Monthly Archives: May 2019

True start to U.S. vs. China Trade War

Credit Bubble Bulletin/Doug Noland/5-18-2019

“Increasingly, it appears as if the respite from Q4 global market instability has about run its course. As an economy – from governments to corporations to households – I can’t imagine a more poorly prepared system for the gathering storm. I know: fundamentals are “sound” and the banking system is ‘well capitalized.’ Besides, there’s the Quadruple Puts – a deeply entrenched market misperception that really concerns me. Complacency is pervasive – epically so. Ignore fundamental developments, while placing faith in the power of politicians and central bankers (and corporations forever enjoying access to cheap finance to fund buybacks). Such a backdrop creates extraordinary risk for an abrupt change in perceptions and resulting crisis of confidence – in policymakers and the markets.”

USAGOLD note: Noland discusses strategies China might deploy with respect to the yuan citing a Reuters report in which Chinese sources say the PBOC will not allow it to break the 7 level.  Since most of gold’s downside the past week was the result of yuan weakness a strong response from the PBOC is likely to be received positively.  Another positive in all of this is that the demand for gold in China is likely to be mobilized as a result as everyone from commercial banks and institutions and private individuals move to protect their assets against yuan depreciation.

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Posted in Today's top gold news and opinion |

Strike three: The next bear market ends the game

Real Investment Advice/Lance Roberts/5-16-2019

“What becomes much more apparent is that bear markets tend to destroy most or all of the previous advance and has done so repeatedly throughout history. Importantly, what was not being discussed between the advisor and his 60-something client was simply the risk of ‘time.’ There are many financial advisors, commentators, experts, and social media gurus who have never actually ‘been invested’ during a real ‘bear market.’ While the ‘theory of ‘buy and hold’ sounds good, kind of like MMT, in practice it is an entirely different issue. The emotional stress of loss leads to selling even by the most ‘die hard”’of individuals. The combined destruction of capital and the loss of time is the biggest issue when it comes to individuals meeting their retirement goals.”

USAGOLD note:  There are two principal approaches to the problem Mr. Roberts so persuasively exposes.  One does not necessarily preclude the other.  The first is to find a good guide to help you paddle through choppy waters.  The second is to diversify before the water begins to even stir.  With respect to hedging stock market exposure, the focus of the essay linked above, a good approach and the one that has gained considerable purchase in these uncertain times is to own an uncorrelated asset – a course of action that inevitably leads the seeker of wisdom to gold’s door. . . . The charts alone are worth the visit.

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Gold specs boost bullish bets most since October

Through Tuesday, May 14, 2019
Charts and commentary courtesy of CountingPips.com
Tables courtesy of GoldSeek

Note: Commitment of Traders reports are published Friday with data from the previous Tuesday.

Gold specs boost bullish bets most since October

Gold Non-Commercial Speculator Positions:

Large precious metals speculators strongly lifted their bullish net positions in the Gold futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Gold futures, traded by large speculators and hedge funds, totaled a net position of 124,536 contracts in the data reported through Tuesday May 14th. This was a weekly gain of 49,125 net contracts from the previous week which had a total of 75,411 net contracts.

The week’s net position was the result of the gross bullish position (longs) rising by 40,560 contracts (to a weekly total of 226,361 contracts) while the gross bearish position (shorts) decreased by -8,565 contracts for the week (to a total of 101,825 contracts).

The Gold speculator position jumped this week and rose for a third consecutive week – gaining by +87,141 in that period. This week’s gain was the most since October 16th when the net position rose by 55,842 contracts. The Gold spec standing is now at the highest level since February 26th.

Gold Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -137,183 contracts on the week. This was a weekly decrease of -40,824 contracts from the total net of -96,359 contracts reported the previous week.

Gold Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Gold Futures (Front Month) closed at approximately $1296.30 which was a gain of $10.70 from the previous close of $1285.60, according to unofficial market data


Silver speculator bets dip lower into bearish territory

Silver Non-Commercial Speculator Positions:

Large precious metals speculators slightly added to their bearish net positions in the Silver futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Silver futures, traded by large speculators and hedge funds, totaled a net position of -2,209 contracts in the data reported through Tuesday May 14th. This was a weekly change of -1,252 net contracts from the previous week which had a total of -957 net contracts.

