DMR–Gold jumps on North Korea tensions, possible trade war escalation

DAILY MARKET REPORT

Gold is moving higher in international markets this morning.  According to a Reuters report from London, the upside is the result of investors covering short positions.  That short covering, which began in Asia overnight and carried over to European trading, is likely the result of rekindled tensions with North Korea and the escalating trade war between the United States and China.  Gold is up nearly $11 at $1265.50.  Silver is up 19¢ at $16.22.  A firmer Chinese yuan is also helping gold this morning.

Senator Lindsay Graham yesterday blamed China for the breakdown in talks with North Korea. If he is right, it would represent a rapid and dangerous escalation that puts a whole new twist on the trade war. If China is willing to move its response outside reciprocal tariffs and trade sanctions to the political and military realms, then we are in a whole different ball game than what has already been priced into financial markets. “I see China’s hands all over this,” he told Fox News yesterday. “We’re in a fight with China. We buy $500 billion worth of goods from the Chinese. They buy $100 billion from us. They cheat. President Trump wants to change the economic relationship with China.”

Quote of the Day
“The cost of living has skyrocketed in recent years. Let’s look at the cost of goods in services in terms of a salary earned by a full college professor. In the 1980s, our ‘full professor’ needed to pay almost 15 minutes of his salary to buy one kilogram of beef. Today, in July 2017, our full professor needs to pay the equivalent of 18 hours to buy the same amount of beef. During the 1980s, our full professor needed to pay almost one year’s salary for a new sedan. Today, he must pay the equivalent of 25 years of his salary. In the 1980s, a full professor with his monthly salary could buy 17 basic baskets of essential goods. Today, he can buy just one-quarter of a basic basket. And what about the value of our money? Well, in March 2007, the largest denomination of paper money in Venezuela was the 100 bolivar bill. With it, you could buy 28 US dollars, 288 eggs, or 56 kilograms of rice. Today, you can buy .01 dollars, 0.2 eggs, and 0.08 kilograms of rice. In July 2017, you need five 100-bolivar bills to buy just one egg.” – Timothy D. Terrell, on life in Venezuela (2018)

Chart of the Day

USAGOLD note:  The inflation rate in Venezuela is 24, 571%.

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