Monthly Archives: November 2018

Gold-Silver COT reports – Friday release

GoldSeek/11-16-2018

[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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Gold in the Attic

Every once in a while we rummage around USAGOLD’s creaky old attic and dust-off a golden vignette from our storied past. Here is a short vignette on software-driven trading in financial markets that originally appeared in the May 2012 edition of NEWS & VIEWS.  It speaks to the issue in a way you might not have anticipated. I hope you enjoy reading it as much as I enjoyed writing it. – MK

Computer software gone mad

“With respect to the growing dominance of machines on Wall Street, I recall the old Star Trek episode that involves a visit to a planet where the inhabitants seem to be living in a state of perfect bliss. Captain Kirk knows that this cannot be right. There is no such thing as perfect happiness. As it turns out, the population is controlled not by a loathsome dictator who has drugged the population into compliance, but by a computer that has evolved sufficiently to somehow gain control of their minds. Something must be done, concludes Kirk, to break its hold. Spock comes up with the solution by instructing the computer ‘to resolve the value of pi’ – an impossibility because its resolution, as we all remember from high school math class, is infinite. The computer spends all of its time and devotes all of its resources trying to achieve the impossible and the dictatorial hold it has on the population is released – a trick we might want to keep in mind for the day computers complete their mastery of Wall Street.”

In the February, 2017 issue of NEWS & VIEWS, we reposted that piece with the following added note:

“Similarly, in early 2017 Financial Times told the story of the textbook, The Making of a Fly: The Genetics of Animal Design. It started out selling for $113 per copy at Amazon – that is until the governing algorithm misfired between two third-party sellers. The price then skyrocketed to $23 million before someone took note and fixed the problem. We forget that computer software, and this applies to Wall Street’s trading apparatus as readily as it does the Amazon pricing platform, is only as reliable and intelligent as the code by which it is instructed to operate. The practical equivalent to Mr. Spock’s solution in the financial realm is to store significant capital in the form of gold and silver coins detached from potentially rebellious electronic circuitry.”


Original publication date: May 2012; February 2017

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Federal Reserve to review strategies on monetary policy in 2019

Financial Times/Mamta Badkar, Joe Rennison and James Politi/11-15-2018

“In a statement on Thursday, the Fed said it would review the ‘strategies, tools and communication practices’ it uses to convey monetary policy.”

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The November issue of our newsletter

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NEWS &VIEWS
Forecasts, Commentary & Analysis
on the Economy and Precious Metals

NOVEMBER, 2018

This month’s edition of NEWS & VIEWS leads off with an overview of the surprising jump in global private investor and central bank gold demand. From there we delve into a wide-range of topics in short form that we think you will appreciate including speculation on whether or not inflation has returned to the U.S. economy, some insight on who owns the national debt, how Asian investors prefer to own gold, and much more.


In conjunction with our regular newsletter, we released a new SPECIAL REPORT-CLIENT ALERT, which is also now available in the clear:

Historic World Gold Coins
One of the great, largely untouched and potentially lucrative
opportunities in the field of gold investing today


If you would like to sign-up to receive our e-mail release notifications for the monthly newsletter and all SPECIAL REPORTS, you can sign-up here.  Subscriptions are free of charge and are handled discreetly. We do not spam or share our email list.

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Gold surges $11 at COMEX open on Brexit, Powell comments

DAILY MARKET REPORT

Gold surged at the COMEX open this morning – up $11 at $1225. Silver is up 10¢ at $14.40. We detect two principal factors driving today’s trading. One is ominous and clear-cut – UK’s Brexit woes. The other is less concrete but probably more influential in the marketplace – guarded comments from Fed chairman Powell that came off as an early warning that a change of direction might be brewing at the Fed on interest rates. Suddenly the possibility of a “pause” has entered market thinking. Adding to the “pause” argument, CNBC ran a blazing headline this morning: “Cramer says CEOs are telling him off the record the economy has quickly cooled.” Such anecdotal evidence might be what was behind Powell’s remarks two days ago.