The week’s net position was the result of the gross bullish position (longs) rising by 196 contracts (to a weekly total of 77,542 contracts) but being overcome by the gross bearish position (shorts) that increased by 1,448 contracts for the week (to a total of 79,751 contracts).

The Silver net position has declined lower for six out of the past seven weeks and now sits in a small bearish position at -2,209 contracts. Spec positions have fallen by over -60,000 contracts in just the past 11 weeks after reaching a strong bullish level on February 26th at a total +58,313 contracts.

Silver Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -12,778 contracts on the week. This was a weekly uptick of 3,881 contracts from the total net of -16,659 contracts reported the previous week.

Silver Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Silver Futures (Front Month) closed at approximately $1481.20 which was a shortfall of $-11.40 from the previous close of $1492.60, according to unofficial market data.


US Dollar Index speculator bets fell this week

US Dollar Index Speculator Positions

Large currency speculators lowered their net positions in the US Dollar Index futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of US Dollar Index futures, traded by large speculators and hedge funds, totaled a net position of 26,677 contracts in the data reported through Tuesday May 14th. This was a weekly decrease of -1,556 contracts from the previous week which had a total of 28,233 net contracts.

This week’s net position was the result of the gross bullish position lowering by -6,691 contracts (to a weekly total of 40,211 contracts) compared to the gross bearish position which decreased by -5,135 contracts for the week (to a total of 13,534 contracts).

US dollar speculators cut back on their bullish positions for the second straight week and for the fourth time out of the past five weeks. The overall standing has now fallen to the lowest level in seven weeks and the overall USD Index sentiment is below the 30,000 contract level for the past nine weeks after a previous streak above this threshold for thirty-two weeks.


*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).
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Posted in COT Reports |

Donald Trump eases tariffs for allies as he focuses on China

Financial Times/James Politi and Jude Webber/5-18-2019

“Donald Trump is easing trade tensions with US allies, bowing to mounting domestic pressure to rein in commercial conflicts across the world and focus on an escalating tariff battle with China.”

USAGOLD note:  Should we call it the ‘US-China Trade War’ or Trade War 1 (TW1)? The White House, Financial Times reports, is only tabling the trade conflicts with Mexico, Canada, Europe and Japan until a later date.

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Posted in Today's top gold news and opinion |

COT–Gold specs boost bullish bets most since October


–– Now posted ––
Commitment of Traders reports for Tuesday, May 14, 2019
GOLD • SILVER • US DOLLAR INDEX

Commentary by Zac Storella, CountingPips

[LINK]


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Posted in Announcements, Today's top gold news and opinion | Tagged |

US trade talks with China have stalled: Sources

CNBC/Jeff Cox/5-17-2019

“Negotiations between the U.S. and China appear to have stalled as both sides dig in after disagreements earlier this month. Scheduling for the next round of negotiations is ‘in flux’ because it is unclear what the two sides would negotiate, two sources briefed on the status of the talks said. China has not signaled it is willing to revisit past promises on which it reneged earlier this month, despite showing up for talks in Washington last week.”

USAGOLD note:   This latest turn of the screw will cause a great deal of anxiety over the weekend that will likely flow into the open for Asian markets late Sunday. . . . .

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Gartman: ‘We make an official recommendation to sell stocks short this morning’

ZeroHedge/Tyler Durden/5-17-2019

“It’s been a while since we updated on the daily doings of the ‘world-renowned commodity guru’ Dennis Gartman for the simple reason that just like the algos, the mom and pops and virtually all hedge funds, Gartman too had no idea what is really going on in a market in which everyone is selling (there is now $135 billion in equity fund redemptions YTD) yet stocks keep rising higher.”

USAGOLD note:  Well said. . .

 

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The dystopian view: Is this the year the world falls apart?

