Monthly Archives: January 2019

Jay Powell and the Fed face ‘dollar doom loop’ dilemma

Financial Times/Joachim Fels

“Damned if they keep raising, damned if they don’t. Federal Reserve chair Jay Powell and his colleagues face a difficult choice over the next few months — and it is one that could have unpleasant ramifications whatever they decide.”

USAGOLD note:  So raise or stay pat after September, that is the question.  As of Friday, Powell made it clear that he wants to keep the central bank’s options open, but that, in itself, was interpreted as a dovish tilt. This article does a good job of outlining what the Fed is up against with emphasis on the big build-up in emerging country debt since the financial crisis and the impact it is now having on Fed policy decisions. It also raises the possibility of a pause in raising rates after September.


Repost from 8/28/2018

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Posted in Today's top gold news and opinion |

Short and Sweet

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Worry about the return ‘of’ your money,
not just the return ‘on’ it

“To be fair, the fiscal side of our current system has been nonexistent. We’re not all dead, but Keynes certainly is. Until governments can spend money and replace the animal spirits lacking in the private sector, then the Monopoly board and meager credit growth shrinks as a future deflationary weapon. But investors should not hope unrealistically for deficit spending any time soon. To me, that means at best, a ceiling on risk asset prices (stocks, high yield bonds, private equity, real estate) and at worst, minus signs at year’s end that force investors to abandon hope for future returns compared to historic examples. Worry for now about the return ‘of’ your money, not the return ‘on’ it. Our Monopoly-based economy requires credit creation and if it stays low, the future losers will grow in number.”

Bond-fund guru Bill Gross posted that piece of advice in his Investment Outlook column back in 2016.  It still applies today – maybe even more so now than it did then. In the wealth game, emphasize defense when you need to, offense when it makes sense. At all times, remain diversified. And by that, we mean real diversification in the form of physical gold and silver coins and/or bullion outside the current fiat money system. There is nothing wrong with owning stocks and bonds. Realize though that these assets are denominated in the domestic currency.  If it erodes in value, the underlying value of those assets erodes along with it.  A proper diversification addresses that problem now and in the future.  Bill Gross, by the way, has recommended buying gold on a number of occasions over the years.

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MKS PAMP Group sees gold at $1460 in 2019

ScrapRegister/1-18-2019

“In its 2019 forecast, MKS PAMP Group said that they see gold prices hitting a high of $1,460 an ounce with prices averaging the year around $1,355 an ounce. This is one of the most bullish forecasts in the precious metals space and represents a gain of nearly 13% from current prices. ‘We view 2019 as a year of assets rebalancing and fresh money to flow into gold,’ the analysts said in their report.”

USAGOLD note:  MKS PAMP Group is Swiss-based gold refiner known for it globally traded gold bars.

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MKS PAMP sees gold at $1460 in 2019

ScrapRegister/1-18-2019

“In its 2019 forecast, MKS PAMP Group said that they see gold prices hitting a high of $1,460 an ounce with prices averaging the year around $1,355 an ounce. This is one of the most bullish forecasts in the precious metals space and represents a gain of nearly 13% from current prices. ‘We view 2019 as a year of assets rebalancing and fresh money to flow into gold,’ the analysts said in their report.”

USAGOLD note:  MKS PAMP Group is Swiss-based gold refiner known for it globally traded gold bars.

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Posted in Gold and Silver Price Predictions from Prominent Players for 2019 |

USAGOLD Special Report

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Bridging the ‘Fourth Turning’ with Gold
It began in 2008.  It is scheduled to end in 2028.
What happens between now and then?

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

–– Full Article ––

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Posted in Announcements, USAGOLD Special Report |

Three reasons gold may be about to run with the bulls

Reuters/Clyde Russell/1-13-2019

“The three legs that supported gold’s extended rally from just after the 2008 global recession until the all-time peak in 2011 may be making something of a comeback this year. This is sparking hopes that the precious metal may finally break out of a fairly narrow five-year range, although it’s still far from certain that the dynamics for a sustained rally are entrenched.”

USAGOLD note: A solid, optimistic overview for those wanting to learn more about what is driving gold demand and prices at this point in time from Reuters’ Asia Commodities and Energy columnist.

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Goldman raises 12-month gold price forecast to highest since 2013

Seeking Alpha/Carl Surran/1-10-2019

“Gold will climb to $1,425/oz. over the next 12 months, a level not seen in more than five years, the Goldman Sachs analyst team predicts in joining an increasing number of bullish takes on the yellow metal.”

