Monthly Archives: December 2017

Happy New Year

Wishing all a happy, prosperous and healthy 2018!
from the staff at USAGOLD

 

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Solid uptrend ends day, week, month, year on positive note

LATE REPORT

Gold finished the day, the week, the month and the year solidly in positive territory.

On the day, it was up $8.12 or .6%
On the week, it was up $28.35 or 1.02 %
On the  month, it was up $28.16 or 1.02%
And. . . last but not least, on the year it was up $152.00 or 13.2%.

Closing price:  $1302.90

Silver also finished the day, the week, the month and the year in positive territory, but not quite as spectacularly as did gold.

On the day, it was up 7¢ or .4%
On the week, it was up 55¢ or 3.4%
On the  month, it was up 54¢ or 3.2%
And. . . on the year, it was up $152.00 or 6.4%.

Closing price:  $16.92

For gold, it was the best year since 2011, the second straight year of posting gains and one that evolved despite a strong stock market, the constant threat of rising interest rates and, rightly or wrongly, an optimistic start to the Trump administration in terms of business and finance.

Quote of the Day
“Large speculators have made a record shift in their positioning for the last two weeks. In the latest week, they reduced their net longs by 66,000 contracts after a reduction of ~51,000 contracts the previous week. This group of traders is usually considered trend-followers. The extreme positing by this group may provide a clue to a changing trend.  In contrast to speculators, commercial traders and bullion banks have reduced their net short positions in gold. This group of traders is usually referred to as smart money. When this category hits the bottom in short interest, prices usually rise. It has been hailed as an indicator that gold prices could have an advantage as we enter 2018.” – Annie Gilroy, Market Realist


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Gold cracks $1300 barrier, trading at $1305; silver cracks $17 barrier at $17.04

Rally brightens year-end for precious metals holders.  Onward to January. . . .and 2018!

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Star over gold market shines brightly as we near year-end

LATE REPORT

Gold closed up today for the fourth straight trading session at $1286.87 (+$4.12). Silver closed at $16.67 (+16¢).  In our last report before the holidays, we included this reference:

“In the December issue of News & Views, we pointed up the ghosts of Decembers past.  “In each of those years (2013 through 2016) December began poorly,” we wrote, “but appropriately by Christmas-time things began to look brighter. By the end of January in the following year, the star over the gold market shone still more brightly. . . ”  As of today, gold is up $23.43 from its December 11th low of $1241.90.  Silver is up 47¢ from its December 11 low of $15.69. It’s just five days ’til Christmas. . . . . .”

On that day (12/20/17) gold was trading in the vicinity of $1265 per ounce and silver was at $16.16.  So as the tally stands today, gold is up a robust $45 from the December 11th low and silver is up nearly $1.00. All in all, it’s been quite a seven-day run, Christmas-time has been made considerably brighter, and we go into the end of the year on an optimistic note.  Come January, we shall see if the star over the gold market will shine even more brightly, as it has the last two years.

Quote of the Day
“The very strong up-move of gold and silver in 2018 will take the investment world by surprise. Investors must pay heed and not be left behind.” – Egon von Greyerz, Matterhorn Asset Management, AG

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The Great Recession 10 years later: Lessons we still have to learn

Robert F. Bruner/The Hill/12-26-2017

“My studies of the 17 major financial crises since the founding of the Republic reveal that over-optimism is an important driver of the bubbles that eventually become busts. As the legendary investor, Sir John Templeton, once said, “The four most dangerous words in investing are ‘This time is different.’” Such was the mindset that real estate prices could only rise (2008), dot-com companies would forever grow and be profitable (2001), or that the Russian government would never default (1998). “

MK note:  If Bruner is right about over-optimism driving bubbles that become busts, we might be in for a doozy. . . .The quotes from George W. Bush and Ben Bernanke are worth the visit to the article linked above, not to speak of the timely warning the author, a professor at the University of Virginia, conveys.  Short of the political culture of prudence he recommends, a diversification with some gold and silver for the ordinary citizen might be the more direct and pragmatic choice.

