Monthly Archives: December 2017

U.S. Treasury budget deficit widened to -$139 bln in Nov, outside expectations of -$135.0 bln, vs -$63.2 bln in Oct and -$137 bln a year-ago.

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Posted in Economic Data |

Gold Down But Not Out; Analysts Seek Buying Opportunities

KitcoNews/Neils Christensen/12-12-17

Gold’s downtrend is entering its seventh day as prices have broken below another key support level, but analysts say that lower prices could provide a significant buying opportunity.

…Bill Baruch, president of Blue Line Futures, noted that gold seasonally bottomed in the second half of December only to finish higher by the end of January in nine out of the last 12 years.

“We believe the best place to buy would be in front of $1,225,” he said. “Ultimately, we are looking for a bottoming setup to buy gold and stay long into and through January.”

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Posted in Gold News, Gold Price, Gold Views |

The Daily Market Report: Gold Weighed As Fed Meets and Dollar Rises


USAGOLD/Peter Grant/12-12-17

Gold’s annual slide ahead of the December FOMC decision continues, with a new 5-month low established at 1235.90. The dollar index has edged to a new 4-week high in anticipation of a rate hike tomorrow and perhaps more hawkish guidance for 2018.

However, there is another camp that believes weak wage growth and inflation continue to warrant a note of caution on the part of the Fed. These were the precise reasons the central bank opted to pause the tightening cycle back in September, and neither condition has materially improved in the intervening months.

Before the policy statement is released, the market will get a look at November CPI. While an uptick in the annualized pace of headline consumer inflation is anticipated, core inflation is expected to remain stagnant.

Congressional Republicans are reportedly closing in on a reconciled tax bill. There’s very little margin for error here, as the Republicans can’t really afford to lose more than one vote in the Senate.

One thing seems certain, the legislation will add $1.5 trillion to the debt over the next decade, the maximum allowed. It will likely be quite a bit more, especially if the long-overdue recession strikes at some point during the next 10-years.

Then Congress only has until December 22 to pass a budget and raise or suspend the debt ceiling. Or of course, they could always kick the can again.

Which brings us full-circle back to the Fed. Rising debt and tighter policy — via higher rates and so-called “normilization” of the Fed’s balance sheet — creates a significant headwind for growth. The Fed could end up triggering that overdue recession.

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

If Fed Signals Weak Inflation, Gold Could Move Back Up To $1,300 — TD Securities

KitcoNews/Anna Golubova/12-11/17

After another disappointing trading session, one bank sees gold ending the week on a positive note, with prices possibly moving up to $1,300 an ounce if the Federal Reserve hints at weak inflation on Wednesday.

“Should inflation disappoint or the Fed communicate some caution with regards to the persistence in weak inflation, the yield curve’s flattening could play a big role in sending gold prices back to the $1,260-$1,300/oz range,” said head of commodity strategy at TD Securities Bart Melek in a report published on Monday.

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Posted in Gold News, Gold Price, Gold Views |

Morning Snapshot: Gold Slides to 5-Month Low As FOMC Meets

USAGOLD/Peter Grant/12-12-17

Gold is down slightly in early U.S. trading, having eked out a new 5-month low at 1238.90. Gold continues to be pressured by a stronger dollar as the Fed begins their 2-day FOMC meeting.

A 25 bps rate hike is fully expected when the Fed announces policy tomorrow. Dollar and yield strength seems to reflect growing expectations of more hawkish guidance for 2018.

Headline PPI rose 0.4% in November, pushing the annualized rate to producer inflation to a 6-year high of 3.1%. However, core PPI remained steady at +2.4% y/y, despite a higher than expected m/m rise of +0.3%.

November CPI comes out tomorrow in advance of the Fed’s announcement. Headline CPI is expected to rise to a 2.2% annualized pace, while core CPI is anticipated to hold steady at +1.8%.

Along with the Fed decision tomorrow, we’ll get the central bank’s economic forecasts and Chair Yellen will hold a press conference. We’ll see how optimistic the Fed is about wage and price growth in the year ahead.

