Monthly Archives: June 2018

Gold steadies, may have bottomed

AFTERNOON UPDATE

FOREX Closes: Gold $1252.91 (+$4.82) / Silver $16.06 (+9¢)

London South East/Alliance News/6-29-2018

“Gold futures rose Friday, snapping a four-day losing skid as traders weighed a flurry of economic news from around the globe. After hitting a 7-month low, gold for August rose USD3.60 to USD1254.60 an ounce.”

 

Posted in Today's top gold news and opinion |

The Illustrated History of Money and Economics – 2

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Visualizations offered in conjunction with the Visual Capitalist 2018-2

Posted in Today's top gold news and opinion |

Surging oil prices send eurozone inflation above ECB target

Financial Times/Claire Jones/6-29-2018

“The surge in the price of oil has pushed eurozone inflation above the European Central Bank’s target, but policymakers in Frankfurt are expected to ignore the rise as broader price pressures across the region remain weak.”

USAGOLD note:  It is interesting to note that both the United States and Europe reported inflation numbers above target based on surging oil prices.  Brent crude is surging again today – up $1.61 at $79.40 and  in a solid uptrend for the past year that the gold market has ignored.

Posted in Today's top gold news and opinion |

China’s yuan tumble blindsides traders, spurs worry over impact

Bloomberg/Tian Chen, Eric Lamm and Anooja Debnath/6-27-2018

“Global investors might shrug at a bear market in Chinese domestic stocks — largely walled off from the rest of the world. But a tumble in the yuan that’s blindsided currency forecasters is now triggering warnings of potential contagion.”

USAGOLD note:  This article is worth reading for the comments from front-line currency traders in the trade wars.

Posted in Today's top gold news and opinion |

A sliver of light today at the end of the tunnel

DAILY MARKET REPORT

A tiny sliver of light flickered at the end of the tunnel this morning with gold bumping $2.50 higher at $1251.50. A slight improvement in China’s yuan was a help as was Europe’s coming to an agreement on immigration policy – an outcome that sent the euro higher on international markets.

The PCE Index, the Fed’s favorite inflation indicator, also offered a glimmer of hope by rising 2.3% (yoy) in May and exceeding the central bank’s 2% target level for the first time in six years. Chairman Powell mentioned recently interest rate policies would not be thrown off course if inflation were to exceed the target level, so the effect on gold and the dollar are likely to be limited in the short term.

Over the longer term though if inflation expectations begin to gather some momentum, current prices might attract some fresh buying in the gold market. MineLife’s Gavin Wendt summed it up this way for Bloomberg this morning, “The U.S. dollar has been the biggest beneficiary as investors’ first choice safe haven. This has indirectly led to gold-price weakness, as the dollar and gold typically move inversely to each other. With the emergence of inflation, gold is likely to find a bottom, as the dollar’s gains weaken.”

Quote of the Day
“If history teaches anything, it is that government cannot be trusted to manage money. When currency is not redeemable in gold, its value depends entirely on the judgment and the conscience of the politicians. (That is the situation in this country today.) Especially in an economic crisis or a war, the pressure to inflate becomes overwhelming. Any alternative may seem politically disastrous. Whether it be the Roman emperors repeatedly debasing their coinage, the French revolutionary government printing a flood of assignats, John Law flooding France with debased money, or the Continental Congress issuing money until it was literally “not worth a Continental,” the story is similar. A government in financial straits finds its easiest recourse is to issue more and more money until the money loses its value. The entire process is accompanied by a barrage of explanations, propaganda and new regulations which hide the true situation from the eyes of most people until they have lost all their savings.” – Scientific Market Analysis

Chart of the Day

Chart note: “In 1982, back when I was a toddler,” says Sovereign Man’s Simon Black, “the price of a Ford Mustang was $6,572. Today the cheapest Mustang starts at $25,680 according to Ford’s website. So a Mustang today is around 4x as expensive as it was 36 years ago. US Labor Department data from 1982 shows that average earnings were $309 per week, or $16,086 per year. That was enough to buy 2.45 Mustangs. Today’s earnings are $881 per week, or $45,812 per year. That’s only enough to buy 1.78 Mustangs.” A good way to fill the gap is through gold ownership. A long-term gold holding has more than compensated for the destruction of the currency for those with patience and an understanding of the forces at work in the modern economy. The chart above on the purchasing power of the dollar and gold since 1971 speaks volumes.

