Monthly Archives: August 2018

Afternoon Update

(USAGOLD – August 20, 2018) – Gold gained some momentum today following Friday’s strong close while the dollar weakened a bit. The metal is  up $17 over the past two trading sessions at $1190.  Silver is down 4¢ at $14.77. Gold was moving sideways until Bloomberg broke the story posted below that the president nominated Jerome Powell for the Fed job thinking he would be a “cheap money” Fed chairman.  Mr. Trump went on to say that he was “not thrilled” with recent rate hikes.  A stronger yuan based on upcoming trade talks between the US and China also helped boost gold.

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Trump confirms Hamptons comments in Reuters’ interview

Reuters/Staff/8-20-2018

“U.S. President Donald Trump said on Monday he was ‘not thrilled’ with Federal Reserve Chairman Jerome Powell for raising interest rates and accused China and Europe of manipulating their respective currencies.”

USAGOLD note:  Looks like the president just confirmed the Hamptons’ comments (scroll below) and upped the ante.

 

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Degussa Market Report

Earlier today we promised reposting the latest Degussa Daily Market Report (Dr. Thorsten Polleit) in full.  It is now on the board further down the page.  It is highly recommended.  Please take special note of the accompanying charts.

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Trump complains to donors in the Hamptons about Powell’s rate hikes

Bloomberg/Jennifer Jacobs and Saleha Mohsin/8-20-2018

“President Donald Trump said he expected Jerome Powell to be a cheap-money Fed chairman and lamented to wealthy Republican donors at a Hamptons fundraiser on Friday that his nominee instead raised interest rates, according to three people present.”

USAGOLD note:  Somehow I think this Bloomberg report is more important than the average run of news on an average day.  Somehow, too, I think there was a major miscommunication between the Fed chairman and the president early-on in their association.

“But financial markets could react badly if Mr Trump again criticises the Fed and attempts to interfere in its decision making. A repeat of the remarks he made about the Fed in July could alarm investors. Those investors might fear that presidential pressure could cause the central bank to fall behind in fighting inflation.” – Barry Eichgengreen in this morning’s Financial Times (Editorial)

 

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We now carry the new silver Krugerrand

FIRST YEAR OF ISSUE
_________________________________________________

Available online HERE
(Anytime)

Or by calling the
ORDER DESK
1-800-869-5115 X100
(8am to 7pm weekdays MT)

In August 2018, for the first time in it’s 50+ year history, the South African mint released a Silver Krugerrand.  A one ounce coin minted to a purity of .999, the Silver Krugerrand mirrors it’s gold counterpart, with the reverse featuring the springbok and the obverse the bust of Paul Kruger, who played a significant role in South Africa gaining independence from Britain in the late 1800’s.  Offered at a slightly lower premium to the popular American Silver Eagle, the Silver Krugerrand is an attractive option for those looking to procure silver through one ounce government minted coins, at a slight lower cost per ounce.  Add in the intrigue of ‘first year of issue’, and these are a great option for building a position in silver, especially at current prices.

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No DMR today

But we will post an update later if anything interesting develops. . . . .

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Bridging the ‘fourth turning’ with gold


The Fourth Turning – the influential work by William Strauss and Neil Howe published in 1997 – uncannily predicted much of what has happened in America over the past twenty years. “The next Fourth Turning,” the authors predicted, “is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation, and empire.”

Howe designates 2008 as the start date for the current fourth turning. Since turnings typically last 20-23 years, it will end sometime between 2028 and 2031. That puts us about midway through the cycle. At the moment, if the politicians, Wall Street and press accounts on the status of the economy are to be believed, the good times have arrived. For many Americans, though, that arrival has some pretty dark clouds hanging over it – the deep political divisions, the escalating trade wars, the emerging nation debt and currency crisis, the overvalued stock market, the threat of rising interest rates – and that is just a sampling of fourth-turning strata that worries global investors. The nation despite the rosy outlook is a bit unnerved by it all. For his part, Howe, who saw it coming, believes things could get much worse before before they get better.

“The fourth turning,” he said in a MacroVoices interview last August, “is the final season of history, if you will, the final generation. And that is the period of crisis. That is the period when we tear down institutions that we’ve built, everything that’s dysfunctional. And we sort of rebuild things from scratch again. And it usually follows a period where—it’s bound up in a period – where there’s complete disgust, complete distrust with what we have.”

