Monthly Archives: October 2018

A telephone call from an old client and friend

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‘Gold shone with the placid certainty of received tradition’

I had the happy occasion recently of receiving a telephone call from an old client and friend – a physician safely retired near the sea and alongside one of the South’s oldest golf clubs. It was good to hear from this student of the markets – one of life’s steady and thoughtful practitioners.  Back at the turn of the century, Doc foresaw much of what would happen economically in the United States and purchased what he considered enough gold to see him through it.

Vanity Fair’s Matthew Hart offers this masterfully written overview of those early years of the 21st century:

“An ounce of gold cost $271 in 2001. Ten years later it reached $1,896 – an increase of almost 700 percent. On the way, it passed through some of the stormiest periods of recent history, when banks collapsed and currencies shivered. The gold price fed on these calamities. In a way, it came to stand for them: it was the re-discovered idol at a time when other gods were falling in a heap of subprime mortgages and credit default swaps and derivative products too complicated to even understand. Against these, gold shone with the placid certainty of received tradition. Honored through the ages, the standard of wealth, the original money, the safe haven. The value of gold was axiomatic. This view depends on a concept of gold as unchanging and unchanged—nature’s hard asset.”

It was in that time frame, when gold was stuck in the $300 to $400 per ounce price range (a time not unlike our own when gold has been stuck in the $1200 to $1300 range), that Doc transferred roughly $500,000 of his net worth into gold coins. His goal, like most of our clientele, was not to become wealthy through gold ownership, but to protect the hard-earned wealth he had already attained. “I still have all the gold I purchased from you,” he said simply. “Every ounce of it. It’s now worth well-over $2,000,000. I want to thank you again for your book* and your advice. It made a great difference to me as you may have gathered.” (Ed note: At the interim top – the $1896 Matthew Hart mentions above – Doc’s holdings reached a value well over $3,000,000!)

“That,” I said, “is the kind of story we enjoy hearing around here, Doc. I’m happy for you. Happy gold could help you like it did.”

“We had some very interesting conversations back in the day,” he said with a chuckle, “and gold did for me what we thought it would, what you said it would.”

The conversation then drifted to other of life’s pursuits for both of us and ultimately to the purpose of his telephone call – a fresh gold transaction. We completed our business and I left the conversation with a strong sense of satisfaction. We get a steady stream of phone calls like Doc’s, but it is always good to hear real-life tales about gold’s role in preserving our clients’ assets.

The fact of the matter, though rarely discussed, is that gold ownership has as much to do with personal philosophy as it does finance and economics – though by that I do not mean to diminish the importance of financial markets, or politics for that matter, in our everyday lives. Things, though, do need to be kept in perspective and gold helps toward that goal – once one understands its true nature.

In many ways, gold ownership, as Doc would likely attest, is a rational portfolio decision that suits the times, but it is also a life-style decision. As Richard Russell, the late purveyor of the Dow Theory Letters once put it, “I still sleep better at night knowing that I hold some gold. If or when everything else falls apart, gold will still be unquestioned wealth.” And one that helps you sleep well no matter what happens on Wall Street or in Washington D.C.

–– Michael J. Kosares

* The ABCs of Gold Investing – How To Protect and Build Your Wealth With Gold (Please see link.)


This piece is an updated repost of an article that originally appeared in News & Views (our monthly newsletter) in July, 2015.

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Hedging financial warfare

A new and important reason for physical gold and silver ownership (not ETFs)

Daily Reckoning/James Rickards

“The result could be a market decline of 20% or more in a single day, comparable to the stock market crash of October 1987 or the crash of 1929. You would not have to trade anything or be in the market during the attack; you would be wiped out based on the market decline even if you did nothing.”

USAGOLD note:  This analysis from James Rickards, in our view, is his most important in a long time.  Financial warfare – the ability of America’s enemies to penetrate and disrupt markets and infrastructure through malware and other forms of electronic weaponry – is something few investors contemplate.  As Rickards, points out though, the threat is very real especially under the current tension-filled circumstances and prudent investors need to take it into account. “The key,” says Rickards, “is to have some portion of your total assets invested in nondigital assets that cannot be hacked, wiped out or disrupted in financial warfare. Such assets include gold, silver, land, fine art and private equity that is usually represented by a paper contract and does not rely on electronic exchange trading for liquidity.” This is the financial market equivalent of living off the grid. We strongly recommend reading and contemplating the article at the link.


