Monthly Archives: May 2018

NEWS & VIEWS
Forecasts, Commentary & Analysis on the Economy and Precious Metals
Celebrating our 45th year in the gold business

June, 2018


‘Mphm!’
How cultivating a little disdain and a healthy gold diversification
can help you cope with the times

The June issue of News & Views is now out to subscribers. This month we depart from our usual fare of charts, tables and numbers to offer something a bit more philosophical.

[LINK]

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If you appreciate analysis that is a bit off the beaten track and concentrates on the long term merits of gold and silver ownership, you might appreciate receiving our monthly newsletter on an on-going basis. It is offered free-of-charge as a service to our regular clientele and an incentive to prospective clients.

Source: The Strand, November, 1921


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NEWS & VIEWS
Forecasts, Commentary & Analysis on the Economy and Precious Metals
Celebrating our 45th year in the gold business

June, 2018


‘Mphm!’
How cultivating a little disdain and a healthy gold diversification
can help you cope with the times

The June issue of News & Views is now out to subscribers.  This month we depart from our usual fare of charts, tables and numbers to offer something a bit more philosophical.

[LINK]

[FREE SUBSCRIPTION sign-up]

If you appreciate analysis that is a bit off the beaten track and concentrates on the long term merits of gold and silver ownership, you might appreciate receiving our monthly newsletter on an on-going basis. It is offered free-of-charge as a service to our regular clientele and an incentive to prospective clients.

Source: The Strand, November, 1921


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Posted in ClientInsights |

Bundesbank: Germany’s gold repatriation program

Bundesbank/Carl Ludwig Thiele/5-31-2018

“Long relegated to the fringes of public attention, Germany’s gold reserves were thrust into the spotlight when turmoil erupted in global financial markets in late 2008 and the German general public suddenly began to take a different view of things. This change of mindset coalesced in a desire for greater security and a need for more information, particularly on Germany’s stock of gold reserves.”

USAGOLD note:  A detailed review of Germany’s gold repatriation program from the Bundesbank itself.  Worth visiting the link just for the photo of Germany’s gold reserves. . . . . . . .

Image: 50 year anniversary medal founding of Germany’s Bundesbank, 2007, 10 euro

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Italy’s political turmoil could mark the end of the EU, roiling global markets

CNBC/Bryan Borzykowski/5-31-2018

“Global stock markets rebounded yesterday after political crises in Italy and Spain sent stocks into a tailspin. Unfortunately, for investors things could get worse from here.”

USAGOLD note:  This article casually drops a bombshell number: Italy owes about $2.5 trillion in sovereign debts.

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Gold continues to bounce around the $1300 mark, looking like it has aspirations of going higher

DAILY MARKET REPORT

Gold continued to bounce around the $1300 mark this morning as a run of government reports reflected mostly benign economic circumstances. At the moment, it is up $2.50 on the day at $1305 and looking like it has aspirations of going higher. If it does, it would not be without proper cause as there is more than the average number of economic threats rattling around the markets. The dollar, too, has suddenly veered south over the past two days.

Commodities continue to move quietly higher, though it has not been a good day for oil thus far – down over 1.5% on the day. By way of an update, the closely watched CRB is up 15% over the past year. Gold, by contrast, is up only 3% over the past year leaving much room for improvement. Gold tends to track commodities over extended periods. The divergence at the end of the plot lines in the chart below is telling. . . . .

Chart courtesy of tradingeconomics.com

Quote of the Day

” . . . I suspect a staggering amount of ‘carry trade’ leverage has accumulated globally over this protracted speculative cycle. ECB policies have clearly spurred leveraged speculation throughout euro zone bond markets, especially the unsound periphery. Eastern Europe as well? There is surely massive leverage in U.S. Credit, most likely having played a prevailing role in the booming investment-grade corporate marketplace. We’re in the stage of the cycle where things look good. In the U.S., in particular, the New Era and New Paradigm mentality has taken deep root. The economy appears robust, bolstered by fantastic technological advancement and scientific development. The underlying instability of finance goes unrecognized; the global nature of Bubble Dynamics unappreciated. Meanwhile, markets again this week provided confirmation of the Unfolding Instability Thesis.” – Doug Noland, Credit Bubble Bulletin

Chart of the Day

Chart courtesy of Advisor Perspectives

Chart note: There are a couple of things unsettling about this chart. First is the sheer amount of investor margin debt present in the current stock market – over $650 billion. Second is the correlation between the growth of that debt and ascent of the S&P 500. With that amount of leverage in the stock market and the influence it has on price levels, if and when the margin calls arrive, the tumble could be fast and extreme. FINRA (Financial Industry Regulatory Authority) warns that “many investors may underestimate the risks of trading on margin and misunderstand the operation of, and reason for, margin calls.” Shades of 1929.