Posted in dailyquotes |

DMR–A sliver of light today at the end of the tunnel

DAILY MARKET REPORT

A tiny sliver of light flickered at the end of the tunnel this morning with gold bumping $2.50 higher at $1251.50. A slight improvement in China’s yuan was a help as was Europe’s coming to an agreement on immigration policy – an outcome that sent the euro higher on international markets.

The PCE Index, the Fed’s favorite inflation indicator, also offered a glimmer of hope by rising 2.3% (yoy) in May and exceeding the central bank’s 2% target level for the first time in six years. Chairman Powell mentioned recently interest rate policies would not be thrown off course if inflation were to exceed the target level, so the effect on gold and the dollar are likely to be limited in the short term.

Over the longer term though if inflation expectations begin to gather some momentum, current prices might attract some fresh buying in the gold market. MineLife’s Gavin Wendt summed it up this way for Bloomberg this morning, “The U.S. dollar has been the biggest beneficiary as investors’ first choice safe haven. This has indirectly led to gold-price weakness, as the dollar and gold typically move inversely to each other. With the emergence of inflation, gold is likely to find a bottom, as the dollar’s gains weaken.”

Quote of the Day
“If history teaches anything, it is that government cannot be trusted to manage money. When currency is not redeemable in gold, its value depends entirely on the judgment and the conscience of the politicians. (That is the situation in this country today.) Especially in an economic crisis or a war, the pressure to inflate becomes overwhelming. Any alternative may seem politically disastrous. Whether it be the Roman emperors repeatedly debasing their coinage, the French revolutionary government printing a flood of assignats, John Law flooding France with debased money, or the Continental Congress issuing money until it was literally “not worth a Continental,” the story is similar. A government in financial straits finds its easiest recourse is to issue more and more money until the money loses its value. The entire process is accompanied by a barrage of explanations, propaganda and new regulations which hide the true situation from the eyes of most people until they have lost all their savings.” – Scientific Market Analysis

Chart of the Day

Chart note:  “In 1982, back when I was a toddler,” says Sovereign Man’s Simon Black,  “the price of a Ford Mustang was $6,572. Today the cheapest Mustang starts at $25,680 according to Ford’s website. So a Mustang today is around 4x as expensive as it was 36 years ago. US Labor Department data from 1982 shows that average earnings were $309 per week, or $16,086 per year. That was enough to buy 2.45 Mustangs. Today’s earnings are $881 per week, or $45,812 per year. That’s only enough to buy 1.78 Mustangs.” A good way to fill the gap is through gold ownership.  A long-term gold holding has more than compensated for the destruction of the currency for those with patience and an understanding of the forces at work in the modern economy.  The chart above on the purchasing power of the dollar and gold since 1971 speaks volumes.

Posted in Today's top gold news and opinion |

Tehran bazaar protests point to Iranian power struggle

Financial Times/Najmeh Bozorgmehr/6-26-2018

“Hundreds of merchants in the vaulted streets of Tehran’s Grand Bazaar have shut down their shops this week in protests against a sliding currency that allies of Hassan Rouhani, Iran’s centrist president, say are being whipped up by hardliners to push him out of office.”

USAGOLD note:  This article cites one shopkeeper as saying that “people buy only basic commodities these days or turn their savings into gold coins.”  We draw your attention to this situation in Iran only because it is symptomatic of what might happen around the world should the emerging countries’ debt and currency crisis accelerate. Iran and Turkey, another country where heavy gold coin has been reported in the face of a currency crisis, are two among dozens of similarly situated countries. With the sheer number of countries and people potentially involved, the demand for physical gold could actually accelerate to levels that it would move the price.

