Monthly Archives: November 2018

Gold-Silver COT reports – Friday release

GoldSeek/11-30-2018

[Last week’s report]

[This week’s full report]

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OPEC advisory committee recommends oil production cut

Bloomberg/Grant Smith/11-30-2018

“OPEC needs to cut oil production to avoid an oversupplied market in 2019, according to the group’s main advisory board, composed of officials that recommend policy to the ministers.”

USAGOLD note:  The advisory board is recommending a cut of 1.3 million barrels per day.  Total current OPEC production, according to the U.S. Energy Information Administration, is 38.78 million barrels per day.  So are talking about a roughly 3.5% cut in overall production.

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Old and new central bank gold buying accelerates sharply

ETF Daily News/Allen Sykora

“Metals Focus is looking for global central-bank net gold purchases of up to 450 tonnes this year, which would top 390 and 375 the last two years, Liang said. If so, this would reverse a four-year gradual decline in net bullion buying since 2014, with last year’s total down by 42% from the multi-decade high of 646 tonnes in 2013, the consultancy said.”

USAGOLD note:  And there might be other purchases that no one knows anything about. . . .


Repost from 11/4/2018

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DMR–Gold resumes ‘wait-and-see’ posture

DAILY MARKET REPORT

Gold resumed its wait-and-see posture this morning as major changes in financial market dynamics seem to be in the making. Minutes to the October FOMC meeting released yesterday point to a drift among governors toward a more dovish overall position.  Markets are still digesting that drift along with the dovish tilt in chairman Powell remarks to the Economic Club of New York this past Tuesday. A change to easy money – or even easier money – will have wide-ranging effects in financial markets, particularly with respect to the dollar and consequently gold.

Adding to the tense market environment, on Saturday the presidents of the United States and China will meet for what many believe will be fateful dinner – one that will likely become a centerpiece in future historical accounts of the era. Goldman came out with its view this morning that the most likely outcome of the Trump-Xi parlay will be an escalation in the trade war, with a “pause” as a close second. Trade negotiator Robert Lighthizer, on the other hand, says he expects the dinner to be a “success.”

The stock market can’t seem to make up its mind on how all of this will work out.  It rallies, then it falls.  Gold, through it all, has taken a more steadfast, even-keeled approach. For today though, the mood has swung back to  cautious. The yellow metal is down $3 on the day at $1221.50.  Silver is down 10¢ at $14.23.

Quote of the Day
“Let it be emphasized once more, and especially to anyone inclined to a personally rewarding skepticism in these matters: for practical purposes, the financial memory should be assumed to last, at a maximum, no more than 20 years. This is normally the time it takes for the recollection of one disaster to be erased and for some variant on previous dementia to come forward to capture the financial mind. It is also the time generally required for a new generation to enter the scene, impressed, as had been its predecessors, with its own innovative genius.” ― John Kenneth Galbraith, A Short History of Financial Euphoria

Chart of the Day

Chart note:  Since 2008, eruptions in the volatility index have preceded upward moves in the gold price. Volatility is on the rise at the present but the increase is not nearly as dramatic as in 2009, 2011, and 2015. If the volatility index is an indicator of sentiment, investors appear worried but, at this juncture, not the level of worry that would cause a mass exodus to gold and other safe havens.  According to a report in Financial Times this past weekend, however, conservative investors have begun to pull money out of corporate bond funds and transfer that capital to gold. Inflows into gold ETFs, FT reports, are up for the seventh week running.

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

Gold resumes ‘wait-and-see’ posture

DAILY MARKET REPORT

Gold resumed its wait-and-see posture this morning as major changes in financial market dynamics seem to be in the making. Minutes to the October FOMC meeting released yesterday point to a drift among governors toward a more dovish overall position. Markets are still digesting that drift along with the dovish tilt in chairman Powell remarks to the Economic Club of New York this past Tuesday. A change to easy money – or even easier money – will have wide-ranging effects in financial markets, particularly with respect to the dollar and consequently gold.

Adding to the tense market environment, on Saturday the presidents of the United States and China will meet for what many believe will be fateful dinner – one that will likely become a centerpiece in future historical accounts of the era. Goldman came out with its view this morning that the most likely outcome of the Trump-Xi parlay will be an escalation in the trade war, with a “pause” as a close second. Trade negotiator Robert Lighthizer, on the other hand, says he expects the dinner to be a “success.”