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Gold continues to bounce around the $1300 mark, looking like it has aspirations of going higher

DAILY MARKET REPORT

Gold continued to bounce around the $1300 mark this morning as a run of government reports reflected mostly benign economic circumstances. At the moment, it is up $2.50 on the day at $1305 and looking like it has aspirations of going higher.  If it does, it would not be without proper cause as there is more than the average number of economic threats rattling around the markets.  The dollar, too, has suddenly veered south over the past two days.

Commodities continue to move quietly higher, though it has not been a good day for oil thus far – down over 1.5% on the day.  By way of an update, the closely watched CRB is up 15% over the past year.  Gold, by contrast, is up only 3% over the past year leaving much room for improvement.  Gold tends to track commodities over extended periods.  The divergence at the end of the plot lines in the chart below is telling. . . . .

Chart courtesy of tradingeconomics.com

Quote of the Day

” . . . I suspect a staggering amount of ‘carry trade’ leverage has accumulated globally over this protracted speculative cycle. ECB policies have clearly spurred leveraged speculation throughout euro zone bond markets, especially the unsound periphery. Eastern Europe as well? There is surely massive leverage in U.S. Credit, most likely having played a prevailing role in the booming investment-grade corporate marketplace. We’re in the stage of the cycle where things look good. In the U.S., in particular, the New Era and New Paradigm mentality has taken deep root. The economy appears robust, bolstered by fantastic technological advancement and scientific development. The underlying instability of finance goes unrecognized; the global nature of Bubble Dynamics unappreciated. Meanwhile, markets again this week provided confirmation of the Unfolding Instability Thesis.” – Doug Noland, Credit Bubble Bulletin

Chart of the Day

Chart courtesy of Advisor Perspectives

Chart note:  There are a couple of things unsettling about this chart.  First is the sheer amount of investor margin debt present in the current stock market – over $650 billion.  Second is the correlation between the growth of that debt and ascent of the S&P 500.  With that amount of leverage in the stock market and the influence it has on price levels, if and when the margin calls arrive, the tumble could be fast and extreme. FINRA (Financial Industry Regulatory Authority) warns that “many investors may underestimate the risks of trading on margin and misunderstand the operation of, and reason for, margin calls.” Shades of 1929.

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Liquidity crisis looming

Financial Sense/Jim Puplava/5-3-2018

“On a daily basis, almost 90 percent of trading on exchanges is carried out through high-frequency trading and index investing, Puplava noted. In the words of recent FS Insider guest Don Coxe, markets are no longer driven by humans but by machines, and machines know the price of everything but the value of nothing. In the event of a major macro event or worse, a monetary event, we could see markets move down rapidly, such as happened during the Flash Crash and also the Taper Tantrum.”

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Soros view ‘ridiculous’ says Morgan Stanley CEO

Bloomberg/Tom Mackenzie and Christopher Anstey/5-31-2018

“Morgan Stanley Chief Executive Officer James Gorman said that investor George Soros’s contention another major global crisis may be in store is unrealistic, and that the Federal Reserve will probably hike interest rates three more times in 2018 despite recent volatility.”

USAGOLD note:  Famous last words or the voice of reason?

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Threat of trade brawl hangs on Trump’s looming tariff deadline

TRADE WARS

Bloomberg/Richard Bravo/5-31-2018

“The European Union is bracing for President Donald Trump to open another front in his confrontation with the bloc, as the EU’s top negotiator prepares for the U.S. to impose either tariffs or quotas on metals imports from America’s closest allies.”

USAGOLD note:  Stepping back and looking East and West, the trans-Pacific, trans-Atlantic trade wars look to be accelerating not diminishing with all sides digging in their heels and threatening worse.  Then there’s the NAFTA problems. . . . . .

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Euro inflation kicking up – an early warning sign?

USAGOLD note:  Trading Economics reports this morning that “the annual inflation rate in the Euro Area is expected to rise to 1.9% in May” boosted mainly by rising oil prices.  This could be an early warning sign that rising oil prices will push up national inflation rates.

