Author Archives: Daily Market Report

Atlas Pulse upgrades gold to bull market for first time since 2012

Atlas Plus/Charlie Morris

“The six-month, or 26-week, momentum signal could be struck anytime now. All gold needs to do is touch $1,270, which is a few dollars away, or stay at current levels while that six-month high keeps on dropping. Either way, the bears will have their shorts pulled down.”

USAGOLD note:  Morris goes through a well-conceived checklist – his first advisory in over a year – why we might be on the verge of a new bull market in gold. “$1776 anyone?” he asks.


Repost from 12/20/2018

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Posted in Today's top gold news and opinion |

Gold inches higher ahead of vote on Brexit plan

DAILY MARKET REPORT

Gold inched higher in early U.S. trading after a relatively quiet night overseas – up $1.50 at $1293 – as the world’s attention shifted to the United Kingdom and today’s vote on Brexit. Silver is down 1¢ at $15.67. A House of Commons’ vote is scheduled for later this afternoon. A firmer U.S. dollar is helping to keep gold constrained this morning.

The major news services are predicting a defeat for the current plan for Britain’s departure from the European Union leaving it a guessing game as to what might happen next in the world’s fifth largest economy. We have seen estimates of up to $1 trillion in capital flight from Britain as a result of that departure. Safe haven demand for gold on both sides of the English Channel has been one of the hallmarks of the departure wrangling.

U.S. Global Investors’ Frank Holmes offers the following summation of the current gold market: “Gold, meanwhile, is set for its fourth weekly gain, marking its longest rally since October. Traders surveyed by Bloomberg are bullish on the yellow metal for a ninth straight week. . .ETFs backed by gold saw 10 straight days of inflows, adding 37,174 troy ounces on Thursday alone. This year’s net purchases so far are 762,975 troy ounces, according to data compiled by Bloomberg.”

Quote of the Day
“But the same analysis applies to debased or light-weight coins driving out full-bodied coins. Examples abound in the ancient literature of the consequences of coinage debasement. From the very beginning of coinage, generally assumed, on the authority of Herodotus, to originate with 7th century Lydia, coinage was overvalued. The earliest coins were made of electrum, a natural alloy of about 70 percent gold and 30 percent silver. But hoards of the earliest coins found in the Temple of Artemis at Ephesus in 1904 contained ;artificial’ electrum coins with much lower gold contents. The weights of the stater coins (or its fractions) were uniform but the gold contents were as low as 30 percent. The Lydians and Greeks had not only learned how to use ancient Egyptian techniques of metallurgy, but also how to overvalue coins by using less of the more expensive metal and exploit the monetary prerogative as a fiscal device.” – Robert Mundell, Uses and Abuses of Gresham’s Law in the History of Money

Chart of the Day

Chart and note courtesy of the World Gold Council/GoldHub

Chart note: “Large net short positions,” says the World Gold Council, “are often prone to covering, creating buying opportunities for investors. In addition, gold speculative positioning in futures markets remains low by historical standards after hitting record lows in the final months of 2018. CME managed money net long positions stand near record low since 2006 – when data was first broken down by investor type. Furthermore, net combined speculative positions, which go back further, are negative for the first time since December 2001. And large net short positions have historically created buying opportunities for strategic investors, as such positions are prone to short-covering adding momentum to rallies in the gold price.”

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Posted in dailyquotes |

DMR–Gold inches higher ahead of vote on Brexit plan

DAILY MARKET REPORT

Gold inched higher in early U.S. trading after a relatively quiet night overseas – up $1.50 at $1293 –  as the world’s attention shifted to the United Kingdom and today’s vote on Brexit. Silver is down 1¢ at $15.67.  A House of Commons’ vote is scheduled for later this afternoon.  A firmer U.S. dollar is helping to keep gold constrained this morning.

The major news services are predicting a defeat for the current plan for Britain’s departure from the European Union leaving it a guessing game as to what might happen next in the world’s fifth largest economy.  We have seen estimates of up to $1 trillion in capital flight from Britain as a result of that departure.  Safe haven demand for gold on both sides of the English Channel has been one of the hallmarks of the departure wrangling.

U.S. Global Investors’ Frank Holmes offers the following summation of the current gold market: “Gold, meanwhile, is set for its fourth weekly gain, marking its longest rally since October. Traders surveyed by Bloomberg are bullish on the yellow metal for a ninth straight week. . .ETFs backed by gold saw 10 straight days of inflows, adding 37,174 troy ounces on Thursday alone. This year’s net purchases so far are 762,975 troy ounces, according to data compiled by Bloomberg.”

Quote of the Day
“But the same analysis applies to debased or light-weight coins driving out full-bodied coins. Examples abound in the ancient literature of the consequences of coinage debasement. From the very beginning of coinage, generally assumed, on the authority of Herodotus, to originate with 7th century Lydia, coinage was overvalued. The earliest coins were made of electrum, a natural alloy of about 70 percent gold and 30 percent silver. But hoards of the earliest coins found in the Temple of Artemis at Ephesus in 1904 contained ;artificial’ electrum coins with much lower gold contents. The weights of the stater coins (or its fractions) were uniform but the gold contents were as low as 30 percent. The Lydians and Greeks had not only learned how to use ancient Egyptian techniques of metallurgy, but also how to overvalue coins by using less of the more expensive metal and exploit the monetary prerogative as a fiscal device.” – Robert Mundell, Uses and Abuses of Gresham’s Law in the History of Money

Chart of the Day

Chart and note courtesy of the World Gold Council/GoldHub

Chart note:  “Large net short positions,” says the World Gold Council, “are often prone to covering, creating buying opportunities for investors.  In addition, gold speculative positioning in futures markets remains low by historical standards after hitting record lows in the final months of 2018. CME managed money net long positions stand near record low since 2006 – when data was first broken down by investor type. Furthermore, net combined speculative positions, which go back further, are negative for the first time since December 2001. And large net short positions have historically created buying opportunities for strategic investors, as such positions are prone to short-covering adding momentum to rallies in the gold price.”

