Author Archives: MK

Gold posts unremarkable day, marginally down week

LATE REPORT

Gold had an unremarkable day today finishing at $1329.50 and down $2.36.  Silver had a nondescript day as well settling at $16.53 and down 5¢.  For the week, gold was down $15.00 (- 1.3%) and silver was down 10¢ (-.6%).  With the amount of uncertainty and volatility floating around the markets this past, we consider the two metals holding their own something of a victory and look to the coming week for better days.

For the record, after all that happened in this already tumultuous year, gold is up 2.1% for 2018 and silver is down 4.4%.  Tellingly, the Dow Jones Industrial Average – for all the publicity, analysis and controversy that surrounds it – is up a competitive 2.1% on the year.

Quote of the Day
“For it is, so to speak, a game of Snap, of Old Maid, of Musical Chairs — a pastime in which he is victor who says Snap neither too soon nor too late, who passed the Old Maid to his neighbour before the game is over, who secures a chair for himself when the music stops. These games can be played with zest and enjoyment, though all the players know that it is the Old Maid which is circulating, or that when the music stops some of the players will find themselves unseated.” – John Maynard Keynes


February, 2018 Edition
Gold and the Law of Attraction
Trade-currency wars likely to inspire major global gold demand
The other inflation hedge – Silver
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Gold off to slow start, Fed prominent in today’s roster of events

EARLY REPORT

Gold is tracking sideways this morning under generally quiet market circumstances.  Silver is also off to a slow start.  Gold is trading at $1329.00, down $1.50 on the day.  Silver is trading at $16.50, down 4¢ on the day.

Things might get a little more interesting as the day progresses with four different Fed regional presidents scheduled for speeches today and the release of the Fed’s Monetary Policy Report later this morning. The policy report, we are being told, is a template for chairman Powell’s Congressional testimony next week. Given the unexpected maelstrom generated by release of minutes to the Fed’s January meeting, it is difficult to guess how Wall Street is likely to react to the report, or the speeches for that matter.

If rumors that National Security Adviser H.R. McMaster and Chief of Staff John Kelly are leaving the White House come to fruition, the impact on financial markets could be significant. Reuters is reporting that officials have said that”tensions could blow over, at least for now.”

Chart of the Day

Chart notes:  The S&P VIX is quiet for now, but still running high for the period and on a hair trigger, as we saw with the reaction to the Fed’s January minutes earlier this week.  Chart courtesy of TradingEconomics.com with thanks.
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Surprisingly good day for gold, tonight’s report a bit longer than usual – a theme emerges

LATE REPORT (OPINION)

Gold was up today recovering its balance as the day went on to gain almost $7.50 and finish at $1332.86.  Silver also had a good day finishing 10¢ higher at $16.59.  Gold sailed through today’s option expiration in surprisingly good shape.

Tonight’s report is going to be a bit longer than I normally like to post, but  don’t worry. You’re safe. This is not going to become a habit.  Much happened today beyond options expiration, though, and as the day progressed, a theme emerged, and that is what I would like to pass along tonight.  I am not going to say we’ve come to some sort of a watershed – not yet anyway – but I do believe we may have come to an interim turning point – an important step along the road to the sentiment change I noted in my predictions for gold and silver for 2018.

Let’s start with something you might not have thought about for a while:  Black Gold.

Oil turned sharply higher today on an unexpected drop in inventories and rising exports.  If someone would have predicted three years ago that U.S. export increases would push up oil prices, I would have thought them a bit unhinged, but here we are.  The economic “regime change” adds another entry to its resume. . . . . .Historically oil and gold have been traveling companions, particularly in times of rising inflation and inflation expectations. Commodities in general had another good day.

Along the same lines, the U.S. Labor Department today reported “unemployment benefits fell to a near 45-year low last week, pointing to strong job growth in February and solid momentum in the economy,” according to a Reuters report. In the recent past, gold might have reacted negatively to such news because it would have provided cause for the Fed to raise interest rates.  Now, with rising interest rates already on the Fed agenda – baked into the cake so to speak – the report was viewed as potentially inflationary, and gold held its own, even edged up a bit.

Sticking with the theme, this morning’s Chart of the Day showed the yield history for U.S. Treasury paper across the spectrum of instruments from 2010 to present – 6-months through 30-years.  (We invite you to scroll down the page to view that chart.)  In the accompanying Chart Notes section, we mentioned that the market would be watching today’s auction to get a read on how interest rates might be affected going forward. Reuters’ bond market reporter Richard Leong was more than accommodating in providing the first installment on that read, and here is what he had to say:

“Wall Street and investors took down with relative ease this week’s flood of government bond supply that included record amounts of three-month and six-month T-bills. But that came at a cost. The Treasury Department paid the highest interest rates in more than nine years to dealers and investors to buy its short-term debt. The Treasury is expected to crank up its bond issuance in the coming months to meet its budget needs, while investors and traders will likely demand more compensation to buy them, analysts said. “The market-clearing (yields) will go higher,” said Praveen Korapaty, head of U.S. rates at Credit Suisse in New York. “Come later this year, the cumulative funding gap will really explode.”

It is interesting to note that in the wake of those sales, gold immediately began to firm up.  In the past, rising interest rates have been a thorn in gold’s side.  In the new economic  regime, they may become the burr under its saddle.  As Dorothy says to Toto along the Yellow Brick Road, “Toto, I’ve a feeling we’re not in Kansas anymore.”


Quote of the Day
“The best thing is, don’t play the game, because it is pros against you. We spend hundreds of millions of dollars a year to get an edge, and others do that too. So it’s very difficult for the individual investor to assume that he [or she] can pick something better.  The best thing you can do is know how to have a balanced portfolio … because you ain’t going to win that game.” – Ray Dalio, Bridgewater Associates, speaking at the Harvard Kennedy School’s Institute of Politics

Related: Ray Dalio hits on important themes for the average investor we discussed in a post a couple of weeks ago under the headline, Bulls, bears and sloths – A sloth’s guide to surviving a week of market volatilityGold fits Dalio’s balanced portfolio approach.  In fact, Bridgewater Associates, the hedge fund he manages, owns significant amounts of gold as a means to achieving the balance he advises.