Chart courtesy of tradingeconomics.com

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More speculation on how the Fed will react to Europe’s problems

Credit Bubble Bulletin/Doug Noland/5-2018

“I don’t expect the Powell Fed to turn hawkish. Indeed, if things unfold as I expect the Fed will surely turn more cautious with rate hikes. But I also believe the new Chairman would rather not come quickly to the market’s defense. Markets are long overdue for removing the training wheels. Interestingly, John Authers’ Friday evening FT article was titled ‘Lack of ‘Powell Put’ Tightens Financial Conditions.’ Akin to Italy’s debt load, the true status of the Fed (and global central banker) put will be a greater concern now that financial conditions have begun to tighten and asset markets have turned more vulnerable.”

USAGOLD note:  We recommend a visit to Noland’s weekly analysis.  Much food for thought . . . He says “we are now on contagion watch.”  Europe will exert pressure on the Fed to go easy. Contrary to press reports that U.S. banks are insulated from Italy and greater Europe’s problems, those conclusions are doubtful in a world of interconnected loan and trading books involving billions, if not trillions, of dollars.  To ignore the situation in Europe is to play with fire.

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Gold steady in dollar terms, but up sharply in the euro since mid-May

DAILY MARKET REPORT

Gold is steady this morning at $1301 balancing a calmer Europe, at least for the moment, with a sharp drop in the dollar. Though the price remains range bound in dollar terms in and around the $1300 level, it has been a different story in euro terms. Since mid-May, when investors first began to worry about events in Italy, the price is up nearly 4% from €1090 per ounce to €1130 early yesterday. The Trump administration is forging ahead full force on $50 billion worth of tariffs on Chinese imports. Tensions are once again heating up in the Middle East.

In its most recent Market Report, Degussa, the Swiss gold refinery, sums up nicely why demand for gold is likely to remain strong in the months and years to come:

“What does it mean for gold’s value proposition? First, gold does not appear to be expensive at the current price. In fact, there is reason to assume that it is (to borrow a term from the investment world) undervalued. Second, gold – if you look at it as a form of money – offers a hedge against the vagaries of the fiat money world. It cannot be debased by central banks’ money printing, and it does not carry a default or counter-party risk. Reflected upon from this perspective, gold certainly has not lost its shine for the long-term oriented investor. This becomes clear once the investor realizes that gold is not an investment instrument but a form of money – in fact, the best and most honest kind of money available.”

Those vagaries have become all too apparent over the past few days – particularly if you happen to take residence in Europe.

Quote of the Day
“[T]he trigger for a crisis could be anything if the system as a whole is unstable. Moreover, the size of the trigger event need not bear any relation to the systemic outcome. The lesson is that policymakers should be focused less on identifying potential triggers than on identifying signs of potential instability.This implies that paying attention to macroeconomic “imbalances” may pay bigger dividends than trying to assess financial instability through highly disaggregated “risk maps” of the sort currently being encouraged by the G20 and the IMF. The latter are not only expensive to monitor, but potential rupture points in the financial fabric can change rapidly in real time.Perhaps more important, serious economic and financial crises can have their roots in imbalances outside the financial system.” – William White, chairman of the Paris-based economic and development review committee at the Organization for Economic Co-operation and Development.

Chart of the Day


Chart courtesy of tradingeconomics.com

Chart note: Italy’s political crisis spilled over to its bond market yesterday spiking the yield on its 10-year bond to over 3%. Since the beginning of May, when concerns about Italy’s political stability began to make headlines, the yield on its 10-year bond has gone from 1.77% to 3.16% as of yesterday. The market stabilized last night, but few see the crisis as passing its high point. Bloomberg cited Swedbank’s Par Magnusson and Filip Andersson as saying in a report to clients that “The Italian house is on fire, and it will spread if someone doesn’t pull out the fire extinguisher soon. Italy may become severely injured, but the EMU may die.” The euro suffered a major setback yesterday declining .75% against the U.S. dollar to $1.153 while all of Europe seemed to go into crisis mode overnight. Italy sneezes. Europe catches a cold. . . .or maybe worse.