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

Story of a gold coin

Mexican Civic Association/Hugo Salinas Price

“As I was shuffling papers in some old files, I came across a slip of paper on which I had written down the price I had paid for a Mexican $50 gold peso coin: $717 Mexican pesos.”

USAGOLD note: An interesting story about a gold coin a good many of our clients own – the beautiful Mexican 50 peso pictured above. We think you will enjoy Hugo Salinas Price’s story at the link above.


Repost from 12/4/2019/edited note

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Gold lays groundwork for solid start to the week, hits a wall in early NY trading

DAILY MARKET REPORT

Gold was in the process of laying some groundwork for a very good start to the week – trading up to the $1296 level in Asian and European markets overnight – until it hit a wall of what looked to be programmed trading at the open in New York and dropped almost $8 in a matter of minutes.  It has retraced some of those losses since and is now priced at $1292 and up $5 on the day.  Silver is up 6¢ on the day at $15.64.

Much of the gold’s gain overseas can be tracked to a stronger yuan and concerns about a less than inspiring earnings period ahead of us. Adding to the stock market’s woes is a report out of China this morning that its trade deficit with the United States grew 17% despite the imposition of tariffs. Lurking in the shadows, and not getting a great deal of attention in the United States, UK’s parliament votes on Brexit this week and that could be a catalyst for surprise capital rearrangements that few anticipated.

Quote of the Day
“I think we’re getting to the point now where the breakout is going to be on the inflation upside. The only question is when.” – Alan Greenspan, February 2018

Chart of the Day


(Interactive chart)

Chart note: This interactive chart compares price appreciation for gold and the dollar index. Gold has consistently outperformed the dollar in twelve of the last eighteen years – a formidable record. Even if one were to add in average yields on dollar-based investments, gold still comes out the clear winner in those twelve years. Gold had an off-year in 2018 – down 1% while the dollar was up almost 7%. Given the performance record, though, contrarian investors might see the present disparity as a buying opportunity.

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Posted in dailyquotes |

DMR–Gold lays groundwork for solid start to the week, hits a wall in early NY trading

DAILY MARKET REPORT

Gold was in the process of laying some groundwork for a very good start to the week – trading up to the $1296 level in Asian and European markets overnight – until it hit a wall of what looked to be programmed trading at the open in New York and dropped almost $8 in a matter of minutes.  It has retraced some of those losses since and is now priced at $1292 and up $5 on the day.  Silver is up 6¢ on the day at $15.64.

Much of the gold’s gain overseas can be tracked to a stronger yuan and concerns about a less than inspiring earnings period ahead of us.  Adding to the stock market’s woes is a report out of China this morning that its trade deficit with the United States grew 17% despite the imposition of tariffs. Lurking in the shadows, and not getting a great deal of attention in the United States, UK’s parliament votes on Brexit this week and that could be a catalyst for surprise capital rearrangements that few anticipated.

Quote of the Day
“I think we’re getting to the point now where the breakout is going to be on the inflation upside. The only question is when.” – Alan Greenspan, February 2018

Chart of the Day


(Interactive chart)

Chart note: This interactive chart compares price appreciation for gold and the dollar index. Gold has consistently outperformed the dollar in twelve of the last eighteen years – a formidable record. Even if one were to add in average yields on dollar-based investments, gold still comes out the clear winner in those twelve years. Gold had an off-year in 2018 – down 1% while the dollar was up almost 7%. Given the performance record, though, contrarian investors might see the present disparity as a buying opportunity.

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No DMR today. . .

but please check back.  We will update if anything of interest develops.

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Posted in dailyquotes |

No DMR today. . .

but please check back.  We will update if anything of interest develops.

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Posted in Today's top gold news and opinion |

Gold trades sideways, markets looking for direction

DAILY MARKET REPORT

Gold is trading sideways this morning after a quiet overnight session – down $1 at $1292. Silver is down 8¢ at $15.67. The markets, in general, seem unsure how to react to a slew of global political and economic events over the past few days and looking for a functional narrative upon which it can proceed.

Two pieces of news yesterday might provide that direction as time goes on. One is Fitch’s warning that it might drop the U.S.’ AAA credit rating if things do not improve in Washington. The credit agency’s warning came hours before the president walked out of a meeting with Congressional Democrats at the White House. The other is the Bloomberg report of “a steep decline in demand” at the U.S. Treasury’s bond auctions. That piece of unsettling news comes at a time when the federal government’s needs are growing rapidly as China and Japan, the two largest holders of U.S. sovereign debt, have moved to the sidelines.

Neither development is minor or easily dismissed as passing phenomena. As mentioned yesterday, when Standard & Poor’s lowered its credit rating of the United States from AAA to AA+ on August 5, 2011, it set off a strong rally in the gold price. On August 4, the price stood at $1662. Within four days it was trading at over $1800. By August 21st it had hit its all-time highs of over $1900 per ounce.

