Monthly Archives: October 2018

Wages and salaries jump by 3.1%, highest level in a decade

CNBC/Jeff Cox/10-31-2018

“Employment costs rose more than expected in the third quarter in a sign that more inflation could be brewing in the U.S. economy.”

USAGOLD note:  In this whacky, upside down, Alice in Wonderland financial environment – wherein good news for gold is bad news and bad news is still bad news – the day-to-day headlines might seem nearly irrelevant in determining the price direction.  Along the way, though, we suspect that the clock will stop running backwards – higher wages will come to mean higher inflation and higher inflation will come to mean higher gold prices.

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Posted in Today's top gold news and opinion |

Gold tracking lower on day but headed to possible 2% gain in tumultuous October

Gold continued to track lower from the $1243 high achieved this past Thursday. Today’s bout of selling began in Asia on concerns about the yuan pushing ever closer to the problematic 7.00 per dollar level. It then carried over to Europe where a weak economic growth report raised the possibility of the ECB watering down quantitative tightening expectations. Gold opened New York with the momentum to the downside. It is down $8 in early trading at $1214.50. Silver is down 15¢ at $14.32. Should gold manage to hold onto current price levels it will finish the tumultuous month of October with 2% gain. Likewise, if the Dow hold on to early gains this morning, it will finish the month with a 6.5% loss.

Quote of the Day
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.” – A Tale of Two Cities, Charles Dickens

Chart of the Day

Chart note: This chart supports the notion that the Fed’s policy of raising rates could turn out to be too aggressive. As you can see the money supply is not displaying the kind of growth that normally lends itself to future inflation. That’s not to say that the trend could not suddenly change. In fact anecdotal evidence of inflation seems to be cropping up at every turn, and some of it, oddly enough, is not the result of monetary policy per se but tariffs on imports.

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DMR-Gold tracking lower on day but heading to possible 2% gain in tumultuous October

DAILY MARKET REPORT

Gold continued to track lower from the $1243 high achieved this past Thursday.  Today’s bout of selling began in Asia on concerns about the yuan pushing ever closer to the problematic 7.00 per dollar level.  It then carried over to Europe where a weak economic growth report raised the possibility of the ECB watering down quantitative tightening expectations.  Gold opened New York with the momentum to the downside.  It is down $8 in early trading at $1214.50. Silver is down 15¢ at $14.32.  Should gold manage to hold onto current price levels it will finish the tumultuous month of October with 2% gain. Likewise, if the Dow holds on to early gains this morning, it will finish the month with a 6.5% loss.

Quote of the Day
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.” – A Tale of Two Cities, Charles Dickens

Chart of the Day

Chart note: This chart supports the notion that the Fed’s policy of raising rates could turn out to be too aggressive. As you can see the money supply is not displaying the kind of growth that normally lends itself to future inflation. That’s not to say that the trend could not suddenly change. In fact anecdotal evidence of inflation seems to be cropping up at every turn, and some of it, oddly enough, is not the result of monetary policy per se but tariffs on imports.

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

Treasury sees 2018 borrowing needs surging to $1.34 trillion

Bloomberg/Randall Woods/10-29-2018

“The U.S. Treasury Department said government borrowing this year will more than double from 2017 to $1.34 trillion as the Trump administration finances a rising budget deficit.”

USAGOLD note:  The national debt as of this morning stands at $21.697 trillion. . . . .

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‘Godfather’ of chart analysis says ‘damage done to the stock market’ is much, much worse’ than anyone is talking about

MarketWatch/Mark DeCambre/10-3-2018

“Prominent market technician Ralph Acampora says the stock market is in bad shape and it’s worse than many on Wall Street investors appreciate. . . ‘From a technical perspective, the damage that has been done technically to the stock market is much, much worse than people are talking about,’ he told MarketWatch in a phone interview on Tuesday.”

USAGOLD note:  Acampora is often referred to as the “godfather” of technical analysis.  His views

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The pretense of knowledge

If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants.

There is danger in the exuberant feeling of ever growing power which the advance of the physical sciences has engendered and which tempts man to try, ‘dizzy with success’, to use a characteristic phrase of early communism, to subject not only our natural but also our human environment to the control of a human will. The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men’s fatal striving to control society – a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.”