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Posted in Gold and Silver Price Predictions from Prominent Players for 2019 |

DMR late report

1-18-2019

[OPINION] To be straightforward about it, we are hard pressed to find a reason for today’s $11.50 drop in the price of gold (trading at the close at $1281).  The dollar is up, but no one would call the move an attention-grabber.  Bonds are steady. Stocks are up but, if reports are to be believed, because of positive developments in the U.S.-China trade wrangle – news that typically would have sent gold higher along with the Dow. Commodities are up – led once again by the energy complex – another situation that normally would register as a positive for gold.  So frankly we are at a loss except to say that after the recent run-ups and attempts to push through the $1300 barrier, gold simply ran out of gas. The stall to the upside in turn encouraged [probable] silicon-based short sellers to jump-in during the opening hours of today’s New York trading session – as shown to the left in the chart below.

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Posted in dailyquotes |

DMR late report

1-18-2019

[OPINION] To be straightforward about it, we are hard pressed to find a reason for today’s $11.50 drop in the price of gold (trading at the close at $1281).  The dollar is up, but no one would call the move an attention-grabber.  Bonds are steady. Stocks are up but, if reports are to be believed, because of positive developments in the U.S.-China trade wrangle – news that typically would have sent gold higher along with the Dow. Commodities are up – led once again by the energy complex – another situation that normally would register as a positive for gold.  So frankly we are at a loss except to say that after the recent run-ups and attempts to push through the $1300 barrier, gold simply ran out of gas. The stall to the upside in turn encouraged [probable] silicon-based short sellers to jump-in during the opening hours of today’s New York trading session – as shown to the left in the chart below.

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NY Fed president warns shutdown is hitting US growth

Financial Times/Sam Fleming and Mamta Badkar/1-18-2019

“Banks and other financial institutions are beginning to become more cautious with their lending, and Fed policymakers were seeing more ‘geopolitical uncertainties’ as well as ‘some emerging headwinds to growth from the partial government shutdown,’ Mr Williams said in a speech to the New Jersey Bankers Association.”

USAGOLD note:  Thus far the Fed has been quiet on the shutdown. Williams raises his concerns as the gap widens between the political parties.  Those on the left will blame the right and those on the right will blame the left.  The markets, for their part, are only interested in how that antipathy might cost the business and finance, and the New York Fed is well-placed to offer an opinion on the shut down’s effects.

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Why the gold ETF is the wrong vehicle for serious, long-term investors

Elliott Wave Trader.net/Avi Gilburt/Audio-Video

“Stay away from the ETFs. . . I’m hoping to give you some taste at least of how toxic these funds are and should not be seriously considered as long-term investment vehicles.”

USAGOLD note:  In this 12-minute video Avi Gilburt outlines what he believes to be the dangers of owning gold ETFs.  Gilburt, by the way, who is best known as an expert in Elliott Wave analysis, is also an attorney.


Repost from August 2018

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Favorite web pages

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Charles DeGaulle’s ‘Criterion’ speech

Given the increasing frequency and severity of international currency imbroglios and one emerging nation state after another falling into monetary disrepair, it is not difficult to visualize more and more of these states looking to gold as a matter of national defense. One recalls Charles DeGaulle’s famous criterion speech on gold in this context. Though such a holding would not cure internal problems derived from excessive debt and the debasement of their own currencies, it would offer something of a shield for all nation states against the devaluation/revaluation policies of other nation states, just as it does for private investors who take the same course of action.

February 4, 1965

[LINK]

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Ray Dalio’s Bridgewater keeps faith in gold despite its slide

Bloomberg/Luzi-Ann Javier

“As of June 30, Dalio’s Bridgewater Associates maintained its 3.9 million shares in SPDR Gold Shares, the largest bullion-backed ETF, and 11.3 million in iShares Gold Trust, the second-largest, according to a regulatory filing.”

USAGOLD note:  Some people buy gold as a speculation.  Others buy it as a long-term hedge.  Like us, Dalio puts himself and Bridgewater, the world’s largest hedge fund, in the latter category.

USAGOLD note (1-19-2019):  And that kept faith paid dividends.  At the time of the original post – mid-August 2018 – gold was trading at $1195.  It is now knocking on $1300’s door – up 7% over the period.


Image by Grameen America (https://vimeo.com/247028348) [CC BY 3.0 (https://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons [Edited]


Repost from 8/13/2018

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Asia’s super rich advised to add more gold to their portfolios to protect assets amid storms pounding equity markets

South China Morning Post/Louise Moon

“Advisers to Asia’s super rich think their clients should put more of their money into gold, taking advantage of price declines to buy the yellow metal amid volatile global markets and US-China trade tensions, a new report said. A survey of these advisers found a preference for gold holdings amounting to 5 per cent to 10 per cent of total assets. That is up from an earlier recommendation of 3 per cent to 5 per cent, according the report, ‘Going for Gold’, which was released on Wednesday by US financial services firm INTL FCStone.”