Quote of the Day
“The great Russian opera singer, Feodor Chaliapin, lost his entire fortune–then worth more than a million pounds–in the Russian revolution. This disaster seared him. He left Russia after the Revolution and went to live in France where in 1931 he bought gold bars and put them in a safe in his cellar in Paris. He was interviewed by the British Sunday Express newspaper on the 5th of May 1935, when he said, ‘People in Britain think governments cannot collapse. They think banknotes are money; banks are impregnable. But I have had everything I made in 25 years stripped from me. I was reduced to singing for tea in which there was sawdust, and bread in which there was wood. With my bar of gold and a pen knife I shall never go hungry.’” — Anecdote told by Haruko Fukuda, World Gold Council chair, in 2000 to the Business Club Zurich

Chart of the Day

Chart note: This long-term gold chart is drawn in log-scale. “Common percent changes,” says Investopedia of log-scale charts, “are represented by an equal spacing between the numbers in the scale. For example, the distance between $10 and $20 is equal to the distance between $20 and $40 because both scenarios represent a 100% increase in price.” On a linear chart, the lesser values are compressed to the point that the viewer misses the strength of a price move, and the greater values are extended to a degree that they tend to dramatize a price move – up or down. The log-scale chart presents data in a more realistic framework without the drama. As you can see from the chart above, the upward trend of the gold price since the early 2000s is not nearly as strong as the move between 1970 and 1980 in percentage terms leading some analysts to believe that we have considerable upside yet to be charted.

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Posted in dailyquotes |

DMR–Gold trades sideways, markets looking for direction

DAILY MARKET REPORT

Gold is trading sideways this morning after a quiet overnight session – down $1 at $1292.  Silver is down 8¢ at $15.67.  The markets, in general, seem unsure how to react to a slew of global political and economic events over the past few days and looking for a functional narrative upon which it can proceed.

Two pieces of news yesterday might provide that direction as time goes on. One is Fitch’s warning that it might drop the U.S.’ AAA credit rating if things do not improve in Washington.  The credit agency’s warning came hours before the president walked out of a meeting with Congressional Democrats at the White House. The other is the Bloomberg report of “a steep decline in demand” at the U.S. Treasury’s bond auctions. That piece of unsettling news comes at a time when the federal government’s needs are growing rapidly as China and Japan, the two largest holders of U.S. sovereign debt, have moved to the sidelines.

Neither development is minor or easily dismissed as passing phenomena.  As mentioned yesterday, when Standard & Poor’s lowered its credit rating of the United States from AAA to AA+ on August 5, 2011, it set off a strong rally in the gold price. On August 4, the price stood at $1662. Within four days it was trading at over $1800. By August 21st it had hit its all-time highs of over $1900 per ounce.

Quote of the Day
“The great Russian opera singer, Feodor Chaliapin, lost his entire fortune–then worth more than a million pounds–in the Russian revolution. This disaster seared him. He left Russia after the Revolution and went to live in France where in 1931 he bought gold bars and put them in a safe in his cellar in Paris. He was interviewed by the British Sunday Express newspaper on the 5th of May 1935, when he said, ‘People in Britain think governments cannot collapse. They think banknotes are money; banks are impregnable. But I have had everything I made in 25 years stripped from me. I was reduced to singing for tea in which there was sawdust, and bread in which there was wood. With my bar of gold and a pen knife I shall never go hungry.’” — Anecdote told by Haruko Fukuda, World Gold Council chair, in 2000 to the Business Club Zurich

Chart of the Day

Chart note: This long-term gold chart is drawn in log-scale. “Common percent changes,” says Investopedia of log-scale charts, “are represented by an equal spacing between the numbers in the scale. For example, the distance between $10 and $20 is equal to the distance between $20 and $40 because both scenarios represent a 100% increase in price.” On a linear chart, the lesser values are compressed to the point that the viewer misses the strength of a price move, and the greater values are extended to a degree that they tend to dramatize a price move – up or down. The log-scale chart presents data in a more realistic framework without the drama. As you can see from the chart above, the upward trend of the gold price since the early 2000s is not nearly as strong as the move between 1970 and 1980 in percentage terms leading some analysts to believe that we have considerable upside yet to be charted.

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

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

Gold resumes climb on trade talk 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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Posted in dailyquotes |

DMR–Gold turns south on technical/trading issues

DAILY MARKET REPORT

Gold ran into significant resistance just short of the $1295 early yesterday.  It subsequently turned south and that sell-off carried over to today’s open.  Gold is trading now at the $1281 level and off about $8 on the day.  Silver is down 5¢ at $15.63. The turn south looks more like a technical/trading issue than anything substantive.

Recent dovish pronouncements from the Fed chairman and the possibility of some kind of rapprochement between the United States and China on trade underlies psychology in the gold market at the present. “Any kind of agreement should be bullish for gold because of a stronger Chinese renminbi,” Commerzbank analyst Carsten Fritsch told Reuters overnight. “Gold is in positive environment. It had such a strong year-end, it is not surprising to see some profit taking,” he said.  As it is, the dollar is trading to the upside this morning and gold has taken the opposite tack.

Quote of the Day
“Take some advice from two observers who have been around for awhile: The long term gets here before you know it. . . .Instead, we’d be dependent on foreign investors’ acquiring most of our debt — making the government dependent on the ‘kindness of strangers’ who may not be so kind as the I.O.U.s mount up. We can’t let that happen — not if we want an America that is able to provide growth and stability at home while maintaining global leadership. We would risk returning with a vengeance to stagflation — the ugly combination of inflation and economic stagnation that we tasted in the 1970s.” – Paul A. Volker and Peter G. Peterson

Chart of the Day

Chart note:  The subject of much controversy as to its positive or ill-effects, the Federal Reserve continues to reduce its original $4.5 trillion balance sheet albeit at a very slow pace.  Thus far, the Fed has allowed about $350 billion to run-off the balance sheet and its total holding is now about $4.14 trillion. The pace of quantitative tightening is expected to ratchet-up as 2019 progresses and this is causing concern among some analysts. “We believe the increase in the speed of the Fed balance sheet runoff could have a significant impact on the market,” says Brandywine Global Investment Management in a Seeking Alpha report this morning, “especially the long-end of the Treasury curve, as most of the Fed’s holdings are long-dated. With almost all major central banks reversing quantitative easing – including the European Central Bank’s recent coda to its asset purchases – we could face more of a dollar liquidity shortage.”

