Monthly Archives: November 2017

Gold easier at 1292.16 (-1.67). Silver 17.21 (-0.10). Dollar lower. Euro higher. Stocks called better, U.S. 10-year 2.35% (+1 bp).

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Posted in Gold Price, Markets, Silver Price |

Gold up today in stellar fashion

LATE REPORT

Gold finished the day in stellar fashion – up $15.41 from yesterday’s close at $1293.87.  It finished the week up $18.52.  Silver also had a good day up 22¢ to finish at $17.27.  It was up 41¢ on the week.  As reported here, the upside push began last evening when it bolted higher in concert with the Japanese yen in Asian trading.  It sustained the upside in Europe early today then bled over to the U.S. market with the strongest part of the move coming in today’s COMEX trading.

Some gave credit to the tax bill, but with gold holding its own in recent weeks despite heavy paper selling, the shorts look like they are beginning to lose heart. Reports of heavy buying in the physical market by Bridgewater [Ray Dalio] might also have given short speculators cause for re-evaluation.  What is he factoring into the gold equation that they are not?

In the background, you have the clampdown in Saudi Arabia on big money players, including asset confiscations. (That had to turn a few heads among the moneyed elite in far-off places.) You also have North Korea back making unsettling assertions about its need to build a nuclear arsenal.  Then there is the small matter this past week of wholesale inflation suddenly registering something other than a faint pulse.

Quote of the Day
“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” – Ernest Hemingway

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Dollar Falls Amid Questions Over Tax Bill’s Chances in Senate


WSJ/Ira Iosebashvili/11-17-17

The dollar fell Friday, as investors continued to weigh whether Republicans can pass a historic tax overhaul.

…GOP lawmakers in the House of Representatives on Thursday passed a bill that would lower corporate taxes to their lowest level since 1939 and cut individual taxes for most households in 2018. The legislation may face a tougher fight in the Senate, however, where at least one Republican has opposed the deal.

Investors might have also turned cautious on the dollar after The Wall Street Journal reported that special counsel Robert Mueller’s team in mid-October issued a subpoena to President Donald Trump’s campaign requesting Russia-related documents.

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Posted in Politics, U.S. Dollar |

The Fed is Poisoning the Market. Here’s the Antidote

WSJ/James Mackintosh/11-16-17

Janet Yellen has two meetings left as chairwoman of the Federal Reserve, and traders think they know exactly what she will do with interest rates. Fed-funds futures peg the chance of a quarter-point hike next month at 97%, with just a 5% chance of a further rise at her swan song in January.

…Central bank openness and the unwillingness of policy makers to surprise investors was a powerful drug in the crisis, but leaks a slow poison into the markets. The result is that investors have piled on bad risks they would otherwise be unwilling to take on. It also degraded the quality of the signals markets send about the economy. Perhaps worst of all for central bankers, the transparency has conspicuously failed in its main job of getting investors to understand the policy process. Their magical aura is wavering, and the danger is the curtain is pulled back to reveal that mere economists control the monetary policy levers.

…Forward guidance menaces markets mainly because it encourages risk taking, over and above that already encouraged by low rates.

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Posted in Central Banks, Fed |

The Daily Market Report: Gold Surges to Approach $1300 For the First Time in a Month


USAGOLD/Peter Grant/11-17-17

Gold is up significantly heading into the weekend. The yellow metal surged to new 4-week highs 1289.50, bolstering expectations for short-term tests back above $1300.

Support is coming from political and geopolitical tensions, which have generated some risk aversion and weighed on both the dollar and stocks. December rate hike expectations have retreated somewhat, but remain above a 90% probability. While this may be seen as a limiting factor on the upside, that rate hike is fully priced and therefore the risk there arguably one-sided toward steady policy.

Gold has sold off into year-end for the past 4-years, premised largely on expectations of Fed tightening (either QE tapering or actual rate hikes). This year — with another rate hike decidedly on the table — gold remains resilient. The yellow metal is a mere 4.7% off the high for the year at 1357.50.

Since that high was set in September, the market has coiled in an increasingly narrow range. Such price action is typically associated with a continuation pattern, favoring eventual breakout in the direction of the trend. That breakout may have commenced today, and the underlying trend is up. We’ll see if we get upside follow-through above the next significant tier of resistance at 1306.04/1308.80 (16-Oct high and 50% retracement of the entire move from 1357.50 to 1260.10).