The Sydney Morning Herald/Ambrose Evans-Pritchard/1-8-2019

“This is the year that mounting hammer blows to the Western alliance system and the edifice of global governance threaten to bring the old order tumbling down. . .Pax Americana is unravelling. The transatlantic concord underpinning the West since the Fifties is dying. Nato, the G7, the G20, the WTO and the EU are all in varying degrees of crisis. Vladimir Putin’s Russia has an open goal. ‘Every single one of these is trending negatively. And most in a way that hasn’t been in evidence since the Second World War,’ it said.”

USAGOLD note:  Joseph Schumpeter referred to the process Evans-Pritchard outlines as ‘creative destruction.’ In replacing the old with the new, though, businesses and financial markets are going to be hurt – whole economies potentially tossed against the rocks. One cannot have read yesterday’s reports of the $1 trillion in possible capital flight from London without becoming concerned.


Repost from 1-8-2019

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Germany repatriates about half of its gold reserves

But with Europe stumbling from crisis to crisis, the German public has grown uneasy about keeping the gold abroad. Some even argue the world’s second biggest bullion reserve may be needed to back a new deutschmark, should the euro zone break up.” – Reuters, 2-9-2017

“Germany has a stronger relationship with gold than most nations. The country’s experience with hyperinflation between 1919 and 1923, during the years of the Weimar Republic, is ingrained in the national consciousness. Gold, above all, stands for stability” – Financial Times, 11-10-2017

Germany this year (2017) completed its scheduled transfer of national gold reserves from the New York Fed and the Bank of France.  Germany will now leave 1236 tonnes at the New York Fed and another 432 tonnes in London.  The remainder of its 3378-tonne national holding will be stored in Frankfurt.  The repatriation transfers to Frankfurt were completed three years ahead of schedule.

With respect to the gold left at the Fed, Bundesbank’s Carl-Ludwig Thiele told reporters: “We have a lot of discussions about (U.S. President Donald) Trump, regarding implications on monetary policy, macroeconomics, etc., but we trust the central bank of the U.S.”

Thiele’s confidence in the Federal Reserve brings to mind an old story about Germany’s relationship with the Federal Reserve and the storage of its gold reserves. When Hjalmar Schacht, head of Germany’s central bank in the 1920s, visited the New York Fed he asked to see Germany’s gold stored in its vaults.

“Strong**,” wrote Schacht in a 1955 autobiography, “was proud to be able to show us the vaults which were situated in the deepest cellar of the building and remarked: ‘Now, Herr Schacht, you shall see where the Reichsbank gold is kept.’ ” Storage staff went off to retrieve the gold.  “At length,” Schacht goes on, “we were told: ‘Mr. Strong, we can’t find the Reichsbank gold.’ ”  To which Schacht replied: “Never mind; I believe you when you say the gold is there. Even if it weren’t you are good for its replacement. ”One need presume that nearly 100 years later, the level of trust conveyed by Schacht remains in place.

It is unlikely that Germany would depart the euro anytime soon and back a new Deutschmark with gold.  Having an asset set aside, though, that is detached from erratic national currencies in this day and age is a wise move for the prudent nation-state – just as it is for the prudent private investor.

–– USAGOLD


** New York Fed president at the time, Benjamin Strong

Repost from 2/10/2017, updated October, 2018. The Financial Times article linked at the top of the page tells the fascinating inside story of Germany’s gold repatriation.

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Posted in MK, RepostKeepers, Today's top gold news and opinion |

Recent client testimonial

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“Thank you! It has been a pleasure doing business with your Company! You’ve treated the small investor (me) just like you would a millionaire. Best wishes, and I hope I can make some purchases in the future.” – L.W., Savannah, Georgia

We also treat millionaires . . . well. . . like millionaires – whether they admit to being millionaires or not [smile].

We receive unsolicited testimonials like L.W.’s routinely. Please see our Client Testimonials page for more feedback, and be sure to visit the Better Business Bureau for even more in the way of FIVE-STAR reviews.  Don’t do business with any gold company until you have checked it out.