Repost from 9-6-2019

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No DMR today. . . . . .

. . . .but please check back.  We may post an update later in the day.

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No DMR today

. . . . but please check back. We may post an update later in the day.

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Sam Zell says gold ‘is a good hedge’

Bloomberg/Daybreak-video interview/1-17-2019

“Sam Zell, the founder of Equity Group Investments, says he bought gold for the first time in his life because ‘it’s a good hedge.'”

USAGOLD note:  Billionaire Sam Zell is not the first property mogul to become a gold owner, nor will he be the last.  He adds his name to a long list of renowned money men who have made their interest in gold public over the past several months.

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Wary investors drawn to gold’s allure

Financial Times/Henry Sanderson and Neil Hume/1-15-2019

“If gold is anything to go by, investors are increasingly anxious about the state of the world. Volatile equity markets and fears of a global economic slowdown have helped gold rally 10 per cent from its August lows, putting it among the best performing metals over that period. It is a sharp contrast to much of the past two years . . . . “

USAGOLD note:  A positive article on gold from Financial Times. . . . . .

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Jay Powell’s gift to markets

Daily Reckoning/James Rickards/1-15-2019

“With just a few words, Powell sent the most powerful signal from the Fed since March 2015. Investors who understand and properly interpret that signal stand to avoid losses and reap huge gains in the weeks ahead. First, let’s focus on Powell’s comments. Then we’ll explain what they actually meant.”

USAGOLD note: He goes on to explain the uses and importance of the word “patient” in the Fed’s financial lexicon.

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Goldman Sachs is bullish on commodities for four reasons

CNBC/Holly Ellyatt/1-16-2019

“Expectations for a decreased oil supply, potential Chinese stimulus and political uncertainty are buoying hopes for gains in the commodities sector, according to Goldman Sachs. Jeff Currie, global head of Commodities Research at Goldman Sachs, told CNBC on Wednesday that the bank is bullish on commodities oil and gold for several reasons, ranging from the Federal Reserve signalling it will hike rates less aggressively than expected and a weakening dollar.”

USAGOLD note:  We post this article as a follow-up to yesterday’s mention in the Daily Market Report of Goldman’s bullish stance on commodities in general and gold and oil in particular.

 

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Trump cancels Davos trip for American delegation

DAVOS WATCH

FoxBusiness/1-17-2019

“Davos is dead for 2019 as far as the United States is concerned and ending the longest running government shutdown is top priority.”

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US officials debate lifting tariffs on China to get a trade deal: WSJ

CNBC/Liz Moyer/1-17-2019

“U.S. officials are reportedly debating lifting tariffs on Chinese imports to give Beijing a reason to make deeper concessions in ongoing trade talks between the two countries.”

USAGOLD note:  Stocks rose on this news.  Gold reopens in a short while . . . . . .

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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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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.”

[For the rest of Doc’s story we invite you to visit this link.]

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IMF warns storm clouds gathering for next financial crisis

The Guardian/PJ Partington/12-11-2018

“The storm clouds of the next global financial crisis are gathering despite the world financial system being unprepared for another downturn, the deputy head of the International Monetary Fund has warned. David Lipton, the first deputy managing director of the IMF, said that ‘crisis prevention is incomplete’ more than a decade on from the last meltdown in the global banking system. ‘As we have put it, ‘fix the roof while the sun shines’. But, like many of you, I see storm clouds building and fear the work on crisis prevention is incomplete.'”

USAGOLD note:  Isn’t this the same refrain regulators expressed in their assessment of the causes and cures for the last financial crisis?  Apparently Wall Street and the regulators did not learn a thing from the 2008 credit crisis and now the IMF warns that another crisis is pending – about as clear an argument in favor of gold and silver ownership that one can make.


Repost from 12/13/2019

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These 5 countries are in bear markets. Is the U.S. next?

Investopedia/Mark Kolakowski

“Already, 14 major stock indexes have dropped by 10% or more from their previous highs, and six of these, representing five different countries, have suffered bear market declines of 20% . . .”

USAGOLD note:  Kolakowski goes on to list China, Germany, Italy, Mexico and South Korea with stock indexes down more than 20%. Outliers or early birds in a generalized global trend?  He goes on to assess the prospects for the U.S. stock market.