Silver remains under pressure as well, also edging to new 5-month lows with the breach of last week’s low at 15.62. Silver is pretty oversold at this point, but $16 must be regained to ease pressure on the downside.

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

GOLDMAN SACHS: Bitcoin hasn’t taken a bite out of demand for gold

BusinessInsider/Will Martin/12-12-17

The surging price of bitcoin has not put investors off buying gold, with “no evidence of a mass exodus” from the safe haven metal despite a drop in prices recently, according to research released by Goldman Sachs this week.

Jeffrey Currie, Goldman’s global head of commodities research, said that the groups of investors looking to invest in the two assets are vastly different, therefore protecting gold demand, he wrote in a note to clients reported by the Financial Times.

…”We believe the composition of demand between bitcoin and gold is the key difference in the recent price action. In our view bitcoin is attracting more speculative inflows relative to gold.”

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

U.S. PPI +0.4% in Nov, in line with expectations, vs +0.4% in Oct; +3.1% y/y. Core +0.3%, above expectations of +0.2%, vs +0.4% in Oct; +2.4% y/y.

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Posted in Economic Data |

Gold steady at 1242.72 (-0.28). Silver 15.75 (unch). Dollar and euro steady. Stocks called mixed. U.S. 10-year 2.40% (+1 bp).

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Posted in Gold Price, Markets, Silver Price |

The short side of the gold market temporarily having its way. . . .

LATE REPORT

Gold was down $6.40 today at $1291 and silver was down 14¢ at $15.69.  Thus far in December gold is down $38 and silver is down 72¢.

Speculators the long side of the futures market are well aware of the “December effect”, i.e, the fact that Decembers do not treat the precious metals kindly. Judiciously, they have elected to keep their powder dry for the time being. That collective recalcitrance, particularly with another Fed meeting on the immediate horizon, has left the short side to temporarily have its way. Come Christmas-time, if past history holds true, we might be writing a different story in these evening reports.

Quote of the Day
“So what happens when bitcoin blows up? If history is any guide then in periods prone to investment bubbles, like ours with its low cost of capital and highly inflated asset prices, then speculation will move on to something else. Why should it be gold and its even shinier sister silver? Well, historically, the people who always do best out of any investment bubble are usually those that cash out and buy precious metals.” – Peter Cooper, The National


The December issue of News & Views, is now available. We invite your interest.

FREE IMMEDIATE ACCESS. Much to think about, analyze, digest. . . . 

 

 

 

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Could gold do a bitcoin and hit $10,000 an ounce in 2018?

The National/Peter Cooper/12-10-17

After bitcoin’s spectacular price spike this year, could gold be about to stage a similar grand finale to its bull market that began back in 2000?

Bitcoin also took many years before its final speculative reach-for-the-sky. Indeed, the scramble to buy at the last minute has been reminiscent of gold’s previous price spike back in 1980 after a long run up in prices during the economically unstable 1970s.

There are certainly goldbugs who argue for $10,000 an ounce convincingly. Ex-CIA macroeconomic adviser Jim Rickards’ latest tome, The New Case for Gold explains how gold will again be needed as a linchpin of the global economy.

PG View: That price target seems pretty optimistic, but given the rise in BitCoin this year, why couldn’t a real tangible asset make a similar jump?

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

The Daily Market Report: Gold Remains Defensive Ahead of This Week’s FOMC Meeting


USAGOLD/Peter Grant/12-11-17

Gold is down, pressuring the 4+ month low established last week, as focus shifts to this week’s FOMC meeting. The Fed will announce policy on Wednesday and it is widely expected that they will raise rates by 25 bps, despite still moribund wages and inflation.

However, the last two December rate hikes (2015 and 2016) closely corresponded with significant lows in the price of gold. The market could be setting up for a similar event this time around, but in 2017 gold has been comparatively buoyant ahead of year end.