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Gold Classics Library

A Gold Classics Library Selection


A Layman’s Guide to Golden Guidelines
for Wise Money Management
Gresham’s Law, Say’s Law, Rule of 72, Marginal Utility, Diminishing Returns, Regression to the Mean, Unintended Consequences, Murphy’s Law, Occam’s Razor, Law of Attraction, Law of Polarity, and more

by R.E. McMaster, former editor of The Reaper newsletter

There is an old saying that not all that glitters is gold — as in the gold coins many of you have held in your hands. There is another kind of gold that inhabits the practical wisdom of the ages. In today’s “go-get-’em,” “read-it-and-forget-it” world of everyday web browsing, it can be a challenge to separate the run of the mill from the meaningful. It is with that thought in mind we offer this compendium of the rules and laws of finance and investment by long-time market analyst R.E. McMaster. Formerly the writer/editor of the widely-circulated The Reaper newsletter, McMaster is known for his occasional forays into the realm of economic philosophy and history. I think you will agree with me that these skillfully condensed descriptions are indeed meaningful — a wellspring of knowledge worth reading, re-reading and passing along to friends and family, especially the kids and grandkids.

(Illustrations by Ed Stein)

[LINK]

[Gold Classics Library Index]

____________________________________________

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Gold off marginally in subdued reaction to another sharp drop in the yuan

(USAGOLD – 5/17/2019) – Gold is off marginally this morning as tensions escalated between the US and China. Yesterday, gold plummeted sharply along with China’s currency.  Today the drop has been more subdued even as the yuan continued its free fall in the offshore market – a situation that signals some investors might be looking to safe havens as a worthy alternative at this juncture. Bonds – the other primary safe haven destination – are also higher this morning. The yellow metal is down $1.50 in the early going at $1284.  Silver is down 7¢ at $14.48.

In a Kitco interview yesterday, Scotiabank’s Nicky Shiels said that gold has stuck in a four year lull but that 2019 might the year it breaks out of its narrow range.  “We feel we are in a good spot for the next commodity cycle,” he said. “Gold is perking up this year, trying to break out of its four-year cycle. It is viewed generally as a hedge to the dollar alongside to being a hedge to inflationary policies and geopolitical risks. I believe gold has a chance of reaching $1,400 this year.”

Quote of the Day
“[S]ome of the biggest players in the gold sector are warning we’ve seen peak gold production. Also, the biggest pools of money on the planet – central banks – are loading up on gold. Dwindling supply met with tons of demand means higher prices.  Historically, gold has been a fantastic leading indicator of central bank policy… The metal ran from under $1,200 an ounce to nearly $1,300 an ounce prior to the Fed’s reversal in January. And if it runs higher from here, which we fully expect, it means all hell is about to break loose. I’d recommend adding to your position while you still can.” – Simon Black, Sovereign Man

Chart of the Day

Chart note: Up until the “double oughts,” the manual on gold read that it performed well under inflationary and deflationary circumstances, but not much else. However, as the decade of asset bubbles, financial institution failures, and global systemic and sovereign debt risk progressed, gold marched to higher ground one year after another. As events unfolded, it became increasingly clear that the metal was capable of delivering the goods under disinflationary circumstances as well. The fact of the matter is that, during the 2000s even as the inflation rate hovered in the low single digits (See chart, green area], gold managed to rise from just under $300 per ounce in the early 2000s to just over $1800 per ounce by 2011 — a gain of nearly 650%. Since then, gold has taken a breather. As this essay is written, it is trading in the $1285 per ounce range — still up over 425% in the new century.

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

How billionaires are preparing for the next bear market

Visual Capitalist/Jeff Desjardins/5-16-2019

“In bear or bull markets, billionaires are constantly worried about one thing: protecting their wealth. This video shows how some billionaires protect themselves from downturns – including turning to uncorrelated assets such as gold.”

PBB note:  Most billionaires do not take delivery of their gold because of the storage problem. That is not the case for the small private investor. A quarter of a million dollars or less in gold coins stores neatly in a modest-sized safe deposit box. Of course, if you would rather store your gold and/or silver at a depository, we can help with the arrangements. Safe storage includes insurance and the costs are not prohibitive. In fact the annual fees on storing are roughly comparable to what most ETFs charge with the added benefit of a delivery option on the coins or bullion stored. To learn more, we invite you to contact our Order Desk directly.