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Gold steady in dollar terms, but up sharply in the euro since mid-May

DAILY MARKET REPORT

Gold is steady this morning at $1301 balancing a calmer Europe, at least for the moment, with a sharp drop in the dollar. Though the price remains range bound in dollar terms in and around the $1300 level, it has been a different story in euro terms. Since mid-May, when investors first began to worry about events in Italy, the price is up nearly 4% from €1090 per ounce to €1130 early yesterday.  The Trump administration is forging ahead full force on $50 billion worth of tariffs on Chinese imports. Tensions are once again heating up in the Middle East.

In its most recent Market Report, Degussa, the Swiss gold refinery, sums up nicely why demand for gold is likely to remain strong in the months and years to come:

“What does it mean for gold’s value proposition? First, gold does not appear to be expensive at the current price. In fact, there is reason to assume that it is (to borrow a term from the investment world) undervalued. Second, gold – if you look at it as a form of money – offers a hedge against the vagaries of the fiat money world. It cannot be debased by central banks’ money printing, and it does not carry a default or counter-party risk. Reflected upon from this perspective, gold certainly has not lost its shine for the long-term oriented investor. This becomes clear once the investor realizes that gold is not an investment instrument but a form of money – in fact, the best and most honest kind of money available.”

Those vagaries have become all too apparent over the past few days – particularly if you happen to take residence in Europe.

Quote of the Day
“[T]he trigger for a crisis could be anything if the system as a whole is unstable. Moreover, the size of the trigger event need not bear any relation to the systemic outcome. The lesson is that policymakers should be focused less on identifying potential triggers than on identifying signs of potential instability.This implies that paying attention to macroeconomic “imbalances” may pay bigger dividends than trying to assess financial instability through highly disaggregated “risk maps” of the sort currently being encouraged by the G20 and the IMF. The latter are not only expensive to monitor, but potential rupture points in the financial fabric can change rapidly in real time.Perhaps more important, serious economic and financial crises can have their roots in imbalances outside the financial system.” – William White, chairman of the Paris-based economic and development review committee at the Organization for Economic Co-operation and Development.

Chart of the Day


Chart courtesy of tradingeconomics.com

Chart note: Italy’s political crisis spilled over to its bond market yesterday spiking the yield on its 10-year bond to over 3%. Since the beginning of May, when concerns about Italy’s political stability began to make headlines, the yield on its 10-year bond has gone from 1.77% to 3.16% as of yesterday. The market stabilized last night, but few see the crisis as passing its high point. Bloomberg cited Swedbank’s Par Magnusson and Filip Andersson as saying in a report to clients that “The Italian house is on fire, and it will spread if someone doesn’t pull out the fire extinguisher soon. Italy may become severely injured, but the EMU may die.” The euro suffered a major setback yesterday declining .75% against the U.S. dollar to $1.153 while all of Europe seemed to go into crisis mode overnight. Italy sneezes. Europe catches a cold. . . .or maybe worse.

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Specter of Euro crisis could force Federal Reserve to slow rate hike plans

CNBC/Patti Domm/5-29-2018

“‘The chaos in Europe is pushing down U.S. interest rates so money is flowing to the U.S., fleeing Europe, making people think, that [with falling interest rates], coupled with the rising dollar, that the Fed responds by maybe having second thoughts about the trajectory of Fed policy,’ said Marc Chandler, head of foreign exchange strategy at Brown Brothers Harriman. ‘It also is a risk to the real economy because Europe’s a big trading partner.'”

USAGOLD note:  There’s some justification for this thinking.  If the Fed backs off on its interest rate plan, it could ignite a rally in the gold market.  The Fed may have no choice. The situation in Europe, Asia and emerging countries instigated by the strong dollar may need to be addressed before things spin out of control. June will be too early for the Fed to make a move but it could make a reference to the situation in its statement.  Putting rates on hold in September is not out of the question.  Italy’s debt to GDP ratio, by the way, is nearly 132% – a big number and climbing.  Greece, Europe’s bad boy, has a debt to GDP ratio of 176% not too far from the 180% peak that almost sent it over the edge. Germany, the standard for stability in Europe, has a 62% debt to GDP ratio.

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Crisis in emerging countries proves gold, not Bitcoin, is a hedge currency collapse

Seeking Alpha/Austrolib/5-29-2018

“The Turkish lira, Brazilian real, and Argentine peso are all down heavily against the US dollar. Gold priced in these currencies has risen at nearly the same rates as they have collapsed in dollar terms, meaning gold is successfully hedging against currency collapse. Bitcoin priced in these currencies is still falling over the same time frame.”

