Monthly Archives: April 2018

LATE REPORT

Not much has changed since the EARLY REPORT was filed earlier today. Please scroll down the page if you missed it. Have a good evening. . . . .

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LATE REPORT

Not much has changed since the EARLY REPORT was filed earlier today. Please scroll down the page if you missed it. Have a good evening. . . . .

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Posted in Today's top gold news and opinion |

Get ready for the most expensive driving season in years

Associated Press/Alex Viega/4-3-2018

“Get ready for a little bit more pain at the pump this summer. Crude oil prices are at the highest level in more than three years and expected to climb higher, pushing up gasoline prices along the way. The U.S. daily national average for regular gasoline is now $2.81 per gallon. That’s up from about $2.39 per gallon a year ago, according to Oil Price Information Service. And across the U.S., 13 percent of gas stations are charging $3 per gallon or more, AAA said last week.”

Image by Quinn Dombrowski (Flickr: You’ve got to be kidding.) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

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Growing concern: Foreign investors lose some hunger for U.S. debt

Wall Street Journal/Daniel Kruger/4-30-2018

“Foreign investors’ appetite this year for U.S. debt hasn’t grown at the same pace as the government’s borrowing needs, which some analysts worry could push bond yields higher and eventually threaten to slow economic growth. Investors in a broad category known as ‘indirect bidders,’ which includes both mutual funds and foreign investors, have been winning the smallest percentage of the bonds they’ve bid for since 2011, according to bidding data for recent Treasury bond auctions.”

 

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Goldman’s Solomon says greed is trumping fear in the bull market

Bloomberg/ Steve Dickson , Erik Schatzker , and Scarlet Fu/4-3-2018

“Investors lulled by the long bull market are being motivated more by a search for yield than concern a correction is coming, according to Goldman Sachs Group Inc. President David Solomon. ‘We’re down the road in the cycle, so there’s certainly places where people are further along the greed spectrum than the fear spectrum,’ Solomon said Monday in an interview on Bloomberg Television. ‘In an environment where money has been so inexpensive for such a long period of time, there’s no question that people have been reaching for yield.'”

MK note:  Unwinding this long and winding road could take time. . . .or it could happen in a New York minute.

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Gold off to rough start, it’s Fed Week

EARLY REPORT

The day got off to a rough start for gold with the metal trading down $11 at $1314, but this is to be expected. After all, it’s Fed Week and when the FOMC meets, it’s time to circle the wagons. Silver is also off in early trading – down 15¢ at $16.34. The talk is that the Fed could move from three rate increases to four before the year is out, but this is splitting hairs. That could happen or it could all change in a heartbeat should some unforeseen event or economic climate change suddenly intervene.

In the meantime, the markets will trade the perceived future as if it were reality, the algos will continue to spin out a high volume of one-way trades, and the gold market will suffer in the short term from trading linkages that may or may not hold up over the long run. For gold owners, it is a time to sit back and watch the show and do a little buying if you’ve been thinking about adding to your holdings on a dip. Quite often, Fed Week ends much differently than it begins.

Chart of the Day

Chart note: As we begin Fed Week, we thought it might be useful to post the overlay chart on gold and the effective Federal Funds rate. As you can see, since the Fed began raising interest rates in 2016, gold has tracked higher in concert with rising rates. Short-term trading, though it is the centerpiece of most reporting on the gold market, does not always reflect the long-term outcome.

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Gold off to rough start, it’s Fed Week

EARLY REPORT

The day got off to a rough start for gold with the metal trading down $11 at $1314, but this is to be expected.  After all, it’s Fed Week and when the FOMC meets, it’s time to circle the wagons.  Silver is also off in early trading – down 15¢ at $16.34.  The talk is that the Fed could move from three rate increases to four before the year is out, but this is splitting hairs.   That could happen or it could all change in a heartbeat should some unforeseen event or economic climate change suddenly intervene.

In the meantime, the markets will trade the perceived future as if it were reality, the algos will continue to spin out a high volume of one-way trades, and the gold market will suffer in the short term from trading linkages that may or may not hold up over the long run.  For gold owners, it is a time to sit back and watch the show and do a little buying if you’ve been thinking about adding to your holdings on a dip. Quite often, Fed Week ends much differently than it begins.