Repost from 8/21/2018

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Gold shorts about to get burned

MishTalk/Mish Shedlock/10-16-2018

“This is an incredibly price-bullish setup. Buy Gold.”

USAGOLD note: Mish Shedlock reports on the record gold short position on the COMEX.  His rationale is short and to the point.  Worth a quick visit. . . . . .

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Favorite web pages

Gold Trading Hours

Whenever the gold market gets active, we have a large increase in visitors at our Gold Trading Hours page.  Investors want to see which markets – Asian, European or American – are the focal point for price movement.  They also want to know when a particular market is going to open or close in areas where gold might experience an influx of buyer or seller interest.  That is why we designed this popular page with market hours and a live clock showing the local time in that particular market and all the other major gold markets.  Gold Trading Hours is one of the quiet pages at USAGOLD that garners significant global interest particularly when the market is moving or breaking news warrants more than average interest. We also invite you to return here regularly – to this Live Daily Newsletter page – for up-to-the-minute gold market news, opinion and analysis as it happens.

We invite your visit.  We encourage your bookmark.

USAGOLD’s
Gold Trading Hours
London – New York – Sydney – Hong Kong – Shanghai – Tokyo – Zurich

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Gold running sideways again this morning, Italy concerns resurface

DAILY MARKET REPORT

Gold is running sideways again today at $1225 after a brief dip in overseas trading. Gold got as low as $1221 in Asian trading hours, reversed in Europe as concerns worked their way back to the surface about Italy’s recently submitted budget proposal. Giuseppi Conte, Italy’s prime minister, told the European Commission that “Austerity is no longer viable” as the country proposed a budget deficit three times larger than what the European Union deems allowable. Italian 10-year yields jumped on the news and gold turned higher – at one point trading at $1228, a $7 turnaround. Italy’s ruling political coalition, some think, is pushing for a break with the euro and reintroduction of the lira.

Also influencing the gold market this morning, the Dow Jones Industrial Average reversed a portion of yesterday’s gains – down 128 as this report is posted. We also note with more than passing interest that gold is holding its own, even displaying an occasional burst of strength, on a day when the dollar is advancing sharply against other currencies.

Quote of the Day
“The best thing is, don’t play the game, because it is pros against you. We spend hundreds of millions of dollars a year to get an edge, and others do that too. So it’s very difficult for the individual investor to assume that he [or she] can pick something better. The best thing you can do is know how to have a balanced portfolio … because you ain’t going to win that game.” – Ray Dalio, Bridgewater Associates, speaking at the Harvard Kennedy School’s Institute of Politics

Chart of the Day

Chart courtesy of HowMuch.net

Chart note: As you can see, after the United States and China, GDP for the rest of the nation states falls off quickly. Japan is a distant third and Germany an even more distant fourth. The European Union as a whole even without the United Kingdom, however, would replace China as number two if counted as a whole. This visualization drives home what’s at stake in the trade war between the United States and China. It involves the two largest economies in the world by far and nearly 40% of the global economy.

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DMR–Gold running sideways again today, Italy concerns resurface

DAILY MARKET REPORT

Gold is running sideways again today at $1225 after a brief dip in overseas trading. Gold got as low as $1221 in Asian trading hours, reversed in Europe as concerns worked their way back to the surface about Italy’s recently submitted budget proposal. Giuseppi Conte, Italy’s prime minister, told the European Commission that “Austerity is no longer viable” as the country proposed a budget deficit three times larger than what the European Union deems allowable.  Italian 10-year yields jumped on the news and gold turned higher – at one point trading at $1228, a $7 turnaround.  Italy’s ruling political coalition, some think, is pushing for a break with the euro and reintroduction of the lira.

Also influencing the gold market this morning, the Dow Jones Industrial Average reversed a portion of yesterday’s gains – down 128 as this report is posted. We also note with more than passing interest that gold is holding its own, even displaying an occasional burst of strength, on a day when the dollar is advancing sharply against other currencies.