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

Gold turns south on technical/trading issues

DAILY MARKET REPORT

Gold ran into significant resistance just short of the $1295 early yesterday. It subsequently turned south and that sell-off carried over to today’s open. Gold is trading now at the $1281 level and off about $8 on the day. Silver is down 5¢ at $15.63. The turn south looks more like a technical/trading issue than anything substantive.

Recent dovish pronouncements from the Fed chairman and the possibility of some kind of rapprochement between the United States and China on trade underlies psychology in the gold market at the present. “Any kind of agreement should be bullish for gold because of a stronger Chinese renminbi,” Commerzbank analyst Carsten Fritsch told Reuters overnight. “Gold is in positive environment. It had such a strong year-end, it is not surprising to see some profit taking,” he said. As it is, the dollar is trading to the upside this morning and gold has taken the opposite tack.

Quote of the Day
“Take some advice from two observers who have been around for awhile: The long term gets here before you know it. . . .Instead, we’d be dependent on foreign investors’ acquiring most of our debt — making the government dependent on the ‘kindness of strangers’ who may not be so kind as the I.O.U.s mount up. We can’t let that happen — not if we want an America that is able to provide growth and stability at home while maintaining global leadership. We would risk returning with a vengeance to stagflation — the ugly combination of inflation and economic stagnation that we tasted in the 1970s.” – Paul A. Volker and Peter G. Peterson

Chart of the Day

Chart note: The subject of much controversy as to its positive or ill-effects, the Federal Reserve continues to reduce its original $4.5 trillion balance sheet albeit at a very slow pace. Thus far, the Fed has allowed about $350 billion to run-off the balance sheet and its total holding is now about $4.14 trillion. The pace of quantitative tightening is expected to ratchet-up as 2019 progresses and this is causing concern among some analysts. “We believe the increase in the speed of the Fed balance sheet runoff could have a significant impact on the market,” says Brandywine Global Investment Management in a Seeking Alpha report this morning, “especially the long-end of the Treasury curve, as most of the Fed’s holdings are long-dated. With almost all major central banks reversing quantitative easing – including the European Central Bank’s recent coda to its asset purchases – we could face more of a dollar liquidity shortage.”

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Posted in dailyquotes |

DMR–Gold sharply higher on Powell’s promise to be patient on rates, China reserves increase

DAILY MARKET REPORT

Gold moved sharply higher in early trading today as the effect of Friday’s job numbers receded and Fed chairman Jay Powell’s promise to be “patient” on rates moved to the pole position.  The yellow metal is trading up $8 at $1293. Silver is up 9¢ at $15.77.

Gold is enjoying a run of positive forecasts of late and acquisition recommendations from various financiers.  BlackRock, one of the world’s largest hedge funds, came out in gold’s favor over the weekend.  “’We’re constructive on gold,” portfolio manager Russ Koesterich told Bloomberg on Friday. “We think it’s going to be a valuable portfolio hedge. We’re multi-asset investors: we think about its effect on the entire portfolio, and what we see value in right now is gold’s value as a diversifier.”

Also, helping gold this morning is a report out of China that the Peoples Bank of China increased its holdings by roughly 10 tonnes – the first such report of an upgrade since 2016.

Quote of the Day
“Debasement was limited at first to one’s own territory. It was then found that one could do better by taking bad coins across the border of neighboring municipalities and exchanging them for good with ignorant common people, bringing back the good coins and debasing them again. More and more mints were established. Debasement accelerated in hyper-fashion until a halt was called after the subsidiary coins became practically worthless, and children played with them in the street, much as recounted in Leo Tolstoy’s short story, Ivan the Fool.” – Charles P. Kindleberger, Manias, Panics and Crashes

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: If you follow the on-going trade war between the United States and China with even passing interest, you have no doubt come across references to China selling U.S. Treasuries as its ultimate hole card. This chart shows something that few, including many financial journalists, acknowledge: China has been unloading exchange reserves since 2014 when they peaked at nearly $4 trillion. Most of those reductions, which have taken China’s reserves to a little over $3 trillion (a 25% reduction) came as part of its policy to smooth the yuan exchange rate against the dollar and prevent wholesale capital flight. It is unclear at this juncture to what extent China would be willing to drain reserves in defense of the yuan in the future. Trading Economics, as the chart shows, projects further reserve reductions in the future.

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

Gold sharply higher on Powell’s promise to be patient on rates, China reserves increase

DAILY MARKET REPORT

Gold moved sharply higher in early trading today as the effect of Friday’s job numbers receded and Fed chairman Jay Powell’s promise to be “patient” on rates moved to the pole position. The yellow metal is trading up $8 at $1293. Silver is up 9¢ at $15.77.

Gold is enjoying a run of positive forecasts of late and acquisition recommendations from various financiers. BlackRock, one of the world’s largest hedge funds, came out in gold’s favor over the weekend. “’We’re constructive on gold,” portfolio manager Russ Koesterich told Bloomberg on Friday. “We think it’s going to be a valuable portfolio hedge. We’re multi-asset investors: we think about its effect on the entire portfolio, and what we see value in right now is gold’s value as a diversifier.”

