Monthly Archives: June 2018

Trump threatens 20% tariff on all car imports from the EU

CNBC/Jeff Cox/6-22-2018

“President Donald Trump tweeted another tariff threat Friday, this time targeting imported autos from the European Union. The president said on his feed that if the EU does not removed duties on U.S. cars, then the U.S. will have no choice but to act.”

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Posted in Today's top gold news and opinion |

Bewildered markets, including gold, await the next twist of fate

DAILY MARKET REPORT

Financial markets, including gold, continue to stumble about in a decidedly bewildered state stunned, it would seem, by the fundamental changes unfolding in the global economy and cautiously awaiting the next twist of fate. The U.S. stock market just spent the past eight past sessions in decline, something it has not done in a very long time. The yield on treasuries lurches back and forth determined one day to react positively to the interest rate environment and and equally determined to react negatively the next. Commodities spurt higher based on inflationary expectations one day than track to the downside on dis-inflationary expectations the next. For its part gold can’t seem to establish itself firmly above the $1300 market, nor can it establish itself with any real conviction below the $1300 mark.

Today we have had more of the same though the yellow metal has managed to eke out a $2 gain at $1269.50. Carlos Guitierrez, former commerce secretary under George W. Bush and now head of the National Foreign Trade Council, summed up the future neatly when he told Financial Times yesterday, “The parties that will be most impacted are U.S. companies. They are going to report bad earnings. It is going to hurt the stock market. Even worse, we are going to put people out of work and it is going to spark inflation.”

Sounds like a prescription for future gold demand. . . . . .

Quote of the Day
“Our central bank monetary-led boom has made debt replace wealth for a long time. That’s not sustainable, of course. (We are ‘mining’ our soil for short-term gain.) We’ll see a return to the significance of productive stuff again I think, and that even includes farming – maybe especially farming. And the Midwest has a pretty good track record with productive stuff. Hard assets will matter again. But of course, I sound ridiculous even saying such things. Like a grumpy old grandpa.” – Mark Spitznagel, Universa Investments (as quoted by columnist, P.J. O’Rourke

Chart of the Day


Chart courtesy of TradingEconomics.com

Chart note: Last week we posted the chart showing that the Bank of Japan’s balance sheet debt holdings were even more burdensome and tenuous than that of the United States Federal Reserve. This chart shows European Central Bank’s balance sheet now at €4.56 trillion or $3.92 trillion – mostly in sovereign debt instruments issued by the European Union’s member states. Together the three central banks hold a mind-numbing nearly $13 trillion in debt instruments. The European Central Bank announced last week that it would halt its bond-buying operations by the end of 2018. Japan will continue with its quantitative easing program as long as it deems it necessary.

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DMR–Bewildered markets, including gold, await the next twist of fate

DAILY MARKET REPORT

Financial markets, including gold, continue to stumble about in a decidedly bewildered state stunned, it would seem, by the fundamental changes unfolding in the global economy and cautiously awaiting the next twist of fate. The U.S. stock market just spent the past eight past sessions in decline, something it has not done in a very long time. The yield on treasuries lurches back and forth determined one day to react positively to the interest rate environment and and equally determined to react negatively the next.  Commodities spurt higher based on inflationary expectations one day than track to the downside on dis-inflationary expectations the next. For its part gold can’t seem to establish itself firmly above the $1300 market, nor can it establish itself with any real conviction below the $1300 mark.

Today we have had more of the same though the yellow metal has managed to eke out a $2 gain at $1269.50. Carlos Guitierrez, former commerce secretary under George W. Bush and now head of the National Foreign Trade Council, summed up the future neatly when he told Financial Times yesterday, “The parties that will be most impacted are U.S. companies. They are going to report bad earnings. It is going to hurt the stock market.  Even worse, we are going to put people out of work and it is going to spark inflation.”

Sounds like a prescription for future gold demand. . . . . .