Quote of the Day
“The best thing is, don’t play the game, because it is pros against you. We spend hundreds of millions of dollars a year to get an edge, and others do that too. So it’s very difficult for the individual investor to assume that he [or she] can pick something better. The best thing you can do is know how to have a balanced portfolio … because you ain’t going to win that game.” – Ray Dalio, Bridgewater Associates, speaking at the Harvard Kennedy School’s Institute of Politics

Chart of the Day

Chart courtesy of HowMuch.net

Chart note: As you can see, after the United States and China, GDP for the rest of the nation states falls off quickly.  Japan is a distant third and Germany an even more distant fourth.  The European Union as a whole even without the United Kingdom, however, would replace China as number two if counted as a whole.  This visualization drives home what’s at stake in the trade war between the United States and China.  It involves the two largest economies in the world by far and nearly 40% of the global economy.

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In surprise move, Central Bank of Hungary announces 10-fold jump in its gold reserves

Bullion Star/Ronan Manly/10-16-2018

“In one of the most profound developments in the central bank gold market for a long time, the Hungarian National Bank, Hungary’s central bank, has just announced a 10 fold jump in its monetary gold holdings. The central bank, known as Magyar Nemzeti Bank (MNB) in Hungarian, made the announcement in Budapest, Hungary’s capital.”

USAGOLD note:  An interesting report from Bullion Star’s Ronan Manley. . .The photo is from the public relations release issued by MNB. Each of those palettes contains one metric tonne of gold and there are 28 of them. . . .an impressively large procurement secured by Hungary’s central bank.  From that press release:

“Following the substantial increase in the Bank’s gold reserves in physical form, its repatriation has already taken place. The possession of precious metal within the country is in line with international trends, supports financial stability and strengthens market confidence in Hungary. In keeping with the historical role of gold, gold remains one of the safest instruments in the world, and, even under normal market conditions, provides a stability and confidence-building function.”

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China cuts U.S. Treasury holdings for third straight month

Bloomberg/Randy Woods and Katherine Greifeld/10-16-2018

“China’s ownership of U.S. bonds, bills and notes was $1.165 trillion, down from $1.171 trillion in July, according to data released by the Treasury Department on Tuesday. Japan, which is the largest foreign owner of Treasuries after China, decreased its holdings to $1.03 trillion from $1.036 trillion a month earlier. Saudi Arabia boosted its ownership by $2.7 billion to a record $169.5 billion.”

USAGOLD note:  This report picks up where our Chart of the Day note left off in yesterday’s DMR.  Both China and Japan are essentially defending their currencies and attempting to thwart capital flight.  How that shakes out in the global foreign exchange markets remains to be seen but their intent seems clear.  Though this article ties the reductions to the trade war, Japan has held their foreign exchange reserves steady since 2012 and China began reducing its reserves in 2014.  In short, neither have been buyers of U.S. Treasuries in the aggregate for quite some time.

Chart courtesy of TradingEconomics.com

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Rocket time for gold

Gold Eagle/Stewart Thomson/10-16-2018

“The long-term bond bull market is dying, and a long consolidation for gold is ending.  Gold’s mighty bull run is ready to resume… and it is likely to continue for decades.”

USAGOLD note:  For an interesting chart and analysis that supports his “continue for decades” prediction, we recommend a visit to the link.

 

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Trump says Fed is his ‘biggest threat’

CNBC/Michael Sheetz/10-16-2018

“‘Because the Fed is raising rates too fast. And it’s independent, so I don’t speak to him,’ Trump said in an interview with Fox Business, referring to Fed Chairman Jerome Powell. ‘But I’m not happy with what he’s doing because it’s going too fast. Because – you look at the last inflation numbers, they’re very low.’”

USAGOLD note:  There has yet to be a response from the Fed and one doubts we are going to get one anytime soon.