 

Posted in Today's top gold news and opinion |

Global stocks see biggest loss of investor cash since the financial crisis

CNBC/Jeff Cox/6-28-2018

“Investors pulled $12.4 billion from global stock-focused funds in June, the highest level since October 2008 amid the worst of the financial crisis. A slowing global economy is spooking some investors as are fears of a trade war.”

USAGOLD note: Part of the capital flight problem we keep alluding to in this on-going commentary. . . . . .The dominoes not only represent one country potentially affecting another, but the problems within individual countries where the problem rolls over from its stock market, to its currency and to its external debt denominated in U.S. dollars. . .and so on.

Posted in Today's top gold news and opinion |

Powell wants ‘real economy’ to guide Fed

Bloomberg/Craig Torres, Jeanna Smialek and Christopher Condon/6-28-2018

“Fed chair’s style is more like Greenspan than Bernanke, Yellen. Fed policy may be more nimble, but a little less predictable. . . For Powell, the first non-economist to hold the job in more than three decades, conceptual benchmarks can’t fully describe the complexity of the U.S. economy. So in this first five months, he’s brought a subtle but important change to the chairmanship at a key juncture in the business cycle: trust evidence as much as economic models.”

USAGOLD note:  An important departure from past Fed chairs. . . .It will also make his tenure more interesting for those of us who spend a lot of time attempting to figure out just what the central banks – and most importantly, the Fed – are up to.

Posted in Today's top gold news and opinion |

Gold prices mark fourth decline for longest losing streak in nearly 5 months

AFTERNOON UPDATE

FOREX Closes: Gold $1248.50 (-$4.87) / Silver $16.05 (-12¢)

MarketWatch/Myra Saefong and Mark DeCambre/6-28-2018

“Gold futures finish lower Thursday to suffer a fourth consecutive loss, as the precious metal continued to be walloped by recent momentum in the U.S. dollar. . . ‘The gold market has a feeling of being oversold, but persistent strong U.S. dollar is keeping a lid on any modest recovery rally in face of ‘so-so;’ economic news’ Thursday, which should have been support for the precious metal, said Jeff Wright, executive vice president at GoldMining Inc.”

Posted in Today's top gold news and opinion |

Bloomberg’s guide to what the world’s top central banks will do next

Bloomberg/Staff/6-28-2018

“What policy makers do next in 2018 is sure to be a driver for financial markets, long supported by the flood of cheap cash.”

USAGOLD note:  A helpful summation of central bank policies that includes opinion from Bloomberg economists on each country’s policy stance.  In these times of uncoordinated, if not competitive, central bank policies, this article provides an overview worth reviewing. We should keep in mind though that whatever the policy today, it could change in a hurry. . . especially in these internationally unpredictable and acrimonious times.

 

Posted in Today's top gold news and opinion |

Gold nudges lower as dollar seesaws and problems mount in Europe and China

Gold nudged slightly lower again today as the U.S. dollar seesawed in international markets. It dipped briefly below the $1250 mark overnight and is now trading at $1252.50, down 75¢ on the day. Silver is trading at $16.00, off 12¢ on the day. If gold finishes lower again today, it will be the fourth day in a row it has lost ground.

With the immigration problem in Europe threatening Angel Merkel’s German government and the trade wars doing damage to China’s stock market and currency, the dollar at the moment is the chief beneficiary of safe-haven capital flow. That could all come to a screeching halt though if the Trump administration were to suddenly decide that the strong dollar is undermining its trade policies. Conversely, China and Europe might decide that a stronger euro and yuan might be in their best interest. We invite you to scroll below for details.