Quote of the Day
“Our central bank monetary-led boom has made debt replace wealth for a long time. That’s not sustainable, of course. (We are ‘mining’ our soil for short-term gain.) We’ll see a return to the significance of productive stuff again I think, and that even includes farming – maybe especially farming. And the Midwest has a pretty good track record with productive stuff. Hard assets will matter again. But of course, I sound ridiculous even saying such things. Like a grumpy old grandpa.” – Mark Spitznagel, Universa Investments (as quoted by columnist, P.J. O’Rourke

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: Last week we posted the chart showing that the Bank of Japan’s balance sheet debt holdings were even more burdensome and tenuous than that of the United States Federal Reserve.  This chart shows European Central Bank’s balance sheet now at €4.56 trillion or $3.92 trillion – mostly in sovereign debt instruments issued by the European Union’s member states. Together the three central banks hold a mind-numbing nearly $13 trillion in debt instruments.  The European Central Bank announced last week that it would halt its bond-buying operations by the end of 2018.  Japan will continue with its quantitative easing program as long as it deems it necessary.

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New lows in store for the rupee?

Investopedia/J.C. Parets/6-21-2018

“Over the past two months, the rupee has rallied against several of the most widely traded currencies in the world, including the U.S. dollar, euro, British pound, yen and Australian dollar. With that said, the rupee’s rally versus the U.S. dollar was short lived, and the pair is now back toward 2.5-year lows, suggesting that it remains vulnerable and that further weakness may be ahead.”

USAGOLD note:  A currency and a country often overlooked, any prolonged weakness in India’s rupee could trigger strong physical demand in the world’s largest market for gold annually.

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US business fears choppy waters ahead due to Trump trade tariffs

Financial Times/Sam Fleming and Shawn Donnan/6-22-2018

“The remorseless escalation of Donald Trump’s trade hostilities with key partners has yet to make a dent in the country’s buoyant growth figures — but anxiety is rising over the impact of his tariffs on US economic prospects.”

USAGOLD note:  Not to speak of  the prospects for the rest of the world’s economies particularly if we move from the short war some are predicting to a longer-term war of attrition.

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Deutsche Bank could spell economic and financial chaos. Could this be why Germany has repatriated 583 tons of gold?

The Gold Telegraph/Tom Lewis/6-22-2018

“Before declaring bankruptcy, Lehman Bros. had $639 billion in assets. It was thought to be too big to fail. Currently, Deutsche Bank has almost triple those assets, $1.7 trillion, but its future is in question. The bank’s net income plummeted by 80 percent from its 2017 level. The Federal Reserve has labeled Deutsche Bank’s US operation as troubled. And that might be an understatement.”

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U.S. beating China in trade fallout, at least in equity markets

Bloomberg/Sofia Horta e Costa/6-21-2018

“Shanghai shares have been hammered by signs of worsening ties, and are now the cheapest ever relative to those in the U.S. The reaction to Donald Trump’s latest tariff threat this week was a $406 billion wipeout, the largest single-day loss of value in the nation’s stock market in more than two years, while the benchmark gauge is poised to enter a bear market after falling about 20 percent from its recent high.”

 

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DMR–Gold recovering this morning from yesterday’s Sintra inspired downdraft

DAILY MARKET REPORT

Gold is staging something of a recovery this morning from yesterday’s downdraft trading at $1268 and even on the day. Silver is down 2¢ at $16.32. Gold broke to the downside late in yesterday’s session responding, as best we can gather, to statements at the Sintra central bank conference from the ECB’s Draghi and Nowotny, the Fed’s Powell, BoF’s Villeroy, BoJ’s Kuroda and others.

Those statements reinforced the split in interest rate policies between the United States and the other participants. That divergence between the perceived hawkish U.S. stance and the rest of the world’s dovish positioning was interpreted as bullish for the dollar and bearish for the rest of the world’s currencies. The result was yesterday’s sell-off. In this new and highly complicated financial order, though, nothing can be taken as given. The dollar index is trading down this morning and gold is recovering from yesterday’s lows.


An observation. . . . .

It is going to be awhile before the present turmoil settles into something recognizable. Market players and investors from institutions and hedge funds to small private investors alike are asking themselves some down-to-earth questions:

1. “Is the world a safer place than what it was before all of this happened?”

2. “Is the trade war likely to be a quick or will it become a long, drawn-out war of attrition?”

3. “Have the markets already priced-in the shock of what is quickly becoming a new world order or we are on the threshold of something more consequential?”

And last but certainly not least. . .

4. “Is my money safer where it is now or do I need to acknowledge that things have changed, perhaps radically, and make some necessary adjustments?