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Short and Sweet

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Gold transcends

I could write many paragraphs about what I see in this chart, but I think it speaks for itself. It explains at a glance why gold in the fiat money era, in which we still find ourselves firmly ensconced, is a good thing to own. Simply put, gold transcends. . . . . . .During the gold standard era, the chart flatlines. The day the United States severed the dollar’s tie to gold in 1971, it registers a pulse. – MK

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Gold drifts sideways, a palpable, eerie calm hangs over markets this morning

DAILY MARKET REPORT

Gold drifted sideways this morning under quiet market circumstances – up $2 on the day at $1229. Silver is up 2¢ at $14.75. In a report published at Scrap Register, Germany’s Commerzbank has some interesting things to say about the current gold market environment. It attributes recent price increases primarily to short covering and points to the 100-day moving average as an incentive for the yellow metal to go even higher. “If it settles down above the 100-day moving average (currently at around $1,227) in any lasting fashion, we expect to see technical follow-up buying that should push the price further up.”

A palpable, eerie calm hangs over the markets this morning. “Everything is but one headline away from sharp reversals,” writes Bloomberg’s Richard Breslow. “Confusion and uncertainty are rife, and fear of loss has gained the upper hand over greed,” he goes on. “That’s a prescription for very unhealthy markets with informational content that should be consumed with care.”

Quote of the Day
“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]

Chart[s] of the Day

Chart note 1: Sometimes the facts get in the way. Though China might be tempted to choose devaluation as a tactic in the trade war, 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. It has kept the yuan in a tight band against the U.S. dollar and sold from its pool of U.S. Treasuries as a means to stabilizing its currency. China’s foreign exchange reserves as a result went from nearly $4 trillion to just above $3 trillion since 2014. Meanwhile, the yuan has traded in a narrow channel between 14.5¢ and 16.5¢.

Chart note 2: PBoC governor Yi Gang stated unambiguously over this past weekend that China “will not engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions.” Part of the narrative behind the dollar’s strong showing of late has been concern that China would ‘weaponize’ the yuan in the trade war. Yi’s statement negates that concern. If China is successful in keeping the yuan within a band, it will kick one of the props out from under the recently strong dollar and in doing so indirectly offer a helping hand to gold.

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DMR–Gold drifts sideways, a palpable, eerie calm hangs over markets this morning

DAILY MARKET REPORT

Gold drifted sideways this morning under quiet market circumstances – up $2 on the day at $1229.  Silver is up 2¢ at $14.75. In a report published at Scrap Register, Germany’s Commerzbank has some interesting things to say about the current gold market environment.  It attributes recent price increases primarily to short covering and points to the 100-day moving average as an incentive for the yellow metal to go even higher. “If it settles down above the 100-day moving average (currently at around $1,227) in any lasting fashion, we expect to see technical follow-up buying that should push the price further up.”

A palpable, eerie calm hangs over the markets this morning.  “Everything is but one headline away from sharp reversals,” writes Bloomberg’s Richard Breslow.  “Confusion and uncertainty are rife, and fear of loss has gained the upper hand over greed,” he goes on. “That’s a prescription for very unhealthy markets with informational content that should be consumed with care.”

Quote of the Day
“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]

Chart[s] of the Day

Chart note 1: Sometimes the facts get in the way. Though China might be tempted to choose devaluation  as a tactic in the trade war, 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. It has kept the yuan in a tight band against the U.S. dollar and sold from its pool of U.S. Treasuries as a means to stabilizing its currency. China’s foreign exchange reserves as a result went from nearly $4 trillion to just above $3 trillion since 2014. Meanwhile, the yuan has traded in a narrow channel between 14.5¢ and 16.5¢.

Chart note 2: PBoC governor Yi Gang stated unambiguously over this past weekend that China “will not engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions.” Part of the narrative behind the dollar’s strong showing of late has been concern that China would ‘weaponize’ the yuan in the trade war. Yi’s statement negates that concern.  If China is successful in keeping the yuan within a band, it will kick one of the props out from under the recently strong dollar and in doing so indirectly offer a helping hand to gold.

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After disappearing for two quarters, gold buyers are back

CNBC/Patti Domm/10-15-2018

“‘It was severely oversold below $1,200. We did get a pickup in physical emerging market demand and a further reduction in scrap supply, and the market tightened a little bit, and that helped it move higher,’ said [HSBC’s Jim] Steel. ‘The real catalyst for the jerk higher in the last few days has been the equity market wobble.’”