Quote of the Day
“Monetary units have always been closely tied up with units of weight. For instance, the word ‘pound’ has been used to describe both the British monetary unit (£) and the weight (lb). The pound weight was originally based on wheat. In 1266, King Henry III decreed that the British unit referred to as the grain should be defined as the weight of a corn of wheat ‘well dried, and gathered out of the middle of the ear.’ Thirty-two grains were to be equal to a pennyweight, twenty pennyweights equal to an ounce, and twelve ounces added up to a pound. So the early English pound, otherwise known as the Tower pound, was comprised of 7,680 ‘well-dried’ grains from the middle of an ear of wheat.” – JP Koning, Bullion Star

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: China’s Shanghai Composite Index dropped another 27 points overnight to close at 2786. It is down about 9% since the January interim top at the 3550 level as part of downtrend in what some analysts have dubbed a bear market for Chinese stocks. A report from the National Institute for Finance and Development, a China government-sponsored think tank, warned yesterday that “. . .China is currently very likely to see a financial panic. Preventing its occurrence and spread should be the top priority for our financial and macroeconomic regulators over the next few years.” The report was published on the internet then subsequently removed. As reported here yesterday, China intervened in currency markets on Wednesday to slow the fall of the yuan but met with limited success. The currency was down sharply again today in Asian trading.

Posted in dailyquotes |

DMR–Gold nudges lower as dollar seesaws and problems mount in Europe and China

Gold nudged slightly lower again today as the U.S. dollar seesawed in international markets. It dipped briefly below the $1250 mark overnight and is now trading at $1252.50, down 75¢ on the day.  Silver is trading at $16.00, off 12¢ on the day. If gold finishes lower again today, it will be the fourth day in a row it has lost ground.

With the immigration problem in Europe threatening Angel Merkel’s German government and the trade wars doing damage to China’s stock market and currency, the dollar at the moment is the chief beneficiary of safe-haven capital flow. That could all come to a screeching halt though if the Trump administration were to suddenly decide that the strong dollar is undermining its trade policies.  Conversely, China and Europe might decide that a stronger euro and yuan might be in their best interest. We invite you to scroll below for details.

Quote of the Day
“Monetary units have always been closely tied up with units of weight. For instance, the word ‘pound’ has been used to describe both the British monetary unit (£) and the weight (lb). The pound weight was originally based on wheat. In 1266, King Henry III decreed that the British unit referred to as the grain should be defined as the weight of a corn of wheat ‘well dried, and gathered out of the middle of the ear.’ Thirty-two grains were to be equal to a pennyweight, twenty pennyweights equal to an ounce, and twelve ounces added up to a pound. So the early English pound, otherwise known as the Tower pound, was comprised of 7,680 ‘well-dried’ grains from the middle of an ear of wheat.” – JP Koning, Bullion Star

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: China’s Shanghai Composite Index dropped another 27 points overnight to close at 2786.  It is down about 9% since the January interim top at the 3550 level as part of downtrend in what some analysts have dubbed a bear market for Chinese stocks.  A report from the National Institute for Finance and Development, a China government-sponsored think tank, warned yesterday that “. . .China is currently very likely to see a financial panic. Preventing its occurrence and spread should be the top priority for our financial and macroeconomic regulators over the next few years.” The report was published on the internet then subsequently removed.  As reported here yesterday, China intervened in currency markets on Wednesday to slow the fall of the yuan but met with limited success.  The currency was down sharply again today in Asian trading.

Posted in Today's top gold news and opinion |

Will the full moon mark a turning point for gold and silver?

Streetwise Reports/Bob Moriarity/6-27-2018

“I read something from Tom [McClellan] a couple of years ago that for certain falls in the Voodoo category. He had heard that there was a relationship between the full moon and turns in the price of gold. He set out to disprove that theory and utterly failed in his attempt. To his very great surprise, there was a relationship on a regular basis. Either the price would accelerate in the direction it had been going or it would do a U-turn.”

Recommended:  321Gold/Bob Moriarity’s website.

USAGOLD note:  Today, June 28th, we have a full moon.

Posted in Today's top gold news and opinion |

Money supply growth slides again, falling to 3-month low

Mises Institute/Ryan McMaken/6-27-2018

“Money supply growth fell to a three-month low in May this year, continuing a general downward slide in growth rates that’s been in place since late 2016. . .The money-supply metric used here — an Austrian or “true” money supply measure — is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure than M2. The Mises Institute now offers regular updates on this metric and its growth.”