 

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Swiss gold exports – mainland China top dog again

Lawrie Williams/Sharps-Pixley/12-22-2017

“The gold flows too should be significant in the context of the global gold price. Eastern hands tend to be firmer than Western ones – holders tend to hang on to their gold and not trade it. They see it as a true store of wealth, mostly only drawing on it in necessity rather than when the price rises by a few dollars. China for example, imports gold, but by law does not export it. Over time this has to have an impact on supply availability, particularly given that, if anything, peak gold has been reached in terms of production and global new mined gold output is beginning to turn down, albeit very slowly at first.”

MK note:  We’ve kind of left the China gold story on the back burner of late because there have not been any really new developments.  That doesn’t mean the importance of their involvement in the gold market has diminished over the past several months.  The London-Zurich-Hong Kong-Shanghai pipeline still has the valves wide open with the flow of gold from West to East as strong as ever.  Anyone who thinks that thousands of years of Chinese history with respect to its attachment to gold will be overturned anytime soon is simply dreaming, and the point made at the end of Lawrie Williams quote above is worth remembering:  China imports gold, but does not export.

 

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Gold prices are hot again on fears of rampant inflation and exploding debt

The Street/Brian Sozzi/12-27-2017

“Investors are giving gold another look as 2017 winds down. . . With the new tax plan fanning fears of inflation and exploding U.S. government debt, the gold bugs have resurfaced.”

MK note:   Going through some old notes, I found an older version of this chart developed for an article a year or two ago.  I thought it painted a compelling picture about annual growth in the national debt and the price of gold, so I decided to update it just for my own reference. The  left axis, keep in mind, is the change in the debt in dollars from a year earlier.  As the reality sinks in that deficits are rapidly increasing, gold rises.  There is a lag, but the relationship is evident.  Now that the new tax plan is concrete, analysts will begin to weigh its effects.  Early on, it seems there is concern about impending deficits.  This chart gives us an inkling of their potential effect on the price of gold.  Also keep in mind that this is not the era simply of deficits; it is the era of mega-deficits.

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What to watch in metals market in 2018


FT/Neil Hume & Henry Sanderson/12-21-17

With a gain of almost 10 per cent, gold has had a decent year even if its gains were overshadowed by those for US stocks. After rising above $1,350 a troy ounce in early September, the highest in just over a year, the precious metal has since retreated to about $1,260.

…As we go into 2018, gold bulls will take some comfort from data that suggest investors have remained loyal to the precious metal.

PG View: I would anticipate that that loyalty will be reward once broad investor complacency is challenged and volatility returns to markets. That may happen in 2018 . . .

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Republicans still don’t have a plan to avoid shutdown

CNN/Deirdre Walsh, Lauren Fox & Ashley Killough/12-21-17

As House Republicans spilled out of a closed-door meeting Wednesday night, it was clear that things hadn’t gone well. Members gave wildly varying accounts of the proposal that’s being cobbled together to keep the government open ahead of Friday’s shutdown deadline.

Most importantly: Do they have the votes to pass a bill?

“I don’t know,” said Rep. Ryan Costello, R-Pennsylvania. “I don’t think anyone knows.”

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Posted in Politics |

Morning Snapshot: Gold Consolidates Gains Notched Earlier in the Week

USAGOLD/Peter Grant/12-21-17

Gold is down slightly after having established a new 2-week high at 1268.29 overseas. A slightly firmer dollar and continued strength in stocks may be limiting the upside for the yellow metal, but political and geopolitical uncertainties continue to support.

This morning’s data has had little impact on the market. U.S. Q3 GDP was revised down slightly to 3.2%. The Philly Fed index for December jumped significantly. U.S. initial jobless claims jumped 20k to 245k last week, above expectations of 232k.

Later this morning, we’ll get November leading indicators. Median expectations for LEI is +0.4%.

Market action is likely to taper heading into the long Christmas weekend, but remember that tomorrow is the deadline for a budget deal (temporary or otherwise) to avert a government shutdown. Eleventh-hour negotiations last night reportedly did not go well. There are some risks heading into the weekend.

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U.S. Q3 GDP revised down to 3.2%, below expectations of 3.3%, vs 3.3% previously and 3.1% in Q2.

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Posted in Economic Data |

U.S. Philly Fed index surged to 26.2 in Dec, well above expectations of 20.5, vs 22.7 in Nov.