USAGOLD note:  HSBC sees gold averaging $1274 through the end of year.

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Investors brace for market tumble — BofA survey

Financial Times/Cat Rutter Pooley/10-16-2018

“A record proportion of investors believe the global economy is in the late stage of the business cycle according to a closely-watched survey, topping the previous peak of December 2007 and underlining the twitchiness that has afflicted markets over the past week.”

USAGOLD note: Evidence from Bank of America Merrill Lynch that stock market sentiment may be shifting, volatility on the rise.

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Bears digging in for the winter?

Sharps Pixley/Ross Norman/10-15-2018

“That said, in a crowded trade it only takes a few breaking rank to start a short covering rally … before it picks up a self-fuelling momentum before a rout follows, with gold rising very sharply to the upside. In short, the bears are looking vulnerable.”

USAGOLD note:  Some interesting thoughts and observations on torpor and hibernation in short form from Ross Norman. . . .


Image by Francis C. Franklin / CC-BY-SA-3.0 [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], from Wikimedia Commons [Edited]

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‘No one questions its value. . .’

“Significant increases in inflation will ultimately increase the price of gold. Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection. I view gold as the primary global currency. It is the only currency, along with silver, that does not require a counter-party signature. Gold, however, has always been far more valuable per ounce than silver. No one refuses gold as payment to discharge an obligation. Credit instruments and fiat currency depend on the credit worthiness of a counter-party. Gold, along with silver, is one of the only currencies that has an intrinsic value. It has always been that way. No one questions its value, and it has always been a valuable commodity, first coined in Asia Minor in 600 BC.” – Alan Greenspan, former chairman of the Federal Reserve


Image courtesy of the British Museum Collection/Lydia, croesid, ca 550 BC

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Recent client testimonial

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“Thank you! It has been a pleasure doing business with your Company! You’ve treated the small investor (me) just like you would a millionaire. Best wishes, and I hope I can make some purchases in the future.” – L.W., Savannah, Georgia

We also treat millionaires . . . well. . . like millionaires – whether they admit to it or not [smile].

We receive unsolicited testimonials like L.W.’s routinely. Please see our Client Testimonials page for more feedback, and be sure to visit  the Better Business Bureau for even more in the way of FIVE-STAR reviews.  Don’t do business with any gold company until you have checked it out.

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Gold regains initiative as we start the week

DAILY MARKET REPORT

Gold regained the initiative as we start the week after Friday’s modest drop – up $11 in the early going at $1229. Silver is up 18¢ at $14.76. Concerns that the China-U.S. trade war could escalate to a more generalized ‘cold war’ are playing a key role in gold’s turnaround that began last Thursday. Potential sanctions against Saudi Arabia and the implications for the oil market are also preying on investors’ minds. Underlying all, though, is the rising interest rate environment and its generalized effect on a number of markets ranging from emerging countries to global debt markets and U.S., Asian and European stock markets. Gold is trading at a 3-month high.

Quote of the Day
“Take some advice from two observers who have been around for awhile: The long term gets here before you know it. . . .Instead, we’d be dependent on foreign investors’ acquiring most of our debt — making the government dependent on the ‘kindness of strangers’ who may not be so kind as the I.O.U.s mount up. We can’t let that happen — not if we want an America that is able to provide growth and stability at home while maintaining global leadership. We would risk returning with a vengeance to stagflation — the ugly combination of inflation and economic stagnation that we tasted in the 1970s.” – Paul A. Volker and Peter G. Peterson

Chart of the Day

Chart note: Popular belief holds that foreign investors and central banks hold the lion’s share of the nearly $22 trillion federal debt. These charts from the St. Louis Federal Reserve tell the real story. Though it has not always been the case, private domestic investors now hold the largest share of the national debt at $13.1 trillion. Foreign investors are number two at $6.2 trillion. Federal Reserve banks are number three at $2.8 trillion. As you can see, federal debt held by private investors is on an ascending curve while both foreign and Federal Reserve banks’ purchases have leveled off. At present, private investors hold more than half the national debt (59.3%) as shown in the pie chart at the very top. Foreign investors hold 28.1% of the U.S. federal debt.