USAGOLD note:  We have registered our concern in the past about raising rates into an environment of diminishing money supply. “What should we take away from this?” asks McMaken. “Falling growth rates — not necessarily into negative territory — often precede economic crises.” If you haven’t gone already, a visit to the Mises Institute site is highly recommended.

 

Posted in Today's top gold news and opinion |

Weak dollar policy and commodities

RealInvestmentAdvice/Michael Lebowitz/6-27-2018

“Trump’s campaign promised fair trade and a resurgence in U.S. manufacturing. While there are many ways he may accomplish this task, the most expeditious would be a weak dollar policy. As we have seen, negotiations can be tricky, complex and time-consuming. With a mid-term election in a few months and the 2020 presidential campaign commencing shortly thereafter, the President’s patience may wear thin. If Trump were to effectively implement a weak dollar policy, the benefits he promised voters are more likely to be apparent, even if they are only cosmetic. Investors can prepare for currency depreciation, which is frequently the expedient and often the preferred tactic of politicians.”

USAGOLD note:  Lebowitz concludes that gold is “the best hedge against a weaker dollar.”  We agree with him that the president’s patience might wear thin with the strengthening dollar.  We have expressed as much in various reports here at USAGOLD.  We should not forget that the president has frequently registered his unhappiness with China and Japan’s weak currency policies.  This is not a president who is unaware of the problem.

Posted in Today's top gold news and opinion |

Why Russia and Turkey are such gold bugs

Bloomberg/Leonid Bershidsky/6-27-2018

“It’s not a given that the world will keep buying U.S. debt at the same levels regardless of American policies and the shifting perceptions of U.S. political and economic power. The Russian and Turkish flight into gold could be a precursor of bigger global shifts.”

USAGOLD note:  We should keep in mind that Russia is light gold when its reserves are measured against other major players on the world stage, but it is making some solid progress toward remedying that problem. Germany, the Netherlands, Austria, Belgium, Venezuela, and maybe some others that have done so very quietly, repatriated their gold with essentially the same logic in mind. Likewise, the total lack of official sector sales from major countries is governed by the same logic.  Central banks own gold for the very same reasons private investors do.

Posted in Today's top gold news and opinion |

Gold marks third straight decline and another 6-month low

AFTERNOON UPDATE

FOREX Closes: Gold $1252.05 (-$6.77) / Silver $16.06 (-20¢)

MarketWatch/Mark DeCambre and Myra P. Saefong/6-27-2018

“The skid for bullion has come even as intensifying jitters around global trade, and the potential for clashes between the U.S. and its partners in China and the Europe, have elevated worries that tit-for-tat import duties will devolve into an all-out trade war, disrupting international economies.”

Posted in Today's top gold news and opinion |

Investors losing faith in global economic upswing

Financial Times/Kate Allen/6-27-2018

“Investors’ confidence in the global economic upswing is fading but this has not yet fed through into their expectations for financial assets, according to new research.”

USAGOLD note:  What me worry?  There is a clause in the new social contract which reads that the stock market will not be allowed to fail under any circumstances.  Just ask the Trump administration. . . .That clause has been included in past contracts, but for some inexplicable reason the market failed anyway – 1929, 1937, 1962, 1970s, 1987, 1990, 2000, 2007.  Some have been worse than others, but some analysts are saying now the next correction is likely to be the Big One – that we should circle 1929.

Posted in Today's top gold news and opinion |

Gold off this morning, not much in the way of news

Gold is off another $2.50 this morning at $1256.00 in a minor continuation of yesterday’s downtrend. Silver is down 8¢ at $16.21. Nothing new has surfaced in the way of market-altering news. Gold seems to be looking for direction in early trading. We will keep the DMR short today as there isn’t much to report, and point you immediately below for a couple quick, but interesting reads.