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Gold struggling but higher this morning, options expiration today

EARLY REPORT

Gold is struggling to get its legs underneath it this morning with the price at $1329, up $2 on the day.  Silver is faring slightly better, up 11¢ on the day at $16.64.  The dollar index is back below 90 in a minor sell-off and stocks have started the day up over 300 points.

Today is options expiration on the April gold contract.  At times in the past, options expiration day has been problematic for gold.  Also today Treasury completes its sale of $258 billion sovereign debt with an auction of $28 billion in 7-year notes.  The markets will be watching the results of that sale and its  impact on rates closely.

“It could be a bad day for the markets once the yield on the benchmark 10-year Treasury hits 3 percent,” UBS’ Art Cashin told CNBC earlier today.  “That 3 percent level is both a target and a kind of resistance. Everybody knows it’s like touching the third rail,’ said Cashin, UBS director of floor operations at the New York Stock Exchange. ‘The assumption is once they do it, all hell will break loose. So we’ll wait and see.'”

Chart of the Day

Chart notes: Yesterday $35 billion in 5-Year notes went out the Treasury’s door in what Reuters described as fair demand overall but weaker demand from foreign entities. Today’s auction of $28 billion in 7-year notes will be closely watched to see if demand holds up. Both sales are part of a massive Treasury $258 billion offer of sovereign debt, the second largest amount over a three day period in history, and $1 billion short of the record set in 2010. As you can see in the chart above, yields on longer-term instruments have remained in a comparatively tighter range while short-term rates have zoomed higher since 2016, one of the reasons why this auction of longer-dated Treasuries will be watched with a great deal of interest.
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Gold holds it own during another volatile day for markets

LATE REPORT

Gold finished down $4.57 today at $1324.44 basically holding its own in a highly volatile market atmosphere following the Fed’s release of minutes from its January meeting.  Silver actually managed to eke out a small gain on the day finishing up 7¢ at $16.48, a gain that might portend good things for both metals going forward. The Dow Jones Industrial average suffered a more than 460-point reversal in the day’s trading to finish 167 point lower on the day, and the yield on the 10-year Treasury moved up steeply to nudge the psychologically important 3% mark.

For a more comprehensive review of the day’s events, we invite you to scroll below. . . . .

Russ Koesterich, portfolio manager for BlackRock’s Global Allocation Team, revealed in a Bloomberg interview recently that the massive asset manager, the largest in the world, had added more gold to its holdings in the wake of the latest stock market drop.  The firm is invested 5% in gold as a “risk mitigant” against rising volatility which he says is going to become “a more permanent feature” of the financial markets. Kosterich is worried about the huge deficits forecast for the future under the new budget regime and consequent rising interest rates and inflation.

Quote of the Day
“The population of the world is increasing at the rate of five thousand four hundred every hour. A small percentage of these people will become gold hoarders, people who are frightened of currencies, who like to bury some sovereigns in the garden or under the bed. Another percentage needs gold fillings for their teeth. Others need gold-rimmed spectacles, jewelry, engagement rings. All these new people will be taking tons of gold off the market every year. New industries need gold wire, gold plating, amalgams of gold. Gold has extraordinary properties which are being put to new uses every day. It is brilliant, malleable, ductile, almost unalterable, and metals except platinum. There’s no end to its uses. But it has two defects. It isn’t hard enough. It wears out quickly, leaving itself on the linings of our pockets, and in the sweat of our skin. Every year, the world’s stock is invisibly reduced by friction. I said that gold has two defects…The other, and by far the major defect, is that it is the talisman of fear. Fear, Mr Bond, takes gold out of circulation and hoards it against the evil day. In a period of history when every tomorrow may be the evil day, it is fair enough to say that a fat proportion of the gold that is taken out of one corner of the Earth is at once buried again in another corner.” – Ian Fleming, Goldfinger


What you need to know before you buy your first ounce of gold
Some initial guidelines from one of America’s top gold experts

If you are new to the concept of gold ownership, you might be looking for a little guidance. We, at USAGOLD, have been in the gold business for a good many years and the one thing that stands out to us in working with so many over the years is how often investors, for one reason or another, get off to a bad start.

That is why we developed a question and answer page many years ago that delves into the subject of GETTING OFF TO THE RIGHT START. We update it regularly as things can change rapidly in the gold and silver markets. The page is linked above and we recommend that newcomers spend the few minutes it takes to get through it. . . .

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Rough sledding for gold today

LATE REPORT

Gold encountered some rough sledding today, down $15 at $1329.60, pushed down mostly by a stronger dollar.  Silver also had a tough go of it today – off 21¢ at $16.47.  The precious metals traded lower despite cracks showing up in both the stock and bond markets. Though the front end of the Treasury’s auction (mentioned further down the page) went uneventfully and contributed to gold’s downside, the back-end longer-term yields the next two days could become problematic, if demand is off. “We have a barrage of U.S. debt being auctioned off,” Saxo Bank’s Ole Saxon told CNBC, “and if there is less than the required appetite for that mountain of debt, that could weaken the dollar and support gold.”

Quote of the Day
“Chinese demand for gold jewelry grew in 2017 despite higher prices for the precious metal as the spread of e-commerce extended retailers’ reach. . .Smartphone apps enabling people to shop from anywhere have also altered habits. Inland residents once had limited opportunities to buy from jewelry sellers concentrated in coastal urban areas. E-commerce has expanded the geographical range stores can draw customers from, making hinterland consumers ‘a new driver’ of the market, [World Gold Council’s Takahiro] Morita said.”


“There are two bubbles: We have a stock market bubble, and we have a bond market bubble. At the end of the day, the bond market bubble will eventually be the critical issue, but for the short term it’s not too bad. . . What’s behind the bubble? Well the fact, that, essentially, we’re beginning to run an ever-larger government deficit . . Debt has been rising very significantly and we’re just not paying enough attention to that.” – Alan Greenspan, on Bloomberg television recently.