As we mentioned yesterday, the unfolding Fed scenario might serve as incentive for traders to begin squaring the enormous short position at the COMEX which requires buying gold contracts as an offset. With a shaky weekend ahead of us, the prudent course of action might be to buy today.

Quote of the Day
“I remember being told many years ago on a South African game reserve that the buffalo was the most dangerous of the big five game animals. In large part, this is because of the complacency shown towards them relative to the other, more obviously dangerous big five game animals (ie the lion, leopard, rhino and elephant). It’s also a fact that unlike the other big five, the buffalo gives no warning of an imminent charge (see link). It’s complacency that gets you killed, and the same goes for investors with the macro-risks. We all know what the big macro-imbalances are out there, caused by years of loose money, but investors continue to ignore them at their peril.” – Albert Edwards, SocGen

Chart of the Day


Chart note: This interactive chart from the St. Louis Federal Reserve shows the average annual price of gold from 1970 through the present. It demonstrates at a glance gold’s strong performance as a portfolio holding over the long haul and emphasizes its role as a reliable long-term portfolio safe haven.

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DMR-Gold surges $11 at COMEX open on Brexit, Powell comments

DAILY MARKET REPORT

Gold surged at the COMEX open this morning – up $11 at $1225.  Silver is up 10¢ at $14.40.  We detect two principal factors driving today’s trading.  One is ominous and clear-cut – UK’s Brexit woes.  The other is less concrete but probably more influential in the marketplace – guarded comments from Fed chairman Powell that came off as an early warning that a change of direction might be brewing at the Fed on interest rates. Suddenly the possibility of a “pause” has entered market thinking. Adding to the “pause” argument, CNBC ran a blazing headline this morning: “Cramer says CEOs are telling him off the record the economy has quickly cooled.” Such anecdotal evidence might be what was behind Powell’s remarks two days ago.

As we mentioned yesterday, the unfolding Fed scenario might serve as incentive for traders to begin squaring the enormous short position at the COMEX which requires buying gold contracts as an offset.  With a shaky weekend ahead of us, the prudent course of action might be to buy today.

Quote of the Day
“I remember being told many years ago on a South African game reserve that the buffalo was the most dangerous of the big five game animals. In large part, this is because of the complacency shown towards them relative to the other, more obviously dangerous big five game animals (ie the lion, leopard, rhino and elephant). It’s also a fact that unlike the other big five, the buffalo gives no warning of an imminent charge (see link). It’s complacency that gets you killed, and the same goes for investors with the macro-risks. We all know what the big macro-imbalances are out there, caused by years of loose money, but investors continue to ignore them at their peril.” – Albert Edwards, SocGen

Chart of the Day


Chart note:  This interactive chart from the St. Louis Federal Reserve shows the average annual price of gold from 1970 through the present.  It demonstrates at a glance gold’s strong performance as a portfolio holding over the long haul and emphasizes its role as a reliable long-term portfolio safe haven.

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A $30 billion computer is about to start selling stocks

ZeroHedge/Tyler Durden/11-14-2018

“A $30 billion computer, run by UBS’ wealth management which oversees $2.4 trillion in capital and entrusted by some of the world’s richest, is poised to underweight stocks as real money and systematic investors pare risk amid flagging bull-market momentum. According to Andreas Koester, head of global asset allocation at UBS Wealth, the quantitative-investing platform is close to trimming its equity holdings to 20% from a neutral 50%, a shift that would lead to an avalanche of selling as hundreds of billions in stocks are forced to find a new home.”

USAGOLD note:  Thought-provoking.  What happens when computers start telling each other to sell – at hair-trigger speed? Someone pulls the plug?  Durden says “there will be no human intermediation to stop the algo-precipitated liquidation.”

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’28 months of work undone in hours’: The City of London reacts to the chaos of Theresa May’s crumbling Brexit deal

Business Insider/Will Martin/11-15-2018

“Dr Daniel Harenberg, senior economist with Oxford Economics, says that the only certainty right now is uncertainty, and that this is likely to cause chaos in the markets.  ‘About the only thing that seems sure now is that the next few months will see considerable political upheaval, triggering bouts of significant market volatility,’ he wrote to clients.”