Frederich von Hayek, 1974 (Speech in acceptance of the Nobel Prize for economics)

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

Germany repatriates about half of its gold reserves

But with Europe stumbling from crisis to crisis, the German public has grown uneasy about keeping the gold abroad. Some even argue the world’s second biggest bullion reserve may be needed to back a new deutschmark, should the euro zone break up.” – Reuters, 2-9-2017

“Germany has a stronger relationship with gold than most nations. The country’s experience with hyperinflation between 1919 and 1923, during the years of the Weimar Republic, is ingrained in the national consciousness. Gold, above all, stands for stability” – Financial Times, 11-10-2017

Germany this year (2017) completed its scheduled transfer of national gold reserves from the New York Fed and the Bank of France.  Germany will now leave 1236 tonnes at the New York Fed and another 432 tonnes in London.  The remainder of its 3378 tonne national holding will be stored in Frankfurt.  The repatriation transfers to Frankfurt were completed three years ahead of schedule.

With respect to the gold left at the Fed, Bundesbank’s Carl-Ludwig Thiele told reporters: “We have a lot of discussions about (U.S. President Donald) Trump, regarding implications on monetary policy, macroeconomics, etc., but we trust the central bank of the U.S.”

Thiele’s confidence in the Federal Reserve, brings to mind an old story about Germany’s relationship with the Federal Reserve and the storage of its gold reserves. When Hjalmar Schacht, head of Germany’s central bank in the 1920s, visited the New York Fed he asked to see Germany’s gold stored in its vaults.

“Strong**,” wrote Schacht in a 1955 autobiography, “was proud to be able to show us the vaults which were situated in the deepest cellar of the building and remarked: ‘Now, Herr Schacht, you shall see where the Reichsbank gold is kept.’ ” Storage staff went off to retrieve the gold.  “At length,” Schacht goes on, “we were told: ‘Mr. Strong, we can’t find the Reichsbank gold.’ ”  To which Schacht replied: “Never mind; I believe you when you say the gold is there. Even if it weren’t you are good for its replacement.”One need presume that nearly 100 years later, the level of trust conveyed by Schacht remains in place.

It is unlikely that Germany would depart the euro anytime soon and back a new Deutschmark with gold.  Having an asset set aside, though, that is detached from erratic national currencies in this day and age is a wise move for the prudent nation state – just as it is for prudent the private investor.

–– USAGOLD


** New York Fed president at the time, Benjamin Strong

Repost from 2/10/2017, updated October, 2018. The Financial Times article linked at the top of the page tells the fascinating inside story of Germany’s gold repatriation.

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

Gold weakens on higher dollar, China trade war concerns

DAILY MARKET REPORT

Gold weakened some in early trading taking its cue from a higher dollar. In turn, the stronger dollar is taking its cue from the president’s warning in a Fox news interview that he will crank-up tariffs if China fails to come around on trade negotiations next month. The Wall Street Journal reports this morning that “China guided yuan to weakest official level in a decade on Tuesday – a move that could fuel expectations of further, self-reinforcing slide.” That weakness spilled over to trading in the gold market – hence the $6 drop this morning to the $1224 level. Silver is up 2¢ on the day at $14.50.

Quote of the Day
“A lot of the bank issues in the United States and around the world have been solved. But migrating the problem to the sovereign balance sheets. So the banks look pretty good, but the Fed has $4 trillion of debt on its balance sheet. And it’s even more, we are not in a European audience. In Europe they would really know what they meant because all the European banking system is fixed but Europeans are all also buying up all the debt. The budget deficits haven’t contracted, they’ve widened. The banks buy the debt, then walk over to the European Central bank, finance it. . . You wonder is the next crisis going to be a sovereign crisis. And if it is, it will just be a continuation. People will look back and say ‘what we really did, we didn’t fix the outcome of the financial crisis. We left that open and as a result, its really been a thirty-year workout.’” – Lloyd Blankfein, Goldman Sachs

Chart of the Day

Chart note: This quarterly chart zeroes-in on why the national debt matters to ordinary Americans. Rising interest rates and massive growth in the gross debt will push these numbers much higher – so much so that it will exceed in the near future what the nation spends on national defense. . . .and the higher interest rates grow the greater the problem will become. One would think that like Italy or Greece, at some point, the level of debt and interest payments will affect the national credit rating. Last, please note the acceleration in debt payments over the last twelve months (the last bar represents Q3-2018).

