Gold moves higher on Brexit, emerging global stimulus programs

(USAGOLD – March 13, 2019) – Gold moved higher in international markets for the second straight day – up $6 at $1308. Silver is up just 2¢ at $15.47.  Gold climbed steadily in Asian trading overnight in a carryover response to yesterday’s Brexit defeat in the House of Commons for the May goverment and a more dovish position on rates and the Fed’s balance sheet reinforced over the weekend by Jerome Powell during a 60-Minutes interview. The dollar has been in a modest, but steady, slide since last week. 

Gold broke from its lethargy last Friday when the European Central Bank’s Mario Draghi warned of weakening European economy and announced new measures to prop up the banks.  The Peoples Bank of China has also moved to stimulate a lagging economy.  Growing concern about a global slowdown, in short, has driven capital in the direction of gold as a safe haven.

Quote of the Day
“For we have reached a critical point. In a sense, it is true that the mists are lifting. We can, at least, see clearly the gulf to which our present path is leading. Few of us doubt that we must, without much more delay, find an effective means to raise world prices; or we must expect the progressive breakdown of the existing structure of contract and instruments of indebtedness, accompanied by the utter discredit of orthodox leadership in finance and government, with what outcome we cannot predict.” – John Maynard Keynes, The Means to Prosperity (1933)

Chart of the Day

Charts courtesy of TradingEconomics.com

Chart note: These four charts show the central bank balance sheet debt holdings of the top four largest economies – the United States, China, Japan and the European Union. Together the four central banks hold an astonishing nearly $17 trillion in debt instruments, and not all are of the highest quality. The US Federal Reserve is in the process of trimming its balance sheet, but that process is expected to come to a halt before the year is out. The European Central Bank was scheduled to begin reducing its holdings later this year, but then altered course again just last week. The Bank of Japan, for its part, says it will continue with its acquisition program as long as it deems necessary.  Though China marginally reduced its balance sheet over the past few months, recent weakness in its economy may force the central bank to put further reductions on hold.

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