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DMR–Gold regains initiative as we start the week

DAILY MARKET REPORT

Gold regained the initiative as we start the week after Friday’s modest drop – up $11 in the early going at $1229.  Silver is up 18¢ at $14.76. Concerns that the China-U.S. trade war could escalate to a more generalized ‘cold war’ are playing a key role in gold’s turnaround that began last Thursday. Potential sanctions against Saudi Arabia and the implications for the oil market are also preying on investors’ minds.  Underlying all, though, is the rising interest rate environment and its generalized effect on a number of markets ranging from emerging countries to global debt markets and U.S., Asian and European stock markets.  Gold is trading at a 3-month high.

Quote of the Day
“Take some advice from two observers who have been around for awhile: The long term gets here before you know it. . . .Instead, we’d be dependent on foreign investors’ acquiring most of our debt — making the government dependent on the ‘kindness of strangers’ who may not be so kind as the I.O.U.s mount up. We can’t let that happen — not if we want an America that is able to provide growth and stability at home while maintaining global leadership. We would risk returning with a vengeance to stagflation — the ugly combination of inflation and economic stagnation that we tasted in the 1970s.” – Paul A. Volker and Peter G. Peterson

Chart of the Day

Chart note:  Popular belief holds that foreign investors and central banks hold the lion’s share of the nearly $22 trillion federal debt.  These charts from the St. Louis Federal Reserve tell the real story.  Though it has not always been the case, private domestic investors now hold the largest share of the national debt at $13.1 trillion. Foreign investors are number two at $6.2 trillion. Federal Reserve banks are number three at $2.8 trillion.  As you can see, federal debt held by private investors is on an ascending curve while both foreign and Federal Reserve banks’ purchases have leveled off. At present, private investors hold more than half the national debt (59.3%)  as shown in the pie chart at the very top. Foreign investors hold 28.1% of the U.S. federal debt.

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Gold 7-year bear market phase over

Gold Eagle/Clive Maund/1-15-2018

“Thursday last week was a momentous day for the Precious Metals sector with gold, GDX and other índices, and giant gold ETF, GLD all breaking out on impressive volume, and this development was all the more extraordinary because it happened when the broad stockmarket was crashing. This is viewed as a strong sign that instead of being dragged lower still by a crashing stockmarket, the PM sector will soar. Silver hasn’t broken out yet, but it should soon follow suit.”

USAGOLD note:  Clive Maund sees the technical factors lining-up in gold’s favor and a couple of major differences between now and 2008 when gold declined at the start of a financial crisis.  One is currently depressed price levels compared to elevated levels in 2008.  The other is a “grimmer” long term outlook for gold based on geopolitical factors. Details at the link. . . . . .

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Global crisis enters ‘critical third phase’

Credit Bubble Bulletin/Doug Noland/10-13-2018

“I posited some months back that tumult in the emerging markets marked the second phase of unfolding Crisis Dynamics. I have argued that the global government finance Bubble, history’s greatest Bubble, has been pierced at the ‘periphery.’ More recently, the analytical focus has been on ‘Periphery to Core Crisis Dynamics.’ I’ve chronicled de-risking/deleveraging dynamics making headway toward the ‘Core.’ This week the ‘Core’ became fully enveloped, as the unfolding global crisis entered a critical third phase.”

USAGOLD note:  We have been following Doug Noland’s writings of late with a great deal of interest.  Here is the latest chapter.  Noland understands credit markets – the make-up and unwinding of financial bubbles.

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China central bank governor promises to keep yuan ‘broadly stable’

Reuters/David Lawder and Yawen Chen/10-14-2018

“China will continue to let the market play a decisive role in the formation of the RMB exchange rate. We will not engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions.” – Yi Gang, governor, Peoples Bank of China (as reported by Reuters at the link above)

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Inflation and deflation: Keep your portfolio safe

Investopedia/Lisa Smith

“Sometimes it’s hard to tell whether inflation or deflation is the bigger threat. When you can’t tell what to do, plan for both. A diversified portfolio that includes allocation to investments that fare well during inflationary periods and investments that fare well during deflationary periods can provide a measure of protection regardless of what happens in the economy.”