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U.S. initial jobless claims +20k to 245k in the week ended 16-Dec, above expectations of 232k.

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Gold easier at 1264.20 (-2.76). Silver 16.13 (-0.07). Dollar better. Euro higher. Stocks called higher. U.S. 10-year 2.49% (-1 bp).

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Posted in Gold Price, Markets, Silver Price |

Gold, silver up solidly from December lows

LATE REPORT

Gold continued its push higher today finishing up $3.87 at $1265.33.  Silver finished up 6¢ at $16.16.  In the December issue of News & Views, we pointed up the ghosts of Decembers past.  “In each of those years (2013 through 2016) December began poorly,” we wrote, “but appropriately by Christmas-time things began to look brighter. By the end of January in the following year, the star over the gold market shone still more brightly. . . ”  As of today, gold is up $23.43 from its December 11th low of $1241.90.  Silver is up 47¢ from its December 11 low of $15.69. It’s just five days ’til Christmas. . . . . .

Quote of the Day
“The current combination of monetary debasement, populism and social unrest is neither a new phenomenon nor a coincidence. The late Roman empire shaved silver coins as it disintegrated; Henry VIII replaced silver coins with copper to pay for wars against France and Scotland; the British empire allowed double-digit inflation to erode bondholders’ wealth following the War of Independence; the Weimar Republic precipitated an inflation spiral. Comparing these examples to QE may sound extreme. Yet the biggest debasement in history may be the one we are experiencing now under the form of a $20tn central bank experiment, which is de facto depreciating money by boosting the price of all assets it can buy.” – Alberto Gallo, Algebris Investments


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If the time has come for you to begin or extend your gold and silver ownership plans – if you are raising the red flag – we invite you contact us and find out why thousands have chosen us as their gold firm.

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The US and China are preparing for all hell to break loose in North Korea

BusinessInsider/Alex Lockie/12-20-17

• Both the US and China have been taking unprecedented steps as tensions ramp up along the Korean Peninsula.

• China has prepared refugee camps and information for citizens to help them survive nuclear attacks and has expanded its offensive capabilities with its air force.

• The US has stepped up military drills, practiced air raids, and reportedly started preparing to seize North Korea’s nuclear weapons by force.

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Posted in Geopolitical Risks, North Korea |

The Daily Market Report: Gold Sets Two-Week High, Nears Important Resistance


USAGOLD/Peter Grant/12-20-17

Gold is trading at two-week highs, buoyed by a softer dollar and persistent political and geopolitical uncertainties. Limiting the upside is continued strengths in stocks and yields at the long-end of the curve in anticipation of tax reform legislation getting passed.

The House is presently taking a second vote on the tax plan, over a procedural issue that arose yesterday, but it is widely anticipated that the votes needed are still there. At that point, the bill will be sent to the President for his signature.

President Trump is already planning a press conference for later this afternoon, despite reports earlier in the day that he might delay signing the bill into law until after the first of the year. This potential delay revolves around the deficits that are likely to result from tax cuts that would trigger automatic spending cuts. Mr. Trump would like to see those budget rules waved.

Stocks and the dollar slumped in reaction, helping gold to notch fresh intraday highs. The next tier of resistance is 1267.60/1269.36, where the 200-day moving average and the halfway back point of the decline from late-November converge.

Both the U.S. and China appear to be escalating preparations for war on the Korean peninsula, according the BusinessInsider. “We’re not committed to a peaceful resolution — we’re committed to a resolution,” said National Security Advisor H.R. McMaster.

Meanwhile, President Trump continues to rattle the saber as well. “America and its allies will take all necessary steps to achieve a denuclearization and ensure that this regime cannot threaten the world . . . It will be taken care of,” said the President.

In times of geopolitical uncertainty, gold is a favored safe-haven. Along with North Korea, Iran, Russia and China are deemed to be geopolitical hot spots.

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

GOP Tax Plan: Trump’s Tax-Bill Signing Could Be Delayed Into January

Dow Jones, via FoxBusiness/12-20-17

President Donald Trump may wait until next year to sign the tax bill Congress is likely to approve Wednesday if lawmakers don’t separately pass a provision to waive certain budget rules that trigger automatic spending cuts.