Quote of the Day
“Reflect on what happens when a terrible winter blizzard strikes. You hear the weather warning but probably fail to act on it. The sky darkens. Then the storm hits with full fury, and the air is a howling whiteness. One by one, your links to the machine age break down. Electricity flickers out, cutting off the TV. Batteries fade, cutting off the radio. Phones go dead. Roads become impassible, and cars get stuck. Food supplies dwindle. Day to day vestiges of modern civilization – bank machines, mutual funds, mass retailers, computers, satellites, airplanes, governments – all recede into irrelevance. Picture yourself and your loved ones in the midst of a howling blizzard that lasts several years. Think about what you would need, who could help you, and why your fate might matter to anybody other than yourself. That is how to plan for a saecular winter. Don’t think you can escape the Fourth Turning. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted.” – William Strauss & Neil Howe, The Fourth Turning [1997]

Charts[s] of the Day

Chart courtesy of TradingEconomics.com

Chart note: Though China might be tempted to choose devaluation over selling U.S. debt as a tactic in the trade war, as Goldman Sach’s economists suggested yesterday, it creates other problems for the country that it has tried to avoid in the past – most notably capital flight. The fact of the matter is that China has chosen to do just the opposite since early 2014: It has sold U.S. debt and tried to keep the yuan in a tight band against the U.S. dollar. China’s foreign exchange reserves as a result went from nearly $4 trillion to just above $3 trillion. Meanwhile, the yuan has traded in a narrow channel between 14¢ and 16¢. Noted gold analyst, Martin Murenbeeld, in fact, recently suggested that the trade war would inevitably force the U.S. to devalue the dollar. (Please scroll below) Also, the Wall Street Journal reports this morning that today “China’s central bank appeared to intervene to stem the yuan’s decline.”

Posted in dailyquotes |

DMR–Gold off this morning, not much in the way of news

Gold is off another $2.50 this morning at $1256.00 in a minor continuation of yesterday’s downtrend.  Silver is down 8¢ at $16.21.  Nothing new has surfaced in the way of market-altering news.  Gold seems to be looking for direction in early trading. We will keep the DMR short today as there isn’t much to report, and point you immediately below for a couple quick, but interesting reads.

Quote of the Day
“Reflect on what happens when a terrible winter blizzard strikes. You hear the weather warning but probably fail to act on it. The sky darkens. Then the storm hits with full fury, and the air is a howling whiteness. One by one, your links to the machine age break down. Electricity flickers out, cutting off the TV. Batteries fade, cutting off the radio. Phones go dead. Roads become impassible, and cars get stuck. Food supplies dwindle. Day to day vestiges of modern civilization – bank machines, mutual funds, mass retailers, computers, satellites, airplanes, governments – all recede into irrelevance. Picture yourself and your loved ones in the midst of a howling blizzard that lasts several years. Think about what you would need, who could help you, and why your fate might matter to anybody other than yourself. That is how to plan for a saecular winter. Don’t think you can escape the Fourth Turning. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted.” – William Strauss & Neil Howe, The Fourth Turning [1997]

Charts[s] of the Day

Chart courtesy of TradingEconomics.com

Chart note: Though China might be tempted to choose devaluation over selling U.S. debt as a tactic in the trade war, as Goldman Sach’s economists suggested yesterday, it creates other problems for the country that it has tried to avoid in the past – most notably capital flight.  The fact of the matter is that China has chosen to do just the opposite since early 2014: It has sold U.S. debt and tried to keep the yuan in a tight band against the U.S. dollar. China’s foreign exchange reserves as a result went from nearly $4 trillion to just above $3 trillion.  Meanwhile, the yuan has traded in a narrow channel between 14¢ and 16¢.  Noted gold analyst, Martin Murenbeeld, in fact, recently suggested that the trade war would inevitably force the U.S. to devalue the dollar. (Please scroll below) Also, the Wall Street Journal reports this morning that today “China’s central bank appeared to intervene to stem the yuan’s decline.”