USAGOLD note: A gold diversification can go a long way in protecting against either or both and all the hybrids in between. Please see: Black Swans, Yellow Gold – How gold performs during periods of deflation, chronic disinflation, runaway stagflation and hyperinflation.


Repost from July, 2018

 

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Gold tracking higher in overnight markets . . .

 . . . as Asian stocks, Dow futures drop.  Trade concerns dominate.  Worries about oil, possible Saudi sanctions also a factor.

Dow futures down almost 200. Gold trading at the $1232 level, up $13.50.  Silver, $14.76 – up 18¢.

USAGOLD Online Order Desk taking orders – open 24/7.

More later –

 

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Rally erupted in gold market days after funds made big bear bet

Bloomberg/Susanne Barton and Mavin G. Perez/10-12-2018

“For a measure of how much this week’s surge in gold prices may have caught many in the market by surprise, consider that hedge funds had just made their biggest-ever bearish wager on the metal days before.”

USAGOLD  note:  Some of the abrupt turnaround, as we suggested in our Thursday update, might have been due to some of those same players reversing short positions.  Here is what it looked like on the chart including volume bars (bottom) and a partial repost of Thursday’s update for those who missed it:

“This is the first time in 2018, a cursory review tells us, that gold has gone up when the Dow Jones Industrial Average has gone down more than 1000 points – a break with recent trends that speaks to a possible resurgence of gold’s safe haven status. Too, we should not overlook the possible role of short-covering in today’s rally. Speculators have built-up a record short volume on the COMEX and will need to reverse those positions in order to lock-in profits. As an early indicator that sentiment might be shifting among funds and institutions, gold ETFs yesterday recorded net purchases of eight tonnes – “the first daily inflow since July” according to Commerzbank.”

More below. . . . .

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Last week was just a taste of the coming gold short squeeze

Dollar Collapse/John Rubino/10-13-2018

“These are historically huge imbalances that – if the action in the paper markets still has predictive value – point to a gold short squeeze in which the speculators who are now betting that precious metals will fall are forced to cover those positions by buying, in the process sending the price up dramatically. On Thursday we got a sense of what that might look like. Stock markets around the world sold off, which sent capital scurrying for cover. Some of that capital flowed into gold, which chased futures speculators out of some of their shorts. The result was a nice pop in gold. . .”

USAGOLD note:  The link above offers some details from John Rubino on the possibility of a short squeeze in the COMEX gold market. It includes a review of Friday’s Commitment of Traders numbers.

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Black Swans
A chronology of panics, mania, crashes
and collapses
–– 400 BC to present ––

Those who think it can’t happen here, or that this time around it’s different, should take note of the number of black swan events in American history alone. The record is formidable. Gold ownership is traditionally a form of battening down the hatches against these recurring storms and, for the minority who adhere to it, an effective and ever-ready defense. Nialls Ferguson, the economic philosopher, summed up what a good many were thinking in the wake of the 2008 meltdown when he said, “Those few goldbugs who always doubted the soundness of fiat money — paper currency without a metal anchor — have in large measure been vindicated. But why were the rest of us so blinded by money illusion?” Why indeed. . .

[LINK]

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Has the derivatives volcano already begun to erupt?

AsiaTimes/David P. Goldman/10-9-2018

Hedging the foreign exchange risk in this half-trillion-dollar per year business has exhausted the balance sheet of the global banking system. That explains a large part of the jump in the US 10-year note yield to 3.2% last Friday from 2.85% in early September. Hedging the foreign exchange risk in these massive flows created a derivatives mountain, and it has started to spew smoke and lava.

USAGOLD note:  We mentioned derivatives earlier today (please scroll).  This article zeroes in on one major area of concern as outlined in the snippet above.  Remember, this is only one area of concern among many. . . albeit a large one.

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America is overdue for another economic disaster

National  Review/George Will

“The durable market rise that began March 6, 2009, is as intoxicating as the Lehman anniversary should be sobering: Nothing lasts. Those who see no Lehman-like episode on the horizon did not see the last one.”

USAGOLD note:  This time around no one can claim that they weren’t warned or that they didn’t see it coming as was universally the case in 2008.  Now  the warnings come almost daily.


Repost from August 19, 2018

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