The stock market can’t seem to make up its mind on how all of this will work out. It rallies, then it falls. Gold, through it all, has taken a more steadfast, even-keeled approach. For today though, the mood has swung back to cautious. The yellow metal is down $3 on the day at $1221.50. Silver is down 10¢ at $14.23.

Quote of the Day
“Let it be emphasized once more, and especially to anyone inclined to a personally rewarding skepticism in these matters: for practical purposes, the financial memory should be assumed to last, at a maximum, no more than 20 years. This is normally the time it takes for the recollection of one disaster to be erased and for some variant on previous dementia to come forward to capture the financial mind. It is also the time generally required for a new generation to enter the scene, impressed, as had been its predecessors, with its own innovative genius.” ― John Kenneth Galbraith, A Short History of Financial Euphoria

Chart of the Day

Chart note: Since 2008, eruptions in the volatility index have preceded upward moves in the gold price. Volatility is on the rise at the present but the increase is not nearly as dramatic as in 2009, 2011, and 2015. If the volatility index is an indicator of sentiment, investors appear worried but, at this juncture, not the level of worry that would cause a mass exodus to gold and other safe havens. According to a report in Financial Times this past weekend, however, conservative investors have begun to pull money out of corporate bond funds and transfer that capital to gold. Inflows into gold ETFs, FT reports, are up for the seventh week running.

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Investors catch gold bug again

Forbes/Simon Constable/11-30-18

“The ‘recent selloff in the S&P 500 Index was the largest monthly drop since September 2011,’ states a recent research note from Aberdeen Standard Investments. ‘During this heightened volatility, investors flocked to gold.’ Investors found ETFs especially attractive, with 23 metric tons, or 739,466 troy ounces getting added to such investments, the report explains. These were the first inflows since April the report states.”

USAGOLD note:  As we have noted consistently at this page, ETF demand is an indicator of institutional and fund interest.  Over the past few years, funds and institutions have been a steady presence in the gold market with many of the big-name buyers consistently stating their concerns about general financial system risks.

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Fed’s Powell shakes gold out of its doldrums

Bloomberg/Marvin G. Perez and Susanne Barton/11-28-2018

“Powell’s views ‘suggest to most readers that after the December hike, they will see how the data comes in,’ Tai Wong, head of base and precious metals trading at BMO Capital Markets, said by phone. The ‘speech could be a game changer if not walked back’ and is more important than any possible statement coming out of the G-20, he added by email.

USAGOLD note:  That use of the word “gamechanger” caught our eye in an otherwise run-of-the-mill report following chairman Powell speech at the Economic Club of New York on Tuesday.


Image by Dilaudid [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/)], via Wikimedia Commons

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Danger lurks for dollar bulls in outcome of Trump-Xi dinner

Bloomberg/Sydney Maki and Liz McCormick/11-29-2018

“The eyes of the global currency market will be on Saturday’s meeting between U.S. President Donald Trump and Chinese leader Xi Jinping, with some analysts seeing even a modicum of progress toward easing trade tensions as enough to sink the dollar.”

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News Alert: US will suspend tariffs if China changes economic policies

Money and Markets/J.T. Crowe/11-29-2018

“The Wall Street Journal is reporting that the United States and China are pursuing a deal to defuse trade tensions and boost markets, in which the Trump administration will hold off on further tariffs through spring as the two sides work on a deal. The talks include “big changes in Chinese economic policy,” according to U.S. and Chinese officials.”

USAGOLD note: A rare optimistic assessment of the upcoming Trump-Xi conclave in Buenos Aires . . . .

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Optimism creeps quietly into gold market with Powell’s dovish tilt

Optimism crept quietly into the gold market beginning about mid-day yesterday. It took the form of a $6 advance immediately following Fed chairman Powell’s dovish tilt in a speech before the Economic Club of New York. It then gathered pace overnight in Asian and European markets and carried over to the U.S. open. Gold is now trading at $1226 and up $5 from yesterday’s FOREX close. Silver is up 5¢ at $14.37.

Some will see yesterday’s remarks as acquiescence to the president who two days ago said he was “not even a little bit happy” with the Fed chairman. Others will see it as a needed adjustment to worrying signs beginning to surface in the economy mostly centered around wobbly stock and bond markets and an overly strong dollar. Perhaps, in the end, it is a little of both. . . .

Also helping gold this morning are reports that Saudi Arabia is pushing hard behind the scenes for oil production cutbacks to address falling prices and a report from Reuters that Russia is “becoming increasingly convinced it needs to reduce oil output in tandem with OPEC.”