ORDER DESK: 1-800-869-5115 x100/orderdesk@usagold.com

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Napoleon Bonaparte!

Those of you who participated in our general offer of Australia British sovereigns – which sold out in less than three hours (May 15th) – might take an interest in this French 40 franc offer.  A small lot of 40 came as a tag-along to that acquisition and they turned out to be the much sought-after and scarce Napoleon I (Bonaparte) mintages from 1803-1812.  Napoleon I coinage usually sells out in short order, so you might want to act quickly if you have an interest. Solid opportunity.

Take the whole lot – if you buy before anyone else does – at a $10 discount per coin
(Right at $24,600 for the 40 coin group at $1286 gold) By telephone order only.

An exclusive Premium Bulletin Board offer!
Description/Details

Order online or by phone.  First-come, first-served.
1-800-869-5115 x100
Shipping included. Available for immediate shipment.

 

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Tariffs are an attack on the economy: Alan Greenspan

FoxBusiness/Julia Limitone/5-16-2019

“‘Excise taxes,’ [said Greenspan] when they are imposed are the same as any tax – they withdraw purchasing power from an economy.’ ‘So if you have two industrial giants, both taking on severe levels of that type of analysis, in other words having a great deal of loss of purchasing power, it’s not good for either one… there is a winner in the fight. But both sides lose. So the winner is the one who loses the least.'”

USAGOLD note:  Greenspan once again cuts to the chase.  The problem presented by the loss of purchasing power is that consumers and businesses step up purchases in order to preserve capital which drives prices even higher.  That is how runaway inflation is ignited in a previously placid economy.

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‘Flash Boys’ speed bump for gold and silver futures gets regulator go-ahead

Bloomberg/Benjamin Bain/5-15-2019

“The go-ahead from the U.S. Commodity Futures Trading Commission, announced Wednesday, comes after ICE announced in February that it planned to impose a 3-millisecond trading delay on gold and silver contracts. The pause would be the first-ever speed bump for futures, showing that an idea popularized in Michael Lewis’s 2014 book ‘Flash Boys’ to rein in high-frequency traders is gaining more adherents.”

USAGOLD note:  Interesting that ICE would choose gold and silver as the two streets in which to install the speed bump.  The CFTC says that the speed bumps “have the potential to significantly impact futures’ markets function and quality” and that it would promote more trading through “slowing down high-speed traders engaged in latency arbitrage.” The CFTC, it would seem, is handing high-speed trading a ticket. Hopefully the net effect will be something of a return to normalcy as the advantage of high-speed trading is throttled.

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The mixed blessing of falling birth rates

Dollar Collapse/John Rubino/5-15-2019

“The only way for Millennials to pay for Boomers’ Social Security and Medicare would be for the latter to confiscate 90% of the former’s paychecks. That won’t happen, so something else has to, most likely massive benefit cuts via hidden inflation.”

USAGOLD note:  Rubino says the demographic problems of the future will lead to a “purposeful inflation” and “a massive shift of capital out of financial assets like government bonds that depend for their value on the stability of the underlying currency, and into real assets like oil wells, farmland and precious metals which governments can’t create with a mouse click.”  The article is worth a read especially for those who suspect demographics might be the root cause of our most intractable economic problems.

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US consumers start to pay price of trade war with China

Financial Times/Sam Fleming and Alistair Gray/5-16-2019

“Donald Trump has been sounding supremely confident that US consumers will emerge unscathed from his trade war, but economists fear households are already starting to be hit by earlier rounds of tariffs and will face a mounting burden as hostilities escalate.”

USAGOLD note:  Several retailers including WalMart have publicly warned their customers that higher prices are coming the result of increased tariffs on China.