USAGOLD note:  We need to remind ourselves that the City of London is still the center of the international gold trade.  We have yet to see any analysis as to how a failed Brexit agreement is likely to affect the gold trade – all those interlocking counterparty agreements between London and continental institutions.  It would be remiss to think that it would not have an effect.


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

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Old and new central bank gold buying accelerates sharply

ETF Daily News/Allen Sykora/11-4-2018

“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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Paul Tudor Jones says we’re in a global debt bubble and headed for some ‘scary moments’

CNBC/Fred Imbert/11-15-2018

“Billionaire investor Paul Tudor Jones said Thursday that the world has loaded on too much debt which could bring trouble across asset classes. ‘From a 50,000-feet viewpoint, we’re probably in a global debt bubble,’ Jones said at the Greenwich Economic Forum in Connecticut. “Global debt to GDP is at an all-time high.’ ‘This is going to be a very challenging time for policymakers moving forward,’ he said.”

USAGOLD note:  Sounds like Jones is calling this the beginning of the end. . .that word “global” before the words “debt bubble” is a bit scary particularly coming from Paul Tudor Jones who has a reputation for consistently making the big calls.  This might be the biggest one yet. . . . .

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BlackSwansYellowGold
How gold performs during periods of deflation,
disinflation, stagflation and hyperinflation

“That men do not learn very much from the lessons of history is the most important of all the lessons of history.” – Aldous Huxley

Though Huxley’s observation is readily applied to humanity collectively, it does not apply so easily to individual investors. As justification, we offer the ongoing (and long-term) success of the USAGOLD website as well as the soaring statistics on the growth of private gold ownership over the past decade both in the United States and abroad, inspired directly by the lessons learned over the past decade of financial market upheaval. The following short essays are dedicated to the safe-haven gold investor who, like noted financial author Nicholas Taleb, believes that it is just as important to prepare for what we cannot foresee as what we can.


BlackSwansYellowGold Series

Gold as a deflation hedge

Gold as a disinflation hedge

Gold as a stagflation hedge

Gold as hyperinflation hedge

Gold as the portfolio choice for all seasons

A chronology of panics, mania, crashes and collapses
(400 BC to present)

_______________________________________________

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Gold pushes cautiously higher on Powell reference to economic ‘headwinds’ in 2019

Gold cautiously pushed higher again today as a carryover from yesterday’s strong rise. It is up another $3 in early trading at $1214, and up about $15 over the past two days. Although one could point to any number of factors to explain yesterday’s sudden jump higher, the one thing that stands out is Fed chairman Jerome Powell’s remarks that the U.S. economy could face “headwinds” in 2019. In a clear break with previous public posturing, he cautioned that the Fed would be “thinking about how much further to raise rates and the pace at which we will raise rates.”

However one parses the whole of Powell’s speech and Q&A session yesterday, this revelation provides a hint as to what the Fed chairman might be thinking. It is likely to be read as a loosening of the more hawkish rhetoric in weeks past and perhaps an early indication of a shift at the Fed.

Gold, we believe, is responding to that possibility. It, in fact, might inspire some squaring of the record short postion at the COMEX. At the moment the dollar appears to be leaning toward an upward bias based on what is occurring in Europe (the UK and Italy) and continuing wariness on further easing in China. That reaction might eventually take a back seat though to a softening at the Fed. Silver is up 5¢ on the day at $14.19.