David Fickling, writing for Bloomberg, notes the distinct seasonal trend that has emerged over the past decade. “Whatever the reason, it’s enough of a consistent pattern these days that it’s starting to become a self-fulfilling prophecy,” says Fickling.

[G]old exhibits a pronounced seasonality. January, February, July and August — the four months this year when the metal has rallied most strongly — had, on average, been the best months to buy gold over the previous 10 years.

In 2016 and 2015, the lows actually occurred in December. “If history is still reliable, January will be a great month to own precious metals,”said John Rubino in a separate note for Sprott Money.

With BitCoin futures now trading on the CBOE, many are arguing that the meteoric rise of the cryptocurrency is stealing gold’s thunder. This is happening at the same time that many are warning BitCoin has become the biggest bubble since the Tulip-Mania of 1636-1637.

Have precious metals suddenly lost their luster – has their 10,000 year history as a store of value suddenly evaporated within the matter of a month? Of course not. This is absurd and ludicrous and sounds like a copy and pasted line from any MSM financial outlet. — Nathan McDonald, Sprott Money News

Certainly BitCoin has been stealing headlines this year, but how long can this last. Clearly longer than many first thought, but with each push to new highs, it arguably becomes increasingly unstable.

That tweet outlines some very serious concerns. One that is not mentioned, is that to this day, nobody even knows who the creator of BitCoin is in reality. Investing — or perhaps more appropriately speculating — in an asset where that critical piece of knowledge is missing seems crazy to many.

Nonetheless, it’s just one of many oddities that have emerged since the financial crisis that seem to have little grounding in economic reality. That of course doesn’t preclude further gains, but like the price, the risks seem astronomic as well.

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

U.S. JOLTS job openings -181k to 5,996k in Oct, below expectations of 6,135k, vs positive revised 6,117k in Sep.

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Posted in Economic Data |

Gold’s Time Is Nigh


Bloomberg/David Fickling/12-11-17

Remember gold?

It seems like only six years ago the shiny metal was flavor of the month, hitting a record $1,900 a troy ounce while its backers prophesied the end of the fiat money system.

With bitcoin sucking up all the crazy in financial markets, gold looks to have lost its luster. The CBOE/Comex Gold Volatility Index, a rough proxy for the amount of fun and profit available for precious metal traders, touched a record low of 10.17 last month, from levels north of 37 back in 2011.

That may be overdue a change. Despite suffering its worst week since May last week, the outlook for gold could be stronger now than it has been for several months.

January, February, July and August — the four months this year when the metal has rallied most strongly — had, on average, been the best months to buy gold over the previous 10 years.

PG View: Certainly gold and silver are undervalued relative to other asset classes. Now may a good time to diversify; take a little off the table in stocks for example and buy some real assets.

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Posted in Gold News, Gold Price, Gold Views |

Gold steadies below $1,250/oz ahead of Fed meeting

Reuters/Jan Harvey/12-11-17

Gold steadied below $1,250 an ounce on Monday after its biggest weekly drop in more than six months, with moves muted ahead of an expected interest rate hike from the U.S. Federal Reserve this week.

…The Fed is widely tipped to lift rates at its two-day policy meeting ending Wednesday, but its accompanying statement will be closely watched for any surprises.

The bank is expected to increase rates another two or three times in 2018, but still-sluggish inflation and wage growth has raised question marks over that view.

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Posted in Gold News, Gold Price, Gold Views |

Republicans fret over tax bill’s unpopularity

The Hill/Alexander Bolton and Naomi Jagoda/12-11-17

Republican lawmakers are concerned about how their tax bill is being viewed by the public and say they need to do a better job of selling it to middle-class and low-income voters.

A CBS News poll conducted last week found that 53 percent of people nationwide disapprove of the GOP tax bill and only 35 percent approve.

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Posted in Politics |

Morning Snapshot: Gold Trading Near Unchanged from Friday’s Close

USAGOLD/Peter Grant/12-11-17

Gold is trading near unchanged in early New York trading after overseas uptick faded. The yellow metal remains defensive near the 4-month plus lows that were set last week as markets await the Fed decision on Wednesday this week, with a softer dollar offering some support.