There is a certain amount of inevitability interlaced throughout Howe’s analysis and a good many will have a hard time accepting it for that reason – especially those who believe that somehow this period in economic history is going to be different from others. Howe though sees strong similarities to the period just before and after World War II, the last fourth turning.

Once again his viewpoint, expressed almost a year ago, is uncanny: “And then the crisis,” he says, “when all of these problems begin to coalesce into one huge problem. It’s when the Great Depression met all of these—the rise of fascism both in Asia and in Europe, and everything came together, currency wars, everything became part of a huge problem. Which, by the resolution, you see—and this is what happens at every fourth turning. All the little problems come together into a giant problem. And then the giant problem gets completely resolved.”


If you have an interest in the kind of analysis you are now reading, you might appreciate our monthly newsletter. You can sign-up for it here. Always timely and written for gold and silver owners or for those thinking about owning it. Are you a prospective gold owner trying to make up your mind? Your interest is welcome at no cost or obligation.


Is that not where we find ourselves today – in the current fourth turning?

“. . .I would say these are strong parallels that we see between the decade we’ve been living through and the 1930s,” he says. “Because it isn’t just what happens to/in the economy. I mean, you consider so many ways in which this last decade has recapitulated the 1930s, starting off with a financial crisis, worries about deflation, worries about declining fertility rates, and currency wars, and beggar thy neighbor policies, and radical attempts by monetary and ultimately fiscal policy to remedy the situation.”

Howe has something of a philosophical partner in the great Russian novelist, Leo Tolstoy who examined the role of fate in human affairs in his masterpiece novel, War and Peace. I am among the group that believes we are carried on great waves of history whether we like or not – what Tolstoy referred to as an historic “fatalism” to which we are all subject:

*We are forced to fall back on fatalism as an explanation of irrational events (that is to say, events the reasonableness of which we do not understand). The more we try to explain such events in history reasonably, the more unreasonable and incomprehensible do they become to us. Each man lives for himself, using his freedom to attain his personal aims, and feels with his whole being that he can now do or abstain from doing this or that action; but as soon as he has done it, that action performed at a certain moment in time becomes irrevocable and belongs to history, in which it has not a free but a predestined significance.

There are two sides to the life of every man, his individual life, which is the more free the more abstract its interests, and his elemental hive life in which he inevitably obeys laws laid down for him. Man lives consciously for himself, but is an unconscious instrument in the attainment of the historic, universal, aims of humanity. A deed done is irrevocable, and its result coinciding in time with the actions of millions of other men assumes an historic significance. The higher a man stands on the social ladder, the more people he is connected with and the more power he has over others, the more evident is the predestination and inevitability of his every action. ‘The king’s heart is in the hands of the Lord.’ A king is history’s slave.” – Leo Tolstory, War and Peace

Like Howe, I too believe that the “giant problem” will somehow find resolution, but my concern is getting across the bridge between the “final season of history” and its ultimate resolution – whatever fate might dictate. That is why I own gold personally and why I think every thinking investor should own it as well. The name of the game is to protect wealth and not leave the results of your life work on the table as the fourth turning moves into its final phases.

A diversification of about 10%-30%, in my view, will get the job done as it did in the first phases of the crisis from 2008-2009.* How high you go within that range depends upon on how strongly you feel about the dangers that lie ahead.

–– Michael J. Kosares, USAGOLD


Neil Howe interview (Courtesy of MacroVoices/Audio version)

* During the early stages of the crisis that began in 2008, gold moved sharply to the downside. In January, 2008 the metal was trading in the $900 range. By October, as the first wave of the crisis washed over the financial markets, it had fallen to $730 – a decline of roughly 20%. Then as the full extent of the financial crisis became apparent and the Fed introduced money printing measures, it began to rise reaching $880 by the end of 2008. From 2009 to September 2011, gold rose to its all-time high of $1895 – a 215% gain in three years.

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Big questions on global economy hang over Jackson Hole gathering

Bloomberg/Christopher Condon and Piotr Skoliminski/8-20-2018

“Summer break for central bankers ends this week when their leaders gather Friday and Saturday for the Federal Reserve’s annual policy symposium in Jackson Hole, Wyoming. With Fed Chairman Jerome Powell set to deliver a Friday morning speech, investors will be looking for clarity on several issues, from the likely path of interest rates and balance sheet policy to Powell’s take on emerging-market turmoil.”