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Short and Sweet

Gold in six easy lessons

1. Don’t buy it because you need to make money; buy it to protect the money you already made.

2. Don’t look at price as a barrier; look at it as an incentive.

3. Don’t buy the paper pretenders; buy the real thing in the form of coins and bullion.

4. Don’t fall prey to glitzy TV ads; do your due diligence instead.

5. Don’t allow naysayers to divert your interest; allow yourself the right to protect your interests as you see fit.

6. Don’t forget the golden rule: Those who own the gold make the rules!

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China dumps US Treasuries at fastest pace in two years

Financial Times/Joe Rennison and Colby Smith/5-15-2019

“Except for a small net purchase in February, China has now sold Treasuries every month since September. A fear in the US is that China could ramp up its sales of Treasuries in an attempt to disrupt the market and put upward pressure on US interest rates, in effect raising borrowing costs for Washington.”

USAGOLD note:  Financial Times points out that the yuan remained flat during March when the liquidations were conducted hinting at a connection with trade negotiations.  FT quotes Deutche Bank’s Torsten Slok as saying “Normally the answer to why this has happened has been very similar — it’s been the exchange rate. This time the number is more surprising. There are a lot of open questions.”  There is another question not covered in the articles we have read on this subject:  Will sales by China prompt sales from other nation states as part of the de-dollarization trend? At the moment, foreign invetors hold over $6 trillion in U.S. debt paper, as shown in the chart below.

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Gold – Past, present and future

Dr. Moneywise says:  Gold has a past. I suspect it has a future. We live in a time when currencies and financial markets have become political enterprises – creations of the world’s governments and central banks. Since we have never seen times like these, when so much depends on the monetary largesse of the policy-makers, no one really knows where the future might lead us. Uncertainty reigns and, when that is the case, history teaches us that gold demand rises proportionally and at times impressively so.

“Why is it,” asks Nathan Lewis in a Forbes magazine article, “that the collective intelligence (let’s be generous) of today’s central bankers, and indeed all the central bankers since 1971, cannot outperform a yellow rock? This probably strikes some as bizarre, but it has always been thus. Way back in 1928, in a book called The Intelligent Woman’s Guide to Socialism and Capitalism, George Bernard Shaw declared: “You have to choose … between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold.”

Whether or not gold is the best basis for money may be a moot point.  On the other hand, whether or not private investors should own it because the money is not gold-backed remains a vital question. The gift of gold – the one passed from generation to generation from ancient times to present – is the protection it offers against a profligate government, an unpredictable economy, unstable financial markets and a myriad of additional threats to private wealth. The gift of gold, in short, is peace of mind.

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Metals Focus says two to three year bull market for gold ‘to start in late 2019’

Bullion Vault/Adrian Ash

“‘For much of 2018, investors tended to focus on other, higher-yielding asset classes [than gold],’ says a note from specialist analysts Metals Focus, ‘but we do expect this position to gradually change, especially during the latter part of 2019…[as] a slowdown in the US economy will encourage the Fed to adopt a far more dovish stance towards its interest rate policy.’ Forecasting that ‘a bull market in gold [will] emerge from late 2019 onwards,’ Metals Focus think that uptrend will then ‘remain in place for two to three years.'”

USAGOLD note (12-19-2019):  Adrian Ash passes along another positive reading for the yellow metal for 2019, this time from London’s Metals Focus.

USAGOLD note (3-15-2019):  This prediction from Metals Focus in December appears to have been prescient and unfolding on a timeline much sooner than originally anticipated. On December 19, the date Metals Focus released their study, gold was trading in the $1240 range.  It reached $1340 February 19th, two months later, and is hovering now in the $1300 range.


Repost from 12-19-2018

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Posted in Gold and Silver Price Predictions from Prominent Players for 2019, Today's top gold news and opinion |

US and China draw closer to final trade agreement

Financial Times/James Politi and Lucy Hornby

“We’re getting into the end-game stage,” said Myron Brilliant, executive vice-president for international affairs at the US Chamber of Commerce. “Ninety per cent of the deal is done, but the last 10 per cent is the hardest part, it’s the trickiest part and it will require trade-offs on both sides,” he told reporters on Tuesday.”