The National Debt and Gold

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Gold down marginally on mixed cues early, big week for bond market

EARLY REPORT

Gold is down $4 this morning at $1341.50 on mixed cues from the bond and FOREX markets.  Silver is down 2¢ at $16.65.  The dollar is up.  Stocks and bonds are down. The big event this week will be the U.S. Treasury Department’s sale of an unprecedented $258 billion in U.S. sovereign debt.  It comes at a time when bond investors are already jittery about the bond market, as reflected in this morning’s mixed early market session.

“Bid farewell to the bond market bull run,” reported CNBC yesterday, “because the markets are entering a phase not seen in 72 years: A rising rates cycle.” As we move into the Chinese Year of the Dog, and the first stages of what market experts are calling a financial market “regime change,” this sale might be seen as a seminal event. . . .and its first major test. “Bond investors, who have been on edge over signs of growing inflation and a possibly more aggressive Federal Reserve,” reports Reuters, “will have their work cut out for them. . .”

By the way, if my assumptions are correct, by the time Treasury finishes this week’s sale, the national debt will be treading perilously near the $21 trillion mark. At the time of the budget standoff in Congress, the accumulated debt was $20.5 trillion – almost one half trillion will have been added in a little over 10 days. But who’s counting? Deficits don’t matter. . .right?

Chart of the Day

Chart notes:  “The Rounding Bottom,” says StockCharts.com, “is a long-term reversal pattern that is best suited for weekly charts. It is also referred to as a saucer bottom, and represents a long consolidation period that turns from a bearish bias to a bullish bias.” Also – “Rounded bottoms—especially when they occur on daily and weekly charts, lasting several months or more—often signal a strong trend change. Trends may last for a long time. In stock and currency markets trends can last five years or more. Therefore, the rounded doesn’t have an accurate long-term price target. Rather, the pattern lets traders know a major new trend could be starting,” says Investopedia.  The rounded bottom on the weekly gold chart is unusually and almost perfectly symmetrical – a two and half year decline to the $1060 low and now a 26-month advance to current levels.  We should keep in mind that the rounding bottom, like any chart analysis, falls into the realm of opinion, not fact, and should be understood as such.
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Slow day for gold but a decent week, and so far – a solid year

LATE REPORT

Gold had a difficult time mustering support today despite a run of news bolstering the inflation thesis. (Please scroll below for details.) It finished the day at $1347.00, off $6.30.  Silver had a similarly lackluster day losing 21¢ and finishing at $16.63.  Gold had a good week with a $31 gain.  Silver finished the week 30¢ higher.  The year thus far has been a mixed bag for the two primary investment precious metals:  Gold is up 3.4% and silver is down 1.7%.

Over in StockMarketLand, it was a see-saw day with the Dow Jones Industrial Average showing a gain of 267 at one point before finishing the day up only 19 – a less than convincing end to the week.  One analyst likened buying stocks in the current environment to picking up “dollars in front of a steamroller” – an appropriate mental image, we thought. Tonight’s Quote of the Day takes a similar tack and supports the notion the more things change, the more they stay the same.

To get the full flavor for the week just passed, we invite you to take a leisurely stroll through the posts immediately below.  Much happened. Much was said. Much still needs to be sorted out. . . . . .

Quote of the Day
“At the quarter-century mark of 1925, the great bull market was under way, and Graham*, then 31, developed what he later described as a ‘bad case of hubris.’ During an early-1929 conversation with business associate Bernard Baruch (about whom he disparagingly observed, ‘He had the vanity that attenuates the greatness of some men’), both agreed that the market had advanced to ‘inordinate heights, that the speculators had gone crazy, that respected investment bankers were indulging in inexcusable high jinks, and that the whole thing would have to end up one day in a major crash.’ Several years later he lamented, ‘What seems really strange now is that I could make a prediction of that kind in all seriousness, yet not have the sense to realize the dangers to which I continued to subject the Account’s4 capital.’ In mid1929, the equity in the ‘Account’ was a proud $2,500,000; by the end of 1932, it had shrunk to a mere $375,000.” –  Frank K. Martin, A Decade of Delusions

*  Benjamin Grahm, “The father of value investing”, 1894-1976, Security Analysis (1934) with David Dodd, and The Intelligent Investor (1949).

February, 2018 Edition
Gold and the Law of Attraction
Trade-currency wars likely to inspire major global gold demand
The other inflation hedge – Silver
–– AND MORE ––


We invite you to sign-up for FREE immediate access
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Gold off marginally early, markets quiet on proposed tariffs and higher import prices

EARLY REPORT

Gold is off marginally from yesterday’s close trading down $2 at $1351.50.  Overnight it had gotten as high as $1361 on major dollar weakness. Silver is also off marginally, down 10¢ at $16.78.  The dollar is staging a recovery from yesterday’s drop and that seems to be the primary influence on today’s pricing of the metals.

Two news items this morning are adding to the inflationary bias building in markets – sharply higher import prices and high tariffs proposed by the Trump administration. (Please see more detail, links below.) At the moment, the markets seem to be in a quandary over how to react to these developments which kind of snuck into the mix while attention was elsewhere.

Chart of the Day

Chart courtesy of TradingEconomics.com
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Gold sideways today despite price-positive developments

LATE REPORT

Gold tracked sideways within a $7 range today, but did  manage to finish near the top of that range at $1354. Silver had a similarly uneventful day. Neither a strong wholesale inflation number (6% annualized) nor the dollar’s continuing demise, particularly against the Japanese yen, got gold off the dime today. Perhaps the real reaction is waiting in the wings.  The Japanese yen, for its part, now threatens to crack the 106 per dollar mark – and that will surely draw attention if/when it occurs.

The Treasury Department released today the full-year 2017 TIC data on foreign buyers of U.S. sovereign debt  and it tells an interesting story. China has geared down its purchases since August of this year, but it still ended up the biggest buyer at almost $134 billion of the $357 billion placed overseas.   Japan,  though, which is the second largest holder of U.S. debt, was a net seller on the year – $41 billion in liquidations.  The question hanging over the U.S. Treasuries market is where the Treasury Department will go to place the huge flood of debt paper that will be created by the $1 trillion plus annual deficits projected for the future, particularly if Japan stays a net seller and China becomes one. Surprisingly, Saudi Arabia placed second taking up $44.6 billion. Ireland, where Apple’s money resides was third taking up $38.3 billion, and the UK placed fourth at almost $33 billion.