USAGOLD note:  Should be an interesting gathering of the central banking elite this year amidst some beautiful mountain scenery and for many an extreme change of climate in the global economy.

(Image:  Jackson Lake, Jackson Hole, Wyoming)

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US dollar and gold: Is this time different?

REPOSTED WITH PERMISSION

by Dr. Thorsten Polleit, Degussa Market Report
On 13 August 2018, the price of gold fell below 1.200 USD/oz, declining to a 1.5 year low. What to make of this move? It seems that several factors have been at work in triggering the gold price decline. At the same time, it does not seem too far-fetched to think that the current market price of gold is now well below its true value, and so the chance for the gold price to go up outweighs the risk of a further drop by quite a margin. Here is why:

Given recent market uncertainty – amongst other things due to the Turkish Lira crisis and other emerging market currencies being affected by the turmoil – in- vestors have substantially increased their demand for the Greenback. It does not only serve as a “safe haven” currency, but it also offers a positive interest rate (e.g. 2-year US bills offering a yield of around 2.6 per cent). In the international context, this is a rather attractive combination from an investor’s point of view.

What follows is an appreciating US dollar and – as its flipside – a decline in the price of gold in US dollar terms. In fact, investors seem to be convinced that the Greenback is the currency to hold, and that the US dollar can outshine the ‘gold currency’. This, however, appears to be a questionable proposition. For the end of the Fed’s hiking cycle might be closer than the market expects. The reason lies in the growing international US dollar indebtedness.

In the period of extreme low US interest rates, many foreign borrowers – in particular, those from emerging market economies – have taken on US dollar de- nominated debt. An appreciating US dollar causes them quite some trouble: It increases the costs of serving their debt. What is more, it makes rolling-over maturing US dollar debt more difficult: Lenders become hesitant to renew loans, and if they do, they can be expected to charge higher interest rates.

Deterioration in credit availability and the cost of funding undoubtedly has the potential of unhinging the credit-driven boom in many emerging market economies. This, in turn, is most likely to also have negative consequences for the developed economies around the world, including the United States of America. To cut a long story short: It seems that the Fed’s room for manoeuvring is quite limited, much more constrained than many market observers might expect.

Due to the high dependence of many economies around the globe on the US dollar, the Fed can no longer gear its monetary policy to the needs of the US economy alone. It can no longer ignore the consequences its monetary policy is most likely to have on other economies around the world. While the US economy may well need higher interest rates, many countries will have significant problems coping with US borrowing costs going up.

As soon as the financial markets find out that the Fed cannot continue its US economy-centred monetary policy, there is a decent chance that the reserve cur- rency status of the US dollar will be critically reviewed. Because the question is:

What does it mean if the Fed’s monetary policy has to increasingly factor in the financial and economic needs of the ‘global economy’? The answer? The currently unshakable belief in the Greenback’s safe-haven status will lose some of its shine.

The Fed’s monetary policy would become, more than ever, a ‘bail-out policy’ for the rest of the world, that is coming to the rescue of foreign borrowers who have overstretched themselves by taking on US dollar debt. Printing great amounts of money and providing it at artificially low interest rates would be- come the hallmark of the ‘new Fed policy’. Hardly an outlook to inspire investor confidence in the Greenback’s store of value function.

In fact, the current inflow into the US dollar seems to disregard the consequences this will have on the international credit system and, as a result, the Fed’s monetary policy. The uncomfortable truth is that keeping the global credit system going, the Fed will have to churn out more fresh money, provided at artificially low interest rates.

Now you may ask: What is going to happen if the Fed ignores the consequences its policy has for much of the rest of the world? If it keeps raising interest rates according to the needs of the US economy? Well, the ‘day of reckoning’ would presumably not be long in coming. If the Fed’s monetary policy tightening tanks the boom of other economies around the world, the US economy is unlikely to escape the mess – and the Fed will have to reverse course.

Against this backdrop, investors are unlikely to get happy betting on the US dol- lar as the one and only ‘safe-haven currency’. In fact, from the viewpoint of the savvy investor, the ‘gold currency’ will have a role to play because the purchasing power of the yellow metal cannot be debased by central banks’ monetary policy. On top of that, gold does not carry a default- or credit-risk as time and savings deposits undeniably do.