Also, helping gold this morning is a report out of China that the Peoples Bank of China increased its holdings by roughly 10 tonnes – the first such report of an upgrade since 2016.

Quote of the Day
“Debasement was limited at first to one’s own territory. It was then found that one could do better by taking bad coins across the border of neighboring municipalities and exchanging them for good with ignorant common people, bringing back the good coins and debasing them again. More and more mints were established. Debasement accelerated in hyper-fashion until a halt was called after the subsidiary coins became practically worthless, and children played with them in the street, much as recounted in Leo Tolstoy’s short story, Ivan the Fool.” – Charles P. Kindleberger, Manias, Panics and Crashes

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: If you follow the on-going trade war between the United States and China with even passing interest, you have no doubt come across references to China selling U.S. Treasuries as its ultimate hole card. This chart shows something that few, including many financial journalists, acknowledge: China has been unloading exchange reserves since 2014 when they peaked at nearly $4 trillion. Most of those reductions, which have taken China’s reserves to a little over $3 trillion (a 25% reduction) came as part of its policy to smooth the yuan exchange rate against the dollar and prevent wholesale capital flight. It is unclear at this juncture to what extent China would be willing to drain reserves in defense of the yuan in the future. Trading Economics, as the chart shows, projects further reserve reductions in the future.

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Posted in dailyquotes |

Gold retreats from $1300 mark, tumbles on jobs report

DAILY MARKET REPORT

Gold, in bullish fashion, made a charge at the $1300 mark in Asian trading overnight. Unable to keep the momentum, it retreated quietly during European trading and then tumbled in New York on the release of this morning’s surprisingly strong jobs report. It is now down $17 at $1278 – a wholly unpleasant end to what up until now had been a fairly good start to the year. Silver kept its composure through it all and is now down a modest 13¢ at $15.61.

Given the fact that gold’s problems this morning have not spread to other sectors, this morning’s sell-off could turn out to be a temporary affair. Oil is up sharply again. Commodities in general look firm. The yen is down but not dramatically so. Meanwhile, the global economy itself is still in dangerous waters despite the feel-good jobs number. Perhaps we would be well-served to see how it all plays out before casting judgement. . . . . . . .

Gold, after all is said and done, is roughly level on the week and still up over 4.5% since December 1.

Quote of the Day
“Problems are likely to continue in emerging markets, compounded by rising interest rates and the US Fed’s monetary policy which has drained global dollar liquidity. We have already seen the impact on the Turkish and Argentinian currencies. We remain concerned about geo-political problems including Brexit, North Korea and the Middle East, at a time when populism is spreading globally. The resolution of these problems in this unpredictable era will surely be difficult. In 9/11 and in the 2008 financial crisis, the powers of the world worked together with a common approach. Co-operation today is proving much more difficult. This puts at risk the post-war economic and security order. In the circumstances our policy is to maintain our limited exposure to quoted equities and to enter into new commitments with great caution.” – Lord Jacob Rothschild, RIT Capital Partners, Half-Yearly Financial Report, June 30, 2018

Chart of the Day

Chart note: When the United States abandoned the gold standard in 1971 and freed currencies to float against one another, the fiat money era began. We are still in that era today. This chart shows the performance of gold from the early 1900s to 1971 when gold backed the dollar, and the era from 1971 to present when it did not. Gold has had its ups and down since 1971, but clearly, over the long run, in the absence of an official gold standard, individual investors have been well-served by putting themselves on a private gold standard.

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Posted in dailyquotes |

DMR–Gold retreats from $1300 mark, tumbles on jobs report

DAILY MARKET REPORT

Gold, in bullish fashion, made a charge at the $1300 mark in Asian trading overnight. Unable to keep the momentum, it retreated quietly during European trading and then tumbled in New York on the release of this morning’s surprisingly strong jobs report. It is now down $17 at $1278 – a wholly unpleasant end to what up until now had been a fairly good start to the year. Silver kept its composure through it all and is now down a modest 13¢ at $15.61.

Given the fact that gold’s problems this morning have not spread to other sectors, this morning’s sell-off could turn out to be a temporary affair. Oil is up sharply again. Commodities in general look firm. The yen is down but not dramatically so. Meanwhile, the global economy itself is still in dangerous waters despite the feel-good jobs number. Perhaps we would be well-served to see how it all plays out before casting judgement. . . . . . . .

Gold, after all is said and done, is roughly level on the week and still up over 4.5% since December 1.

Quote of the Day
“Problems are likely to continue in emerging markets, compounded by rising interest rates and the US Fed’s monetary policy which has drained global dollar liquidity. We have already seen the impact on the Turkish and Argentinian currencies. We remain concerned about geo-political problems including Brexit, North Korea and the Middle East, at a time when populism is spreading globally. The resolution of these problems in this unpredictable era will surely be difficult. In 9/11 and in the 2008 financial crisis, the powers of the world worked together with a common approach. Co-operation today is proving much more difficult. This puts at risk the post-war economic and security order. In the circumstances our policy is to maintain our limited exposure to quoted equities and to enter into new commitments with great caution.” – Lord Jacob Rothschild, RIT Capital Partners, Half-Yearly Financial Report, June 30, 2018

Chart of the Day

Chart note: When the United States abandoned the gold standard in 1971 and freed currencies to float against one another, the fiat money era began. We are still in that era today. This chart shows the performance of gold from the early 1900s to 1971 when gold backed the dollar, and the era from 1971 to present when it did not. Gold has had its ups and down since 1971, but clearly, over the long run, in the absence of an official gold standard, individual investors have been well-served by putting themselves on a private gold standard.