The Fed is widely expected to hike interest rates by 25 bps, despite persistently soft earnings and inflation. Fed funds futures continue to put the probability of a hike in excess of 90%.

Today’s calendar is light with JOLTS job openings for October and 3- and 10-year auctions. November PPI and CPI come out on Tuesday and Wednesday respectively. Headline numbers are expected to edge higher, while core readings are likely to remain sluggish.

Silver is down modestly and remains on the ropes below $16 after posting a third consecutive weekly decline. With the gold/silver ratio elevated above 79, silver is arguably quite undervalued. A move back above $16 would ease short-term pressure on the downside.

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

Gold steady at 1249.00 (+0.70). Silver 15.81 (-0.05). Dollar easier. Euro higher. Stocks called mixed. U.S. 10-year 2.36% (-2 bps).

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Posted in Gold Price, Markets, Silver Price |

Bill Gross: Expect a ‘More Cautious and Easier Fed’

USAGOLD/John Gittelsohn/12-07-17

Billionaire bond manager Bill Gross, who has long warned that low interest rates punish savers and banks, says the Federal Reserve is likely to be cautious with increases because the current environment leaves little room for error.

“Should a crisis arise because of policy mistakes, geopolitical crises, or other currently unforeseen risks, the ability to protect principal will be impaired relative to history,” Gross wrote in an investment outlook released Thursday. “That in turn argues for a more cautious and easier Fed than otherwise assumed.”

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Posted in Central Banks, Economy, Fed, Monetary Policy |

Morning Snapshot: Gold Up Modestly Post-NFP

USAGOLD/Peter Grant/12-08-17

Gold remains defensive at the low-end of yesterday’s range. The yellow metal continues to be weighed by a firmer dollar and heightened risk appetite.

The greenback has risen more than 1% this week on expectations that the Fed will come off “pause” next week and hike the Fed funds rate by 25 bps. The current ‘risk-on’ environment is keeping focus on stocks and bitcoin.

Today’s better than expected nonfarm payrolls number lends credence to the anticipated rate hike. However, there continues to be reason for concern in the earnings data.

Nonfarm payrolls rose 228k in November, above expectations of +198k, versus a negative revised +244k in October (was +261k). The unemployment rate steady at 4.1%, as expected.

Hourly earnings rose 0.2%, below expectations of +0.3%, versus a negative revised -0.1% (was unch) in October. That does not bode well for an imminent end to this allegedly “transitory” period of low inflation.

Congress passed a stopgap spending measure late yesterday, which will keep the government funded for an additional two-weeks until December 22. A kick of the can, albeit a short one.

Silver remains defensive below $16, but is trading slightly higher this morning. The gold/silver ratio reached a high of 79.53 yesterday, suggesting that silver is very undervalued relative to gold. A rebound above $16 is needed to ease short-term pressure on the downside.

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

Hourly earnings +0.2% in Nov, below expectations of +0.3%, vs negative revised -0.1% (was unch). Average workweek steady at 34.4 hours.

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Posted in Economic Data |

U.S. nonfarm payrolls +228k in Dec, above expectation s of +198k, vs negative revised +244k in Nov (was +261k). Unemployment rate steady at 4.1%, as expected.

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Posted in Economic Data |

Gold steady at 1247.05 (-0.30). Silver 15.82 (+0.08). Dollar higher. Euro lower. Stocks called higher. U.S. 10-year 2.38% (+2 bps).

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Posted in Gold Price, Markets, Silver Price |

Speculators run down gold price today on Fed rate hike

Gold was down another $16 today as speculators pounced on the Federal Reserve’s upcoming rate hike as sufficient reason to run down prices.  It finished at $1247 on the day. Silver also took a hit, down 23¢ on the day to finish at $15.69.  Decembers have not been kind to the metals in recent years and Federal Reserve policy has been a defining issue in each instance.  Prices, though, tended to level out by Christmas-time and by January the metals were trending higher – in some years significantly higher. To learn more we invite you to read the post immediately above this one.