* Bloomberg: Powell says solid economy faces headwinds as Fed mulls rates

Quote of the Day
“This is a terrible fiscal situation we’ve got ourselves into. The administration is doing tax cuts and a spending decrease, but he’s doing them in the wrong order. What we need right now is to focus totally on reducing the debt. We’re in a stage where if nothing is changed, we’re about to go from stagnation to stagflation, with a significant rise in inflation and a wholly significant imbalance in the economy, which is very difficult to anticipate at this stage. But the outlook is not exactly terrific.” – Alan Greenspan, 12/2017, CNBC interview

Chart of the Day

Chart note: The St. Louis Federal Reserve recently released this new chart on tax receipts. It shows corporate tax receipts plummeting and taxes on production and imports rising. This might be a new set of circumstances brought about by the Trump administration’s tax cuts and tariff programs. In the aggregate, tax receipts represented by the thick black line are falling at a time when government debt is expected to increase – and by some accounts increase significantly. For a prescient observation as to what all of this might lead to, we refer you to the quote from Mr. Greenspan immediately above.

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DMR–Gold pushes cautiously higher on Powell reference to economic ‘headwinds’ in 2019

DAILY MARKET REPORT

Gold cautiously pushed higher again today as a carryover from yesterday’s strong rise.  It is up another $3 in early trading at $1214, and up about $15 over the past two days.  Although one could point to any number of factors to explain yesterday’s sudden jump higher, the one thing that stands out is Fed chairman Jerome Powell’s remarks that the U.S. economy could face “headwinds” in 2019. In a clear break with previous public posturing, he cautioned that the Fed would be “thinking about how much further to raise rates and the pace at which we will raise rates.”

However one parses the whole of Powell’s speech and Q&A session yesterday, this revelation provides a hint as to what the Fed chairman might be thinking.  It is likely to be read as a loosening of the more hawkish rhetoric in weeks past and perhaps an early indication of a shift at the Fed.

Gold, we believe, is responding to that possibility. It, in fact, might inspire some squaring of the record short postion at the COMEX.  At the moment the dollar appears to be leaning toward an upward bias based on what is occurring in Europe (the UK and Italy) and continuing wariness on further easing in China.  That reaction might eventually take a back seat though to a softening at the Fed.  Silver is up 5¢ on the day at $14.19.

* Bloomberg: Powell says solid economy faces headwinds as Fed mulls rates

Quote of the Day
“This is a terrible fiscal situation we’ve got ourselves into. The administration is doing tax cuts and a spending decrease, but he’s doing them in the wrong order. What we need right now is to focus totally on reducing the debt. We’re in a stage where if nothing is changed, we’re about to go from stagnation to stagflation, with a significant rise in inflation and a wholly significant imbalance in the economy, which is very difficult to anticipate at this stage. But the outlook is not exactly terrific.” – Alan Greenspan, 12/2017, CNBC interview

Chart of the Day

Chart note: The St. Louis Federal Reserve recently released this new chart on tax receipts. It shows corporate tax receipts plummeting and taxes on production and imports rising. This might be a new set of circumstances brought about by the Trump administration’s tax cuts and tariff programs. In the aggregate, tax receipts represented by the thick black line are falling at a time when government debt is expected to increase – and by some accounts increase significantly. For a prescient observation as to what all of this might lead to, we refer you to the quote from Mr. Greenspan immediately above.

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Pound tumbles and gilts rally on fears for Brexit deal

Financial Times/Frederica Coco and Richard Blackden/11-15-2018

“Having been stuck in a tight range in early trading on Thursday, the pound tumbled 1.8 per cent to below the $1.28 mark after [Brexit secretary Dominic]  Raab said he could not in ‘good conscience’ support the deal. UK government bonds rallied, with the yield on the benchmark 10-year bond falling 10 basis points to 1.4 per cent.”

USAGOLD note: The euro is falling as well. . .

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Paulson & Co keeps stake in gold investments during third-quarter: filing

Reuters/Renita D. Young/11-14-2018

“Paulson & Co, led by longtime gold bull John Paulson, kept its stake in gold investments during the third quarter of 2018 while other heavyweights including Soros Fund Management LLC, Jana Partners LLC and Caxton Corp remained unexposed to the metal.”

USAGOLD note:  Some speculate in the metal, other buy and hold.  Paulson is in the latter category like Ray Dalio as reported here yesterday.