Chart of the Day

Chart note:  As we begin Fed Week, we thought it might be useful to post the overlay chart on gold and the effective Federal Funds rate.  As you can see, since the Fed began raising interest rates in 2016, gold has tracked higher in concert with rising rates.  Short-term trading, though it is the centerpiece of most reporting on the gold market, does not always reflect the long-term outcome.

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Is the Eurocrisis over?

Mises Institute/Phillip Bagus/4-30-2018

“In 2017, for the first time ever, all Euro zone countries had a government deficit below 3% of GDP, thereby complying with the Stability and Growth Pact. Does this mean that the euro crisis is officially over? Have pessimists been wrong? Can governments boost government spending as they rejoice? There are several reasons why the euro crisis is far from being over and government finances still unsustainable.”

MK note:  The euro remains a currency without a country and the European Union a loose confederation of states with each member having its own economic agenda. France’s Macron has offered proposals to ‘federalize’ the European Union, but few expect anything to materialize from it anytime soon.   The ECB’s quantitative easing program remains in place, a threat to value of the euro, bank deposits and finally the stock and bond markets – all denominated in that currency.    German investors have gone to physical gold ownership in response and Germany itself has moved to have its national gold holdings repatriated within its borders.

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Conventional wisdom

Credit Bubble Bulletin/Doug Noland/4-28-2018

“Conventional Wisdom will look especially foolish when this protracted cycle comes to its fateful conclusion. Not only was the mortgage finance Bubble not the proverbial ‘100-year flood,’ it set the stage for historic global government finance Bubble excesses. The real once-in-a-lifetime crisis lies in wait. Not only do we not learn from our mistakes, we instead seem to go out of our way to create bigger ones. This time much Bigger.”

 

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Petroyuan – The shape of things to come

PETROYUAN

UBS/Hayden Briscoe/4-30-2018

“As the dominant customer, particularly for major oil exporters like Russia, Venezuela, Iraq, Iran, and Saudi Arabia, China’s market means leverage, and many of these suppliers have either already agreed to price their sales to China in RMB, or are actively considering it. If, or rather when, China’s total oil import bill gets priced in RMB, that’s going to create large piles of RMB reserves in oil exporting countries that will either be spent on Chinese exports, or recycled into China’s financial markets, giving China much more heft in the global economy. This will have two principal effects: increased demand for RMB assets and a switch out of the USD for trading purposes, which will likely undermine the United States’ dominant role in the global economy and create a sea change in global asset allocation to China’s financial markets.”

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Gold finishes day in minor uptrend on tepid GDP, possibility of a two front trade war

LATE REPORT

Gold, pushed by a tepid GDP report, finished the day in a minor uptrend at $1324.50 and up $6 on the day. Silver lost 5¢ despite gold’s positive showing and finished the day at $16.55. As the day moved along, gold also got a bit of help from German chancellor Angela Merkel’s frosty reception at the White House. She had no sooner climbed back into her limo that talk of a trade war between the United States and Europe popped up in financial media.

It seems the Trump administration is intent on opening a two-front trade war with simultaneous Pacific and Atlantic theaters. It is hard to imagine how such a process could unfold without ramped-up demand for physical metals by Asians, Europeans and Americans alike.

A word on next week’s FOMC meeting . . . .

The Federal Reserve’s Open Market Committee will meet Wednesday, May 2, and announce their decision on interest rates at 2pm EDT. Though Fed meetings in recent months have been kryptonite to the gold market this one might not be all that damaging. First, the Fed is not expected to announce a rate increase. It is saving that for June. Second, there will be no analysis, unexpected guidance or forecasting in its statement, at least there is not supposed to be. Third, there will be no press conference in which the words of the Chairman can be misconstrued, over-analyzed, parsed, re-defined or otherwise bent to the purposes of those rendering an opinion. Gold just might, as a result, escape unscathed.

Quote of the Day
“Gold is a special kind of currency (it is a bet against the U.S. dollar). This is what we have been repeating for a long time (for example, you can check out the July 2015 edition of the Market Overview), but that simple message has not yet reached all investors. So they commit the same mistakes all the time. They focus on irrelevant factors, such as mining dynamics. Or they listen to Warrant Buffet and don’t own any gold. He has the right: gold is neither an industrial commodity, nor an asset generating cash flows. But so what? It’s like complaining to the lion that it’s not an elephant or a giraffe! So please remember one of the most important lessons about the yellow metal’s fundamentals: gold is more currency than commodity.” – Arkadiusz Sieron


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Gold finishes day in minor uptrend on tepid GDP, possibility of a two front trade war

LATE REPORT

Gold, pushed by a tepid GDP report, finished the day in a minor uptrend at $1324.50 and up $6 on the day.  Silver lost 5¢ despite gold’s positive showing and finished the day at $16.55.   As the day moved along, gold also got a bit of help from German chancellor Angela Merkel’s frosty reception at the White House.  She had no sooner climbed back into her limo that talk of a trade war between the United States and Europe popped up in financial media.