Quote of the Day
“The changing of the guard at the US Federal Reserve raises questions over future policy and casts a shadow over the dollar in 2018. With the departure of prominent Fed members Stanley Fischer and Daniel Tarullo earlier this year, and the announcement that chair Janet Yellen will step down in February, analysts say the US is poised for its least experienced board of governors in three decades. The sweeping changes at board level might discount what analysts at Danske Bank are calling the ‘Fed experience premium’ baked into the dollar since 1973.” – Emma Dunkley, Financial Times

 

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U.S. consumer credit +$20.5 bln in Oct, above expectations of +$17.0 bln, vs revised +$19.2 bln in Sep.

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Posted in Economic Data |

North Korea: War is inevitable

The Hill/Mallory Shelbourne/11-07-17

North Korea has reportedly said that a nuclear conflict in the region is unavoidable, accusing CIA Director Mike Pompeo of provocation.

…“We do not wish for a war but shall not hide from it, and should the U.S. miscalculate our patience and light the fuse for a nuclear war, we will surely make the U.S. dearly pay the consequences with our mighty nuclear force which we have consistently strengthened,” the unidentified spokesperson said in remarks originally reported by the Korean Central News Agency.

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Posted in Economic Data, Geopolitical Risks, North Korea |

The Daily Market Report: Gold Falls to 4-Month Lows On Heightened Risk Appetite


USAGOLD/Peter Grant/12-07-17

Gold remains under pressure after dropping through the low end of the range in overseas trading. The yellow metal is being weighed by elevated risk appetite and a firmer dollar.

The market is optimistic that some deal will be struck this week to avert a government shutdown. While House Minority Leader Nancy Pelosi declared that Democrats would not support today’s stopgap spending bill, GOP leaders say they have the votes to kick the can for two more weeks.

If a partial government shutdown is temporarily averted, there will be a full-court press by the GOP to reconcile the House and Senate tax bills and get something to the President’s desk by Christmas. While there is some concern about the increase in deficits surrounding tax reform, the market seems to be focused solely on wider profit margins for corporations.

The market is also expecting a decent NFP print tomorrow (+198k median), which will further reinforce expectations for a 25 bps rate hike next week. While inflation and wage growth continues to disappoint — and these were the primary concerns that prompted the September pause — the Fed may ‘bet on the come’ regarding tax cuts, hoping they provide some level of long-awaited fiscal stimulus.

It is worth remembering that gold has rebounded smartly after the previous two December rate hikes. What’s different this year is that gold has been relatively buoyant ahead of the December policy decision, as compared to previous years.

Weakness in the broader commodities complex, attributed to concern about slowing growth in China, may also be playing a role in the recent pressure on gold. Pretty much every commodity fund/index/ETF has a gold component and when these are sold, gold is sold as well.

However, softer commodities portend broader economic weakness and the likelihood that below target inflation will persist. This could end up warranting more dovish central bank policies that one might associate with weaker currencies and a higher gold price.

Offering an underpinning to the gold market are heightened geopolitical tensions. North Korea has said that war is inevitable. Meanwhile, the Trump administrations decision to move the U.S. embassy to Jerusalem has sparked heightened unrest in the middle east.

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

The Gift of Gold – A simple thought for the holiday season

by Michael J. Kosares
Founder:  USAGOLD
Author:  The ABCs of Gold Investing – How To Protect and Build Your Wealth with Gold

Gold has a past. I suspect it has a future.

We live in a time when currencies and financial markets have become political enterprises – creations of the world’s governments and central banks. Since we have never seen times like these, when so much depends on the monetary largesse of the policy-makers, no one really knows where the future might lead us. Uncertainty reigns and, when that is the case, history teaches us that gold demand rises proportionally and at times impressively so.