Posted in Today's top gold news and opinion |

Blue Line Research’s Bill Baruch sees gold at $1300 in 30-60 days

Bloomberg/Futures in Focus/6-26-2018

Posted in Today's top gold news and opinion |

Dollar devaluation against gold inevitable – Murenbeeld

TRADE WARS

Sharps Pixley/Lawrie Williams/6-26-2018

“‘Students of monetary history should recall that global growth shrank  in the wake of the Smoot-Hawley Tariff Act of 1930, and the US was forced to devalue the dollar against gold in January 1934 with the result that the gold price rose by 70% (from $20.67 to $35.00).’   He goes on to say that, under the current Trump policy, the dollar will inevitably have to be devalued as these tariffs and counter tariffs are followed through to their inevitable conclusion.  A trade war tends to have no winners.”

USAGOLD note:  Murenbeeld’s thinking goes along with our own contention posted previously that the Trump administration is unlikely to stand idly by while other nation states launch competitive devaluation policies that would nullify the effect of tariffs. Any de facto devaluation of the dollar, no matter the mechanisms applied to carry it out, would probably push up the price of gold.

 

Posted in Today's top gold news and opinion |

Standard Charter’s Suki Cooper sees gold support at $1250

Bloomberg/Markets/6-25-2018 (Video interview)

USAGOLD note:  $1250 is long-standing support level.

Posted in Today's top gold news and opinion |

Gold hits more than 6-month low as dollar, equities recover

AFTERNOON UPDATE

FOREX Closes: Gold $1258.82 (-$6.58) / Silver $16.26 (-3¢)

Reuters/Maytaal Angel/6-26-2018

“Gold hit its lowest in more than six months on Tuesday as a sell off in global risk assets eased and the precious metal remained under pressure from the prospect that rising U.S. interest rates will further support the dollar.”

USAGOLD note:  Also, today was options expiration day on the July COMEX contract, as reported in this morning’s DMR further down the page.

Posted in Today's top gold news and opinion |

Global banks entering bear market are red flag for US

Investopedia/Mark Kolakowski/6-14-2018

“Shares of 16 Systemically Important Financial Institutions (SIFIs) are now in bear market territory, down by 20% or more from their recent highs in dollar terms, the Financial Times reports. This is sparking alarm in some quarters. ‘If these banks are supposed to be systemically important then policymakers ought to be watching them to see what is happening,’ says Ian Hartnett, chief investment strategist at London-based Absolute Strategy Research, as quoted by the FT. Taking this drop in bank share prices as an indicator of financial stress, Hartnett issued his first ‘Black Swan’ alert since 2009.”

USAGOLD note: While the inflationary alarm clangs loudly in the forefront, this dis-inflationary red flag flaps hardly noticed in the background – a possible black swan, according to Hartnett.

Posted in Today's top gold news and opinion |

Market crash downside target

Clive P. Maund/6-21-2018

“What makes this rally such a deceptive trap is that the index is still above bullishly aligned moving averages, so many buy the dip players think that it’s ‘business as usual’, but according to our interpretation, the final peak of the long bullmarket occurred late in January, and the current situation is “the calm before the storm”, with the majority being clueless that the bullmarket is dead, but they’ll really start to grasp the concept once the index breaks down through the support at the apex of the Triangle and in so doing breaks down through its moving averages which will quickly turn down. The breach of these important support levels will be what triggers the crash phase.”

USAGOLD note:  For those who like their analysis sprinkled with solid technical indicators. . . . . . . If you happen to be among those who have an unshakeable belief in the stock market, the thought of the S&P dropping to 700 from its recent high at over 2800 might seem preposterous.  In the years following the crash of 1929, though, stocks dropped 90% and did not return to the pre-crash highs for 25 years.  Something to think about. . . . . . . As always we are not suggesting that you dump your stocks in toto and buy gold, we are simply saying that a little diversification might help matters should analysts like Clive Maund turn out to be correct.