It seems the Trump administration is intent on opening a two-front trade war with simultaneous Pacific and Atlantic theaters. It is hard to imagine how such a process could unfold without ramped-up demand for physical metals by Asians, Europeans and Americans alike.

A word on next week’s FOMC meeting . . . .

The Federal Reserve’s Open Market Committee will meet Wednesday, May 2, and announce their decision on interest rates at 2pm EDT. Though Fed meetings in recent months have been kryptonite to the gold market this one might not be all that damaging.  First, the Fed is not expected to announce a rate increase.  It is saving that for June.  Second, there will be no analysis, unexpected guidance or forecasting in its statement, at least there is not supposed to be.  Third, there will be no press conference in which the words of the Chairman can be misconstrued, over-analyzed, parsed, re-defined or otherwise bent to the purposes of those rendering an opinion. Gold just might, as a result, escape unscathed.

Quote of the Day
“Gold is a special kind of currency (it is a bet against the U.S. dollar). This is what we have been repeating for a long time (for example, you can check out the July 2015 edition of the Market Overview), but that simple message has not yet reached all investors. So they commit the same mistakes all the time. They focus on irrelevant factors, such as mining dynamics. Or they listen to Warrant Buffet and don’t own any gold. He has the right: gold is neither an industrial commodity, nor an asset generating cash flows. But so what? It’s like complaining to the lion that it’s not an elephant or a giraffe! So please remember one of the most important lessons about the yellow metal’s fundamentals: gold is more currency than commodity.” – Arkadiusz Sieron


Recent Better Business Review

“Thank you so much for your high rating for USAGOLD, Denver. They were recommended by a close friend and I researched them on your website in Oct 2009 and have been in touch with them ever since. I am now in full trust with their extraordinary business of great integrity and expertise. I will always deal with them . . Again, thank you for your expert ratings.”

Scorecard: 38 five star reviews. Zero complaints.
A+ rating. Accredited since 1991.

[Link]

We are happy to help with your questions
and get you started on the right track.

ORDER DESK.
1-800-869-5115
Extensions #100
8am to 7pm weekdays.

To end right, start right.
Choose the right portfolio mix with the right firm at the right price.
Choose USAGOLD – reliably serving physical gold and silver investors since 1973.

 

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Europe and U.S. Teeter on the brink of a trade war

TRADE WARS

CNBC/Toluse Olorunnipa and Patrick Donahue/4-27-2018

“German Chancellor Angela Merkel failed to win a public commitment from President Donald Trump to halt U.S. tariffs on imported steel and aluminum from Europe, leaving the two economic powers teetering on the brink of a trade war. With a U.S. tariff exemption for the European Union expiring on May 1, Merkel said she discussed trade disputes with Trump during talks at the White House on Friday, including her offer of broader trade negotiations with the EU. She suggested the president wasn’t convinced. ‘The president will decide, that’s clear,’ Merkel told reporters at a news conference alongside Trump.  ‘We spoke about the state of negotiations and our respective assessments. The decision lies with the president.’”

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Gold gets its head above water on tepid GDP number

EARLY REPORT

Gold managed to get its head above water in today’s early going after the GDP came in 2.3% higher in the first quarter. That’s down from the 2.9% gain for the fourth quarter last year and pretty much directionally challenged from the Trump administration’s point of view. As it stands now, the markets seem a bit confused about the results, but things should become clearer as the day progresses. The markets are also attempting to sort out whether or not the latest cozying-up between the two Koreas translates to a real change or another false spring.

Gold is up $4 at $1322 and silver is down 5¢ at $16.51.  As pointed out in yesterday’s EARLY REPORT, the dollar remains range-bound despite recent monetary policy announcements in Japan and Europe that should have sent it soaring.  Both countries will leave their quantitative easing programs in place while the United States tightens. The fact that it cannot seem to get unstuck may be taken as a sign that the dollar’s mini-rally that began mid-April might be running out of gas.  Beyond that, there is the larger concern that the dollar might resume the downtrend that began in 2017.