There are a number of events upcoming that could spur gold higher. October PCE inflation is slated for release on November 30. This is the Fed’s preferred measure of inflation and if there are signs of continued weakness, it could conceivable tank rate hike expectations rather quickly. The December FOMC meeting is December 12-13.

While Congress is very focused on tax reform right now, a budget agreement and some accord on the debt ceiling is going to be needed in early December. As noted in yesterday’s DMR, Congress is on break next week for Thanksgiving and the Christmas recess starts on December 18. There really aren’t many working days left this year and by kicking the budget/debt ceiling can in September.

Hold onto your hats! The remainder of the year could be really interesting.

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

Gold jumps to new 4-week highs above 1289.50, now up more than $14 intraday.

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Posted in Gold News, Gold Price, Gold Views |

North Korea Says Nuclear Weapons Only Option Against ‘Repressive U.S. Imperialists’

Newsweek/John Haltiwanger/11-17-17

North Korea is rejecting calls from China to step away from its nuclear program, claiming such weapons are vital to the security of its people, the Seoul-based Yonhap News Agency reported Friday.

“The conclusion that our army and people have reached via the history of North Korea-U.S. confrontations is there is no way other than standing against the repressive U.S. imperialists only with a nuclear deterrent of justice,” the state-run newspaper Rodong Sinmun wrote in an article…

PG View: Newsweek is also reporting that North Korea is building a ballistic missile submarine. I would imagine the U.S. views the prospect of a North Korean “boomer” lurking off the west coast as completely unacceptable.

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Posted in Geopolitical Risks, North Korea |

Gold gains as dollar dips on uncertainty over Trump tax bill

Reuters/Eric Onstad/11-17-17

Gold rose on Friday as the dollar softened on uncertainty about the progress of what would be the biggest overhaul of U.S. taxes since the 1980s.

…”They’re pricing out Trump’s tax reform once again as a result of those two proposals in Congress that are quite far apart from each other,” said Jonathan Butler, commodities analyst at Mitsubishi in London.

The dollar weakened against a basket of six major currencies and was set for its biggest weekly loss in more than a month.

“There’s also a lot of concern that the equity market rally is possibly becoming a little exhausted for now, and that should be supportive of gold in the short term,” Butler added.

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Posted in Gold News, Gold Price, Gold Views |

Morning Snapshot: Gold Edges Higher Within the Range

USAGOLD/Peter Grant/11-17-17

Gold is up in early U.S. trade, underpinned by escalating political uncertainty and geopolitical tensions. The dollar and stocks remain somewhat defensive as well, providing additional support for the yellow metal.

The Wall Street Journal reported yesterday that more than a dozen Trump campaign officials were issued a subpoena by Special Counsel Robert Mueller last month, requesting documents and emails “that reference a set of Russia-related keywords.” This comes at a time when the Trump administration is trying to shepherd tax reform legislation through Congress, deemed critical to keeping their broader economic agenda on track.

North Korea has reportedly rejected Chinese overtures to give-up their nuclear program. “[T]here is no way other than standing against the repressive U.S. imperialists only with a nuclear deterrent of justice,” declared the state-run newspaper Rodong Sinmun.

U.S. housing starts for October came in much better than expected, surging 13.7% to a 1.290M pace. That’s the extent of the U.S. data today.

It’s worth mentioning that Canadian CPI slowed in October to 1.4% y/y, versus 1.6% in September. Median core CPI slowed to 1.7% y/y, down from 1.8% in September. These inflation data come in the month after the BoC surprised with a 25 bps rate hike in September.

A breach of the high from earlier in the week at 1289.50 is needed to clear the way for renewed probes above $1300. Key resistance is marked by the mid-October high at 1306.04, which is the trigger for a retest of the 1357.30 high for the year.

Meanwhile, the low end of the range is well defined at 1263.00/1260.10. Intervening barriers are at 1269.60 and 1264.70.

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Posted in Gold News, Gold Price, Gold Views, Snapshot |

U.S. housing starts surged 13.7% to 1.290M pace in Oct, well above expectations of 1.186M, vs positive revised 1.135M in Sep.

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Posted in Economic Data |

Gold higher at 1283.16 (+3.66). Silver 17.10 (+0.004). Dollar steady. Euro better. Stocks called mixed. U.S. 10-year 2.37% (-1 bp).