Current price action in financial markets clearly suggests that investors do not fear inflation or systemic default risks. This, however, appears to be grossly underestimating the true risk profile in the global credit and monetary architecture and it may well explain why there has been a sell-off in gold in recent days. However, there are good reasons to conclude that the sell-off has gone too far and that it has pushed the price of gold well below its ‘true value’.

In other words, gold has become cheap (and undeservingly so) – which might be painful for those currently holding gold but offers an excellent opportunity for those who want to build up their gold positions. In any case, it appears that we are right in the middle of a situation in which market prices do not reflect ‘true values’: The stock market seems to be expensive, and gold is too cheap. And history taught us that over- and undervaluations will be corrected over time.

This brings us back to the relation between the US dollar and gold. We might have entered a phase in which the US dollar – an unbacked paper currency – is no longer, and for political-economic reasons can no longer, serve as the world’s only reserve currency. If this assessment is true, or even half-true, going forward, the price of gold can be expected to move higher by quite a margin; perhaps much higher than most people expect under current conditions.

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US companies push rising costs on to customers

Financial Times/Andrew Edgecliffe-Johnson/8-19-2018

“Cost inflation has been a recurring theme of US second-quarter earnings announcements from companies in industries as diverse as retail and industrial equipment. Executives have pointed to a combination of higher freight and labour costs with increased prices for raw materials, some of which has been driven by the Trump administration’s tariffs on imported steel and aluminium, and by other countries’ retaliatory tariffs on US goods.”

USAGOLD note:  This article offers the latest in the way of anecdotal evidence that inflation is gathering momentum. The price increases reported are likely to begin showing up in government reports as we move into fourth quarter of the year. As reported in this article, producers of well-known products have begun passing along price increases to retail consumers.

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It isn’t only Turkey—Asia is the ‘elephant in the room’ in excessive dollar debts

MarketWatch/Sunny Oh/8-17-2018

“Investors unsettled by Turkey’s dollar borrowing might also want to pay attention to Asian countries. ‘Forget about Turkey’s woes, Asia is the elephant in the room,’ said Neels Heyenke and Mehul Daya, strategists at Nedbank CIB, in a Tuesday research note. ‘Asia will be the next source of downside systemic risk for financial markets.’”

USAGOLD note:  There is arguably a great deal more at stake in the Pacific Rim than Turkey in terms of assets and the contagion effect.

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Bridging the ‘fourth turning’ with gold

IN-DEPTH WEEKEND READING


The Fourth Turning –  the influential work by William Strauss and Neil Howe published in 1997 – uncannily predicted much of what has happened in America over the past twenty years. “The next Fourth Turning,” the authors predicted, “is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation, and empire.”

Howe designates 2008 as the start date for the current fourth turning. Since turnings typically last 20-23 years, it will end sometime between 2028 and 2031. That puts us about midway through the cycle.  At the moment, if the politicians, Wall Street and press accounts on the status of the economy are to be believed, the good times have arrived.  For many Americans, though, that arrival has some pretty dark clouds hanging over it – the deep political divisions, the escalating trade wars, the emerging nation debt and currency crisis, the overvalued stock market, the threat of rising interest rates –  and that is just a sampling of fourth-turning strata that worries global investors.  The nation despite the rosy outlook is a bit unnerved by it all.  For his part, Howe, who saw it coming, believes things could get much worse before before they get better.

“The fourth turning,” he said in a MacroVoices interview last August, “is the final season of history, if you will, the final generation. And that is the period of crisis. That is the period when we tear down institutions that we’ve built, everything that’s dysfunctional. And we sort of rebuild things from scratch again. And it usually follows a period where—it’s bound up in a period – where there’s complete disgust, complete distrust with what we have.”

There is a certain amount of inevitability interlaced throughout Howe’s analysis and a good many will have a hard time accepting it for that reason – especially those who believe that somehow this period in economic history is going to be different from others.  Howe though sees strong similarities to the period just before and after World War II, the last fourth turning.

Once again his viewpoint, expressed almost a year ago, is uncanny:  “And then the crisis,” he says, “when all of these problems begin to coalesce into one huge problem. It’s when the Great Depression met all of these—the rise of fascism both in Asia and in Europe, and everything came together, currency wars, everything became part of a huge problem. Which, by the resolution, you see—and this is what happens at every fourth turning. All the little problems come together into a giant problem. And then the giant problem gets completely resolved.”