USAGOLD note:  The good news is that both sides seem to want to finalize a deal as they round the final turn and head into the backstretch, according to this FT report. The bad news is that the final 10% Brilliant references, could be a deal killer. We hesitate to point out that it has been on the table for months. . . . . . .Market strategist Clif Droke has this to say about the potential effect of a trade deal on the price of gold: “. . .[T]here is also a growing sense among some analysts that if a trade deal is soon reached, it would actually benefit gold. This belief is based on the assumption that a trade deal would likely push the U.S. dollar’s value lower, in turn boosting gold’s price due to its inverse correlation to the dollar.”  We would add that a trade deal would likely increase demand for commodities in general – a development that could spill over to the gold and silver markets.


Repost from 4-3-2019 (Hard to believe that this where we were roughly a month and a half ago.)

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The vast gold hoards held by Germany’s population

Bullion Star/Ronan Manly

“While the Chinese and Indian populations are well known for their insatiable appetite for importing, buying and hoarding physical gold, there is one market in the West that does likewise but which flies under the radar slightly, garnering less attention than China and India. That gold market is Germany. Although German citizens are known for their fondness for holding gold, the vast size of the German population’s gold holdings was clarified recently in a newly published survey commissioned by Reisebank, a bank active in the German precious metals market.

The survey, conducted by the Research Center for Financial Services (CFIN) on behalf of Reisebank, found that German adults currently own a staggering 8918 tonnes of gold, worth about € 330 billion at current Euro gold prices. Note, this figure is gold held by private citizens in Germany and does not include the gold reserves of the German central bank, the Bundesbank, which amount to an additional 3370 tonnes.”

USAGOLD note 1:  When push comes to shove, those who own the gold make the rules.


Repost from 4-29-2019

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DMR UPDATE

(USAGOLD – 5-16-2019) – We can’t be certain at this juncture, but it looks like this morning’s sell-off in gold is related to weakness in China’s yuan. An article in the South China Morning Post today focuses on the 2% drop in China’s currency over the past two days* and states that a “further slide of the yuan below 7.00 to the dollar could counter a new 25 per cent tariff on US$300 billion of Chinese goods exported to the US.” It then quotes Capital Economics’ senior China economist Julian Evans-Pritchard as saying that “if tariffs were ultimately implemented on all US imports from China, Beijing would have less to gain from supporting the yuan than allowing the market to weaken it.”

Along these lines, Deutsche Bank is out with a report this morning (featured at ZeroHedge) saying that “Asia is the region we expect to suffer most from the renewed global headwinds. We argue that policymakers in China are now going to be more accepting of USD/CNY appreciation through 7 . . .”  That kind of thinking, we believe, is what probably drove the dollar sharply higher this morning and gold sharply lower. If something else surfaces, we will post it.

* The 2% drop SCMP cites appears closer to 2.5%, but occurring since May 6 – not the past two days.

Chart courtesy of TradingEconomics.com

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Posted in Today's top gold news and opinion |

Gold continues retreat from $1300 level

(USAGOLD – 5/16/2019) – Gold continued its retreat from the $1300 level begun yesterday.  It is trading at $1291.50 early in the US session – down $5 on the day.  Silver is down 3¢ at $14.77. “We have seen repeated attempts in the last few days to rise above $1,300 and it (gold) appears to be facing some kind of barrier. There is clearly some selling when it hits that level,” Capital Economics analyst Ross Strachan told Reuters yesterday.

Lingering hopes that the US and China might still agree to a trade deal and the Trump administration’s decision to put a six-month delay on EU auto tariffs (and avoid a two-front trade war) contributed to the pull back. In other news, Scrap Register reports that “India’s gold imports spiked by 54% to $3.97 billion in April from $2.58 billion in the same month last year, according to the latest data release from the Ministry of Commerce.” Strong seasonal demand was given an assist by rupee weakness and a correction from a five-year high in the rupee gold price.