Today Germany’s Daimler, the manufacturer of Mercedes Benz, issued a warning that its profits would be undermined by China’s tariffs on U.S. imports. Stocks for Europe’s automobile manufacturers dropped sharply as a result. The announcement amounts to the recognition of a new way of doing business and one, by the way, that is not specific to Daimler. There are likely a good many similar epiphanies in the waiting both on the corporate level and among private investors as well.

Quote of the Day
“For those that have invested across assets – and especially over time – gold’s role as a safe haven is a familiar one. A refuge from panic is defined by confidence in stability and liquidity. The precious metal’s capacity to play that critical outlet has been proven over centuries. This particular status has only solidified itself over recent years, however, as some of the favorite alternatives have been materially distorted by financial conditions. In particular, government bonds from top credit rated countries have seen their value eroded substantially by dramatic rise of stimulus programs. It is that same diversion for safety that caters to the more prolific ‘anti-fiat’ appeal in the commodity. More and more, the threat of a wide risk aversion promotes the appeal of the metal as Dollar, Yen and Swiss franc find themselves undermined by circumstance.” – John Kicklighter, NASDAQ Daily FX

Chart of the Day

Chart note: With the US dollar the centerpiece of interest the past several weeks, we thought it appropriate to post the long-term overlay chart of the gold price and the major-currency version of the US Dollar index. As you can see, the dollar has been in a secular, long-term decline against other major currencies since the early 1970s when the U.S. abandoned gold-backing for the currency and the world switched to free-floating gold and currency prices. Despite all the talk of a strong dollar and how Treasury secretaries historically back the concept, the reality is the opposite – a weak dollar when measured against its major competitors. In the end, unencumbered ownership of physical gold coins and bullion, as this chart amply illustrates, has proven to be a very effective defense in the on-going process.

 

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Gold recovering this morning from yesterday’s Sintra inspired downdraft

Gold is staging something of a recovery this morning from yesterday’s downdraft trading at $1268 and even on the day. Silver is down 2¢ at $16.32. Gold broke to the downside late in yesterday’s session responding, as best we can gather, to statements at the Sintra central bank conference from the ECB’s Draghi and Nowotny, the Fed’s Powell, BoF’s Villeroy, BoJ’s Kuroda and others.

Those statements reinforced the split in interest rate policies between the United States and the other participants. That divergence between the perceived hawkish U.S. stance and the rest of the world’s dovish positioning was interpreted as bullish for the dollar and bearish for the rest of the world’s currencies. The result was yesterday’s sell-off. In this new and highly complicated financial order, though, nothing can be taken as given. The dollar index is trading down this morning and gold is recovering from yesterday’s lows.


An observation. . . . .

It is going to be awhile before the present turmoil settles into something recognizable. Market players and investors from institutions and hedge funds to small private investors alike are asking themselves some down-to-earth questions:

1. “Is the world a safer place than what it was before all of this happened?”

2. “Is the trade war likely to be a quick or will it become a long, drawn-out war of attrition?”

3. “Have the markets already priced-in the shock of what is quickly becoming a new world order or we are on the threshold of something more consequential?”

And last but certainly not least. . .

4. “Is my money safer where it is now or do I need to acknowledge that things have changed, perhaps radically, and make some necessary adjustments?

Today Germany’s Daimler, the manufacturer of Mercedes Benz, issued a warning that its profits would be undermined by China’s tariffs on U.S. imports. Stocks for Europe’s automobile manufacturers dropped sharply as a result. The announcement amounts to the recognition of a new way of doing business and one, by the way, that is not specific to Daimler. There are likely a good many similar epiphanies in the waiting both on the corporate level and among private investors as well.

Quote of the Day
“For those that have invested across assets – and especially over time – gold’s role as a safe haven is a familiar one. A refuge from panic is defined by confidence in stability and liquidity. The precious metal’s capacity to play that critical outlet has been proven over centuries. This particular status has only solidified itself over recent years, however, as some of the favorite alternatives have been materially distorted by financial conditions. In particular, government bonds from top credit rated countries have seen their value eroded substantially by dramatic rise of stimulus programs. It is that same diversion for safety that caters to the more prolific ‘anti-fiat’ appeal in the commodity. More and more, the threat of a wide risk aversion promotes the appeal of the metal as Dollar, Yen and Swiss franc find themselves undermined by circumstance.” – John Kicklighter, NASDAQ Daily FX

Chart of the Day

Chart note:  With the US dollar the centerpiece of interest the past several weeks, we thought it appropriate to post the long-term overlay chart of the gold price and the major-currency version of the US Dollar index.  As you can see, the dollar has been in a secular, long-term decline against other major currencies since the early 1970s when the U.S. abandoned gold-backing for the currency and the world switched to free-floating gold and currency prices.  Despite all the talk of a strong dollar and how Treasury secretaries historically back the concept, the reality is the opposite – a weak dollar when measured against its major competitors.  In the end, unencumbered ownership of physical gold coins and bullion, as this chart amply illustrates, has proven to be a very effective defense in the on-going process.