Chart of the Day

Chart note: The log chart illustrates gold’s journey through the fiat money era without the drama implied in the arithmetic chart we are used to seeing. “Common percent changes,” says Investopedia, “are represented by an equal spacing between the numbers in the scale. For example, the distance between $10 and $20 is equal to the distance between $20 and $40 because both scenarios represent a 100% increase in price.” Linear charts, in short, emphasize nominal price movement while a log chart emphasizes the percentage movement and, as such, offers the more practical portrayal of price movement from an investment perspective.

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Gold gets its head above water on tepid GDP number

EARLY REPORT

Gold managed to get its head above water in today’s early going after the GDP came in 2.3% higher in the first quarter.  That’s down from the 2.9% gain for the fourth quarter last year and pretty much directionally challenged from the Trump administration’s point of view.  As it stands now, the markets seem a bit confused about the results, but things should become clearer as the day progresses. The markets are also attempting to sort out whether or not the latest cozying-up between the two Koreas translates to a real change or another false spring.

Gold is up $4 at $1322 and silver is down 5¢ at $16.51.  As pointed out in yesterday’s EARLY REPORT, the dollar remains range-bound despite recent monetary policy announcements in Japan and Europe that should have sent it soaring.  Both countries will leave their quantitative easing programs in place while the United States tightens. The fact that it cannot seem to get unstuck may be taken as a sign that the dollar’s mini-rally that began mid-April might be running out of gas.  Beyond that, there is the larger concern that the dollar might resume the downtrend that began in 2017.

Chart of the Day

Chart note:  The log chart illustrates gold’s journey through the fiat money era without the drama implied in the arithmetic chart we are used to seeing.  “Common percent changes,” says Investopedia, “are represented by an equal spacing between the numbers in the scale. For example, the distance between $10 and $20 is equal to the distance between $20 and $40 because both scenarios represent a 100% increase in price.”  Linear charts, in short, emphasize nominal price movement while a log chart emphasizes the percentage movement and, as such, offers the more practical portrayal of price movement from an investment perspective.

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Nicholas Taleb on gold

Gold Republic/Olav Dirkmaat/4-28-2018

“As I had the opportunity to directly question Taleb on gold, he told me truly despises gold. He hates gold. He couldn’t care less about the gold market. Yet Taleb does invest a large share of his ‘safe assets’ in physical gold. Gold is the robust investment par excellence. In case the global economy is on the verge of collapse, gold will keep afloat and survive. Or things might go great, but even then an investment in gold will not result in enormous, unrecoverable losses and ruin. Or as some gold investors rightly remark: for a more or less regular gold coin you could buy hundreds of liters of wine centuries ago and for the value of a similar coin in present times that probably still holds true. Taleb calls this the Lindy effect: gold has been a store of value for, according to some accounts, 4,000 years. We can reasonably expect gold, therefore, to continue to be a store of value for the next 4,000 years.”

MK note:  Nicholas Taleb has always held a place of honor in my reference list of economists and market commentators even before I learned of his love-hate attachment to gold through Olav Dirkmaat’s excellent profile linked above. Taleb’s latest book is Skin in the Game.  I have not read it yet, but I plan to.

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EU to City of London: Expect no Brexit favors, we don’t need you

Bloomberg/Ian Wishart and Silla Bush/4-26-2018

“Barnier debunked the line often taken by U.K. lobbyists that the EU needs the City of London and will suffer if it’s weakened. ‘This is not what we hear from market participants, and it is not the analysis that we have made ourselves,’ he said. With no special trade deal with the EU on financial services, U.S. banks are hardly suffering, however. Their domination of the investment-banking market was underscored on Thursday with the announcement that Deutsche Bank AG is abandoning its ambitions to be a top global securities firm.”

MK note: According to this report, Michael Barnier, the EU’s chief Brexit negotiator, “issued a stark warning that markets should prepare for a messy breakup.” The gold market in Britain might get a jolt from investors moving to the metal as a defense against the worst outcomes resulting from Brexit.  We have seen signs of that in the past.

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Canada has no gold but a mountain of debt. . .Things will end badly

The Gold Telegraph/Alex Deluce/4-25-2018

“While other central banks have been busy increasing their gold reserves, Canada sold off all its gold reserves in 2016. The Bank of Canada ranks last globally out of 100 major central banks. There is precedence in a central bank selling off its gold, and it didn’t work out very well. In 1999, when the price of gold was low at $282.40 an ounce, the United Kingdom sold half of its gold reserves, worth approximately $6.5 billion. The sale raised $3.5 billion. By 2007, the price of gold had risen to $675.00 an ounce, and the UK had lost more than £2 billion. This financial disaster, known as Brown’s Bottom, did not work out well. And Canada appears to be following in its footsteps.”