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DMR–Gold weakens on higher dollar, China trade war concerns

DAILY MARKET REPORT

Gold weakened some in early trading taking its cue from a higher dollar.  In turn, the stronger dollar is taking its cue from the president’s warning in a Fox news interview that he will crank-up tariffs if China fails to come around on trade negotiations next month. The Wall Street Journal reports this morning that “China guided yuan to weakest official level in a decade on Tuesday – a move that could fuel expectations of further, self-reinforcing slide.”  That weakness spilled over to trading in the gold market – hence the $6 drop this morning to the $1224 level.  Silver is up 2¢ on the day at $14.50.

Quote of the Day
“A lot of the bank issues in the United States and around the world have been solved. But migrating the problem to the sovereign balance sheets. So the banks look pretty good, but the Fed has $4 trillion of debt on its balance sheet. And it’s even more, we are not in a European audience. In Europe they would really know what they meant because all the European banking system is fixed but Europeans are all also buying up all the debt. The budget deficits haven’t contracted, they’ve widened. The banks buy the debt, then walk over to the European Central bank, finance it. . . You wonder is the next crisis going to be a sovereign crisis. And if it is, it will just be a continuation. People will look back and say ‘what we really did, we didn’t fix the outcome of the financial crisis. We left that open and as a result, its really been a thirty-year workout.’” – Lloyd Blankfein, Goldman Sachs

Chart of the Day

Chart note: This quarterly chart zeroes-in on why the national debt matters to ordinary Americans. Rising interest rates and massive growth in the gross debt will push these numbers much higher – so much so that it will exceed in the near future what the nation spends on national defense. . . .and the higher interest rates grow the greater the problem will become. One would think that like Italy or Greece, at some point, the level of debt and interest payments will affect the national credit rating.  Last, please note the acceleration in debt payments over the last twelve months (the last bar represents Q3-2018).

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Goldman says the return of fear is a good thing for gold

Bloomberg/Ranjeetha Pakiam/10-29-2018

“Bullion’s recent advance ‘happened on the back of the market sell-off and spike in volatility,’ analysts including Mikhail Sprogis and Jeffrey Currie, wrote in a report dated Oct. 30. In our view, it represents a rebound in fear-related demand for gold with ETFs beginning to build after several months of declines.’”

USAGOLD note:  The idea of capturing gains in suddenly vulnerable and volatile markets by transferring hard-won capital to the safety of gold is a concept as old as the markets themselves.

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Volcker rebukes Bernanke and Yellen

The IRA Bank Book/Christopher Whalen/10-28-2018

“Former Chairman Alan Greenspan, the most politically astute Fed chief in half a century, puts such worries in perspective: ‘I don’t know a single President, and I worked for a lot of them, who don’t want lower interest rates. Now, obviously that’s not possible. You keep lowering them down to zero, where do you go from there?'”

USAGOLD note:  We posted some of Volcker’s recent comments last week made in conjunction with the release of his new book, Keeping At It:  The Quest for Sound Money and Good Government.” This review delves into some of the details.  What is most interesting is Whalen’s summary of the views of past Fed chairmen.   A good read for those searching for a little perspective that transcends today’s overheated political rhetoric, and for those interested in a summary of the philosophical differences and experiences among recent Fed chiefs.

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How bears are taking over world stock markets

Reuters/Ritvik Carvalho/Julien Ponthus/10-29-2018

“But according to data analysed by Reuters, the proportion of stocks, regions and sectors that are technically in a bear market has shot up since the start of January, prompting some analysts to conclude the bull run may already be over.”

USAGOLD note:  The volatility in yesterday’s Dow Jones Industrial Average was something to behold.  At one juncture it had gyrated more almost 900 points from peak to trough before bouncing up 300 off the intra-day bottom in the last 30-minutes of trading.