 

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Chinese-American misunderstandings, disputes and wars

Linked-in/Ray Dalio-Bridgewater Associates/6-18-2018

“Because Chinese and American leaders have all sorts of carrots and sticks (e.g., economic, military, cyber, etc.) that they can use, they are now determining which ones to use, how far to push the testing, and how far the other will go in inflicting pain and enduring it. The escalations come in the form of tit-for-tats—i.e., a series of escalations that can become progressively larger and more painful, and that take different forms that can extend beyond trade (e.g., to include capital wars). It’s this series of escalations that the wise Chinese leader that I referred to conveyed can easily get beyond anyone’s control.” [Emphasis added]

USAGOLD note:  Dalio explores the cultural differences between China and the United States based on his experience from his business dealings and contacts there.  Deep background from the head of the world’s largest hedge fund and a gold owner/advocate.

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EU to impose duties on U.S. imports Friday after Trump tariffs

Reuters/Philip Blenkinsop/6-20-2018

USAGOLD note:  While all eyes are on China, EU announces 25% tariff on U.S. imports.  Given the history thus far, the Trump administration will likely retaliate.  Auto tariffs??

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Russia dumps Treasuries for gold

Bloomberg/Natasha Doff/6-20-2018

USAGOLD note:  Unlike other reports we have seen on Russian gold purchases, this one ties the those acquisitions directly to liquidation of U.S. sovereign debt.  In related news, China’s holdings of U.S Treasuries declined by $5.8 billion in April and Japan net sold $12.3 billion.  These liquidations are important both with respect to the actual liquidations and because these countries obviously are withdrawing from the U.S. sovereign debt market at a time when U.S. offers of sovereign debt are running at record levels.  If China has been quietly swapping U.S. debt for gold, it has not been made public.  Japan has not been a gold buyer in the past.

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US tax reform drains more dollars from global economy than Fed

Financial Times/Delphine Strauss/6-20-2018

“US companies repatriating profits drained more dollars from global markets in the first quarter of the year than did the Federal Reserve’s actions to shrink its balance sheet, according to data that suggests embattled emerging markets cannot simply blame the Fed for their plight.”

USAGOLD note:  Interesting factoid to blend into the general analysis. . . . . .

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Gold trading circumspectly this morning, quiet summer day in markets

DAILY MARKET REPORT

Gold is trading circumspectly this morning in and around the $1275 mark and level with yesterday’s closing number. Silver is also running sideways. A statement from Fed chairman Powell that the central bank will stay the course on raising interest rates, which normally might have undermined the price, is balanced with concerns about the intensifying trade war between the U.S. and China. The commodities complex and U.S. dollar are also level on the day with stocks displaying marginal weakness. In short. . .a quiet day summer day in the markets.

Quote of the Day
“If we don’t quite know what the future holds, there is little point in getting carried away by very fancy mathematical calculations of optimal portfolios. Don’t rely on past data to be a good guide. Try to think through what mix of assets gives you the best chance of surviving some big event. That must mean including assets that are negatively correlated or uncorrelated in your portfolio. . . .And I am very struck by the fact that over many many years, central banks, governments and individuals have always, despite the protestations of economists, held some gold in their portfolio. Obviously, there is no high running return, but when unexpected things happen, particularly when governments rise and fall, then gold is a means of payment that everyone is always prepared to accept. And I think that’s why even central banks have always had a role in their portfolios for gold.” – Mervyn King, former Governor of the Bank of England

Chart of the Day

Chart note: When the United States abandoned the gold standard in 1971 and freed currencies to float against one another, the fiat money era began. We are still in that era today. This chart shows the performance of gold from the early 1900s to 1971 when gold backed the dollar, and the era from 1971 to present when it did not. Gold has had its ups and down since 1971, but clearly, over the long run, in the absence of an official gold standard, individual investors have been well-served by putting themselves on a private gold standard, as Mervyn King suggests above.