MK note:  Canada.  Goldless.  That chapter in UK history is also referred to as “Brown’s Folly”.  It was sold at the bottom.  Four years later, gold launched its secular bull market.  Britain lost a fortune.

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The coming boom in gold prices

Sovereign Man/Simon Black/4-25-2018

“We’ve been seeing for more than a year that interest rates have been rising. Yesterday afternoon the yield on the 10-year US Treasury note surpassed 3% for the first time since 2014. And oil prices have been rising steadily as well. Financial markets don’t like this combination– it means that inflation is coming. Big time. And stocks plummeted worldwide as a result. Now, that immediate reaction was probably a bit too panicky. But the deep concern that inflation is coming (or has already arrived) is completely valid. Inflation is a HUGE problem. And the traditional hedge in times of inflation is GOLD.”

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LATE REPORT

Not much has changed since the EARLY REPORT was filed earlier today. Please scroll down the page if you missed it. Have a good evening. . . . .

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Posted in dailyquotes |

LATE REPORT

Not much has changed since the EARLY REPORT was filed earlier today. Please scroll down the page if you missed it. Have a good evening. . . . .

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Posted in Today's top gold news and opinion |

Commodities now: All roads lead to gold?

Barron’s/Crystal Kim/4-26-2018

“Gold’s outlook looks rosy. The precious metal should benefit from late-cycle dynamics, which tend to favor real assets over stocks. A weaker dollar could help too and [TS Lombard’s Konstantinos] Venetis said what appears to be in the works today is the opposite of what happened following the 2013 taper tantrum: ‘Back then, the currencies of current account-deficit emerging markets came under pressure as the dollar strengthened from a low point, deflationary headwinds spread and commodity prices suffered. Now, the currencies of large current account-surplus developed markets are appreciating as the dollar retreats from lofty levels, inflation picks up speed and commodity prices increase.’”

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Gold struggles as ECB signals “long goodbye to QE”

EARLY REPORT

Gold is struggling again this morning for the second day in a row trading at $1318.50 and down about $4.50 on the day. Silver is also down this morning at $16.47 (-13¢).

Today we learn that the ECB will put a hold on rates accompanied by a Financial Times headline that there will be a “long goodbye for QE” in the European Union. Matching that statement of intent, the Bank of Japan announced a similar course of action over last weekend. Meanwhile, the Federal Reserve has not backed off its intent to tighten policy even as many raise concerns about an “end of cycle” recession looming on the immediate horizon. All this should have sent the dollar on a tear, but it hasn’t. One wonders why. . . . .and what Mr. Market is trying to tell us.

I will round out today’s report with a bracing prediction from Standard Charter’s Suki Cooper who told CNBC earlier today that she sees gold testing five year highs by the end of the year starting after the Fed’s rate meeting in June. Gold upside, she says, would come in concert with a weakening trend in the U.S. dollar. That five year high as shown in our Chart of the Day is $1700 and, needless to say, would constitute a dramatic upside correction.

Chart of the Day

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Gold struggles as ECB signals “long goodbye to QE”

EARLY REPORT

Gold is struggling again this morning for the second day in a row trading at $1318.50 and down about $4.50 on the day.  Silver is also down this morning at $16.47 (-13¢).

Today we learn that the ECB will put a hold on rates accompanied by a Financial Times headline that there will be a “long goodbye for QE” in the European Union.  Matching that statement of intent, the Bank of Japan announced a similar course of action over last weekend.  Meanwhile, the Federal Reserve has not backed off its intent to tighten policy even as many raise concerns about an “end of cycle” recession looming on the immediate horizon. All this should have sent the dollar on a tear, but it hasn’t.  One wonders why. . . . .and what Mr. Market is trying to tell us.

I will round out today’s report with a bracing prediction from Standard Charter’s Suki Cooper who told CNBC earlier today that she sees gold testing five year highs by the end of the year starting after the Fed’s rate meeting in June.  Gold upside, she says, would come in concert with a weakening trend in the U.S. dollar.  That five year high as shown in our Chart of the Day is $1700 and, needless to say, would constitute a dramatic upside correction.