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Greenspan sees signs of stagflation, threats to U.S. economy

Bloomberg/Video Interview with David Rubenstein/11-14-2018

“Former Federal Reserve Chairman Alan Greenspan tells David Rubenstein that rising deficits and debt are already showing signs of eroding U.S. growth and that he sees indications of stagflation — a stagnant economy saddled with rising inflation.”

USAGOLD note:  The Maestro weighs-in on the current state of economic affairs in the United States. . . . .Gold proved to be an excellent hedge against the last stagflationary episode in the 1970s early 1980s.

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Warren Buffett would buy precious metals again, if he could

Investing.com/Jesse Felder/11-14-2018

“‘But it’s also important to look at his later thesis for buying silver: ‘In recent years, bullion inventories have fallen materially, and last summer Charlie and I concluded that a higher price would be needed to establish equilibrium between supply and demand.’ Currently, we have a very similar situation in gold.”

USAGOLD note:  In this interesting retrospective, Jesse Felder applies Munger-Buffet logic from two decades ago  to the present situation and concludes its a good time to buy gold. . . .

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Surge in U.S. corporate debt a key vulnerability: JPMorgan

Forbes/Pedro Nicolaci da Costa/11-14-2018

“U.S. corporate debt levels have again surpassed their pre-crisis peaks of $6 trillion, raising widespread concern that, as the Federal Reserve raises interest rates, some firms could run into financial trouble.”

USAGOLD note:  According to this Forbes article, JPM is not worried that corporate exposure will end up in the same trash bin with the housing paper a decade ago.  Others are not so sanguine. . . . . . .”Zombification” with reference to over-leveraged, over-indebted big corporations is a frequently-used word in the Wall Street lexicon these days.

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Short and Sweet

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Stuck in a fiat dollar world
for some time to come

“For all its problems, the current dollar-based non-system has been far more resilient than the Bretton Woods gold-exchange standard, which never operated as White intended. And the real alternatives — a classical gold standard, in which interest rates are driven by cross-border gold flows; or a supranational currency, like Keynes advocated at Bretton Woods — are likely to remain too radical politically. We are, therefore, almost surely stuck in a fiat dollar world for some time to come.” – Benn Steil, Council on Foreign Relations

Those of you who frequent this page will recall previous references to Benn Steil’s gold advocacy.  Steil, who is the director of international economics at the Council on Foreign Relations, sees central banks’ utilizing gold as a reserve asset to the offset the risks of holding national currencies as opposed to direct backing for the dollar.  In this respect, his thinking is closely aligned with that of Nobel Prize winner, Robert Mundell, who also proposed the use of gold for the same purpose to the European Union at the inception of the euro.

In the essay linked below Steil provides a brief but revealing history of the transition from the late-1960s, early-1970s gold-based system to the dollar-based system under which the global economy functions today. He includes a number of interesting stories about the countries and people involved.  Few people know, for example, that France dispatched a battleship in the early 1970s to New York harbor to pick up its gold deposited at the New York Federal Reserve.

In the absence of a gold standard, the best recourse for the average investor is to put one’s portfolio on the gold standard through a diversification in physical coins and bullion.  We agree with Steil: “We are almost surely stuck in a fiat money world for some time to come” with all its attendant risks.

Adopt a gold-backed dollar? This is what happened the last time we tried
Marketwatch/Benn Steil/8-11-2016

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U.S. budget deficit jumps to $100 billion at start of fiscal year

Bloomberg/Sarah McGregor/11-13-2018

“The U.S. recorded a $100.5 billion budget deficit in October, an increase of about 60 percent from a year earlier, as spending grew twice as fast as revenue.”

USAGOLD note: And that is the political deficit. . .The real addition to the national debt for the month of October was right at $184 billion!  As posted by the Treasury Department (Treasury Direct):

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Gold on the fence as global tangle dominates trading

DAILY MARKET REPORT

Gold continues to ping-pong on either side of the $1200 mark unable to make a convincing move up or down. It, in fact, is right at $1200 as we write this report and down $3.50 on the day. Silver similarly is stuck in and around the $14 mark and down marginally on the day.