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

DMR–Silver up sharply, breaks ranks with gold

DAILY MARKET REPORT

Gold is higher for the second day running in 2019, but it is silver that is capturing the attention of traders this morning – up 17¢ at $15.67. Gold is up $2 at $1288. The metals are holding much of the ground gained overnight in response to a sudden surge in the value of the Japanese yen. Since then the yen and gold have settled into a range, but silver, seemingly determined to strike out on its own, has broken ranks and is up over 1% on the day thus far.

Clive Maund, the London-based commodities analyst, says that silver’s breakout “may well be the opening shot of a major bull market. . . The PM sector has been about the only one that hasn’t become a bubble in recent years, and the way things are shaping up, it could wind up being the only sector that becomes a bubble while most everything else is dropping through the floor.”

Oil is up sharply and the rest of the commodities complex looks firm confounding early year expectations that the Chinese economy will slow in 2019 and push commodity prices lower.

Quote of the Day
“As the unwind continues, Financial Assets inflated by the free-money effects of QE are still finding new equilibrium valuations. Markets will remain volatile. Tech change and supply fundamentals will continue to shock us – look at oil prices for an example; turning a good year for oil and energy into a question market. Or look at how iPhone sales in India have fallen off a cliff as people buy cheaper phones that do the same – commoditisation! The thing that scares me most is liquidity – the lack of it.” – Bill Blain, Blain’s Morning Porridge

Chart of the Day

Chart note:  Gold’s for the most part sideways performance in 2018 aside, it has been a steady performer since the turn of the 21st century – registering gains in fourteen of the first eighteen years.

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

Silver up sharply, breaks ranks with gold

DAILY MARKET REPORT

Gold is higher for the second day running in 2019, but it is silver that is capturing the attention of traders this morning – up 17¢ at $15.67. Gold is up $2 at $1288. The metals are holding much of the ground gained overnight in response to a sudden surge in the value of the Japanese yen. Since then the yen and gold have settled into a range, but silver, seemingly determined to strike out on its own, has broken ranks and is up over 1% on the day thus far.

Clive Maund, the London-based commodities analyst, says that silver’s breakout “may well be the opening shot of a major bull market. . . The PM sector has been about the only one that hasn’t become a bubble in recent years, and the way things are shaping up, it could wind up being the only sector that becomes a bubble while most everything else is dropping through the floor.”

Oil is up sharply and the rest of the commodities complex looks firm confounding early year expectations that the Chinese economy will slow in 2019 and push commodity prices lower.

Quote of the Day
“As the unwind continues, Financial Assets inflated by the free-money effects of QE are still finding new equilibrium valuations. Markets will remain volatile. Tech change and supply fundamentals will continue to shock us – look at oil prices for an example; turning a good year for oil and energy into a question market. Or look at how iPhone sales in India have fallen off a cliff as people buy cheaper phones that do the same – commoditisation! The thing that scares me most is liquidity – the lack of it.” – Bill Blain, Blain’s Morning Porridge

Chart of the Day

Chart note: Gold’s for the most part sideways performance in 2018 aside, it has been a steady performer since the turn of the 21st century – registering gains in fourteen of the first eighteen years.

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Posted in dailyquotes |

Sudden after-hours jump in gold looks yen-related . . . .

UPDATE

. . . . comes as Asian markets open for trading.  The Japanese yen is now considered a safe-haven trade along with gold and there have been times when the two have found themselves traveling companions.  Gold got as high as near $1290 and is now settling down a bit along with the yen. . . .Not sure what exactly is behind the sudden flurry of interest. At first we couldn’t rule out some sort of trading aberration.  Now it is beginning to look real, hence the update. – USAGOLD/DMR

 

 

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Posted in Today's top gold news and opinion |

Alan Greenspan: Investors should prepare for the worst (irrational exuberance redux)

CNN Business/Donna Borak/12-18-2018

“Alan Greenspan says the party’s over on Wall Street. The former Federal Reserve chairman who famously warned more than two decades ago about ‘irrational exuberance’ in the stock market doesn’t see equity prices going any higher than they are now. ‘It would be very surprising to see it sort of stabilize here, and then take off,’ Greenspan said in an interview with CNN anchor Julia Chatterley. He added that markets could still go up further — but warned investors that the correction would be painful: ‘At the end of that run, run for cover.'”

USAGOLD note: Greenspan over the years has consistently advocated gold ownership as a means to hedging the next financial crisis.


Repost from 12-18-2018

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

Gold up tenuously to start the new year

DAILY MARKET REPORT

Gold is putting its best foot forward to start the New Year – trading up $3.50 at $1285 in today’s early going. Silver, not quite as enthusiastic about the turn of the year, is down 6¢ at $15.41. With the dollar strengthening overnight on reports of an economic slowdown in China, the positive start for gold appears on the surface a bit tenuous. With that in mind, many will call it a good start for the year if gold simply holds its ground in positive territory by the end of the day. Commodity markets in general are off with oil down over 2.5% on the day.

Today’s upside adds to a rally that began in mid-November at the $1200 level. As it is, gold finished up 5% for December, but down 2.6% for 2018. Silver, always more volatile than gold on both the up- and downsides, finished up 8% for December, but down about 9.3% for 2018.