Posted in Today's top gold news and opinion |

Gold down early on options expiration

DAILY MARKET REPORT

Gold is trading down $6.50 early in today’s session at $1259.50. Technical factors dominate trade with July options expiration on today’s agenda. Gold can sell-off sharply on options expiration day, but it can often recover just as quickly. That might be the case today as it is already up $5 from earlier low at$1254.50. Silver is down 5¢ on the day at $16.29.

Quote of the Day
Central bankers are coy about gold’s importance as a monetary metal. Former Fed Chair Benjamin Bernanke, at one of our hearings, claimed flatly that gold was not money. When I pressed Bernanke on why, then, do central banks hold gold, he declared that after a long pause that it was merely ‘tradition.’ He had no interest in my suggestion that the gold could be sold off to the American people if it’s not money. The point is that due to today’s impending crisis, many governments are now accumulating more gold—while others are holding onto what they have with the expectation it will once again be used in the monetary system.” – Ron Paul, former Congressman and presidential candidate [Emphasis added]

Chart of the Day

Chart note: This long term gold chart is drawn in log-scale. “Common percent changes,” says Investopedia of log-scale charts, “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.” On a linear chart the lesser values are compressed to the point that the viewer misses the strength of a price move, and the greater values are extended to a degree that they tend to dramatize a price move – up or down. The log-scale chart presents data in a more realistic framework without the drama. As you can see from the chart above, the upward trend of the gold price since the early 2000s is not nearly as strong as the move between 1970 and 1980 in percentage terms leading some analysts to believe that we have considerable upside yet to be charted.

Posted in dailyquotes |

DMR–Gold down early on options expiration

DAILY MARKET REPORT

Gold is trading down $6.50 early in today’s session at $1259.50. Technical factors dominate trade with July options expiration on today’s agenda. Gold can sell-off sharply on options expiration day, but it can often recover just as quickly. That might be the case today as it is already up $5 from earlier low at$1254.50.  Silver is down 5¢ on the day at $16.29.

Quote of the Day
Central bankers are coy about gold’s importance as a monetary metal. Former Fed Chair Benjamin Bernanke, at one of our hearings, claimed flatly that gold was not money. When I pressed Bernanke on why, then, do central banks hold gold, he declared that after a long pause that it was merely ‘tradition.’ He had no interest in my suggestion that the gold could be sold off to the American people if it’s not money. The point is that due to today’s impending crisis, many governments are now accumulating more gold—while others are holding onto what they have with the expectation it will once again be used in the monetary system.” – Ron Paul, former Congressman and presidential candidate [Emphasis added]

Chart of the Day

Chart note:  This long term gold chart is drawn in log-scale. “Common percent changes,” says Investopedia of log-scale charts, “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.” On a linear chart the lesser values are compressed to the point that the viewer misses the strength of a price move, and the greater values are extended to a degree that they tend to dramatize a price move – up or down.  The log-scale chart presents data in a more realistic framework without the drama.  As you can see from the chart above, the upward trend of the gold price since the early 2000s is not nearly as strong as the move between 1970 and 1980 in percentage terms leading some analysts to believe that we have considerable upside yet to be charted.

Posted in Today's top gold news and opinion |

Why protectionist rhetoric roils markets

NewsMax/Mohamed E-Erian/6-26-2018

“Financial markets have long been able to ignore the spillover from political and geopolitical developments. Now, they seem a lot more sensitive to possible disruptions these events could cause to growth and corporate earnings, and with good reason: The threats seem to be spreading and the fortifications are weaker.”

USAGOLD note:  Prior to Trump administration negotiator Peter Navarro’s calming statements yesterday, the DJIA was down nearly 500 points.  It recovered to settle down just over 325.  El-Erian is hopeful that cooler heads will prevail. Taking into consideration the damage done in the Shanghai stock market and China’s threat to “punch” back over this past weekend, the possibility of the opposite, i.e., a strong reaction from Beijing, cannot be ruled out as the higher percentage outcome.

Posted in Today's top gold news and opinion |