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Future is golden for this sharp clubland businessman selling bullion to billionaires

Evening Standard/Jim Armitage/10-29-2018

“‘Old money gets gold,’ he says admiringly. ‘One Italian client’s family have been super-wealthy for 900 years. Most wealthy dynasties lose it in a few hundred. How did they do it? A third in art, a third in land and a third in gold.’ When you think what Italy has been through since the 12th century, that family’s good fortune should tell you a lot. Gold may be old, but it’s real, and always will be.”

USAGOLD note:  This is an interesting article featuring Sharps Pixley’s Ross Norman – the London gold dealer.

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Gold marginally higher today in dollar terms, up 6% in euro so far this year and 5% in yuan

DAILY MARKET REPORT

Gold is trading marginally lower this morning in quiet trading – off $3 at $1230.50 Silver is down 2¢ at $14.69. The dollar is also trading in a narrow range. Markets in general seem to be taking a break as the week begins, though the Dow at the moment is up about 300.

Quietly, in the background, while market attention has been focused elsewhere, the euro has been steadily losing ground against the dollar. It is down almost 10% on the year. Merkel’s role – now more fully determined after yesterday’s state election in Germany – played a role in that decline, but so did the dovish ECB/hawkish Fed scenario. Beyond on the narrow fate of Angela Merkel and the CDU, there is the moe generalized political and economic upheaval in Europe. Germany, in the process, has developed a healthy appetite for physical gold. Since the beginning of October, gold is up about 6% in euro terms.

Meanwhile, across the Pacific, another drama is unfolding with China’s yuan. The Chinese central bank trenchantly warned off speculators against the currency late last week – a shot across the bow that pretty much defines where the country stands on its currency. This, too, could have positive implications for gold as the year concludes. Speculators, algos at the ready, are waiting to see if the government and central bank give ground. For its part, the citizenry in China, like its counterpart in Germany, continue to accumulate gold as a precautionary measure. Gold is up over 5% in yuan since the beginning of October.

Quote of the Day
“Although there are countless scourges which in general debilitate kingdoms, principalities, and republics, the four most important (in my judgment) are dissension, [abnormal] mortality, barren soil, and debasement of the currency. The first three are so obvious that nobody is unaware of their existence. But the fourth, which concerns money, is taken into account by few persons and only the most perspicacious. For it undermines states, not by a single attack all at once, but gradually and in a certain covert manner.” – Copernicus

Chart of the Day

Chart note: Since gold’s current rally began in early 2016, silver has kept up with its sibling metal in fits and starts. Presently, at a ratio of almost 84 to 1, silver is greatly undervalued relative to gold. The gap between the two metals, as you can see in the chart, has become accentuated in recent months leading some to think silver is overdue for a catch-up rally. There is precedent for such a rally. Silver languished behind in gold in early 2016 only to stage a sharply accelerated rally beginning in April of that year that closed the gap. Silver enthusiasts are hoping for similar performance in 2018.
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DMR-Gold marginally higher today in dollar terms, up 6% in euro so far this year and 5% in yuan

DAILY MARKET REPORT

Gold is trading marginally lower this morning in quiet trading – off $3 at $1230.50  Silver is down 2¢ at $14.69.  The dollar is also trading in a narrow range.  Markets in general seem to be taking a break as the week begins, though the Dow at the moment is up about 300.

Quietly, in the background, while market attention has been focused elsewhere, the euro has been steadily losing ground against the dollar.  It is down almost 10% on the year. Merkel’s role – now more fully determined after yesterday’s state election in Germany – played a role in that decline, but so did the dovish ECB/hawkish Fed scenario.  Beyond on the narrow fate of Angela Merkel and the CDU, there is the moe generalized political and economic upheaval in Europe. Germany, in the process, has developed a healthy appetite for physical gold. Since the beginning of October, gold is up about 6% in euro terms.

Meanwhile, across the Pacific, another drama is unfolding with China’s yuan.  The Chinese central bank trenchantly warned off speculators against the currency late last week – a shot across the bow that pretty much defines where the country stands on its currency.  This, too, could have positive implications for gold as the year concludes.  Speculators, algos at the ready, are waiting to see if the government and central bank give ground.  For its part, the citizenry in China, like its counterpart in Germany, continue to accumulate gold as a precautionary measure. Gold is up over 5% in yuan since the beginning of October.