At issue are so-called “pay as you go,” or “pay-go,” budget rules that could be triggered by deficits in the tax bill. Congressional Republicans are preparing a separate fix to waive the rules after they finish the tax bill, but if they don’t do it before Congress adjourns for its year-end recess, one way to delay the automatic cuts would be to sign the bill in January.

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Posted in Politics |

U.S. existing home sales +5.6% to 5.81M pace in Nov, above expectations of 5.50M, vs positive revised 5.50M in Oct.

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Posted in Economic Data |

Cramer’s charts reveal bitcoin is not replacing gold anytime soon

CNBC/Elizabeth Gurdus/12-19-17

…the $2.4 trillion global gold market is very deep. Millions of investors own a piece of the pie in the form of bullions, jewelry, coins or other investments. In comparison, the entire digital currency market is worth $600 billion, with bitcoin only accounting for about half.

…Garner was skeptical that gold is falling because bitcoin is soaring. Gold pulled back below $1,250 an ounce four times this year and managed to bounce back, and no one blamed the declines on bitcoin, she said.

Moreover, gold’s charts suggest its value could go higher. Historically, gold tends to decline in early December, then buyers come in and drive the precious metal to rally until March.

PG View: Garner also cited COT data and the dollar chart as further evidence of upside potential in gold.

“…gold is not being supplanted by bitcoin as the go-to alternative to actual currency, and the charts, as interpreted by Carley Garner, suggest that gold might be ready to make a comeback. And while I won’t discourage anyone from buying bitcoin — just know the risks, know your limitations — I’m with Carley when it comes to the precious metal, not the precious keystroke.” — Jim Cramer
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Buy Gold As Strategic Hedge – World Gold Council


KitcoNews/David Lin/12-18-17

Gold should be seen as a strategic asset that investors use to weather the storm, says Juan Carlos Artigas, Director of Investment Research at the World Gold Council.

Artigas told Kitco News that gold, as an insurance, should be consistently held in a portfolio and not bought only when there is an equities market correction. “If you look at history, you’ve seen these [equities] corrections happen.

If you wait until the last minute to protect your portfolio from that correction, you may actually miss it,” he said.

PG View: In fact, the quiet periods in between stock market corrections and periods of economic duress are the ideal time to be accumulating gold.

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Morning Snapshot: Gold Remains Firm as Tax Reform Moves Down the Homestretch

USAGOLD/Peter Grant/12-20-17

Gold is up modestly in early U.S. trading, establishing fresh 2-week highs. A softer dollar is helping to keep the yellow metal underpinned, despite continued buoyancy in stocks and yields as the tax bill moves down the homestretch.

Despite the impending legislative win on tax reform, the U.S. faces a government shutdown at the end of the week. There is little hope that Congress will pass a budget before midnight on Friday, so they will likely try to pass another stopgap funding measure that will kick the can into the new year.

With Democrats perhaps feeling a little stung from the tax reform process, they may be a less amicable on the budget negotiations. The resulting uncertainty may be contributing to recent gains in gold.

The U.S. calendar is light today with existing home sales and EIA crude inventory.

Silver is up at 2-week highs as well, trading comfortably back above $16 and near the 38.2% retracement level of the decline from the mid-November high. A rise above 16.50 would further ease pressure on the downside.

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House to vote again on tax bill; Trump on verge of win

Reuter/David Morgan & Amanda Becker/12-20-17

The Republican-controlled U.S. House of Representatives on Wednesday was expected to give final approval to a sweeping tax bill and send it to President Donald Trump to sign into law, sealing his first major legislative victory in office.

In the largest overhaul of the U.S. tax code in 30 years, Republicans in mere weeks steamrolled over the opposition of Democrats to slash taxes for corporations and the wealthy, while offering mixed, temporary tax relief to working American individuals and families.

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Gold better at 1265.20 (+3.14). Silver 16.22 (+0.06). Dollar and euro steady. Stocks called higher. U.S. 10-year 2.49% (+2 bps).