Quote of the Day
“I am not a great fan of this nomenclature [i.e., the greater fool theory] as it suggests a veneer of respectability that I find undeserved. To me  these are really better described as greater fool markets. They are cynical bubbles in that those buying the asset in question don’t really believe they are buying at fair price (or intrinsic value), but rather are buying because they want to sell to someone else at an even higher price before the bubble bursts. Chuck Prince, the former CEO of Citibank, aptly demonstrated the typical cynical bubble mentality when in July of 2007 he uttered those fateful words, ‘As long as the music is playing, you’ve got to get up and dance. We are still dancing.’” – James Montier, GMO Asset Allocation


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Gold steady so far this morning, producer prices post strong gain

EARLY REPORT

Gold is steady this morning after yesterday’s big run-up trading at $1354.00.  Silver is down a tad trading at $16.86 (-8¢). The Producer Price Index is out this morning and it posted a .4% gain for January adding credence to building inflationary concerns and validating yesterday’s retail inflation numbers.

Commodity prices in general are on the rise, particularly the energy complex and metals – precious and industrial, and those price increases are likely to factor into the pricing for manufactured goods as we move along through 2018.  Gasoline, for example, was a major factor in this morning producer price index number.

Chart of the DayChart note:  This Trading Economics chart on the GSCI Commodity Index shows a rising trend in commodity prices despite the most recent leg down.
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Gold vaults sharply higher on inflation, dollar concerns

LATE REPORT

Gold vaulted sharply higher today to finish on concerns about the strong .5% jump in the Consumer Price Index (6% annualized) and the subsequent steep drop in the dollar. Gold finished the day up $21 at $1350.50. Silver went along for the ride finishing up 25¢ on the day at $16.81.  Commodities across the boards registered gains again today with oil and metals leading the way.  The 10-year Treasury yield is now nudging against the 3% market at 2.90%.

A number of analysts were surprised at gold’s performance today in that the Fed might decide to get more aggressive on interest rates and that is rarely good for gold.  However, there are other concerns playing on investors’ minds. “What’s interesting to note about the recent stock market plunge,” says Cliff Droke at Seeking Alpha, “is that U.S. Treasuries weren’t the go-to safe haven among worried investors. Instead it was the old standby – the Japanese yen – and the yellow metal.”  That demand, global in nature, is pushing up prices.

For a more detailed look at the day’s events and what led up to them, we invite you to scroll below where you will find a wealth of information.

Quote of the Day
“When news comes out to justify interest rate hikes like CPI today, gold and stocks will (should) sell off. When (if) the rate hike actually comes.. Gold will be more likely to rally as the fed must lag inflation keeping real rates close to zero or negative to prop stocks. And the unintended consequences of Gold rallying as the Fed attempts to orchestrate an orderly low volatility type of descent in stocks will become obvious. Gold traders should consider selling Gold and stocks on the data. And buy Gold on the actual hike in rates. Welcome to the 1970s. ‘Buy the Dip’ is no longer exclusive to stocks. It may soon become Gold’s mantra.” – Vince Lanci, EchoBay


What you need to know before you buy your first ounce of gold
Some initial guidelines from one of America’s top gold experts

If you are new to the concept of gold ownership, you might be looking for a little guidance.  We, at USAGOLD, have been in the gold business for a good many years and the one thing that stands out to us in working with so many over the years is how often investors, for one reason or another, get off to a bad start.

That is why we developed a question and answer page many years ago that delves into the subject of GETTING OFF TO THE RIGHT START. We update it regularly as things can change rapidly in the gold and silver markets. The page is linked above and we recommend that newcomers spend the few minutes it takes to get through it. . . .

This page receives considerably high-ranking from Google on a number of important searches and we like to think it’s because of the cause it serves – providing some positive direction to investors trying to get off to a solid start in their pursuit of gold ownership.

If you would like to talk with a real, live gold expert about your needs,
try this phone number or drop us an e-mail:

1-800-869-5115
Extension #100

– or –

orderdesk@usagold.com

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Gold vaults higher on this morning’s CPI report, dollar craters

UPDATE………Gold is now spiking higher as the strong CPI number sinks in, up $17 at $1349.50.  Silver has also gained some momentum, up 18¢ at $16.80.  The inflation number came in far above expectations.  The big addition to the national debt over the past two days is also raising concerns (scroll immediately below for details).

The dollar index is in free fall. . . . .We will keep you updated.

EARLY REPORT

Gold dropped abruptly on the Consumer Price Index report of a .5% jump in inflation, then just as abruptly jumped higher – as traders attempted to read a meaning in the numbers. Gold is now trading at $1334, up $2.00 on the day.  Silver is up 3¢ at $16.64.  The stock market has been indecisive as well but trading down 128 at the moment. The dollar moved indecisively higher on the news.

A quick look at our Chart of the Day tells us that it is not the number itself that is affecting the markets this morning, but the context in which it is delivered.  At a 6% annualized rate today’s CPI number validates the higher inflation expectations that pushed stock markets sharply lower last week.  The developing trend above the 2% annualized figure the Federal Reserve has targeted will be troublesome for stocks, bonds and the dollar as well.  It will be interesting to see how this all plays out over the course of the day.

Chart of the Day

 

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Gold up respectably today, much in abeyance waiting for tomorrow’s CPI report

LATE REPORT

Gold closed up $7 today on the FOREX at $1329.50 on a sharp break in the dollar  index. The upside move started in Asia as the yen moved higher, lost momentum in Europe, then reasserted itself during the U.S. session. Silver had a quiet, sideways day. All seemed to be in abeyance awaiting tomorrow’s CPI report with much speculation about what is likely to be reported and how it will affect various assets.

Barron’s Avi Salzman captured the spirit of the day when he wrote: “The release of tables showing the changes in the prices of mundane items like tires and cheese will be watched on Wednesday with the same intensity as if it were the fourth quarter of the Super Bowl. Investors want to know if inflation is really back, or if the fear of rising prices is over-hyped. Trillions of dollars in stock and bond market value could hang on the difference of a few tenths of a percentage point.” Even if you knew the CPI number ahead of time, it would be difficult to place a sure bet on how gold would likely react. I guess we’ll find out tomorrow following the 8:30AM ET tip-off.