Quote of the Day
“Gold is scarce. It’s independent. It’s not anybody’s obligation. It’s not anybody’s liability. It’s not drawn on anybody. It doesn’t require anybody’s imprimatur to say whether it’s good, bad, or indifferent, or to refuse to pay. It is what it is, and it’s in your hand.” – Simon Mikhailovich, Tocqueville Funds (with thanks to Ron Stoeferle and Mark Valek at Incrementum AG)

Chart of the Day

Chart note: As we head into the final month of the year, we thought it might be a good time to post a chart on gold’s performance thus far in 2018. As of November 23, gold is down 5.1% on the year. The downside is not as amplified as the day-to-day headlines might suggest and for value investors, the upturn over the last several weeks might indicate a change in sentiment and direction for the gold market – particularly with the latest stock market weakness taken into account and the Fed chairman’s migration to a dovish tilt in comments before the Economic Club of New York yesterday.

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DMR–Optimism creeps quietly into gold market with Powell’s dovish tilt

DAILY MARKET REPORT

Optimism crept quietly into the gold market beginning about mid-day yesterday. It took the form of a $6 advance immediately following Fed chairman Powell’s dovish tilt in a speech before the Economic Club of New York. It then gathered pace overnight in Asian and European markets and carried over to the U.S. open.  Gold is now trading at $1226 and up $5 from yesterday’s FOREX close.  Silver is up 5¢ at $14.37.

Some will see yesterday’s remarks as acquiescence to the president who two days ago said he was “not even a little bit happy” with the Fed chairman.  Others will see it as a needed adjustment to worrying signs beginning to surface in the economy mostly centered around wobbly stock and bond markets and an overly strong dollar.  Perhaps, in the end, it is a little of both. . . .

Also helping gold this morning are reports that Saudi Arabia is pushing hard behind the scenes for oil production cutbacks to address falling prices and a report from Reuters that Russia is “becoming increasingly convinced it needs to reduce oil output in tandem with OPEC.”

Quote of the Day
“Gold is scarce. It’s independent. It’s not anybody’s obligation. It’s not anybody’s liability. It’s not drawn on anybody. It doesn’t require anybody’s imprimatur to say whether it’s good, bad, or indifferent, or to refuse to pay. It is what it is, and it’s in your hand.” – Simon Mikhailovich, Tocqueville Funds (with thanks to Ron Stoeferle and Mark Valek at Incrementum AG)

Chart of the Day

Chart note:  As we head into the final month of the year, we thought it might be a good time to post a chart on gold’s performance thus far in 2018.  As of November 23, gold is down 5.1% on the year.  The downside is not as amplified as the day-to-day headlines might suggest and for value investors, the upturn over the last several weeks might indicate a change in sentiment and direction for the gold market – particularly with the latest stock market weakness taken into account and the Fed chairman’s migration to a dovish tilt in comments before the Economic Club of New York yesterday.

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European investors opt for gold

Funds Europe/Nick Fitzpatrick/11-26-2018

“A large number of European investors have cited gold as the best investment opportunity over the next 12 months, according to a Legg Mason survey. The survey, which polled the views of over 16,000 investors globally, found that about a quarter of those polled in Germany, Italy, Switzerland and the UK identified gold as an investment opportunity.”

USAGOLD note:  Between the complications with Brexit and the dispute between Brussels and Rome and now the sudden resurfacing of tensions between Ukraine and Russia, Europeans have much to worry about – politically and economically.  The old refuge – the one that goes back centuries as a hedge against European turmoil – appears to be receiving new attention as reflected in both the acqusition of physical coins and bullion and gold ETF shares.

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US dollar will weaken through 2020 as investors find better returns elsewhere, Morgan Stanley says

CNBC/Yen Nee Lee/11-29-2018

“With U.S. economic growth forecast to slow next year, the Fed is widely expected to take a break from hiking rates in the middle of 2019 which will weaken the U.S. dollar. But more importantly, large economies such as Europe, Japan and China are now investing less in global financial markets, so demand for the U.S. dollar will likely reduce, said Hans Redeker, Morgan Stanley’s global head of FX strategy.”

USAGOLD note: The point Redeker makes is one based on supply-demand fundamentals and largely left out of recent analysis on the dollar.

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How a dovish tone at the Fed sounded across markets

Bloomberg/Vildana Hajric, sarahPonczek and Elena Popina/11-28-2018

“From emerging-market bonds to developed-nation currencies, the ripples from Jerome Powell’s comments on interest rates barreled through markets in seconds.”