Frankfurt Exchange image by Dontworry [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], from Wikimedia Commons [Edited]


Repost from 12/14/2019

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DMR–Gold continues to seesaw aimlessly, Goldman bullish on commodities including gold

DAILY MARKET REPORT

Gold continued to see-saw aimlessly this morning unable to make up its mind convincingly on a direction.  It is down $3.00 early at $1290.50.  Silver is off 14¢ at $15.49.  A stronger dollar and weaker commodities complex are not helping matters.  Today’s weakness aside, Goldman Sachs has come public with a bullish outlook for commodities – gold and oil included.  It cites four reasons for the positive outlook including China’s economic stimulus program which it sees as igniting demand, a weaker dollar in 2019, decreased oil supply and a more dovish position from the Federal Reserve. The general reaction to the Brexit vote earlier this week continues to be muted in most markets.  As reported at our Live Daily Newsletter though there are reports, however, of a very strong demand in the United Kingdom for physical gold coins and bullion.

Quote of the Day
“I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago.” – John Maynard Keynes, 1946

“Were Keynes alive today, he would likely be arguing along with German Chancellor Angela Merkel for more monetary discipline and a return to a more balanced international system. No doubt, however, his neo-Keynesian acolytes would be dismissing his concerns as hopelessly outdated and reactionary. Keynes was an economic theorist, but he was also a clear-eyed market analyst, and a passionate and committed speculator for his own account and for Cambridge University. If he took in today’s economic vista of near-zero interest rates and quantitative easing, it is clear that he would be buying gold hand over fist—regardless of what his disciples might think.” – Richard Hurowitz, Octavian Report (in a Wall Street Journal editorial published September 2015)

Chart of the Day

Chart courtesy of the World Gold Council/GOLDHUB

Chart note:  Post a more than 5% gain, the Long USD Gold Index outperformed other assets during 2018 based on this chart with a global perspective from the World Gold Council.  The Long USD Gold Index from Solactive measures performance of a “hypothetical long position in physical gold and a short position in a basket of non-USD currencies.”  Henning Kahre, head of Research at Solactive  says that “the new index offers investors exposure to gold as though they’ve purchased it in a basket of foreign currencies.”

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

Gold continues to seesaw aimlessly, Goldman bullish on commodities including gold

DAILY MARKET REPORT

Gold continued to see-saw aimlessly this morning unable to make up its mind convincingly on a direction. It is down $3.00 early at $1290.50. Silver is off 14¢ at $15.49. A stronger dollar and weaker commodities complex are not helping matters. Today’s weakness aside, Goldman Sachs has come public with a bullish outlook for commodities – gold and oil included. It cites four reasons for the positive outlook including China’s economic stimulus program which it sees as igniting demand, a weaker dollar in 2019, decreased oil supply and a more dovish position from the Federal Reserve. The general reaction to the Brexit vote earlier this week continues to be muted in most markets. As reported at our Live Daily Newsletter though there are reports, however, of a very strong demand in the United Kingdom for physical gold coins and bullion.

Quote of the Day
“I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago.” – John Maynard Keynes, 1946

“Were Keynes alive today, he would likely be arguing along with German Chancellor Angela Merkel for more monetary discipline and a return to a more balanced international system. No doubt, however, his neo-Keynesian acolytes would be dismissing his concerns as hopelessly outdated and reactionary. Keynes was an economic theorist, but he was also a clear-eyed market analyst, and a passionate and committed speculator for his own account and for Cambridge University. If he took in today’s economic vista of near-zero interest rates and quantitative easing, it is clear that he would be buying gold hand over fist—regardless of what his disciples might think.” – Richard Hurowitz, Octavian Report (in a Wall Street Journal editorial published September 2015)

Chart of the Day

Chart courtesy of the World Gold Council/GOLDHUB

Chart note: Post a more than 5% gain, the Long USD Gold Index outperformed other assets during 2018 based on this chart with a global perspective from the World Gold Council. The Long USD Gold Index from Solactive measures performance of a “hypothetical long position in physical gold and a short position in a basket of non-USD currencies.” Henning Kahre, head of Research at Solactive says that “the new index offers investors exposure to gold as though they’ve purchased it in a basket of foreign currencies.”

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Massive surge in gold demand ahead of Brexit vote?

InternationalAdviser/Kirsten Hastings/1-16-2019

“We remained open until 10pm [on 15 January], taking orders from panic-stricken investors, as many of them expressed concern over the prospect of either a general election and/or the UK leaving the EU without a deal and the effect this will have on our economy. Over the course of the seven days before the vote, the company reported an astonishing 324% increase in enquiries when compared with the average across the past year.”

USAGOLD note:  As the old saying goes, there is no rush like a gold rush. . . . . .

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