Chart of the Day

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The big bad bull gets meeker and weaker

Seeking Alpha/Gary Gordon/4-25-2018

“The effects already are taking a toll on the retail investing public. According to the Conference Board, record-level optimism peaked in January in the same fashion as it did before the dot-com stock bust at the start of 2000. Now, however, there are as many survey participants expecting stocks to be lower in 12 months as there are those who expected stocks to be higher over the next year. Perhaps ironically, those who had been insisting that we had not been seeing irrational euphoria earlier this year (we had been) now insist we are witnessing irrational despair. We’re not. Fear has a long way to go before it reaches the level of anguish associated with the tech wreck, the financial collapse and/or the eurozone sovereign debt crisis.”

MK note:  This article digs a little deeper than most. . . .

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Will Bitcoin ever dethrone gold?

SafeHaven/Alex Kimani/4-25-2018

“Throughout history, gold was widely considered the leading safe-haven asset because it has proved to be a reliable store of value, cannot be manipulated by interest rate policies by any single government–or worse, printed like fiat currencies such as the dollar. Safe havens tend to increase in value or retain it at the very least when most other assets are losing it. Bitcoin’s downside deviation is close to 50 percent, compared to gold’s 8 percent. That fact alone makes it a tough choice for use as regular money let alone as a safe haven.”

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Fed at odds with itself as eases bank rules and raises rates

Bloomberg/Rich Miller/4-26-2018

“In unveiling a proposal on April 11 to ease leverage limits on Wall Street banks, the Fed and the Office of the Comptroller of the Currency said the step might lower the amount of capital lenders are required to hold in their main subsidiaries by $121 billion. The move would give banks added flexibility to extend credit.”

MK note:  That $121 billion can be leveraged into many hundreds of billion in loans.  Whether or not that occurs and it is actually injected into the Main Street economy is an open question.  This article presents a variety of viewpoints worth reviewing.

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Gold/silver ratio climbing back toward 80

Scrap Register/4-26-2018

“The gold/silver ratio, which had fallen for a time to 78, has climbed back almost to 80 as a result. Silver has clearly been dragged down by base metals in recent days, whereas gold has fared somewhat better, despite suffering some losses.”

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Gold stabilizes as day wears on, unsure how to react to rate environment

LATE REPORT

Gold stabilized as the day wore on seemingly unsure how it should react to the 10-year Treasury establishing itself firmly above the 3% mark at 3.031%. It finished the day down $9.50 at $1322. Silver closed down 18¢ on the day at $16.57. Reuters reports rates being generally driven higher by the “growing supply of government debt and inflationary pressures from rising prices.” If that is truly the case, it is difficult to explain gold’s downside today. Historically, those two maladies – inflation and government debt – have served as inducement for higher prices not the opposite.

As for rising interest rates themselves, Investopedia has this to say on the subject: “While popular opinion is that interest rate hikes have a bearish effect on gold prices, the effect that an interest rate increase has on gold, if any, is unknown, since there is actually little solid correlation between interest rates and gold prices. Rising interest rates may even have a bullish effect on gold prices.” So, we shall wait patiently for the market to come to its senses, which if Jeffrey Gundlach is proven correct is something in the works.

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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Gold stabilizes as day wears on, unsure how to react to rate environment

LATE REPORT

Gold stabilized as the day wore on seemingly unsure how it should react to the 10-year Treasury establishing itself firmly above the 3% mark at 3.031%.  It finished the day down $9.50 at $1322. Silver closed down 18¢ on the day at $16.57.  Reuters reports rates being generally driven higher by the “growing supply of government debt and inflationary pressures from rising prices.” If that is truly the case, it is difficult to explain gold’s downside today. Historically, those two maladies – inflation and government debt – have served as inducement for higher prices not the opposite.

As for rising interest rates themselves, Investopedia has this to say on the subject: “While popular opinion is that interest rate hikes have a bearish effect on gold prices, the effect that an interest rate increase has on gold, if any, is unknown, since there is actually little solid correlation between interest rates and gold prices. Rising interest rates may even have a bullish effect on gold prices.”  So, we shall wait patiently for the market to come to its senses, which if Jeffrey Gundlach is proven correct is something in the works.

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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If the market madness of the past few weeks has you thinking you might need to hedge your portfolio with gold and silver, we invite to get in touch with us. We will provide the same kind of pricing and service that has made Jack D. a long-time client and friend of the firm.

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