Quote of the Day
“Although there are countless scourges which in general debilitate kingdoms, principalities, and republics, the four most important (in my judgment) are dissension, [abnormal] mortality, barren soil, and debasement of the currency. The first three are so obvious that nobody is unaware of their existence. But the fourth, which concerns money, is taken into account by few persons and only the most perspicacious. For it undermines states, not by a single attack all at once, but gradually and in a certain covert manner.” – Copernicus

Chart of the Day

Chart note: Since gold’s current rally began in early 2016, silver has kept up with its sibling metal in fits and starts. Presently, at a ratio of almost 84 to 1, silver is greatly undervalued relative to gold. The gap between the two metals, as you can see in the chart, has become accentuated in recent months leading some to think silver is overdue for a catch-up rally. There is precedent for such a rally. Silver languished behind in gold in early 2016 only to stage a sharply accelerated rally beginning in April of that year that closed the gap. Silver enthusiasts are hoping for similar performance in 2018.
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Trend followers stung in hedge fund ‘bloodbath’ as rout deepens

Bloomberg/Suzy Waite and Nishant Kumar/ 10-26-2018

“Hedge funds using computer-driven models to follow big market trends have been whiplashed as volatility has spiked, among the biggest casualties of a stock rout that has accelerated worldwide. . . . ‘It’s a bloodbath out there across almost every strategy with very few exceptions,’ said Vaqar Zuberi, head of hedge funds at Mirabaud Asset Management, which oversees 8.8 billion Swiss francs ($8.8 billion). ‘CTAs have been caught by a double-whammy with rising rates and equities plummeting,’ said Zuberi. ‘There’s only one exit and everyone is trying to exit now because the models are telling them to do so.’”

USAGOLD note:  Live by the algo, die by the algo.  If Zuberi’s assessment is correct we could in for an interesting week.  The HAL Effect is kicking-in. . . . .

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US stocks head for worst month since the financial crisis

Financial Times/Robin Wigglesworth, Adam Samson and Michael Hunter/10-26-2018

“Wall Street headed for its worst month since the financial crisis after discouraging forecasts from some of the world’s largest technology groups triggered a wider sell-off, reigniting fears the longest bull market in history had come to a halt.”

USAGOLD note:   As of Friday, stocks are down over 9% for the month of October and gold is up 3.7%. The safe-haven trade is back.

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Guarding stability, China likely to slow yuan’s slide to 7 per dollar – sources

Reuters/Kevin Yao/10-26-2018

“China is likely to use its vast currency reserves to stop any precipitous fall through the psychologically important level of 7 yuan per dollar as it could risk triggering speculation and heavy capital outflows, policy insiders said.”

USAGOLD note:  If there is any truth to the stated correlation between the yuan and gold, then this news surely will benefit the yellow metal.

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Gold speculators pushed their bullish net positions higher this past week

Gold Eagle/Zachary Storella/10-28-2018

“Speculative positions rose for a second week after a huge increase (+55,842 contracts) last week and have now gained by +67,563 contracts over that two-week span. The current gold spec standing is now in a bullish position for a second week after having been in bearish territory for the previous nine weeks.”

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Gold-Silver COT reports – Friday release

GoldSeek/10-26-2018


[Last week’s report[This week’s full report.]

USAGOLD note:  Given the strong interest in the record COT short positions in gold and silver, we plan to make these GoldSeek reports a regular Friday feature. So please check back on Friday afternoons for the latest reports. We will make a comment or two when warranted.