Uncertainty reached a whole new level, though, toward the end of November when minutes of a recent Federal Reserve Open Market Committee meeting revealed a level of concern within the central bank not often expressed in the public venue. “In light of elevated asset valuations and low financial market volatility,” read the minutes, “several participants expressed concerns about a potential buildup of financial imbalances. They worried that a sharp reversal in asset prices could have damaging effects on the economy.” Blunt as it was, a good many took those words as a warning from on high about the prospects for 2018.

The gift of gold – the one passed from generation to generation in ancient times to present – is the protection it offers against an unpredictable economy. The gift of gold, in short, is peace of mind.

Wishing you and yours the very best for the holiday season and a prosperous New Year from all of us at USAGOLD.

On the ghosts of Decembers past

December, as it turns out, has been a humbug month for gold the past four years. In each of those years (2013 through 2016) December began poorly, 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. . .

–– On December 1, 2013 gold finished the day at $1220 per ounce. The low for the month came on the 19th at $1188, but by January 31, 2014, it traded at $1244 – up 4.7% from the December low.

–– On December 1, 2014 gold finished the day at $1212 per ounce. The low for the month came on the 24th at $1174, but by January 30, 2015, it traded at $1283 – up 9.3% from the December low.

–– On December 1, 2015 gold finished the day at $1069 per ounce. The low for the month came on the 17th at $1051, but by January 31, 2016, it traded at $1118 – up 6.4% from the December low.

–– On December 1, 2016 gold finished the day at $1171 per ounce. The low for the month came on the 22nd at $1128, but by January 31, 2017, it traded at $1210 – up 7.3% from the December low.

So the lesson imparted is to buy in December and enjoy the holidays. January is the start to a wholly new year.


Here we are in December, chugging along toward the end of the year.  In the recently released December issue of News & Views, we concentrate on the gold market itself with a variety short but informative reports with the upcoming year in mind:

• On the ghosts of Decembers past (See reprint above)
• End-of-year gold and silver price predictions
• U.S. Mint makes a mint selling gold coins at a 25% mark-up
• Gold’s mysterious waterfall drops
• The gold/quality man’s suit ratio

• And a long run of “Notable Quotables” for your reading pleasure

If you are not already a subscriber, we invite you to sign-up for free immediate access to the December issue, as well as future issues of our newsletter.  We think you will enjoy the subject matter and gain from our take on recent events in the gold market.


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Gold slides to 4-month low as dollar edges up

Reuters/Apeksha Nair/12-07-17

Gold prices dropped to their lowest level in four months on Thursday as the dollar rose underpinned by optimism surrounding tax reform in the United States.

…The dollar on Thursday inched up against its peers, as optimism over U.S. lawmakers making progress on tax legislation continued to grow.

Hopes that U.S. tax reforms would boost economic growth have dented demand for safe-haven assets such as gold.

…INTL FCStone analyst Edward Meir said gold could move slightly lower heading into next week’s Federal Reserve meeting as investors would be jittery about the Fed’s policy wording going forward.

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Posted in Gold News, Gold Price, Gold Views |

Morning Snapshot: Gold Drops to 4-Month Lows

USAGOLD/Peter Grant/12-07-17

Gold is down in early U.S. trading, having definitively breached the low end of the range at 1260.10 overseas. That puts the yellow metal at a 4-month low amid a firmer dollar and ongoing optimism that a tax bill will get to the President’s desk before year-end.

Tomorrow is the deadline for at least a temporary spending measure to avert a government shut down. Congressional leaders are slated to meet with President Trump at the White House today in a last ditch effort to kick this can once again.

Then the Fed will make their final policy decision of the year next week. There is plenty of evidence to suggest they should remain on pause, but the market remains convinced that a 25 bps rate hike is in the cards.

U.S. initial jobless claims fell 2k to 236k in the week ended 02-Dec, below expectations of 240k. Later this morning we’ll get October Consumer Credit and M2 for last week.

Tomorrow is jobs Friday. Nonfarm payrolls are expected to rise by 198k. The jobless rate is expected to hold steady at 4.1%.

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

U.S. initial jobless claims -2k to 236k in the week ended 02-Dec, below expectations of 240k.

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Posted in Economic Data |