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DMR–Gold trading circumspectly this morning, quiet summer day in markets

DAILY MARKET REPORT

Gold is trading circumspectly this morning in and around the $1275 mark and level with yesterday’s closing number.  Silver is also running sideways.  A statement from Fed chairman Powell that the central bank will stay the course on raising interest rates, which normally might have undermined the price, is balanced with concerns about the intensifying trade war between the U.S. and China.  The commodities complex and U.S. dollar are also level on the day with stocks displaying marginal weakness. In short. . .a quiet day summer day in the markets.

Quote of the Day
“If we don’t quite know what the future holds, there is little point in getting carried away by very fancy mathematical calculations of optimal portfolios. Don’t rely on past data to be a good guide. Try to think through what mix of assets gives you the best chance of surviving some big event. That must mean including assets that are negatively correlated or uncorrelated in your portfolio. . . .And I am very struck by the fact that over many many years, central banks, governments and individuals have always, despite the protestations of economists, held some gold in their portfolio. Obviously, there is no high running return, but when unexpected things happen, particularly when governments rise and fall, then gold is a means of payment that everyone is always prepared to accept. And I think that’s why even central banks have always had a role in their portfolios for gold.” – Mervyn King, former Governor of the Bank of England

Chart of the Day

Chart note: When the United States abandoned the gold standard in 1971 and freed currencies to float against one another, the fiat money era began. We are still in that era today. This chart shows the performance of gold from the early 1900s to 1971 when gold backed the dollar, and the era from 1971 to present when it did not. Gold has had its ups and down since 1971, but clearly, over the long run, in the absence of an official gold standard, individual investors have been well-served by putting themselves on a private gold standard, as Mervyn King suggests above.

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Deutsche Bank’s troubles raise worries about the future of the Euro Zone

Mises Institute/Thorsten Polleit/6-19-2018

“Beware of big banks — this is what we could learn from the latest financial and economic crises 2008/2009. Big banks have the potential to take an entire economy hostage: When they get into trouble, they can drag everything down with them, especially the innocent bystanders – taxpayers and, if and when the central banks decide to bail them out, those holding fiat money and fixed income securities denominated in fiat money.”

USAGOLD note:  If  Deutsche Bank slides over the edge it will be interesting to see how Germany and its central bank will react.  The national position has been anti-bailout in the southern perimeter of Europe, but one wonders how both will react when the problem of bank unsustainability hits closer to home.  Will the call go out to the ECB?  Deutsche Bank’s balance sheet, as Polleit points out, represents 45% of Germany’s GDP.  One company.  Big number.  Gold demand in Germany has been one of the precious metals markets’ big stories this year.

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Tiny Asian nation hoards gold as shield against trade war

Bloomberg/Evgenia Pismennaya and Anna Andrianova/6-19-2018

“Kyrgyzstan hopes to have half of reserves invested in bullion. ‘Rules of the game are changing,’ central bank governor says What do you do when your two biggest trading partners are embroiled in economic standoffs with the U.S.? You buy as much gold as you possibly can.”

USAGOLD note:  Kyrgyzstan’s reasoning resurrects Nobel economist Robert Mundell’s advice to the European Union at the time of the euro’s launch to keep a strong gold reserve as a hedge against currency vulnerabilities.  One would have to think that other nation states similarly positioned will diversify with gold if the trade wars become more entrenched and lingers for any length of time. Currency stability will likely become an issue.

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Five reasons the drop in gold prices shouldn’t worry investors

Forbes/Simon Constable/6-18-2018

“Gold prices took a hit at the end of last week, and it has some observers concerned. But the truth is it shouldn’t be worrying.”

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Visualization courtesy of HowMuch.net (Click to enlarge)

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Billionaire investor Jim Mellon: This is the start of a ‘very major’ correction

MarketWatch/Shawn Langlois/6-19-2018

“There has been far too much complacency, far too much buybacks by corporations of their stock which have supported the market, far too much concentration of ownership, particularly in tech stocks in the U.S. And it’s time for a very major correction, which is I think what we’re embarking on.”

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Better Business Bureau Five Star Review

__________________________________________________

Recent Better Business Bureau Client 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.” – Elan C., 8-29-2017

Scorecard: 38 45 five star reviews. Zero complaints.
A+ rating. Accredited since 1991.

