DMR–Gold resumes climb on trade talks progress, strong yuan

DAILY MARKET REPORT

Gold  – up $6.00 at $1291 – resumed its climb this morning after a dull session overseas.  News that trade talks between the United States and China had made some progress pushed the yuan sharply higher.  The commodity complex in general led by crude oil is also sharply higher on the day.  Silver is up 10¢ at $15.76.

A World Gold Council report released on Monday indicated a strong rebound in gold ETF buying on the part of funds and institutions in December to end what had been a year of luke-warm demand for the bullion funds.  Strong interest among professional money managers indicates a possible change of sentiment in the global money centers that often drives gold market pricing.  Today’s strong move at the New York open is part and parcel of the generally growing interest in precious metals.  Here at USAGOLD, we have experienced a steady increase in activity among private investors in both gold and silver – in terms of both fresh buying and first-time inquiries.

Quote of the Day
“. . .[I]f you go down the line of currencies around the world, you don’t find many attractive opportunities. And that’s why I say if the world were to give up on dollars and give up on euros, they’d probably go back to the old standby, which is gold. And I don’t mean by gold, government-run gold standard,like we had in the late 19th century. That’s politically impossible. Governments will never be willing to subordinate their policies to the constraints of a hard commodity ever again… So how could gold make a revival as a sort of international money? Well, we don’t actually need a government-run gold standard anymore…since people have always had confidence in gold as a long-term store of value, there’s no reason why it couldn’t play that role.” – Benn Steil, Director of International Economics, Council on Foreign Relations

Chart of the Day

Chart note: With the US dollar the centerpiece of interest in recent months, we thought it appropriate to post the long-term overlay chart of the gold price and the major-currency version of the US Dollar index. As you can see, the dollar has been in a secular, long-term decline against other major currencies since the early 1970s when the U.S. abandoned gold-backing for the currency and the world switched to free-floating gold and currency prices. Despite all the talk of a strong dollar and how Treasury secretaries historically back the concept, the reality is the opposite – a weak dollar when measured against its major competitors over the long term. In the end, unencumbered ownership of physical gold coins and bullion, as this chart amply illustrates, has proven to be an effective defense in the on-going process.

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