USAGOLD note:  Imagine yourself in one of these countries facing the reality of a collapsing currency.  Are you really going to choose Bitcoin over gold if it gets down to cases and your wealth is on the line?  Really??

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Soros bets heavy on European financial crisis

Bloomberg/Nishant Kumar/5-29-2018

USAGOLD note:   According to this article, Soros has placed a $256 million bet against stocks “from Stockholm to London.”

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Dow down almost 500 on Italy concerns, volatility spikes

CNBC/Thomas Franck and Alexandra Gibbs/5-29-2018

USAGOLD note:  U.S. banks are taking a hit. . .Volatility Index spikes almost 40%.

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USAGOLD – Quality service and pricing since 1973

USAGOLD ranks among the most reputable gold companies in the United States with several thousand clients and multi-millions in annual revenue. Founded in the 1970s and still family-owned, we are one of the oldest and most respected names in the gold industry. Our unblemished, zero-complaints record and solid reviews with the Better Business Bureau testify to the exceptional customer service and professional excellence which sets us apart from the competition.

USAGOLD specializes in gold and silver coins and bullion delivered to our client’s safekeeping. For over 45 years, we have resolutely advocated owning precious metals for asset preservation purposes rather than speculation. Admittedly, this philosophy does not resonate with all prospective gold and silver owners, but if it does with you, we think you will find our firm a kindred spirit.

When it comes time to pursue your first (or next) purchase, we invite you to learn first-hand why so many have chosen USAGOLD as their precious metals firm.

Call or drop us an e-mail.

1-800-869-5115
Ext#100
orderdesk@usagold.com

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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Incrementum: Gold and the turning of the monetary tides

In Gold We Trust – Annual Report

Incrementum/Ronald-Peter Stoferle and Mark J. Valek/5-29-2018

“Overall, 2017 was clearly positive for gold across all major global currencies with the exception of the euro, where it incurred a slight loss of 1%. The average performance in this secular bull market is still impressive. For example, the average annual performance from 2001 to 2018 has been +9.40%. During this period, gold has outperformed practically every other asset class, and in particular every currency, despite intermittent, sometimes substantial corrections.”

USAGOLD note:  We highly recommend Incrementum’s in-depth report on the gold market – its past, present and future.  It encompasses the essential long-term rationale for gold’s continuing presence in the well-structured investment portfolio.  The short version runs 45 pages and the longer version 230 pages (!).  The link above goes to the 45-page version.

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DMR–Gold off marginally early, market confusion reigns over crisis in Italy

DAILY MARKET REPORT

Gold is off marginally in early Monday trading at $1297 (-$1.00). Silver is down 11¢ at $16.41. In Europe, gold moved up on concerns about Italy as the political crisis pushed into financial markets, but when the U.S. market opened those gains were wiped out. Spain was pulled into Italy’s vortex and George Soros publicly raised concerns about Europe being on the brink of another major financial crisis. Bond and currency markets were fragile anyway before any of this happened. They are even more fragile now.

Oddly, the dollar too at first gained on the turmoil in Italy, but then, like gold, reversed itself adding to the confusion among market participants. In the era of algo-driven markets, the things that would make gold demand rise, do not always translate to the things that would make the price rise. So, the cautious European who deems it a good time to buy some gold is likely to find that the price today is to his or her liking.

Quote of the Day
“So, we were just chatting away there in friendly conversation and then Volcker walks in, you can’t miss him because I think he’s about six-and-a-half feet tall. So, he walks in and I thought, “well I have to shake his hand and say hello.” He didn’t even look at me. He didn’t come to me. He went straight to his staff and he said, ‘what’s the price of gold?’ So, I thought, ‘gold is important to him’ and I still think it’s every bit as important to Fed people now because it is the ultimate measurement of the dollar. They can rig it and monkey around with it and play games, but ultimately, the market will have its say.” – Ron Paul from a recent Mises Institute Interview with Jeff Deist

Chart of the Day

Chart note: LIke a good many others, we thought that the excess reserves held by commercial banks at the Federal Reserve were a ticking time bomb for inflation. Once the commercial banks began drawing down those reserves, we reasoned, we would finally have the response to quantitative easing so many thought was imminent following the 2007-2008 meltdown. Well, excess reserves have come down almost 28% since their August, 2014 high of $2.7 trillion. It is a mystery though where that capital has gone. The money supply, as reported here recently, is actually shrinking. Inflation, though widely anticipated, has yet to surface in any meaningful way. Instead we remain stuck in the same disinflationary rut that has characterized this economy for more than a decade. So where has the money – some $740 billion – gone? We can only hope some economic sleuth will come along and solve for us The Case of the Missing Excess Reserves.

