Gold sell-off yesterday possibly Japanese yen related

(USAGOLD – April 12, 2019) – At $1292 per ounce, gold is level in early trading after yesterday’s sell-off.  Silver is up 6¢ at $15.04. Mystery lingers as to the cause of yesterday’s sudden $17 retreat.  The dollar index this morning has already given up yesterday’s gains and more. The Japanese yen, on the other hand, remains in a downtrend against the dollar supporting the notion that yesterday’s abrupt market movement could have been the result of a trader or traders reacting to that country’s monetary and currency policies. We note that though the price of gold dropped in dollar terms yesterday, it rose sharply in Japanese yen.

The World Silver Survey is out this morning and it reports strong demand for silver among investors in 2018. “[P]hysical demand increased 4% in 2018,” reads the survey, “propelled by a modest rise in jewelry and silverware fabrication, and a jump in coin and bar demand. Indeed, investment in silver bars and coins grew by an impressive 20% last year, driven by an exceptionally strong demand sentiment in India.” In addition to the strong demand from India, the WSS reports strong bullion demand from Chinese domestic banks that “thought the silver price attractive.”

Quote of the Day
“The Fed will be forced to participate as avoiding deflation will be the number 1 priority – not the profitability of the banking sector. Investors should contemplate a brave new world of negative Fed Funds, negative US 10y and 30y bond yields, 15% budget deficits and helicopter money. Sounds ridiculous, doesn’t it? What I said in 2006 sounded ridiculous too.” – Albert Edwards, Society Generale

Chart of the Day

Chart note: The Volatility Index pushed to levels late last year and early this year not seen since the financial crisis in 2008. December 2018 was the worst month for stocks since the Great Depression. According to the Bank of America, not even the stock market rally early in the year was enough to convince investors to stay put. They were net sellers of $26 billion in U.S. stocks and $7 billion in European stocks in January. Meanwhile, gold bullion accumulation continued to advance steadily. Gold ETFs, the favored vehicle for funds and institutions, added almost 72 tonnes to their holdings in January and 185 tonnes since the beginning of October. ETF stockpiles now stand at their highest level since 2013.

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