USAGOLD note:  An interesting quick summation on how various markets reacted to the Powell speech. . . . . including gold.

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Gulf between US and China looms large ahead of G20 meeting

Financial Times/Tom Mitchell and Sherry Fei Ju/11-28-2018

“Three months ago, Chinese officials saw the meeting between Xi Jinping and Donald Trump at the G20 as their best hope for a settlement that would end Beijing’s trade war with Washington. Then they hoped for a truce. Now they will consider themselves lucky if this week’s encounter passes without any embarrassment for Mr Xi, as they brace themselves for a new round of US tariffs early next year.”

USAGOLD note:  The consensus opinion seems to be that rapprochement between the one and two economies in the world is a distant possibility.  It is difficult to know how markets, including gold, will react once the reality sets in.

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U.S. trade deficit in goods widens 1.3% to $77.2 billion in October

MarketWatch/Greg Robb/11-28-2018

“An early look at trade patterns in October showed a 1.3% widening in the U.S. goods deficit – to $77.2 billion from a revised $76.3 billion in September, the Commerce Department said Wednesday. Economists were looking for the deficit to widen to $77.7 billion. Exports declined in October while imports rose at a slightly faster pace.”

 

USAGOLD note:  We note that the current trade deficit in goods is running at record levels despite rising domestic oil production and the implementation of tariffs on steel and aluminum.

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Gold, dollar charts after Powell comments

Charts courtesy of TradingEconomics.com

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DMR Update–Gold bolts higher on Powell comments

(USAGOLD, Wednesday 11/28/2018) – Gold bolted $6 higher immediately after Fed chairman Jerome Powell stated in a speech that interest rates are “just below” the neutral range, an indication that the Fed might slow interest rate increases in 2019. It is now trading at $1220.50, up $6 on the day. Silver is up 16¢ at $14.33.

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DMR Update – Gold bolts higher on Powell comments

(USAGOLD, Wednesday 11/28/2018) – Gold bolted $6 higher immediately after Fed chairman Jerome Powell stated in a speech that interest rates are “just below” the neutral range, an indication that the Fed might slow interest rate increases in 2019.  It is now trading at $1220.50, up $6 on the day.  Silver is up 16¢ at $14.33.

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Here’s what to expect from Fed Chief Powell’s most important speech yet

CNBC/Jeff Cox/11-28-2018

“Fed Chairman Jerome Powell is delivering a speech Wednesday that one strategist says ‘may be the most consequential’ of his term to date.”

USAGOLD note:  An interesting array of opinion from Wall Streeters on what the Fed chair might try to accomplish in his speech today.

 

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No DMR today. . . .

. . . . but please check back.  We will post an update if anything of interest develops.

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Will central banks come to the rescue? Don’t count on it

ETF Daily News/Kristina Hooper/11-27-2018

“As I noted in my commentary last week, there are hints of an economic slowdown appearing. In this environment, expectations are increasing that central banks may loosen their monetary policy in response, but I’m not sure that central banks will come to the rescue this time. In fact, I believe central banks are more likely to be a risk factor going forward.”

USAGOLD note:  This article offers some unsettling background in light of the president’s surprising public comments about chairman Powell noted below. It will be interesting to see how markets react to these developments today.

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Trump attacks Fed Chairman Powell: ‘I’m not even a little bit happy with my selection of Jay’

CNBC/Christine Wang/11-27-2018

“‘I’m doing deals and I’m not being accommodated by the Fed,’ Trump told the Post. ‘They’re making a mistake because I have a gut and my gut tells me more sometimes than anybody else’s brain can ever tell me.'”

USAGOLD note:  Is a shake-up coming at the Fed? Wall  Street’s attention will be focused on Chairman Powell’s speech today at the Economic Club of New York.

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DMR Update–Clarida comments tank gold market

No sooner had we posted today’s DMR than Fed Vice Chair Richard Clarida gave a speech widely interpreted as ‘hawkish’ on interest rates. Gold immediately spiked lower in response.  It is now down $8.75 on the day at $1214.  Silver is down 10¢ at $14.16. Clarida tried to strike a middle-ground stance, but the markets are not reading it that way.

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DMR update–Clarida comments tank gold market

No sooner had we posted today’s DMR than Fed Vice Chair Richard Clarida gave a speech widely interpreted as ‘hawkish’ on interest rates. Gold immediately spiked lower in response.  It is now down $8.75 on the day at $1214.  Silver is down 10¢ at $14.16. Clarida tried to strike a middle-ground stance, but the markets are not reading it that way.