Quote of the Day
“I‘m concerned that our increasing fractious political process, particularly with respect to federal spending, is threatening our ability to properly defend our nation, both in the short term and especially in the long term. . .The failure to address our long-term fiscal situation has increased the national debt to over $20 trillion and growing. I would urge all of us to address this challenge.” – Dan Coats, Director of National Intelligence


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Gold pushing higher today on dollar weakness

EARLY REPORT

Gold is pushing higher in early trading, up $6.00 at $1329.00.  Silver is sideways this morning at $16.57.  Gold turned to the upside in Asia overnight in concert with a stronger yen and weakness in the Tokyo stock market, came off a bit in London trading and then swung sharply higher at the New York open. Overall dollar weakness underlies gold’s upside bias this morning.  The Dollar Index is off a little over one-half per cent as we go to fetch this report to the server and back below the 90 mark.

The most interesting news to surface this morning came from Bank of America Merrill Lynch – a survey showing that fund managers have cut their bond portfolio allocations to their lowest level in 20 years.  This comes at a time when sovereign states – in particular China and Japan – have also cut bond purchases to the bone, while the U.S. government has launched a spending spree that will push deficits over the $1 trillion mark.  One wonders where the financing is going to come from in future years and how all of this is going to affect the bond market and interest rates.

Chart of the Day

Chart note:  With inflation concerns and expectations on the rise, I thought posting the gold-inflation adjusted chart a worthy enterprise. Its most helpful feature is that it shows us where the price of gold would have to go in order to match performance levels of the past once currency depreciation is taken into account. Most gold holders are interested in what the inflation-adjusted price of gold would need to be to match the 1979-1980 nominal high just under $900 per ounce.  The answer, as you can see, is about $2200 per ounce.  We should keep two things in mind when contemplating those numbers.  First, gold anticipates inflation, as it did in the 1970s run-up, so the $2200 number is by no means a ceiling.  Second, this chart is based on the Consumer Price Index measure of inflation which many analysts believe to be flawed and understated.
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Gold up today on commodity strength across the spectrum

LATE REPORT

Gold ended higher today up $6.50 at $1322.50 pushed by rising commodity prices across the spectrum and some dollar weakness.  Silver also finished higher up 20¢ at $16.53. President Trump today announced an escalation of the trade wars with various (mostly Asian) countries by promising of a “reciprocal  tax” on their exports to the United States.

The markets in the days and weeks ahead will need to sort out how the burgeoning trade wars are going to affect the value of the dollar and the market for U.S. sovereign debt.  So, whereas the stock and bond market rose today for reasons no one could readily quantify, there are these looming trade, currency and debt problems that are quietly intensifying in the background and don’t seem to want to go away. Volatility was pushed to the background today, but possibly not for long. . . . . . .

Quote of the Day
“My job is not picking the top. My job has always been risk mitigation. Picking crashes is impossible… timing crashes is impossible. If you require a forecast in order for your investment thesis to do well, then I think you’re doing it wrong.” – Marc Spitznagel, Universa Investments


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 • The rationale for gold ownership • How gold performs under various breakdown scenarios • Portfolio approaches • & More

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Gold up modestly in quiet early trading

EARLY REPORT

Gold is attempting to get its legs underneath it this morning with little in the way of news to influence the price in the early going.  Gold is up a moderate $4 at $1320 in quiet trading.  Silver is up 12¢ at $16.47.  Commodity prices are pushing higher and that could help the precious metals as the day moves along. The U.S. Labor Department will report on January’s consumer prices on Wednesday and producer prices on Thursday. The market will be watching to see if the trends established in December’s CPI report (a 3.6% annualized rate) carried through to January’s numbers.

Stocks are in recovery mode this morning – at least so far. In this morning’s Financial Times, Bridgewater’s Bob Prince warned of “more volatility as we are entering a new macroeconomic environment.” Goldman Sachs’ Brian Levine issued a similar warning at the end of last week saying that he believes there has been an important sentiment shift – “a regime change one where you sell-the-rallies rather than buy-the dips.”

Chart of the Day


Chart note:  Gold’s performance since 2000 illustrates its potential as an investment for the times.  After 12 straight years of positive returns (2001-2012), we had one sideways year (2014) sandwiched between two years of declines (2013 & 2015).  Over the last two years (2016-2017), gold has once again delivered positive returns – a performance many gold market analysts view as a harbinger of things to come.  If you are looking for an overview of gold’s past history, we offer a page in conjunction with the St. Louis Federal Reserve you might find interesting: Gold trends and indicators in chart form.   We welcome your visit.
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According to the Fed’s other inflation measure, inflation’s at an 11-year high

Mises Institute/Ryan McMaken/2-8-2018

“According to the Federal Reserve’s Underlying Inflation Gauge, the 12-month inflation growth in December was at 2.98 percent. That’s the highest rate recorded in 136 months, or about 11 years. The last time the UIG measure was as high was in September 2006, when it was at 3 percent.”

MK note:  The Underlying Inflation Gauge (UIG) is Under Wraps (UW). And the free market unsurprisingly is pushing 10-year Treasury yield toward that number. . .

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Meticulous care must be taken in monetary policy to settle markets

The Yomuiri Shimbun/2-10-2018

“Given the latest fluctuations in stock prices, speculation has emerged on the market that interest rate hikes will be postponed. There is also a view that if rate hikes are delayed amid brisk business, it will increase concern about steep rises in interest rates later on. In any case, it is essential for Powell to explain his policy plans meticulously in his testimony to Congress scheduled for late this month.

The stock market crash of 1987, known as Black Monday, happened shortly after Alan Greenspan assumed the post of Fed chairman. A change in heads of central banks could lead to destabilizing the stock and financial markets. The term of the Bank of Japan’s governor, Haruhiko Kuroda, will expire in April. To realize a smooth transfer to the term of a new central bank governor, it is imperative for the monetary authority to have interactions with markets on such matters as the future course of massive monetary easing.