If you have an interest in the kind of analysis you are now reading, you might appreciate our monthly newsletter. You can sign-up for it here. Always timely and written for gold and silver owners or for those thinking about owning it.  Are you a prospective gold owner trying to make up your mind?  Your interest is welcome at no cost or obligation.


Is that not where we find ourselves today – in the current fourth turning?

“. . .I would say these are strong parallels that we see between the decade we’ve been living through and the 1930s,” he says. “Because it isn’t just what happens to/in the economy. I mean, you consider so many ways in which this last decade has recapitulated the 1930s, starting off with a financial crisis, worries about deflation, worries about declining fertility rates, and currency wars, and beggar thy neighbor policies, and radical attempts by monetary and ultimately fiscal policy to remedy the situation.”

Howe has something of a philosophical partner in the great Russian novelist, Leo Tolstoy who examined the role of fate in human affairs in his masterpiece novel, War and Peace. I am among the group that believes we are carried on great waves of history whether we like or not – what Tolstoy referred to as an historic “fatalism” to which we are all subject:

*We are forced to fall back on fatalism as an explanation of irrational events (that is to say, events the reasonableness of which we do not understand). The more we try to explain such events in history reasonably, the more unreasonable and incomprehensible do they become to us. Each man lives for himself, using his freedom to attain his personal aims, and feels with his whole being that he can now do or abstain from doing this or that action; but as soon as he has done it, that action performed at a certain moment in time becomes irrevocable and belongs to history, in which it has not a free but a predestined significance.

There are two sides to the life of every man, his individual life, which is the more free the more abstract its interests, and his elemental hive life in which he inevitably obeys laws laid down for him. Man lives consciously for himself, but is an unconscious instrument in the attainment of the historic, universal, aims of humanity. A deed done is irrevocable, and its result coinciding in time with the actions of millions of other men assumes an historic significance. The higher a man stands on the social ladder, the more people he is connected with and the more power he has over others, the more evident is the predestination and inevitability of his every action. ‘The king’s heart is in the hands of the Lord.’ A king is history’s slave.” – Leo Tolstory, War and Peace

Like Howe, I too believe that the “giant problem” will somehow find resolution, but my concern is getting across the bridge between the “final season of history” and its ultimate resolution – whatever fate might dictate. That is why I own gold personally and why I think every thinking investor should own it as well. The name of the game is to protect wealth and not leave the results of your life work on the table as the fourth turning moves into its final phases.

A diversification of about 10%-30%, in my view, will get the job done as it did in the first phases of the crisis from 2008-2009.* How high you go within that range depends upon on how strongly you feel about the dangers that lie ahead.

–– Michael J. Kosares, USAGOLD


Neil Howe interview (Courtesy of MacroVoices/Audio version)

* During the early stages of the crisis that began in 2008, gold moved sharply to the downside.  In January, 2008 the metal was trading in the $900 range.  By October, as the first wave of the crisis washed over the financial markets, it had fallen to $730 – a decline of roughly 20%.  Then as the full extent of the financial crisis became apparent and the Fed introduced money printing measures,  it began to rise reaching $880 by the end of 2008.  From 2009 to September 2011, gold rose to its all-time high of $1895 – a 215% gain in three years.

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Gold’s sharp rally late looks like short-covering

AFTERNOON UPDATE

(USAGOLD – August 17, 2018) – As you can see in the accompanying chart, most of gold’s $11 move to the upside this afternoon occurred late in COMEX trading. The sharp rally has the classic look of short-covering though we won’t have any data to back that hunch until the Commitment of Traders report is released next week. Many analysts over the past few weeks have pointed to the record short position in gold as cause to be optimistic. At some point, shorts need to cover their positions in order to lock-in their profits. Simultaneous to gold’s reversal, the dollar took an equally sharp tumble. Both moved in the absence of any notable or publicly disclosed political or economic news.