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Posted in Gold Price, Markets, Silver Price |

Gold bolts higher in overnight, Asian trading. . . . .

LATE REPORT

After a quiet day today in Stateside trading, gold is bolting higher in the overnight, Asian market – up about $6 at $1284.  The yen is pushing higher as well, a scenario that raises questions about the yen/gold relationship mentioned in these reports several times over the past few months.  The dollar, in fact, is down across the boards in overnight trading.  Here’s a snapshot on tonight’s trading, i.e., the yen-gold correlation.  There is a reason for the Japanese yen heading North and it’s made an impression on gold.  That reason is not evident at the moment.  We might know more as the evening unfolds.

Quote of the Day
“In a matter of only 2 quarters, Bridgewater has accumulated 3.894 million shares of GLD, which are worth $473M today and 11.3 million IAU shares, which are worth $140M today. Put together, Bridgewater is betting $613M of clients’ money that gold will perform well, and we know the benchmark is 21%, so Mr. [Ray]Dalio has a conservative outlook that gold prices will reach $1,556 by the end of 2018. . .gold has weathered through huge paper smashes that have proven to bears that demand is too strong right now. . . Gold held above its 200-DMA. It’s now trading above its 100-DMA and is on the brink of moving higher than the 50-DMA. ” – Wealth Research Group


If you are looking for a quick snapshot of the day’s events with respect to gold, or if you are attempting to put together an explanation as to why gold is up or down at any given point in time, you would gain from bookmarking our GOLD TODAY! page.  This page is heavily traveled and always has been.  We invite you to take advantage of this service provided by USAGOLD and check back here regularly for our take when the market breaks in one direction or the other.

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The Daily Market Report: Gold Little Changed as Softer Dollar/Firmer Stocks Create Opposing Forces


USAGOLD/Peter Grant/11-16-17

Gold is up slightly within the range. While the dollar remains somewhat defensive, stocks have rebounded, resulting in opposing forces acting on the yellow metal.

The House appears poised to advance their version of tax reform legislation; likely without any support from the minority party. However, some GOP opposition to the Senate bill has emerged. Senator Ron Johnson of Wisconsin has already said he can not vote for the bill and there are a number of other key Republicans that have not committed.

Political uncertainty is likely to remain elevated in the coming weeks as tax legislation either advances or stalls. The key being, whether a bill will reach the President’s desk before year-end.

In the interim, and likely complicating matters, will be the budget discussion and the debt ceiling in early December. That can got kicked back in September, averting a government shutdown and allowing the majority party to focus on tax reform. However, that can may not have been kicked far enough.

The debt ceiling is back in play on December 8, which may provide the Democrats leverage to impact the tax legislation if something doesn’t get to the President before then. Congress is on Thanksgiving break all of next week and the Christmas recess starts on December 18. There really is very little time to get anything done.

Even if tax reform does get done, the long-term implications to the national debt are likely to be significant. Be assured, the debt ceiling will get raised, albeit perhaps not in a timely manner. As the debt continues to rise, servicing costs will continue to rise as well.

This is all coming to a head just as the Fed contemplates another rate hike at the December 12-13 FOMC meeting. The prospects at that time for fiscal stimulus will certainly weigh in the decision making process, as will the long-term debt trajectory.

This all sets the stage for potentially heightened volatility going into the holidays. With gold and silver still well contained and off the highs for the year, now is likely a good time to be boosting your protective hedges.

Precious metals research and consultancy firm GFMS believes gold has “formed a base for a more sustainable move above $1,300 later this year and to rise still further in 2018 as it averages $1,360 and hits a 2018 peak of almost $1,450.” They cite growing equity market risks and continued geopolitical tensions as forces that will likely push the yellow metal higher.

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

U.S. NAHB housing market index rose to 70 in Nov, above expectations, vs 68 in Oct.

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Posted in Economic Data |

Barclays: Commodity AUM Highest Since 2013; Gold Plays Role


KitcoNews/Allen Sykora/11-16-17

Total commodity assets under management (AUM) hit an estimated $305 billion in October, the highest level since 2013, Barclays reports. This has been helped by a year-to-date inflow into exchange-traded products for precious metals. Total commodity AUM are up $40 billion from the end of 2016. “Inflows to the sector reached $13.3 billion in Q3 and $0.4 billion in October, bringing year-to-date investment inflows to roughly $30 billion,” Barclays says.