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The naughty boy who blurts out unpleasant truths
“In the first place, the ‘classic’ writers, without neglecting other cases, reasoned primarily in terms of an unfettered international gold standard. There were several reasons for this but one of them merits our attention in particular. An unfettered international gold standard will keep (normally) foreign-exchange rates within specie points and impose an ‘automatic’ link between national price levels and interest rates. The modern mind dislikes this automatism, as much for political as for economic reasons: it dislikes the fetters this automatism clasps on government management of the economic process – dislikes gold, the naughty boy who blurts out unpleasant truths. But most of the economists of the period under survey liked it for precisely the same reasons. Though they compromised in practice as in theory and though they admitted central-bank management, the automatism – a phrase beloved by Lord Overstone [Samuel Jones Loyd, 1st Baron Overstone] – was for them, who are neither nationalists nor etatistes, a moral as well as an economic ideal.” –– Joseph Schumpeter, History of Economic Analysis (1954) Published posthumously

Dr. MoneyWise says. . . .And to Dr. Schumpeter’s well-considered discourse on the practical merits of the gold standard, I will add a simple thought of my own:  Absent the gold standard, the prudent investor who stores gold benefits in concert with the blurting of those unpleasant truths.

Emphasis added.

––––––––––––––––––––––––––––––––––––––––––––––––––
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Gold pushes warily higher

Gold pushed warily higher this morning after emerging unscathed from yesterday’s off-month options expiration. It showed signs overnight of breaking higher then reversed a bit when GDP came in 3.5% higher and the Fed’s favorite inflation indicator registered a benign 1.6% gain.

Stocks traded nervously lower despite those readings with major tech companies announcing less than inspiring earnings. It is likely to be a tense day on Wall Street with the weekend coming up and so much politically, geopolitically and economically stacking up against it. A severe test there could translate to the gold market as the day progresses. (Please see today’s Chart of the Day for more background.) As it is, the markets, including gold, appear to be in a bit of a quandary thus far this morning.

Gold is up $4 at $1336 and showing an inclination to go higher. (It got as high as $1238 in overnight trading.) Silver is up 6¢ at $14.72. We will be back with an update if any of this coalesces into a firm reading on direction.

Quote of the Day
“What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.” – Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable

Chart of the Day

Chart note: On Jim Cramer’s “Mad Money” recently, Carley Garner of DeCarley Trading made an interesting observation about gold’s price behavior of late. “[It] hasn’t reacted to the current trade war,” she says, “or the exploding deficit or even the recent uptick in inflation.” True enough. However, as we reported in yesterday’s DMR, gold is beginning to act again like the ultimate safe haven and asset of last resort. While the Dow has lost 8% in Shoctober, gold has gained 3.8%.

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DMR–Gold pushes warily higher

DAILY MARKET REPORT

Gold pushed warily higher this morning after emerging unscathed from yesterday’s off-month options expiration.  It showed signs overnight of breaking higher then reversed a bit when GDP came in 3.5% higher and the Fed’s favorite inflation indicator registered a benign 1.6% gain.

Stocks traded nervously lower despite those readings with major tech companies announcing less than inspiring earnings.  It is likely to be a tense day on Wall Street with the weekend coming up and so much politically, geopolitically and economically stacking up against it. A severe test there could translate to the gold market as the day progresses. (Please see today’s Chart of the Day for more background.) As it is, the markets, including gold, appear to be in a bit of a quandary thus far this morning.

Gold is up $4 at $1336 and showing an inclination to go higher. (It got as high as $1238 in overnight trading.)  Silver is up 6¢ at $14.72. We will be back with an update if any of this coalesces into a firm reading on direction.

Quote of the Day
“What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.” – Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable

Chart of the Day

Chart note: On Jim Cramer’s “Mad Money” recently, Carley Garner of DeCarley Trading made an interesting observation about gold’s price behavior of late.  “[It] hasn’t reacted to the current trade war,” she says, “or the exploding deficit or even the recent uptick in inflation.” True enough. However, as we reported in yesterday’s DMR, gold is beginning to act again like the ultimate safe haven and asset of last resort.  While the Dow has lost 8% in Shoctober, gold has gained 3.8%.

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

Wary of crypto, UK government blocks Royal Mint’s digital gold

Reuters/Peter Hobson/10-25-2018

“Britain’s Royal Mint has frozen plans to launch a digital gold token after a partnership with U.S. exchange group CME failed and the government vetoed a plan to have the tokens trade on a cryptocurrency exchange, three sources told Reuters.”