The precious metals are experiencing headwinds from weakness in both the yuan and euro in recent days.  The situation in Europe – most notably having to do with Brexit and the budget situation in Italy – does not lend itself to quick or easy resolution.  With respect to China, there have been rumblings of lower interest rates and a weakening economy.  That prognosis is balanced in the United States against the prospect of rising inflationary expectations and concerns about stability in financial markets.

“Demand for copper shall be positive next year and in the coming years,” Marcin Chludziński, head of copper mining giant KGHM Polska Miedz SA, told Bloomberg yesterday. “The trade conflict may affect demand to some extent,” he concludes, “but on the other hand China is changing its growth model and starting to accelerate internal consumption in order to rely less on exports and more on its domestic market.”

In an odd break with standard operating procedure, ex-Fed chair Janet Yellen voiced her concerns about the dollar being too strong – a prospect she feels could widen the U.S. trade gap. It seems that much is up in the air at the moment on the global stage and gold is content to remain on the fence as a result – at least for now. That, as always though, is subject to change without notice. . . . . . . .

Quote of the Day
“[T]he object of speculation may vary widely from one mania or bubble to the next. It may involve primary products, especially those imported from afar (where the exact conditions of supply and demand are not known in detail), or goods manufactured for export to distant markets, domestic and foreign securities of various kinds, contracts to buy or sell goods or securities, land in the country or city, houses, office buildings, shopping centers, condominiums, foreign exchange. At a late stage, speculation tends to detach itself from really valuable objects and turn to delusive ones. A larger and larger group of people seeks to become rich without a real understanding of the processes involved. Not surprisingly, swindlers and catchpenny schemes flourish.” – Robert Z. Aliber and Charles P. Kindleberger, Manias, Panics and Crashes – Anatomy of a Typical Financial Crisis (2001)

Chart of the Day

Chart note: As the chart above illustrates, gold does not always react to the start of a crisis as anticipated. As the credit crisis gained momentum in 2008, gold declined as the dollar rose – acting in much the same way it is reacting now to the emerging markets crisis and U.S.-China trade war. It was not until late 2008, when the full extent of the crisis became all too apparent, that it began to move higher. Thereafter, from 2009 to September 2011, it rose to its all-time high of $1895 – a 215% gain in three years.

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DMR–Gold on the fence as global tangle dominates trading

DAILY MARKET REPORT

Gold continues to ping-pong on either side of the $1200 mark unable to make a convincing move up or down.  It, in fact, is right at $1200 as we write this report and down $3.50 on the day.  Silver similarly is stuck in and around the $14 mark and down marginally on the day.

The precious metals are experiencing headwinds from weakness in both the yuan and euro in recent days.  The situation in Europe – most notably having to do with Brexit and the budget situation in Italy – does not lend itself to quick or easy resolution.  With respect to China, there have been rumblings of lower interest rates and a weakening economy.  That prognosis is balanced in the United States against the prospect of rising inflationary expectations and concerns about stability in financial markets.

In an odd break with standard operating procedure, ex-Fed chair Janet Yellen voiced her concerns about the dollar being too strong – a prospect she feels could widen the U.S. trade gap.  It seems that much is up in the air at the moment on the global stage and gold is content to remain on the fence as a result – at least for now. That, as always though, is subject to change without notice. . . . . . . .

Quote of the Day
“[T]he object of speculation may vary widely from one mania or bubble to the next. It may involve primary products, especially those imported from afar (where the exact conditions of supply and demand are not known in detail), or goods manufactured for export to distant markets, domestic and foreign securities of various kinds, contracts to buy or sell goods or securities, land in the country or city, houses, office buildings, shopping centers, condominiums, foreign exchange. At a late stage, speculation tends to detach itself from really valuable objects and turn to delusive ones. A larger and larger group of people seeks to become rich without a real understanding of the processes involved. Not surprisingly, swindlers and catchpenny schemes flourish.” – Robert Z. Aliber and Charles P. Kindleberger, Manias, Panics and Crashes – Anatomy of a Typical Financial Crisis (2001)

Chart of the Day

Chart note: As the chart above illustrates, gold does not always react to the start of a crisis as anticipated. As the credit crisis gained momentum in 2008, gold declined as the dollar rose – acting in much the same way it is reacting now to the emerging markets crisis and U.S.-China trade war. It was not until late 2008, when the full extent of the crisis became all too apparent, that it began to move higher. Thereafter, from 2009 to September 2011, it rose to its all-time high of $1895 – a 215% gain in three years.