Chart courtesy of Bullion-Rates.com

Quote of the Day
“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 GoldChartsRUs/Nick Laird

Chart note: This interesting chart on consumer prices from 1550 to present shows the direct relationship between declining purchasing power in the British pound and the sterling price of gold after 1931, the year Britain departed the gold standard. Prior to 1931, there was an occasional minor bump higher in the price of gold, as you can see, but for the most part it followed along the same flat line as consumer prices. It was only after Britain separated the pound from gold in 1931 that gold showed its true colors as portfolio defense against a depreciating domestic currency. The metal’s price moved significantly higher after 1971 when the Bretton Woods agreement was abandoned and currencies and gold were allowed to move freely in international markets. The real lesson in this chart is that when a nation-state moves away from gold-backed to fiat money, gold coins and bullion become a logical and worthwhile alternative for citizen-investors – even after centuries of relative price stability.

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

How the long debt cycle might end

Financial Times/Martin Wolf/5-15-2019

“Start then with inflationary fire. Much of what is going on right now recalls the early 1970s: an amoral US president (then Richard Nixon) determined to achieve re-election, pressured the Federal Reserve chairman (then Arthur Burns) to deliver an economic boom. He also launched a trade war, via devaluation and protection. A decade of global disorder ensued. This sounds rather familiar, does it not? In the late 1960s, few expected the inflation of the 1970s.”

USAGOLD note:  True, “in the late 1960s, few expected the inflation of the 1970s.”  But the few who did profited enormously by purchasing gold at $35 per ounce just before the United States devalued the dollar and holding it through the following highly inflationary decade. It rose nearly 25 times.  What the current president is attempting to do today de facto is what Nixon had the luxury of doing de jure by simply raising the official dollar price of gold.  The current president given his proclivity for easy money must envy the way it was in 1971.  That aside, the subheadline to this article is the one that caught by attention: Some fear the fire of inflation; others the ice of deflation.  Either way, as we have said many times here, gold historically has been an effective hedge against either – fire or ice.

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Posted in Today's top gold news and opinion |

Our long anticipated gold momentum rally begins

TheTechnicalTraders/Chris Vermuelen/5-15-2019

“The next leg higher for Gold will see a price peak near $1450 before another brief sideways/stalling pattern sets up.  After that, our research suggests a rally will quickly drive Gold prices above $1550 (or much higher). As we’ve been suggesting, Silver will likely lag behind Gold by about 20+ days. We believe Silver is going to see an incredible upside price move – even bigger than Gold in percentage terms. Our belief is that Silver will be trading above $26 to $28 per ounce – almost DOUBLE the recent low price level, when Gold will be trading just above $2000 per ounce. The reason for this is the relationship between the Gold/Silver/US Dollar pricing levels – called the Gold/Silver Ratio.”

USAGOLD note:  A very optimistic forecast from a group that has made “some truly amazing precious metals calls over the past 6+ months.”

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Posted in Gold and Silver Price Predictions from Prominent Players for 2019, Today's top gold news and opinion |

Washington and Wall Street need to wake-up to a new reality

Washington, Wall Street wake up to reality Beijing is happy to walk away
MarketWatch/Steve Goldstein/5-13-2019

Steve Bannon: ‘No chance’ Trump will back down in China trade war
CNBC/Matthew J. Belvedere/5-15-2019

China calls for People’s War against the US, fight for a new world
ZeroHedge/Tyler Durden/5-15-2019

USAGOLD note:  We group these three articles to make a point. Together they point up how quickly the situation between the US and China has moved from negotiable to intractable. The third tells how China seems to be putting its population on a war footing psychologically – something we found to be particularly relevant at this juncture.  The financial markets may need to make some further adjustments to accommodate this new reality.

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Posted in Today's top gold news and opinion |

Central banks are buying gold at the fastest pace in six years

Sovereign Man/Simon Black/5-14-2019


“And if the Bolsheviks come to power next year and offer free goodies (paid for with more debt) to anyone with a pulse, the debt burden will explode. Anyone who thinks owning 10-year US treasuries – or even worse, 30-year government bonds – is risk-free, is completely insane. The dollar’s problems aren’t limited to the US government’s pitiful finances either.”

USAGOLD note:  In this entertaining and instructive essay, Simon Black states the case for gold ownership in no uncertain terms of which the snippet above is an example.

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Posted in Today's top gold news and opinion |