MK note:  This Japanese newspaper makes not the slightest attempt to hide its sincere desire for the Bank of Japan and, we note, the U.S. Federal Reserve as well, to keep the monetary spigots open. Note the strategic use of the adjective “massive”. . . . .

 

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The reason why gold hasn’t rallied as stocks sold off

LATE REPORT

Gold was down marginally today losing $2.50 to finish at $1332.75.  It finished a harrowing week down $16.75 after all was said and done – not bad considering the carnage found elsewhere in financial markets. Silver was down marginally today as well losing 6¢ to finish at $16.39. It was the second straight down week for both metals.

Under the headline There’s a good reason why gold hasn’t rallied as stocks sold off, Bloomberg addresses a question on many investors’ minds.  “One possible reason,” it reports, “is that ETF investors might be selling gold to offset their stock-market losses, according to a note by Commerzbank AG analysts including Eugen Weinberg. It’s not the first time gold has struggled during the acute phase of a sell-off – the metal also fell during the 2008 crash, probably as investors scurried to cover margin calls. Yet bullion’s haven appeal is evident in its out-performance on a relative basis, turning higher in later phases of a downturn while all else continues to slide.”

Those ETF investors are big-stake players – institutions and funds who took positions in the gold market in the event that something like what has happened in the stock market over the past two weeks actually took place.  In other words, they bought gold as a hedge.  Now they are quietly using the metal, as intended, to cover losses in other areas of their portfolios – another example of gold fulfilling its advertised role as a safe haven.

Quote of the Day
“There is no means of avoiding the final collapse of a boom brought about by [circulation-] credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises


New to the idea of including gold in your investment portfolio?
If so, you might have questions.

This page is for you.

What you need to know before you buy your first ounce of gold
Some initial guidelines from one of America’s top gold experts

If you are new to the concept of gold ownership, you might be looking for a little guidance. We, at USAGOLD, have been in the gold business for a good many years and the one thing that stands out to us in working with so many over the years is how often investors, for one reason or another, get off to a bad start.

That is why we developed a question and answer page many years ago that delves into the subject of GETTING OFF TO THE RIGHT START. We update it regularly as things can change rapidly in the gold and silver markets. The page is linked above and we recommend that newcomers spend the few minutes it takes to get through it. . . .

This page receives considerably high-ranking from Google on a number of important searches and we like to think it’s because of the cause it serves – providing some positive direction to investors trying to get off to a solid start in their pursuit of gold ownership.

If you would like to talk with a real, live gold expert about your needs,
try this phone number or drop us an e-mail:

1-800-869-5115
Extension #100

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orderdesk@usagold.com

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Gold down marginally, Moody’s fires shot across U.S. federal government’s bow

EARLY REPORT

Gold is down marginally today trading at $1314 (- $4.50) in a continuation of the same weakening trend established over the past two weeks.  Silver is down 12¢ at $16.27.  The markets seem to have quieted down a bit from the tumult of the past several days with the Dow up about 170, the 10-year Treasury yield level, and the dollar pretty much running sideways.  With market volatility running at high levels, though, and the weekend coming up, the calm could be easily broken at the slightest provocation.

Moody’s, the bond rating service, did not react all that favorably to the budget resolution Congress passed last night which will add $300 billion to annual deficits over the next two years. “Moody’s,” it says in press release this  morning, “has already indicated that rising entitlement costs and rising interest rates will cause the US’s fiscal position to further erode over the next decade, absent measures to reduce those costs or to raise additional revenues. The recently-agreed tax reform will exacerbate and bring forward those pressures. Moody’s current baseline forecast is that the sovereign balance sheet will continue to weaken over the coming decade. Absent corrective fiscal measures, the US’s Aaa rating will rely increasingly on its unparalleled economic base and the central role it plays in the global financial system.”

In other words, “Be forewarned. If the economy goes south, the dollar deteriorates or interest rates drive up carrying costs, we might be forced to hit you with a downgrade.”  Once digested, the implications of Moody’s shot across the bow could affect the markets today.

Chart of the Day

Chart note:  Above you see what might be at the heart of Moody’s concerns – interest payments on the national debt.  As we pointed out in “The National Debt and Gold” (part of our SafeHaven Introductory Information Packet), “If the ten-year Treasury bill were to rise to 2.82% (the average since 2007), the implied interest payment would exceed $750 billion, 20% more than what the United States spends annually on the national defense.”  Today, the yield on the 10-year U.S. Treasury is 2.83% and threatening to go higher.
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Gold hangs in there as chaos reigns

LATE REPORT

Gold hung in there today finishing the day pretty much at yesterday’s closing number – $1318.  Silver finished up 5¢ on the day at $16.39.

Gold did well to hold its own with the high level of chaos unfolding around it:

• the DJIA down over 1000

• the 10-year inching toward 2.9%

• The VIX spiking radically from 25 to almost 36

• CNN Money’s Fear and Greed Index suddenly swinging from an extreme Greed reading of 75 (out of 100) to an extreme Fear reading of 16 in less than a month

It all happened very fast.

Quote of the Day
“The real culprit behind today’s decline is the same miscreant that’s weighed us down for the last couple of days: the unspooling of these obscure products that allowed … idiotic money managers and neophyte investors to bet against what’s known as volatility. . .Now they’re all imploding. I swear, some of these dopes never learn. The current situation is like a similar version of what happened in 2008 after hedge funds levered up — borrowed money — to bet on mortgage-backed bonds.” – Jim Cramer, CNBC


Recent BBB client review
(One of 38 five star reviews published at the BBB website)

“In June, 2009, I decided to make gold ownership an essential part of my investment portfolio. Based on the recommendation of financial professionals, and because I liked that they had been in business for so long, I contacted USAGOLD. After a thorough review of my financial goals and budget constraints, they provided me with a comprehensive set of suggestions as to which gold coins, and what quantities, I should consider. That advice perfectly addressed my investment needs and I have been a customer ever since. Over my years with USAGOLD, I have completed several transactions, both buying and selling gold. Each one was handled with the highest integrity, and the advice I received was always reliable, based on their extensive awareness of current and projected market conditions for gold. I recommend them without reservation. Do not make a decision regarding gold ownership without contacting them.” – Jack D.