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Posted in Gold Price, Markets, Silver Price |

Gold Prices Inch Lower Ahead of Tax-Bill Vote

WSJ/Amrith Ramkumar & Christopher Alessi/12-19-17

Gold prices were slightly lower Tuesday, closely tracking the dollar ahead of a House of Representatives vote on a tax-overhaul bill.

…Gold prices are back near their November trading range, up nearly 10% for the year but roughly 6.5% off their year-to-date highs from early September.

Analysts have said geopolitical uncertainty and hesitation among Fed officials about a gradual pace of interest-rate increases could continue to support gold prices. Many investors favor gold and other haven assets when they believe markets might turn rocky.

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A Fed official who has been voting against rate hikes thinks he knows why wages aren’t rising faster

BusinessInsider/Pedro Nicolaci da Costa/12-181-7

“Why aren’t wages picking up?” Kashkari asked in a blog post explaining his latest dissent. “In my view, the two most likely explanations are that the job market is not as tight as the 4.1% unemployment rate suggests and that people’s expectations for future inflation have fallen, which can become self-fulfilling.”

Kashkari believes low labor-force participation and other underlying pockets of weakness are still leaving workers in too precarious a situation to bargain for higher wages.

“One measure of the labor force — the participation rate for workers between 25 and 54 years old, typically called ‘ prime age’ — suggests that there could be more than a million workers still on the sidelines,” Kashkari said.

PG View: Kashkari has the same doubts about the so-called “transitory” nature of low inflation: “…the longer it persists, the more tenuous the transitory factors story becomes.”

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Posted in Central Banks, Economy, Fed, Monetary Policy, Today's top gold news and opinion |

Gold holds firm as dollar wilts ahead of U.S. tax vote


Reuters/Jan Harvey/12-19-17

Gold held firm above $1,260 an ounce on Tuesday as caution over the passage of sweeping tax legislation in the United States weighed on the dollar, supporting the precious metal after two days of gains.

But moves in the metal were muted, as market players were wary of taking new positions before the holiday season. Gold is on track to post its narrowest trading range of any quarter in a
decade in the last three months of the year.

PG View: I would suggest that the narrow trading range in Q4 reflects the resilience of gold in the face of record stock gains, Fed interest rate hikes and a somewhat firmer dollar. The market may be “coiling” in advance of a breakout, which typically comes in the direction of the underlying trend. The trend for the year is up.

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McMaster: ‘I don’t think we can tolerate’ a nuclear North Korea

The Hill/Mallory Shelbourne/12-19-17

National security adviser H.R. McMaster said in a Tuesday morning interview that he does not believe the world can allow North Korea to develop nuclear weapons.

“I don’t think we can tolerate that risk. The world can’t tolerate that risk,” McMaster told “CBS This Morning” when asked if the United States and a nuclear North Korea can “co-exist.”

PG View: McMaster stops short of saying how far the U.S. is prepared to go to prevent nuclear armed North Korea, but the threat seems pretty clear. The associated geopolitical risk should continue to underpin gold.

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Posted in Geopolitical Risks, North Korea |

Morning Snapshot: Gold Remains Firm Ahead of House Vote on Tax Bill

USAGOLD/Peter Grant/12-19-17

Gold is up slightly as markets awaits today’s anticipated House vote on tax reform legislation. In the mad scramble to get this piece of legislation to the President’s desk before the end of the week, the market seems to be ignoring the fact that the current short-term spending bill expires on December 22.

While neither party seems to have the stomach for a government shutdown, the window to get something done before the Christmas recess begins is small. Continually kicking the can with short-term continuing resolutions is no way to run a government, and yet this seems to be the only way to avert a government shutdown these days.

The inability of the dollar to build on last week’s bounce is helping to underpin gold. Meanwhile, stock market gains associated with an expectation of impending corporate tax cuts, have limited the upside for the yellow metal.

Rising geopolitical tensions are also seen as supportive to gold. The U.S. has blamed North Korea for a cyber attack earlier this year. Meanwhile, National security adviser H.R. McMaster said he doesn’t think the U.S., nor the world, can “tolerate” the risk of a nuclear armed DPKR.

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U.S. housing starts +3.3% to 1.297M pace in Nov, above expectations of 1.250M, vs 1.256 man in Oct.

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Posted in Economic Data |