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Gold tracking in a narrow range, president says ‘Fed a bigger problem than China’

Gold is tracking within a narrow range this morning essentially taking a wait-and-see approach to a number of issues on the event calendar. Caution prevails. Topping the list are policy speeches from top Fed officials, tenuous talks between China and the United States at the upcoming G-20 conference and lingering concerns about vulnerable global stock markets. Gold made an attempt to go higher in Europe overnight then thought better of it – now at $1222 and down $1 on the day. Silver, similarly disposed, is up 2¢ on the day at $14.27. The president has little doubt about what tops the economic agenda these days. “I think the Fed right now is a much bigger problem than China,” he said in an interview yesterday.

Quote of the Day
“Europe has brought us a depression worse than 1929. It has led to entire peoples being broken and humiliated, like the Greeks, all for the sake of preserving the infernal instrument of the euro. This whole disaster has been adorned by a chain of lies, shouted ever louder because they are afraid that the colossal damage they have done will be discovered.” – Claudio Borghi, Catholic University of Milan

Chart of the Day


Chart courtesy of the World Gold Council

Chart note: This chart shows global net gold ETF assets in tonnes since their inception in 2004. Note the steady overall growth since 2016. Generally speaking, ETFs are the preferred method for gold ownership among funds and institutions. For market-watchers, it indicates the level of interest among major market participants. As you can see North American growth is up marginally since the beginning of 2016 but European interest has grown markedly. In the United States, stock market over-valuation and interest rates head up fund and institutional concern. Brexit and the possibility of a instability in Italy are at the forefront of European investor concerns.

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Posted in dailyquotes |

DMR–Gold tracking in a narrow range, president says ‘Fed a bigger problem than China’

DAILY MARKET REPORT

Gold is tracking within a narrow range this morning essentially taking a wait-and-see approach to a number of issues on the event calendar.  Caution prevails. Topping the list are policy speeches from top Fed officials, tenuous talks between China and the United States at the upcoming G-20 conference and lingering concerns about vulnerable global stock markets. Gold made an attempt to go higher in Europe overnight then thought better of it – now at $1222 and down $1 on the day.  Silver, similarly disposed, is up 2¢ on the day at $14.27.  The president has little doubt about what tops the economic agenda these days. “I think the Fed right now is a much bigger problem than China,” he said in an interview yesterday.

Quote of the Day
“Europe has brought us a depression worse than 1929. It has led to entire peoples being broken and humiliated, like the Greeks, all for the sake of preserving the infernal instrument of the euro. This whole disaster has been adorned by a chain of lies, shouted ever louder because they are afraid that the colossal damage they have done will be discovered.” – Claudio Borghi, Catholic University of Milan

Chart of the Day


Chart courtesy of the World Gold Council

Chart note:  This chart shows global net gold ETF assets in tonnes since their inception in 2004.  Note the steady overall growth since 2016. Generally speaking, ETFs are the preferred method for gold ownership among funds and institutions.  For market-watchers, it indicates the level of interest among major market participants.  As you can see North American growth is up marginally since the beginning of 2016 but European interest has grown markedly.  In the United States, stock market over-valuation and interest rates head up fund and institutional concern.  Brexit and the possibility of a instability in Italy are at the forefront of European investor concerns.

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Where to invest $1 million right now

Bloomberg/Frederik Balfour/11-27-2018

“Because of my family background—my grandfather founded Lee Cheong Gold Dealers in Hong Kong in 1950—I believe in the physicality of gold. I would buy a million dollars’ worth of bullion bars and stuff them under my mattress. Gold has underperformed the S&P 500 index for the past five years. SPX has delivered 46 percent in that time, and gold has lost 1 percent. In the next 10 years gold is one of the best contrarian plays. I say buy when no one else does.”

USAGOLD note:  Two of the six Hong Kong-based advisors offering their opinion on where to invest $1 million right now recommended gold . . . . .

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The US, China and Wall Street’s new man in the middle

Financial Times/Tom Mitchell and James Politi/11-25-2018

“But a new generation of China whisperers is emerging as Mr Kissinger, 95, grows frail and US President Donald Trump jettisons the principles that formed the bedrock of Sino-American relations through eight successive US administrations — namely the conviction that the two countries’ common interests outweighed their differences, and that their periodic disputes could always be managed peacefully.”

USAGOLD note: This editorial explores Wall Street’s behind-the-scenes effort to influence a more positive outcome to the U.S.-China trade dispute. . . .

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