If the market madness of the past several days has you thinking you might need to hedge your portfolio with gold and silver, we invite to get in touch with us.  We will provide the same kind of pricing and service that has made Jack D. a long-time client and friend of the firm.

1-800-869-5115
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Gold down a bit but seems to be laying the groundwork for a recovery

EARLY REPORT

Gold is down $3 in early trading at $1315 though it does seem to be laying the groundwork for something of a recovery.  Silver is similarly disposed only trading on the upside – up 4¢ at $16.38.  Gold found support in European trading at the $1308 mark.  The Dow Jones Industrial Average is headed once again in a southerly direction in early trading, down 390 as this written, but dropping precipitously.

Congress managed to piece together a compromise on the budget yesterday – a two year arrangement that will add $300 billion to the deficit annually. Reuters reports a senior aide saying that the budget increases “would not be offset by any spending cuts or new tax revenue, meaning an increase in the federal deficit.”

In our Chart of the Day, we illustrate how that will look on the already unsettling additions to the national debt we have experienced since the 2007-2008 financial crisis.  Fiscal conservatives, as has been the case in the wake of more budget battles than we care to contemplate, were shunted to the sidelines. Congress  meanwhile unapologetically satisfied the bipartisan predisposition to spend beyond the government’s means.  We wouldn’t even bother with a comment on the politics involved if not for the direct impact it will have on the dollar, the bond market, imports, exports, and the economy in general – items central to every gold owner’s frame of reference.

Chart of the Day

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Gold continues trek to downside on dollar strength

LATE REPORT

Gold tracked lower the remainder of the day today and ended up down $5.73 at $1318.25.  Silver also tracked lower all day finishing down 28¢ at $16.34.  As suggested in today’s EARLY REPORT the greatest influence on the pricing of both metals was the dollar’s strength.

A weakly bid Treasury auction aided the dollar’s rise as the 10-year yield returned to the 2.81% level – the level, as reported below, that incited the stock market sell-off over the past several days.  As we go to fetch this report over to the server, Dow Jones futures are trading 257 points under today’s close.  Obviously, the selling has not run its course.

To get a fuller picture of today’s events, we suggest scrolling through the day’s post and, if you haven’t done it already, reading this morning EARLY REPORT and last night’s LATE REPORT.

••• Tonight’s Quote of the Day is dedicated to Congress which found compromise on the federal government’s budget with only one small problem: It will add another $300 billion to the national debt annually.  Stay tuned. . . . .More on this subject tomorrow . . . . .

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 – Historian


What you need to know before you buy your first ounce of gold
Some initial guidelines from one of America’s top gold experts

If you are new to the concept of gold ownership, you might be looking for a little guidance.  We, at USAGOLD, have been in the gold business for a good many years and the one thing that stands out to us in working with so many over the years is how often investors, for one reason or another, get off to a bad start.

That is why we developed a question and answer page many years ago that delves into the subject of GETTING OFF TO THE RIGHT START. We update it regularly as things can change rapidly in the gold and silver markets. The page is linked above and we recommend that newcomers spend the few minutes it takes to get through it. . . .

This page receives considerably high-ranking from Google on a number of important searches and we like to think it’s because of the cause it serves – providing some positive direction to investors trying to get off to a solid start in their pursuit of gold ownership.

If you would like to talk with a real, live gold expert about your needs,
try this phone number or drop us an e-mail:

1-800-869-5115
Extension #100

orderdesk@usagold.com

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Gold down on dollar’s strength

Gold is down $4.50 this morning at $1322.50 as it continues to buck headwinds driven by a stronger dollar, as shown in our first Chart of the Day. Silver is also having an off-day, down 23¢ at $16.45.  The dollar index’ push higher has coincided with gold’s downside since the beginning of February and probably a bigger factor in gold’s pricing than the turmoil in the stock market.

“Gold isn’t guaranteed to rise when equities fall. Indeed, it may drop amid a severe crash if fund managers sell to cover losses on other assets,” said Adrian Ash, director of research at BullionVault told MarketWatch, “But that is part of gold’s role as insurance, because it offers a deep and uniquely liquid market of diverse buyers, from microchip makers to Chinese households celebrating New Year as well as investors,” he said.

Our second Chart of the Day buttresses Adrian Ash’s comments.  It shows the currently dominant trend for both the dollar and gold.  If the markets provide an interim buying opportunity, there are those – based upon their understanding of the underlying fundamentals – who will take advantage of it.

Chart of the Day (1)

Chart of the Day (2)

Charts courtesy of tradingeconomics.com
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Gold runs into headwinds today

LATE REPORT

It was rough going for gold today fighting headwinds most of the day and finishing down $15.30 at $1324.  Silver also traded lower – down 8¢ at $16.62.

Gold traders on the Comex, where the price is determined on a daily basis, seem to be a bit bewildered by the wild trading in the stock market (as are we all) and cautiously waiting on the sidelines for a sign that the worst might be over – or not over, whatever the case might be. Probably the most troubling analysis to surface during the course of the day was speculation that arcane, little-known volatility index derivatives might be at the heart of the stock market sell-off – a reminder of the mortgage-based derivatives that nearly brought down the house in 2007-2008.

The legendary investor, Carl Icahn, was interviewed on CNBC this morning and delivered probably the most interesting opinion for the day.  “There is going to be a major, major, major correction. . .I do think the market will bounce back but these are the rumblings before the earthquake.  The market is telling you something. . .it is telling you it’s very dangerous. . .it’s way over leveraged.”

Icahn’s warning brings to mind the quote from John Kenneth Galbraith posted last night.  We think so much of it, that we are posting it again tonight.

Quote of the Day
“A common feature of all these earlier troubles was that, having happened, they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. (Not only were a record 12,894,650 shares sold on 24 October; precisely the same number were bought.) The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.” – John Kenneth Galbraith, The Great Crash: 1929


USAGOLD’s Online Order Desk

If you haven’t visited our new Online Order Desk as yet, we invite you to take a test drive. We have been surprised by its instantaneous popularity and the number of clients who have already placed their first order. One of its most useful features is that you can order anytime day or night and on weekends. With prices down some this evening, it might be a good time to put in your first order. The state of the art system updates prices continuously, and we have a good selection of items available typical of most safe-haven precious portfolios. We invite your visit and your participation.