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Gold’s sharp rally late looks like short-covering

AFTERNOON UPDATE

(USAGOLD – August 17, 2018) – As you can see in the accompanying chart, most of gold’s $11 move to the upside this afternoon occurred late in COMEX trading.  The sharp rally has the classic look of short-covering though we won’t have any data to back that hunch until the Commitment of Traders report is released next week. Many analysts over the past few weeks have pointed to the record short position in gold as cause to be optimistic.  At some point, shorts need to cover their positions in order to lock-in their profits.  Simultaneous to gold’s reversal, the dollar took an equally sharp tumble.  Both moved in the absence of any notable or publicly disclosed political or economic news.

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Gold firms on stronger yuan, yen, contagion concerns

DAILY MARKET REPORT

Gold firmed overnight beginning in Asia and the positive trend carried over to New York at the open. The precious metal is now priced at $1179.50 and up $4 on the day. Silver is up 6¢ on the day at $14.72. A stronger Chinese yuan and Japanese yen are the chief influences with weak stock markets in Asia and Europe adding to the flow of interest in the direction of precious metals. Commodity prices also firmed overnight led by oil and natural gas up 1.1% and 1.6% respectively as we upload this report to the server. The Turkish lira returned to the downside this morning as measures taken by the government appear to have worn off – a turn of events likely to reinvigorate global concern about an emerging market contagion.

Quote of the Day
“To suppose that the value of a common stock is determined purely by a corporation’s earnings discounted by the relevant interest rates and adjusted for the marginal tax rate is to forget that people have burned witches, gone to war on a whim, risen to the defense of Joseph Stalin and believed Orson Welles when he told them over the radio that the Martians had landed.” – James Grant, Interest Rate Observer

Chart of the Day

Chart note: The direct relationship between growth in the federal debt and the price of gold. The national debt, by the way, now stands at $21.372 trillion with $880 billion added so far in 2018.

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DMR–Gold firms on stronger yuan, yen, global contagion concerns

DAILY MARKET REPORT

Gold firmed overnight beginning in Asia and the positive trend carried over to New York at the open.  The precious metal is now priced at $1179.50 and up $4 on the day.  Silver is up 6¢ on the day at $14.72. A stronger Chinese yuan and Japanese yen are the chief influences with weak stock markets in Asia and Europe adding to the flow of interest in the direction of precious metals. Commodity prices also firmed overnight led by oil and natural gas up 1.1% and 1.6% respectively as we upload this report to the server. The Turkish lira returned to the downside this morning as measures taken by the government appear to have worn off – a turn of events likely to reinvigorate global concern about an emerging market contagion.

Quote of the Day
“To suppose that the value of a common stock is determined purely by a corporation’s earnings discounted by the relevant interest rates and adjusted for the marginal tax rate is to forget that people have burned witches, gone to war on a whim, risen to the defense of Joseph Stalin and believed Orson Welles when he told them over the radio that the Martians had landed.” – James Grant, Interest Rate Observer

Chart of the Day

Chart note:  The direct relationship between growth in the federal debt and the price of gold. The national debt, by the way, now stands at $21.372 trillion with $880 billion added so far in 2018.

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Unsure how to handle Trump, China braces for ‘New Cold War’

Bloomberg/Peter Martin, Dandan Li, Brendan Scott, and Bill Faries/8-16-2018

“In government offices and think tanks, universities and state-run newsrooms, there is an urgent debate underway about what many here see as the hidden motive for Washington’s escalating trade war against President Xi Jinping’s government: A grand strategy, devised and led by Trump, to thwart China’s rise as a global power.”

USAGOLD note:  This lengthy article explores the possibility that the trade war is part and parcel of something much larger.  If it is, we might want to prepare for a much longer and protracted set of economic circumstances than originally anticipated most notably the potential for higher prices without the hope of an early settlement to belay the inflationary process.

 

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New Zealand bans foreigners from buying homes

Financial Times/Jamie Smythe/8-16-2018

“Robert A Johnson, head of the Institute for New Economic Thinking, a US think-tank, told a 2015 audience at Davos he knew hedge fund managers all over the world who were ‘buying airstrips and farms in places like New Zealand’ because they thought they needed a bolt-hole in case rising inequality provokes a revolt.'”

USAGOLD note:  An “inequality revolt”, I am fairly certain, is only one of a litany of concerns New Zealand property owners are entertaining – particularly with the worldwide currency and debt issues now on the front burner. Some are not as indifferent as others about the current state affairs.  This article under an innocuous headline reveals much deeper concerns among those who spend a good deal of time thinking about these things.