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Posted in Gold News, Gold Views |

Gold steady as investors weigh U.S. rate moves against fiscal outlook

Reuters/Zandi Shabalala/11-16-17

Gold has traded in a tight range spanning about $24 in November.

ICBC Standard Bank precious metals strategist Tom Kendall said gold was stuck in a range, with the prospect of a rise in U.S. interest rates exerting pressure while uncertainty about the direction of U.S. fiscal policy offered support.

“The two are kind of pushing and pulling on global yields and on the gold price,” he said.

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Posted in Gold News, Gold Price, Gold Views |

Morning Snapshot: Gold Little Changed After Mixed Data, Tax Reform Concerns

USAGOLD/Peter Grant/11-16-17

Gold is up slightly in early New York trading, underpinned by recent softness in the dollar and mounting doubts about the prospects for tax reform legislation. Geopolitical tensions remain elevated as well, providing additional support to the yellow metal.

Senator Ron Johnson of Wisconsin has vowed not to vote for the Senate version of tax reform. “If they can pass it without me, let them,” said Johnson. There are reportedly some other potential defectors as well.

Today’s U.S. data were kind of a mixed bag. Industrial production for October was better than expected. The Philly Fed index sunk more than expected. Initial jobless claims jumped by 10k. Import and export prices were weaker than expected, dealing perhaps another blow to hopes that inflation is picking up.

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Posted in all posts, Gold News, Gold Price, Gold Views, Snapshot |

U.S. industrial production +0.9% in Oct, above expectations of +0.5%, vs positive revised +0.4% in Sep; cap use to rises to 77%.

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Posted in Economic Data |

Philly Fed index fell to 22.7 in Nov, below expectations of 24.1, vs 27.9 in Oct.

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Posted in Economic Data |

U.S. import prices +0.2% in Oct, below expectations of + 0.4%, vs upward revised +0.8% in Sep. Export prices unch, below expectations of +0.5%, vs negative revised +0.7% in Sep.

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Posted in Economic Data |

U.S. initial jobless claims +10k to 249k in the week ended 11-Nov, above expectations of 234k.

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Posted in Economic Data |

Gold steady at 1280.28 (+0.72). Silver 17.11 (+0.078). Dollar steady. Euro easier. Stocks called higher. U.S. 10-year 2.35% (+3 bps).

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Posted in Gold Price, Markets, Silver Price |

Top Central Bankers Defend Stimulus Efforts

WSJ/Tom Fairless/11-14-17

The heads of four of the world’s most important central banks defended their sweeping crisis-fighting measures in a rare joint appearance, and discussed how words themselves have become a vital policy tool.

The leaders of the Federal Reserve, European Central Bank, Bank of Japan and Bank of England—whose terms all end in the next two years—have relied heavily on verbal communication in recent years as their policy decisions have grown more complex.

…The Bank of Japan has been at the core of efforts to shake off a cycle of weak inflation and growth. BOJ governor Haruhiko Kuroda defended his track record on Tuesday, including a controversial decision in 2016 to push interest rates below zero. The bank’s “strong commitment did work to some extent,” he said.

PG View: Hey it’s working “to some extent” in Japan, but at what cost? The BoJ’s balance sheet is darn-near 100% of GDP!

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Posted in Central Banks, Monetary Policy, QE |

The Daily Market Report: Gold Softens After Reaching 4-Week Highs in Earlier Trade


USAGOLD/Peter Grant/11-15-17

Gold is down modestly midday, but only after setting fresh 4-week highs above 1288.70. After retail sales and CPI came out, the dollar index rose from corresponding 4-week lows, knocking the yellow metal back into the range.

The uptick in core CPI inflation to a 1.8% annualized pace has pushed December rate hike expectations back north of 96%. As I mentioned in the Morning Snapshot, it was the first uptick since January. I would suggest that one uptick does not mean the trend in inflation is now up, but the Fed is pretty desperate for a victory on the policy front.

Risk aversion is also helping to underpin gold, driven by yet another escalation in the rhetoric between the U.S. and North Korea, a Venezuelan default and now an apparent coup in Zimbabwe.

The House has perhaps further complicated the reconciliation process for tax reform legislation with the late addition of language that repeals the Obamacare individual mandate. Getting the legislation across the finish line and to the President’s desk by year end may now be even more difficult.