Quote of the Day
Central bankers are coy about gold’s importance as a monetary metal. Former Fed Chair Benjamin and presidential candidate [Emphasis added]Bernanke, at one of our hearings, claimed flatly that gold was not money. When I pressed Bernanke on why, then, do central banks hold gold, he declared after a long pause that it was merely ‘tradition.’ He had no interest in my suggestion that the gold could be sold off to the American people if it’s not money. The point is that due to today’s impending crisis, many governments are now accumulating more gold—while others are holding onto what they have with the expectation it will once again be used in the monetary system.” – Ron Paul, former Congressman and presidential candidate [Emphasis added]

“Students of monetary history should recall that global growth shrank in the wake of the Smoot-Hawley Tariff Act of 1930, and the US was forced to devalue the dollar against gold in January 1934 with the result that the gold price rose by 70% (from $20.67 to $35.00).” – Martin Murenbeeld, Gold Monitor newsletter

Chart of the Day

Chart note: From time to time we re-post this chart on the average annual price of gold since 1971 – the year the U.S. severed the tie between the dollar and gold and launched the fiat money era. It dispels the notion that gold is somehow volatile or unpredictable and as a result unreliable as a long-term portfolio safe haven. To the contrary, it demonstrates at a glance gold’s strong performance as a portfolio holding over the long haul and emphasizes its role as a reliable long-term portfolio safe haven and means to long-term wealth preservation.

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Posted in dailyquotes |

DMR–Gold up tenuously to start the new year

DAILY MARKET REPORT

Gold is putting its best foot forward to start the New Year – trading up $3.50 at $1285 in today’s early going.  Silver, not quite as enthusiastic about the turn of the year, is down 6¢ at $15.41. With the dollar strengthening overnight on reports of an economic slowdown in China, the positive start for gold appears on the surface a bit tenuous. With that in mind, many will call it a good start for the year if gold simply holds its ground in positive territory by the end of the day. Commodity markets in general are off with oil down over 2.5% on the day.

Today’s upside adds to a rally that began in mid-November at the $1200 level.  As it is, gold finished up 5% for December, but down 2.6% for 2018.  Silver, always more volatile than gold on both the up- and downsides, finished up 8% for December, but down about 9.3% for 2018.

Quote of the Day
Central bankers are coy about gold’s importance as a monetary metal. Former Fed Chair Benjamin and presidential candidate [Emphasis added]Bernanke, at one of our hearings, claimed flatly that gold was not money. When I pressed Bernanke on why, then, do central banks hold gold, he declared after a long pause that it was merely ‘tradition.’ He had no interest in my suggestion that the gold could be sold off to the American people if it’s not money. The point is that due to today’s impending crisis, many governments are now accumulating more gold—while others are holding onto what they have with the expectation it will once again be used in the monetary system.” – Ron Paul, former Congressman and presidential candidate [Emphasis added]

“Students of monetary history should recall that global growth shrank  in the wake of the Smoot-Hawley Tariff Act of 1930, and the US was forced to devalue the dollar against gold in January 1934 with the result that the gold price rose by 70% (from $20.67 to $35.00).” – Martin Murenbeeld, Gold Monitor newsletter

Chart of the Day

Chart note:  From time to time we re-post this chart on the average annual price of gold since 1971 – the year the U.S. severed the tie between the dollar and gold and launched the fiat money era.   It dispels the notion that gold is somehow volatile or unpredictable and as a result unreliable as a long-term portfolio safe haven. To the contrary, it demonstrates at a glance gold’s strong performance as a portfolio holding over the long haul and emphasizes its role as a reliable long-term portfolio safe haven and means to long-term wealth preservation.

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

No DMR until January 2

Please check back though. We will update if circumstances warrant. . .

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Posted in dailyquotes |

No DMR until January 2

Please check back though. We will update if circumstances warrant. . .

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Posted in Today's top gold news and opinion |

DMR–Gold, silver up sharply in early trading, beneficiaries of major, on-going capital rotation

DAILY MARKET REPORT

Normally, we would take a break from posting the DMR during this last week of the year, but given the unusual circumstances in financial markets and the large number of visitors to the site, we thought a few comments might be in order.

Gold is up another $11 at $1279 in early trading today as investors, including funds and institutions, continue to rotate capital out of stocks and into safe-haven alternatives.  Silver is up a steep 39¢ at $15.17 and solidly over the $15 barrier.  The climb began overnight in Asian and European markets and carried over to the New York COMEX open. Bonds are also a beneficiary amidst the shifting currents.

A detailed article in this morning’s Wall Street Journal points up something we have warned about for years on this page and what many see to be the primary influence in this stock market sell-off, i.e., the over-wrought presence and dominance of computer-based trading.  With respect to the ill-effects, our characterization remains the same: Live by the algo. Die by the algo.  And just as the momentum in a football game can turn on a single event, so too can it turn in financial markets. Massive capital that poured into stocks for a good many years will now be looking for a place to go.  To what degree, this capital tsunami will affect the much thinner gold market remains to be seen.

As we approached the holiday break last week, we learned of a meeting of the Working Group for Financial Markets called by Treasury Secretary Mnuchin and also his contact with several of the large banks on their liquidity levels.  Whether or not the plunge protection team can turn the tide will dominate Wall Street concerns over the next few days, and the rest of us will be watching closely as well.

Quote of the Day
“The speed and magnitude of the move probably are being exacerbated by the machines and model-driven trading. Human beings tend not to react this fast and violently.” – Neal Berger, Eagle’s View Asset Management, as quoted in today’s Wall Street Journal

Chart of the Day

Chart note:  This chart illustrates the changing sentiment in financial markets since early October of this year.  Stocks have suffered in the worst late year market performance since the Great Depression.  Gold has been a beneficiary as investors seek a safe haven.