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Sentiment speaks: Will the impending U.S. economic collapse usher in socialism?

Seeking Alpha/Avi Gilburt/7-25-2018

“My personal expectation, based upon many of the charts I analyze and based upon the modern political trend, is that this regressive period will mirror what was experienced by Europe during the Greek debt cycle, but to a much more extreme degree. Therefore, my expectation is that even more extreme socialistic policies will likely be adopted, wherein the government will seem to have no choice other than to take over various segments of private industry. We have seen the initial stages of this potential during the Great Recession, and the economic downturn I expect in the future will be of one degree greater than the Great Recession. . .Yet, what I also see quite interestingly is that the metals complex seems to be setting up in a similar manner to what Elliott saw in the DOW back in 1941. In fact, my read on the metals complex is that it is about to enter a 50+ year bull market.

USAGOLD note:  Gilburt goes on to say that he is not “the doomsday type”, but simply goes where his Elliot Wave analysis takes him.  In the past he has predicted that gold would someday sell for $25,000 per ounce, suggestive of a long-term Kondratieff-like process rather than an event. Of course, such a process will not occur in a vacuum, and what Gilburt is suggesting here is a full-out slide into socialism that will underlie the “50+ year bull market.”  This article is not for everyone.  It delves into the longer-term trends at work as revealed in Elliott’s original five wave analysis.  It, in fact, picks up, where Elliott left off, with a mention of our old friend, Robert Prechter, who resurrected Elliott Wave analysis back in the 1980s.

 

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Better Business Bureau Five Star Review

__________________________________________________

Recent Better Business Bureau Client Review

“Before investing in gold I really didn’t have a clue about what or how much to invest in. I came across the USAGOLD website and found an excellent resource for both first time and seasoned buyers. My representative has always provided me with useful and trustworthy analysis related to the markets and trends that has further informed my purchase decisions. Transactions are timely and handled with a high degree of professionalism and integrity. I cannot recommend this company highly enough.” – Y.O., 5-14-2018

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

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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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Gold up on China trade delegation news

Gold is up this morning on overnight news that China is sending a delegation to the United States at the end of August for trade talks. At the time the announcement came public during Asian trading hours, gold was tracking sharply to the downside.  It abruptly reversed course on the news from the $1170 level.  In early New York trading, it is now up $5.00 on the day at $1179.  Silver is up 24¢ at $14.68. The Chinese yuan also reversed course.

The markets are likely to be cautious about these upcoming talks that come at the invitation of the United States.  We have already had several false starts in the negotiations.  On the plus side, though, the participants have now gotten a glimpse of a full-out trade war’s implications and the sight isn’t pretty.  Such realizations offer plenty of incentive on both sides to settle the matter and move on.

Also assisting gold, the Turkish lira is higher for the second straight day.  Generally speaking, the dollar weakened against currencies across the boards against both emerging and developed market currencies. With it, the threat to emerging markets seems to have receded somewhat.

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.

 

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Posted in dailyquotes |

DMR–Gold up on China trade delegation news

DAILY MARKET REPORT

Gold is up this morning on overnight news that China is sending a delegation to the United States at the end of August for trade talks. At the time the announcement came public during Asian trading hours, gold was tracking sharply to the downside.  It abruptly reversed course on the news from the $1170 level.  In early New York trading, it is now up $5.00 on the day at $1179.  Silver is up 24¢ at $14.68. The Chinese yuan also reversed course.

The markets are likely to be cautious about these upcoming talks that come at the invitation of the United States.  We have already had several false starts in the negotiations.  On the plus side, though, the participants have now gotten a glimpse of a full-out trade war’s implications and the sight isn’t pretty.  Such realizations offer plenty of incentive on both sides to settle the matter and move on.

Also assisting gold, the Turkish lira is higher for the second straight day.  Generally speaking, the dollar weakened against currencies across the boards against both emerging and developed market currencies. With it, the threat to emerging markets seems to have receded somewhat.

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.

 

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Posted in Daily Market Report, Today's top gold news and opinion |

China commerce ministry says new round of trade talks to be held with U.S. in late August

Reuters/Staff/8-15-2018

“A Chinese delegation led by vice commerce minister Wang Shouwen will travel to the United States for trade talks in late August, China’s Ministry of Commerce said on Thursday.”