USAGOLD note:  The reason given for the UK government going cold on crypto gold is that it saw “partnering with a crypto exchange as too big a gamble with the reputation of the government and the Mint.” The Chicago Mercantile Exchange had previously pulled out of offering a blockchain-based trading platform for the product.  It sounds like British authorities became concerned about the counter-party risks associated with the crypto exchanges.  We applaud the UK government and Mint for its common sense and prudent due diligence.

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Trump’s trade war with China is starting to get nasty for US companies

Business Insider/Bob Bryan/10-25-2018

“Surveys from the Federal Reserve and market-research firms released Wednesday found widespread worries about the tariffs, while individual companies have started to tabulate the tens of millions of dollars in new costs they’re likely to incur from the tariffs.”

USAGOLD note:  Inflation continues to build at the manufacturing and wholesale levels. . . .

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Gold back in from the cold as markets buckle

Financial Times/Henry Sanderson/10-25-2018

Yellow metal regains ‘haven’ status as stocks around the world sink

“The volatility across global markets this month has been intense enough to spur a rally in gold, the metal that has been shunned for most of the year as US stocks set new record highs.”

USAGOLD note:  The Financial Times does not often run a positive report on gold so the article linked above is a welcome change.  Sanderson hits on some of the same themes we have highlighted here over the past several days mostly having to do with gold reclaiming its status as a portfolio safe haven.  Hold a pile of gold coins in your hands, like those pictured above, and somehow that status instantaneously asserts itself in the mind of the beholder.

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Investors ignore ‘most underrated risk’, could spark imminent blowup

Business Insider/Will Martin/10-25-2018

“[Societe Generale’s Albert] Edwards, who is well known on Wall Street for his doom-laden predictions for the markets, argues that China’s ability to navigate the 2008 crisis fairly unscathed had blinded investors and made them ignore signs that a crash might be imminent.”

USAGOLD note:  Echoes the “Why China’s economic troubles run deep” post from Wednesday [Please scroll].  If Edwards is correct, gold demand will intensify in a country that already generates the strongest demand for physical gold in the world.

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Posted in Today's top gold news and opinion |

USAGOLD Special Report

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Gold – A reverse bubble in search of a pin
The victim could quickly find itself the beneficiary

“The current COMEX short position in gold is a computer-driven market bubble blown to enormous proportions. Now at a record level, it is a different kind of bubble, though, from the type we usually associate with the term – a reverse bubble brought to life and nurtured through excessive selling rather than buying.  Nevertheless, it is just as deadly and opportunistic as the proverbial kind – a bubble in search of a pin.”

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Posted in Announcements, USAGOLD Special Report |

Economics report: Compare and contrast India vs. Brazil

Investopedia/Sean Ross/10-23-2018

“India and Brazil are both multi-trillion-dollar economies and members of the oft-cited BRIC countries along with Russia and China. While both are among the most-watched emerging markets, the economic fortunes of Brazil and India appear to be on divergent paths. India should continue to gain ground on Brazil, unless the South American country confronts difficult political and economic challenges.”

USAGOLD note: Interesting background on two often overlooked economies. . . . . .If the growth and wealth projections on India turn out to be the reality, it could be a major positive for the physical gold market in future years.  As for Brazil, it will have an election over the weekend and the populist-rightist, Jair Bolsonaro, is ahead in the polls with 57% and expected to win a landslide victory, according to a Reuters’ article on Wednesday.


Charts courtesy of TradingEconomics.com

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Posted in Today's top gold news and opinion |

Short and Sweet

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The stock market faces ‘unlimited downside risk’

“There is unlimited downside risk in the market right now and I don’t think it’s being respected. It’s not until afterwards that they ask, ‘what happened? The Fed, the Trump, the ebola, or whatever excuse du jour is being regurgitated on the various media outlets. The only one to blame is ourselves.” – J.C. Parets, All Star Charts, as reported by MarketWatch

USAGOLD note:  Especially if one fails to properly diversify. “We have met the enemy,” as Walt Kelly of Pogo fame once put it, “and he is us.”

Full article: The stock market faces ‘unlimited downside risk,’ warns veteran trader / MarketWatch / 10-24-2018

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Posted in Short and Sweet, Today's top gold news and opinion | Tagged , |