[Link]

USAGOLD Recommendation: The precious metals industry is unique in the financial industry in that it is not subject to oversight or regulation by third-party government entities like the SEC or CFTC. As such, marketplace forums and feedback sites often serve as a replacement for investors attempting due diligence. While several options can be found, by far the most impartial and least susceptible to vested influence is the Better Business Bureau. When looking at a company’s BBB profile, don’t focus solely on the rating. To be honest, pretty much everybody has an ‘A’ or ‘A+’ rating. What is far more important to assess is the number and nature of complaints, number and caliber of positive and negative reviews, longevity with the BBB, as well as the number of ‘stars’ given a company through the actual customer review system.

__________________________________________________

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Better Business Bureau Five Star Review

__________________________________________________

Recent Better Business Bureau Client 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.” – Elan C., 8-29-2017

Scorecard: 38 45 five star reviews. Zero complaints.
A+ rating. Accredited since 1991.

[Link]

USAGOLD Recommendation: The precious metals industry is unique in the financial industry in that it is not subject to oversight or regulation by third-party government entities like the SEC or CFTC. As such, marketplace forums and feedback sites often serve as a replacement for investors attempting due diligence. While several options can be found, by far the most impartial and least susceptible to vested influence is the Better Business Bureau. When looking at a company’s BBB profile, don’t focus solely on the rating. To be honest, pretty much everybody has an ‘A’ or ‘A+’ rating. What is far more important to assess is the number and nature of complaints, number and caliber of positive and negative reviews, longevity with the BBB, as well as the number of ‘stars’ given a company through the actual customer review system.

__________________________________________________

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Wall Street joins global sell-off as trade fears intensify

Financial Times/Michael Hunter, Edward White and Hudson Lockett/6-19-2018

“Wall Street opened lower on Tuesday after a sharp sell-off in Asia as investors were shaken by Donald Trump’s threat to slap new tariffs on $200bn in Chinese imports, increasing fears tit-for-tat retaliatory duties was spinning into a full-scale trade war.”

USAGOLD note:  Once again today’s stock market sell-off began in Asia, spread to Europe and took that momentum into the New York open.  Usually, as mentioned yesterday, it is the other way around.  The important point to file for future reference is that it is not just one but all national stock exchanges that are affected by the trade wars – a commonality that should send shivers down the spine of the investment community.  You can run, in other words, but you can’t hide.  Diversification makes sense not just in the United States, but just about everywhere. That sentiment at some point will likely affect gold demand and the price.

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BIS blasts cryptos in Special Report: “Beyond the Hype”

MishTalk/Mish Shedlock/6-18-2018

“The BIS blasts cryptos over scaling issues, energy, and trust. The BIS is correct. Cryptos are fatally flawed as money. A Bank of International Settlements (BIS) report examines cryptocurrencies in depth. The study, called ‘Looking Beyond the Hype’ investigates whether cryptocurrencies could play any role as money.”

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Gold pushes to lower levels with trade wars and lower commodity prices providing impetus

DAILY MARKET REPORT

Gold pushed to lower levels in early New York trading in a move that began overnight in Asia. It is trading at $1275 – down $6 on the day – with a Trump administration promise to escalate the U.S.-China trade war, and an additional response from China to respond in kind, seemingly the main impetus.

On the one hand, traders are betting that a slowdown in China’s economy would result in lower commodity prices. On the other hand, widespread tariffs are likely to push price inflation higher in the United States. At the moment, the prospect of lower commodity prices has the upper hand in gold’s pricing. The dollar is higher this morning as a result while gold and silver are following the rest of the commodity complex to lower ground. In a trend that started in Asia yesterday, global stock markets continued their sell-off overnight and the Dow looks poised to open about 350 points lower.