USAGOLD note:  At the time this announcement came public, gold was tracking down in early Asian trading.  It reversed abruptly on the news from the $1170 level. The Chinese yuan also reversed course. The visit reportedly is at the invitation of the United States.

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Posted in Today's top gold news and opinion |

The dollar liquidity storm is ahead of us

Daily Reckoning/Brian Maher/8-15-2018

“The danger of course is that the dam busts… and the current crisis spreads beyond Turkey. ‘Forget about Turkey’s woes,’ warn the aforesaid [Nedbank strategists Neels Heyneke and Mehul Daya].

What is the next trouble spot, in their estimation? Asia.  ‘Asia is the elephant in the room. We believe Asia will be the next source of downside systemic risk for financial markets.'”

USAGOLD note:  Maher’s article is a good companion piece for the Naomi Prins analysis below.

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Posted in Today's top gold news and opinion |

You should fear the emerging market debt bubble

Daily Reckoning/Nomi Prins/8-15-2018

“This situation becomes more dangerous than even asset bubbles because debt is required to be repaid on a set schedule. If a country misses a debt payment, it could set off a chain reaction of defaults. That’s why an EM crisis could quickly become a global crisis. In today’s world of financial globalization, any remote crisis can become an international problem in seconds. That’s the reality of today’s markets. Obviously, it could also have major ramifications for your own finances and investments.”

USAGOLD note:  Prins, a former Goldman Sachs managing director as well as analyst for several major banks, goes on to detail why she thinks “a September rate hike is now in doubt.” Cancelling the September rate hike could add up to a positive for the gold market.  Needless to say, if she is right about the contagion effect moving from emerging to developed countries, hedging with gold and silver would be a logical investment alternative. Prins has recommended gold and silver ownership in the recent past.

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Posted in Today's top gold news and opinion |

Anatomy of hyperinflation

FXStreet/Michael Pento/8-13-2018

“The point is that we should soon see rapid inflation globally the likes of which we have not seen since the Roman Empire circa 275AD. This is because the governments of the developed world, including Europe, Japan and the US, will soon have to admit that their future solvency depends upon interest rates that can never normalize and debts that will be forever monetized.  In other words, expect an internal inflation crisis to wipe out much of the purchasing power of all fiat currencies due to global central banks’ response to the imminent bursting of the current global financial bubble.”

USAGOLD note:  An interesting piece of analysis from Michael Pento. . . . .

Related: CLIENT ALERT – Get the jump on inflation with an investment in graded, historic U.S. $20 gold pieces

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Posted in Today's top gold news and opinion |

Why gold will remain one of the safest ports during the turbulent times ahead

The National/Peter Cooper/8-5-2018

“Of course, if you knew a large devaluation of your currency was approaching then shifting money into hard assets like gold, which is priced in dollars, would make a great deal of sense. So to would the inflationary impact of tariffs. Gold is the classic inflation hedge as a monetary metal. Strange then that commercial speculators have been running near record short gold positions, driving gold prices lower and lower in recent months. They operate with extreme leverage and this greatly distorts gold prices to the downside. Then again, as soon as the wind changes and these shorts all have to be covered then there will be a huge surge in the price of gold. Nice for those who bought at low prices in June or now.”

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Posted in Today's top gold news and opinion |

Emerging markets index falls into bear market

Financial Times/Adam Samson/8-15-2018

“A wide gauge of emerging market equities has dropped by one-fifth from its January highs, leaving it in a bear market amid rising global volatility.”

USAGOLD note:  And it could be more “the end of the beginning than the beginning of the end,” to borrow a phrase from Mr. Churchill.

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Posted in Today's top gold news and opinion |

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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.

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Posted in ClientInsights, Today's top gold news and opinion |

Harvest time for stocks according to Guggenheim CIO

MarketWatch/Mark DeCambre/8-15-2018

“[Scott] Minerd, chief investment officer for Guggenheim Partners, meanwhile, wondered aloud Tuesday, via Twitter, why investors aren’t dumping stocks more heartily in an August that he expects to offer limited upside—at best: ‘If there were ever a moment to harvest gains and reduce risk, it is August 2018. And if it turns out not to be the moment, I don’t think you are giving up much upside.’”

USAGOLD note:  This articles supplements this Morning’s Daily Market Report (DMR) . . . .

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Posted in Today's top gold news and opinion |