The Trump administration needs this legislative victory to keep hope alive for their broader pro-business, reflation agenda. Whether they can do that without blowing up the deficit in the process remains to be seen.

That’s something that the Fed should take into consideration come the December FOMC meeting. Further complicating matters will be the reinstatement of the debt ceiling on December 8, just several days prior to the FOMC meeting.

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

Venezuela Goes Bust

WSJ/The Editorial Board/11-14-17

On Monday Caracas missed interest payments due on two government bonds and one bond issued by the state-owned oil monopoly known by its Spanish initials PdVSA. Venezuela owed creditors $280 million, which it couldn’t manage even after a 30-day grace period.

Venezuela is broke, which takes some doing. For much of the second half of the 20th century, a gusher of oil exports made dollars abundant in Venezuela and the country imported the finest of everything. There were rough patches in the 1980s and 1990s, but by 2001 Venezuela was the richest country in South America.

PG View: As the editorial board points out, any hope for restructuring Venezuela’s debts is very much dependent on the economy returning to growth. That is going to be very difficult if the government of President Maduro continues to cling to socialism.

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Posted in Debt, Economy |

Gold has retraced earlier gains as the dollar index recovers from 4-week lows.

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Posted in Gold News, Gold Price, Gold Views, U.S. Dollar |

Gold rises for third day after U.S. inflation data


Reuters/Peter Hobson/11-15-17

Gold prices rose for a third day on Wednesday as the dollar weakened and U.S. bond yields fell despite solid U.S. economic data that reinforced expectations that the Federal Reserve will press ahead with increases to U.S. interest rates.

…the outlook for U.S. tax cuts that could stimulate economic growth was clouded after U.S. Senate Republicans created new political obstacles by linking the repeal of a key component of Obamacare to the tax reform plans.

“The biggest factor right now shoring up gold is the weaker dollar,” said Robin Bhar, head of metals research at Societe Generale.

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Posted in Gold News, Gold Price, Gold Views |

Zimbabwe’s Mugabe ‘under house arrest’ after army takeover

BBC/11-15-17

Zimbabwe’s military has placed President Robert Mugabe under house arrest in the capital Harare, South African President Jacob Zuma says.

Mr Mugabe told Mr Zuma in a phone call that he was fine, the South African leader’s office said.

Troops are patrolling the capital, Harare, after they seized state TV and said they were targeting “criminals”.

The move may be a bid to replace Mr Mugabe with his sacked deputy, Emmerson Mnangagwa, BBC correspondents say.

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Posted in Geopolitical Risks |

Morning Snapshot: Gold Hits 4-Week Highs, Remains Firm After Today’s Data

USAGOLD/Peter Grant/11-15-17

Gold is up, reaching new 4-week highs above 1288.70. The yellow metal was being buoyed by a weaker dollar and risk aversion going into this morning’s data, and is sustaining those gains post-data.

Geopolitical tensions remain high, with an apparent coup in Zimbabwe adding to the risk-off mindset.

U.S. CPI for October came in pretty much in line with expectations. Headline CPI slowed to a 2.0% annual pace, down from 2.1% in September. Core CPI on the other hand accelerated to 1.8% y/y, versus 1.7% in September. It was the first uptick since January.

That may keep December rate hike expectations elevated, but one uptick in 9-months does not a trend make. I don’t think it will be enough to sway the more dovish members of the Fed that are leaning toward keeping policy on pause through year-end.

U.S. retail sales rose 0.2% in October, above expectations of +0.1%. However, ex-auto rose just 0.1% on expectations of +0.3%. September was revised higher in both instances, but it appears that hurricane distortions are fading.

While gold remains confined to the range that has dominated for the last month, upticks in more recent weeks bode well for renewed tests above $1300. A breach of resistance at 1306.04 (16-Oct high) is still needed to return attention to the high for the year at 1357.50 (08-Sep high).

The bottom of the range at 1263.00/1260.10. This level was reinforced by unsustained tests of the downside earlier in the week. Yesterday’s low at 1269.60 now provides a good intervening barrier.

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Posted in Gold News, Gold Price, Gold Views, Snapshot |

NY Empire State index tumbled to 19.4 in Nov, below expectations of 25.4, vs 30.2 in Oct.

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Posted in Economic Data |