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Italy defies EU request to present revised budget

TheGuardian/Angela Giuffreda/11-14-2018

“Luigi Di Maio, the deputy prime minister and leader of the anti-establishment Five Star Movement, which is ruling in coalition with the far-right League, said the government was committed to maintaining its deficit target of 2.4% but it would move forward with plans to cut taxes, introduce a universal basic income and lower the retirement age.”

USAGOLD note:  Looks like Italy and Brussels are hurtling toward a head-on crash. . .

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Ray Dalio’s faith in gold is unshaken

Bloomberg/Luzi Ann Javier/11-13-2018

“Not even gold’s second quarterly straight decline was enough to shake billionaire hedge-fund manager Ray Dalio’s confidence in gold. Dalio’s Bridgewater Associates maintained its holdings in SPDR Gold Shares, the largest bullion-backed ETF, at 3.9 million shares, and its stake in iShares Gold Trust, the second-largest, at 11.3 million shares in the third quarter, according to a regulatory filing Tuesday.”

USAGOLD note:  The latest on Dalio’s gold positions. . . .

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Janet Yellen says the US trade deficit is likely to get even bigger.

Quartz/Gwynn Guilford/11-13-2018

“Speaking at a conference in Beijing, Janet Yellen said that the steady rise in US interest rates is pushing up the value of the dollar, which will likely cause the US trade gap to widen further, according to Bloomberg (paywall).”

USAGOLD note:  Janet Yellen thinks the dollar is too strong?

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Gold is cheap. Inflation is coming. You do the math.

Barron’s/Andrew Bary

“Compared with stocks and other financial assets, gold looks inexpensive. More important, inflation is starting to pick up in the U.S. and in much of the world as central banks shrink their enormous balance sheets. And gold has represented a good defense against inflation eroding the value of a stock or bond portfolio.”

USAGOLD note:  A lengthy, well-written excursion into the benefits of owning gold. Recommended reading from Barron’s. . . . .


Repost from late September but worth the reprise. . . . . .

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Technically speaking: Major markets are all flashing warning signs

Real Investment Advice/Lance Roberts/11-13-2018

“The ongoing deterioration in the markets continues to confirm, as I wrote back in April, the bull market that started in 2009 has ended. However, we will likely not know for certain until we get into 2019, but therein lies the biggest problem. Waiting for verification requires a greater destruction of capital than we are willing to endure.”

USAGOLD note:   Lance Roberts is waving the warning flag on the current stock market . . .His emphasis on the potential for capital destruction is well-taken.

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Sardines, Old Maid and Musical Chairs

“There is the old story about the market craze in sardine trading when the sardines disappeared from their traditional waters in Monterey, California. The commodity traders bid them up and the price of a can of sardines soared. One day a buyer decided to treat himself to an expensive meal and actually opened a can and started eating. He immediately became ill and told the seller the sardines were no good. The seller said, ‘You don’t understand. These are not eating sardines, they are trading sardines.’ . . .

There is great allure to treating stocks as pieces of paper that you trade. Viewing stocks this way requires neither rigorous analysis nor knowledge of the underlying businesses. Moreover, trading in and of itself can be exciting and, as long as the market is rising, lucrative. But essentially it is speculating, not investing. You may find a buyer at a higher price—a greater fool—or you may not, in which case you yourself are the greater fool.” – Excerpt from “Margin of Safety” by Seth Klarman

USAGOLD note:  This Seth Klarman anecdote reminds us of the quote from Maynard Keynes on the Old Maid and Musical Chairs:

“For it is, so to speak, a game of Snap, of Old Maid, of Musical Chairs — a pastime in which he is victor who says Snap neither too soon nor too late, who passed the Old Maid to his neighbour before the game is over, who secures a chair for himself when the music stops. These games can be played with zest and enjoyment, though all the players know that it is the Old Maid which is circulating, or that when the music stops some of the players will find themselves unseated.” – John Maynard Keynes


Repost from March, 2018

Full Article:  Value Walk/The Acquirer’s Multiple/3-2-2018

 

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Gold consolidating at $1200, looking to regain its footing

DAILY MARKET REPORT

Gold looks to be consolidating around the $1200 mark in early trading with the combined effects of last week’s Fed meeting and election now behind us. The stock market’s initial reaction to last week’s events was euphoric. Now with yesterday’s more than 600 point drop/reality check, and a weak open this morning, it looks to be having second thoughts. Gold plummeted initially. Now though it is attempting to regain its footing and muster support at the $1200 level.

China’s yuan keeps getting in the way of those aspirations – down sharply again today after a price rally failed in overnight trading. Financial markets are jittery about China with an economic slowdown and potentially lower interest rates worrying investors. Reuters reports Hong Kong bargain-hunters returning to the gold market the past few days.

As it stands, gold and silver are both level on the day at $1202 and $14.04 respectively.

Quote of the Day.
“The world hasn’t seen inflation in a decade now. But it’s coming. And while the Fed is raising rates to combat inflation, there’s zero chance it hits the perfect mix to keep markets chugging along. Remember, we’ve already seen the stock market and real estate panic crash in response to a small interest rate hike. And I think there’s more pain ahead as inflation really starts to work its way into the economy. With inflation looming, I’d want to own some gold.” – Simon Black, Sovereign Man

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note:Producer prices for final demand in the US,” says TradingEconomics, “rose by 0.6 percent in October 2018, following a 0.2 percent advance in September and easily beating market expectations of 0.2 percent. It was the biggest monthly gain in producer prices since September 2012 mainly boosted by a jump in costs for energy (2.7 percent vs -0.8 percent in September) and trade services (1.6 percent vs 0.1 percent). Prices also rose for foods (1 percent vs -0.6 percent) and transportation and warehousing services (0.6 percent vs 1.8 percent).”

 

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DMR–Gold consolidating at $1200 looking to regain footing

DAILY MARKET REPORT

Gold looks to be consolidating around the $1200 mark in early trading with the combined effects of last week’s Fed meeting and election now behind us. The stock market’s initial reaction to last week’s events was euphoric. Now with yesterday’s more than 600 point drop/reality check, and a weak open this morning, it looks to be having second thoughts.  Gold plummeted initially.  Now though it is attempting to regain its footing and muster support at the $1200 level.

China’s yuan keeps getting in the way of those aspirations – down sharply again today after a price rally failed in overnight trading. Financial markets are jittery about China with an economic slowdown and potentially lower interest rates worrying investors. Reuters reports Hong Kong bargain-hunters returning to the gold market the past few days.

As it stands, gold and silver are both level on the day at $1202 and $14.04 respectively.

Quote of the Day.
“The world hasn’t seen inflation in a decade now. But it’s coming. And while the Fed is raising rates to combat inflation, there’s zero chance it hits the perfect mix to keep markets chugging along. Remember, we’ve already seen the stock market and real estate panic crash in response to a small interest rate hike. And I think there’s more pain ahead as inflation really starts to work its way into the economy. With inflation looming, I’d want to own some gold.” – Simon Black, Sovereign Man

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note:Producer prices for final demand in the US,” says TradingEconomics, “rose by 0.6 percent in October 2018, following a 0.2 percent advance in September and easily beating market expectations of 0.2 percent. It was the biggest monthly gain in producer prices since September 2012 mainly boosted by a jump in costs for energy (2.7 percent vs -0.8 percent in September) and trade services (1.6 percent vs 0.1 percent). Prices also rose for foods (1 percent vs -0.6 percent) and transportation and warehousing services (0.6 percent vs 1.8 percent).”

 

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