Quote of the Day
Mr. Powell’s plain-speaking approach is refreshing. He is the antithesis of ‘Greenspeak.’ The new Chairman is clear, concise and devoid of obfuscation. He’s no ideologue. There are no glaring idiosyncrasies, for a change. Powell appears the adept and confident leader, yet he demonstrates an admirable humility when it comes to pontificating about today’s exceedingly complex backdrop. The Chairman has also abandoned much of the academic narrative that too often ensures economic analysis and discussion turn hopelessly convoluted and divorced from reality.” – Doug Noland, Credit Bulletin

Chart of the Day

Chart note: Gold gets its share of press, not all of it good. In recent months, the financial media have hammered away at the mistaken notion that gold does not do well in a rising interest rate environment. Nothing could be further from the truth as revealed in our Chart of the Day. Since the Fed started raising interest rates in late 2015, gold has been in a strong, sustained uptrend. The Fed funds rate has gone from .12% in November, 2015 to 1.70% today. Gold simultaneously has gone from $1062 to $1300 as of yesterday’s close for a gain of 22% during the initial stages of this rate raising period.
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DMR–Gold pushes to lower levels with trade wars and lower commodity prices providing impetus

DAILY MARKET REPORT

Gold pushed to lower levels in early New York trading in a move that began overnight in Asia.  It is trading at $1275 – down $6 on the day – with a Trump administration promise to escalate the U.S.-China trade war, and an additional response from China to respond in kind, seemingly the main impetus.

On the one hand, traders are betting that a slowdown in China’s economy would result in lower commodity prices. On the other hand, widespread tariffs are likely to push price inflation higher in the United States.  At the moment, the prospect of lower commodity prices has the upper hand in gold’s pricing.  The dollar is higher this morning as a result while gold and silver are following the rest of the commodity complex to lower ground. In a trend that started in Asia yesterday, global stock markets continued their sell-off overnight and the Dow looks poised to open about 350 points lower.

Quote of the Day
Mr. Powell’s plain-speaking approach is refreshing. He is the antithesis of ‘Greenspeak.’ The new Chairman is clear, concise and devoid of obfuscation. He’s no ideologue. There are no glaring idiosyncrasies, for a change. Powell appears the adept and confident leader, yet he demonstrates an admirable humility when it comes to pontificating about today’s exceedingly complex backdrop. The Chairman has also abandoned much of the academic narrative that too often ensures economic analysis and discussion turn hopelessly convoluted and divorced from reality.” – Doug Noland, Credit Bulletin

Chart of the Day

Chart note: Gold gets its share of press, not all of it good. In recent months, the financial media have hammered away at the mistaken notion that gold does not do well in a rising interest rate environment. Nothing could be further from the truth as revealed in our Chart of the Day. Since the Fed started raising interest rates in late 2015, gold has been in a strong, sustained uptrend. The Fed funds rate has gone from .12% in November, 2015 to 1.70% today. Gold simultaneously has gone from $1062 to $1300 as of yesterday’s close for a gain of 22% during the initial stages of this rate raising period.
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Russia cuts Treasury holdings in half as foreigners start losing appetite for US debt

CNBC/Jeff Cox/6-18-2018

“The U.S. government needs buyers of its debt as the Fed continues to reduce its holdings and the budget deficit is projected to surge in coming years.”

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Global stock bourses face trade war headwinds

Table courtesy of TradingEconomics. com

USAGOLD note:  It is not unusual to see the majority of stock bourses all down on the same day.  What is unusual about today’s market action, though subdued compared to what it could be, is that it started in Asia, carried over to Europe and spilled over to the NYSE opening this morning.  Usually it is the other way around – starting in New York and moving to Asia, then Europe.  The cross-border trend has to do with the escalating trade wars and shows that the damage sustained has been and will be global in scope.  As a stock investor, in other words, you can run but you can’t hide – a circumstance likely to drive capital into gold and other safe haven assets as investors look for a place to take shelter.

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Fiat currency always ends in collapse

The Gold Telegraph/Tom Lewis/6-18-2018

“When the fiat currency in your wallet collapses in value, gold will remain a hedge against inflation and other economic chaos. Today’s central banks have created unprecedented global debts that do not bode well for future economic health. Many countries, including the US, are at the brink of financial disaster. These governments will attempt to solve the problem by printing more fiat currency and devaluing it even more.”

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Was gold actually “dumped” on Friday?

Gold Eagle/Dave Kranzler/6-17-2018

“On Friday June 15, 2018), after the primary physical bar trading markets – India and China – were closed for the weekend, large quantities of paper gold futures were suddenly being dumped into the CME’s Globex computer trading system, about 5 minutes before the Comex gold pit opened for the day (8:20 a.m. EST). You can see the action narrated in the chart above. It’s not uncommon for the price of gold to be smashed using paper gold on the Friday after an FOMC meeting, especially in the summer months when trading operations are likely only at half-staff and the rest of the world is gone for the weekend.”

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