Great prices. Quick delivery. All the time.
Modern gold and silver bullion coins and bars
Historic fractional gold coins
Historic U.S. gold coins

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Gold gives up yesterday’s gain then some, but the day is young

EARLY REPORT

Gold is giving up what it gained yesterday and then some in early trading today.  It is down $11.50 at $1329.20.  Silver has given up 13¢ on the day and is trading at $16.67. That said, the day is young and anything can happen as volatile as the financial markets have been the past two sessions, also taking into account the impressive volumes at play in nearly all markets.

Both metals’ performances are heavily influenced by a strong acceleration in the dollar index, and we will be keeping a close eye on it as the day progresses.  It seems that the weakness in overseas stock markets is having a negative effect on the currencies making the dollar an inadvertent, perhaps even reluctant (from the Trump administration’s perspective) beneficiary. The DJIA is on a wild ride today – up about 360 points on the open, then reversing to down over 85 as this report is sent over to the server.  Overnight, it was down more than 850. What happens there is likely to figure into market pricing on most other assets, including gold.  As I said. . .the day is young.

For a more thorough understanding of the complexities driving these markets, we invite you to scroll and read. . . . .

Chart of the Day

Chart note:  Gold trading volumes have been massive over the past five trading days with the bulls in the ascendancy yesterday, and the bears thus far today.  Volume yesterday was over 43 million ounces, or 1337 metric tonnes. – some big numbers – and it is approaching that level again today, the seventh straight day of ramped up volumes.
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Gold holds own, finishes on up note after disastrous day on Wall Street

LATE REPORT

Gold finished today on a high note, up $6.50 at $1339.30 after trying to make up it mind on direction during and after the disastrous 1275 point collapse in the Dow Jones Industrial Average – the worst single-day point drop in its history. Silver had a similarly indecisive day finishing up 12¢ at $16.69 after being up sharply at the beginning of the day’s trading.

For the time being at least, it looks like gold is gaining some separation from the Dow psychologically after seeming similarly disposed to the downside in Friday’s trading. That is a good thing, i.e., the seemingly rational thing after a day like today.  Investors are likely to chalk that up in the PLUS column in the days ahead – and we hope that it sticks. (It should.)

For some interesting insights we refer you to the in-depth analysis released today and now getting quite a bit of play in gold circles on the world wide web – Gold takes center stage in the dollar scare.   A bit further down the page, this morning’s EARLY REPORT is also worth a look.

Newcomers might be well-served to venture through the past few days of posts here at our online daily newsletter – a good many germane to the events of the day. . . . . .

Quote of the Day (Particularly appropriate today)
“A common feature of all these earlier troubles was that, having happened, they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. (Not only were a record 12,894,650 shares sold on 24 October; precisely the same number were bought.) The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.” – John Kenneth Galbraith, The Great Crash: 1929


What you need to know before you buy your first ounce of gold
Some initial guidelines from one of America’s top gold experts

If you are new to the concept of gold ownership, you might be looking for a little guidance.  We, at USAGOLD, have been in the gold business for a good many years and the one thing that stands out to us in working with so many over the years is how often investors, for one reason or another, get off to a bad start.

That is why we developed a question and answer page many years ago that delves into the subject of GETTING OFF TO THE RIGHT START. We update it regularly as things can change rapidly in the gold and silver markets. The page is linked above and we recommend that newcomers spend the few minutes it takes to get through it. . . .

This page receives considerably high-ranking from Google on a number of important searches and we like to think it’s because of the cause it serves – providing some positive direction to investors trying to get off to a solid start in their pursuit of gold ownership.

If you would like to talk with a real, live gold expert about your needs,
try this phone number or drop us an e-mail:

1-800-869-5115
Extension #100

orderdesk@usagold.com

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Update 1987 redux. . .

MK note:  Jerome Powell’s first day on the job and the Dow Jones Industrial Average closes down 1175.  Can you imagine?  Has to be one of the rudest greetings for a Fed chairman in U.S. financial history.

>>> Please scroll below until you run into the photo of Mr. Powell and read. . .posted yesterday morning on the possibility of a 1987 replay.

“Have you ever seen in some wood, on a sunny quiet day, a cloud of flying midges — thousands of them — hovering, apparently motionless, in a sunbeam? …Yes? …Well, did you ever see the whole flight — each mite apparently preserving its distance from all others — suddenly move, say three feet, to one side or the other? Well, what made them do that? A breeze? I said a quiet day. But try to recall — did you ever see them move directly back again in the same unison? Well, what made them do that? Great human mass movements are slower of inception but much more effective.” – Bernard Baruch, early 20th century market speculator

Chart courtesy of tradingeconomics.com
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Gold regains its footing, silver up sharply

EARLY REPORT

Gold has regained its footing in early trading today, up $4 at $1337.00.  Silver is trading sharply higher – up 31¢ at $16.88. Gold and silver are getting a residual, though modest, boost from the stock market routs in Asian and Europe overnight and early New York trading.  The dollar is steady to down this morning, but inflation concerns weigh heavily on both the forex and bond markets.

Not getting much attention thus far is the report released this morning by Standard & Poor’s warning of the debt default danger among highly leveraged corporations.  (See immediately below.)  Zoom out from all the noise and obvious concern this morning among professional traders and you get a sense that the financial markets have crossed a psychological line of which the general public is only casually aware.

Please scroll to get a fuller picture of what is influencing markets this morning.

Chart of the Day

Chart note:  We thought that now with the rumblings in the stock market, it would be a good time to post the chart you see above from MacroTrends. It  shows how many ounces of gold it would take to buy the Dow Jones Industrial Average from 1915 to present.  At present, after Friday’s 665 point drop, it takes 19 ounces of gold to buy the Dow.  In 2000, it took over 40 ounces before the ensuing correction and the launch of gold’s secular bull market.  In 1979, the bottom shown on the chart, the ratio was near one to one. The chart suggests that gold is undervalued compared to the Dow Jones Industrial Average and that at some point the values will cross. The question then becomes: “Where and when will that happen?” – a question that opens the door to all sorts of possibilities.
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