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

Gold, silver up sharply in early trading, beneficiaries of major, on-going capital rotation

DAILY MARKET REPORT

Normally, we would take a break from posting the DMR during this last week of the year, but given the unusual circumstances in financial markets and the large number of visitors to the site, we thought a few comments might be in order.

Gold is up another $11 at $1279 in early trading today as investors, including funds and institutions continue to rotate capital out of traditional stock markets and into safe-haven alternatives.  Silver is up a steep 39¢ at $15.17 and solidly over the $15 barrier.  The climb began overnight in Asian and European markets and carried over to the New York COMEX open. Bonds are also a beneficiary amidst the shifting currents.

A detailed article in this morning’s Wall Street Journal points up something we have warned for years about on this page and what many see to be the primary influence in this stock market sell-off, i.e., the over-wrought presence and dominance of computer-based trading. With respect to the ill-effects, our characterization remains the same: Live by the algo. Die by the algo. And just as the momentum in a football game can turn on a single event, so too can it turn in financial markets. Massive capital that poured into stocks for a good many years will now be looking for a place to go. To what degree, this capital tsunami will affect the much thinner gold market remains to be seen.

As we approached the holiday break last week, we learned of a meeting of the Working Group for Financial Markets called by Treasury Secretary Mnuchin and also his contact with several of the large banks on their liquidity levels. Whether or not the plunge protection team can turn the tide will dominate Wall Street concerns over the next few days, and the rest of us will be watching closely as well.

Quote of the Day
“The speed and magnitude of the move probably are being exacerbated by the machines and model-driven trading. Human beings tend not to react this fast and violently.” – Neal Berger, Eagle’s View Asset Management, as quoted in today’s Wall Street Journal

Chart of the Day

Chart note: This chart illustrates the changing sentiment in financial markets since early October of this year. Stocks have suffered in the worst late year market performance since the Great Depression. Gold has been a beneficiary as investors seek a safe haven.

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Posted in dailyquotes |

Something in the air as we approach holiday season

CHRISTMAS MESSAGE

Gold’s come off a bit from yesterday’s nearly $20 rise, but that is to be expected.  We mentioned late last week that the upcoming Fed Week might be different from the rest.  Little did we know how different it would be. One would have to reach deep into the memory banks to find a comparison if there is one.

 As the smoke begins to clear from the past week’s events, though, we sense that sentiment in the financial marketplace has been fundamentally altered – a significant and surprising overturning of a way of thinking that has driven markets for a very long time. One hesitates to suggest such a thing because that governing mindset has been with us for a very long time.

Yet it would be hard to deny that something is in the air, as very significant developments have begun to emerge in the political realm as well.  Today’s Chart of the Day featuring gold and volatility speaks to that shift in sentiment. So, as we bring 2018 to a close, the word change superimposes itself over our Christmas message  – change that likely will present challenges and test our skills in the year ahead. We will be called upon, it appears, to adjust and prepare as investors for what could be tumultuous times ahead.

Wishing you and yours the very best for the holidays from all of us at USAGOLD!

Quote of the Day
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world’s great civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency from complacency to apathy, from apathy to dependency, from dependency back to bondage.” – Alexander Tyler, 18th-century historian and jurist

Chart of the Day

Chart note: High volatility in the past has preceded upward movement in the gold price. In an article this morning under the headline “Wild days return to stock market as VIX surges like never before,” Bloomberg points out that volatility now is running at levels not seen since the 2007-2008 breakdown and, in fact, “the biggest annual surge on record.” In yesterday’s Chart of the Day, we featured the lag in gold’s response to the early phases of the 2007-2008 financial crisis. The move upward came later after investors came to realize the full extent of the crisis and it culminated at all-time highs.

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Posted in dailyquotes |

DMR–Something in the air as we near the holiday season

CHRISTMAS MESSAGE

Gold’s come off a bit from yesterday’s nearly $20 rise, but that is to be expected.  We mentioned late last week that the upcoming Fed Week might be different from the rest.  Little did we know how different it would be. One would have to reach deep into the memory banks to find a comparison if there is one.

 As the smoke begins to clear from the past week’s events, though, we sense that sentiment in the financial marketplace has been fundamentally altered – a significant and surprising overturning of a way of thinking that has driven markets for a very long time. One hesitates to suggest such a thing because that governing mindset has been with us for a very long time.

Yet it would be hard to deny that something is in the air, as very significant developments have begun to emerge in the political realm as well.  Today’s Chart of the Day featuring gold and volatility speaks to that shift in sentiment. So, as we bring 2018 to a close, the word change superimposes itself over our Christmas message  – change that likely will present challenges and test our skills in the year ahead. We will be called upon, it appears, to adjust and prepare as investors for what could be tumultuous times ahead.

Wishing you and yours the very best for the holidays from all of us at USAGOLD!

Quote of the Day
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world’s great civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency from complacency to apathy, from apathy to dependency, from dependency back to bondage.” – Alexander Tyler, 18th-century historian and jurist

Chart of the Day

Chart note: High volatility in the past has preceded upward movement in the gold price. In an article this morning under the headline “Wild days return to stock market as VIX surges like never before,” Bloomberg points out that volatility now is running at levels not seen since the 2007-2008 breakdown and, in fact, “the biggest annual surge on record.” In yesterday’s Chart of the Day, we featured the lag in gold’s response to the early phases of the 2007-2008 financial crisis. The move upward came later after investors came to realize the full extent of the crisis and it culminated at all-time highs.

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