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DMR–Gold off marginally early, market confusion reigns over crisis in Italy

DAILY MARKET REPORT

Gold is off marginally in early Monday trading at $1297 (-$1.00).  Silver is down 11¢ at $16.41.  In Europe, gold moved up on concerns about Italy as the political crisis pushed into financial markets, but when the U.S. market opened those gains were wiped out.  Spain was pulled into Italy’s vortex and George Soros publicly raised concerns about Europe being on the brink of another major financial crisis. Bond and currency markets were fragile anyway before any of this happened. They are even more fragile now.

Oddly, the dollar too at first gained on the turmoil in Italy, but then, like gold, reversed itself adding to the confusion among market participants. In the era of algo-driven markets, the things that would make gold demand rise, do not always translate to the things that would make the price rise. So, the cautious European who deems it a good time to buy some gold is likely to find that the price today is to his or her liking.

Quote of the Day
“So, we were just chatting away there in friendly conversation and then Volcker walks in, you can’t miss him because I think he’s about six-and-a-half feet tall. So, he walks in and I thought, “well I have to shake his hand and say hello.” He didn’t even look at me. He didn’t come to me. He went straight to his staff and he said, ‘what’s the price of gold?’ So, I thought, ‘gold is important to him’ and I still think it’s every bit as important to Fed people now because it is the ultimate measurement of the dollar. They can rig it and monkey around with it and play games, but ultimately, the market will have its say.” – Ron Paul from a recent Mises Institute Interview with Jeff Deist

Chart of the Day

Chart note:  LIke a good many others, we thought that the excess reserves held by commercial banks at the Federal Reserve were a ticking time bomb for inflation.  Once the commercial banks began drawing down those reserves, we reasoned, we would finally have the response to quantitative easing so many thought was imminent following the 2007-2008 meltdown.  Well, excess reserves have come down almost 28% since their August, 2014 high of $2.7 trillion. It  is a mystery though where that capital has gone.  The money supply, as reported here recently, is actually shrinking. Inflation, though widely anticipated, has yet to surface in any meaningful way. Instead we remain stuck in the same disinflationary rut that has characterized this economy for more than a decade.  So where has the money – some $740 billion – gone?  We can only hope some economic sleuth will come along and solve for us The Case of the Missing Excess Reserves.

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Turmoil in Italy – Bond selloff triggers global shock waves

Bloomberg/Heather Burke/5-29-2018

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‘Major’ financial crisis is coming – Soros

Zero Hedge/Tyler Durden/5-29-2018

“In a speech delivered Tuesday in Paris, billionaire investor George Soros warned that the world could be on the brink of another devastating financial crisis, as debt crises reemerge in Europe and a strengthening dollar pressures both the US’s emerging- and developed-market rivals.”

USAGOLD note:  Over the past several days, we have voiced similar concerns on these pages. Though Soros concentrates on Europe in the speech ZeroHedge highlights, we should not discount similar cause and effect in Asia.

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Silver and the first chapter in globalization

How silver changed the world

South China Post/Adolfo Arranz/5-28-2018

“It can be argued that when Spain instituted a common currency in the form of the Real de a Ocho, also known as Pieces of Eight, or the Spanish dollar, globalisation’s first chapter had been written. The acceptance of the dollar coins for commercial transactions throughout Asia, the Americas and much of Europe, resulted in a cultural exchange between nations, as well as the relatively free movement of people and goods between the three continents.”

USAGOLD note:  Some interesting history, if you are looking for a bit of diversion. . . . .Silver is not simply and only a commodity metal and it never has been.  It has also been a monetary metal in the past and it remains so today in the minds of many investors around the world. And at the current gold-silver ratio, it is still a worthy consideration for the well-diversified precious metals portfolio.

