $1,500.”

MK note:  This video is worth watching in that Gartman establishes a logical, basic framework for gold going forward.

Posted in all posts |

Investors boost gold assets in world’s top ETF by most since 2011

The Business Times-Bloomberg/5-4-2016

“Investors are piling back into gold, and they’re coming in droves. Holdings in SPDR Gold Shares, the world’s largest exchange-traded fund backed by gold, surged 20.8 metric tons on Monday, the biggest one-day expansion since 2011, data compiled by Bloomberg show. About US$7.1 billion in new money poured into SPDR Gold this year, the most of any ETF tracked by Bloomberg around the world, as holdings soared to the highest since 2013.”

MK note:  As noted in the April issue of our monthly newsletter, hedge funds and other institutional capital is making its way to the gold and silver markets and most of that is entering the market through ETFs.  The primary impetus is the very-low-to-negative interest rate environment. Though ownership of an ETF constitutes essentially ownership of paper gold for the average investor because of the complicated and burdensome delivery procedures, it remains the primary investment vehicle for hedge funds and other institutions that do not plan to take delivery. Individual investors usually opt for direct coin and bullion ownership wherein the metal is delivered to the owners’ safekeeping.

Posted in all posts |