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Snider: Fed should look at the real economy not its econometric models

Seeking Alpha/Jeffrey Snider/5-25-2018

“[St. Louis Fed’s James Bullard] ‘dovish’ concerns were improperly couched in monetary policy, suspend taper, but ultimately, his view was the correct one – the only member who was even close to getting 2015 right. Unlike what Yellen and the rest were so easily willing to overlook, dramatic market upheaval wasn’t a good sign. QE wasn’t the issue, rather it was the economic outlook, particularly in looming deflationary tendencies, that demanded policymakers reassess the situation.”

USAGOLD note:  As Jeffrey Snider points us in this solid assessment, Bullard’s position is not so much ‘dovish’ as it is ‘cynical’ that inflation hikes are warranted given what is going in the real economy – as opposed to the one structured in the Fed’s econometric models.  Snider says the market indicators “agree with the ‘dovish’ Bullard” or should that read the ‘realistic’ Bullard?

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Charles Schwab CEO says it might be wise to diversify with precious metals

Charles Schwab/Walt Bettinger, CEO/5-11-2018

“Of course, sometimes a negative outlook is justified, which is why it may be wise to diversify with defensive assets, including cash investments (such as certificates of deposit and money market funds), U.S. Treasuries and even precious metals. Such investments may not appreciate as rapidly as stocks during a bull market, but they have historically outperformed during a bear market.”

USAGOLD note:  Who’d a’ thunk?. . . . . .With thanks to John Rubino (Dollar Collapse) for the heads up.  Worth visiting the link for the rest of this short advisory that quotes an interesting statistic of which we were unaware. . . . . .

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The 2020s might be worst decade in history

Forbes/John Mauldin/5-24-2018

“As this recession unfolds, we will see the Fed and other developed world central banks abandon their plans to reverse QE programs. I think the Federal Reserve’s balance sheet assets could approach $20 trillion later in the next decade. Not a typo—I really mean $20 trillion, roughly five times as much as what we had after 2008.”

USAGOLD note:  Mauldin makes reference to Strauss and Howe’s Fourth Turning in this article and we live day to day the social, economic and political breakdown described in that book.  It is the matrix in which everything else is grown.  We will not get to place where the Fed buys up another $16 trillion in debt without a systemic financial disturbance that will make the 2007-2008 breakdown look like a minor tremor.

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On war, gold, my years in Congress

Mises Institute/Jeff Deist/5-25-2018/Ron Paul Interview

“We had our first [Gold Commission] meeting and it was held in secret and [Donald] Regan was the chairman. He was Treasurer and he said, ‘we have to keep this secret because we don’t want to mess up the gold markets and all.’ And guess who came to our rescue? Several people did, but [syndicated columnist and journalist] Bob Novak did. Novak was a gold guy and he started writing about it and he got enough people to pester them and then they turned the commission’s documents over. Few people in Washington wanted an open discussion.”

USAGOLD note:  Ron Paul reminisces about key figures, his campaigns, Congress  . . . .  an interesting read.

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Mindless robots have taken over the market, says Don Coxe

Financial Sense/Jim Puplava/5-23-2018

“As market pricing becomes increasingly automated, Coxe worries that this threatens to undermine the qualitative individual (human) decision-makers provide in valuing goods and services. ‘What we’re doing once again is preventing the ordinary responses to shocks from functioning,’ Coxe said. ‘Therefore, we’ll get new kinds of shocks.'”

USAGOLD note:  We agree with this sentiment, especially the use of the words “mindless robots” which in our opinion is pretty much telling it like it is. No one knows where we will end up once the holodeck shuts down, but gold – the one investment that remains fully grounded in reality – will likely help us dematerialize in the danger zone and rematerialize safely on the other side.  My worry is that we get one major all-encompassing shock because so many smaller shocks, and their healthy resolution, have been bumped down the road, or better put – ignored – as the machines increasingly behave with a mindlessness of their own.

Related:Biggest, most heavily traded markets vulnerable to flash crashes’ warns Goldman. Also, the last issue of News & Views – The case for gold in the era of financial virtual reality

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Part 4 – ‘American Default: The Untold Story of FDR, the Supreme Court and the Battle over Gold’

Bloomberg/Sebastian Edwards/5-25-2018

USAGOLD note: Roosevelt and Congress devalue the dollar as a means to igniting inflation and reinforce restrictions on American’s ability to own gold bullion.  The Supreme Court nullifies the gold clause.  The United States moves forward in the first stages of establishing a fiat monetary system that comes to full fruition 38 years later under Richard Nixon and makes the private ownership of gold an important option for American citizens.

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Posted in Today's top gold news and opinion |