Financial Times/George Parker/3-19-2019
“Theresa May has told her cabinet that Britain is facing a ‘crisis’ after Commons Speaker John Bercow made it even harder for her to pass her Brexit deal through parliament.”
USAGOLD note: Some experts believe that Bercow’s roadblock to a new vote on Brexit could lead to no Brexit. Others believe it is the road to a longer extension for negotiations. The markets, in our view, are not giving this development the weight it deserves. The UK remains on razor’s edge – a nation at odds with itself, in crisis as Theresa May points out, and with no signs of a Churchill emerging to show the way.
Bloomberg/Daniella Martina Booth
“When ’60 Minutes’ reporter Scott Pelley asked Bernanke if the Fed was printing money, his reply was, ‘Well, effectively. And we need to do that, because our economy is very weak, and inflation is very low. When the economy begins to recover, that will be the time that we need to unwind those programs, raise interest rates, reduce the money supply, and make sure that we have a recovery that does not involve inflation.’”
USAGOLD note: A frank admission on the part of the Fed chairman we thought worth passing along for your consideration. Central bankers always believe they can control the inflation they create. Sometimes they can. Sometimes they can’t and that is why investors buy gold and silver.
Repost from 3-12-2019
Bloomberg/Catarina Saraiva, Jana Randow and Paul Gordon/2-28-2019
“The appointment will be part of government horse-trading over several top EU positions, focusing on nationality and gender as well as expertise. Draghi’s tenure was defined by unprecedented stimulus and his pledge to do ‘whatever it takes’ to preserve the euro. The Italian’s successor will inherit a plan to gradually unwind those measures and rebuild the buffers before the next downturn.”
USAGOLD note: We’ll see how that works out. Nothing in EU politics is without complications. The next ECB president’s tenure might be among the most challenging in its short history with Brexit and the situation in Italy leading the list. Finland’s Erkki Liikanen is the current favorite to take over for Mario Draghi. He is generally considered to be a monetary policy hawk.
Repost from 3-1-2019
South China Morning Post/Teddy Ng/3-15-2019
“Xinhua reported that Chinese Vice-Premier Liu He held a telephone conversation with US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin on Thursday. ‘The two sides have further made concrete progress on the text of the trade agreement between the two sides,’ the report said, without giving further details.”
USAGOLD note: This is the article referenced in this morning DMR.
“Stocks have barnstormed their way into 2019, but investors may soon enter a ‘show me the money’ phase as they contemplate a slowing U.S. economy and a pending plan from the Federal Reserve to bring its liquidity tightening to an end.”
USAGOLD note: We might get a better reading on the Fed’s plan after the March 19-20 FOMC meeting, but then again we might get another less than a concrete statement of intent.
Financial Times/Gideon Rachman
“Two questions come up repeatedly in the corridors of the World Economic Forum in Davos. First, what is going to happen in the US-China trade war? Second, what is going to happen with Brexit?” [Both come up in March.]
Also, please see:
The Guardian view on Davos: elites without answers/The Guardian/Editorial/1-23-2019
How many private jets are going to Davos in 2019?/WorldEconomicForum [Blog]/Oliver Cann/1-23-2019
USAGOLD note (3-14-2019) – Beware the Ides of March. . . . . . . . .
Image by Flyout [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0/)], via Wikimedia Commons / Davos panorama
How Much/March 2019
Click to enlarge
“The U.S. economy hit $20.5 trillion in GDP in 2018,” says HowMuch. “What does this number actually mean? Well, GDP stands for “gross domestic product”, or, the total value of goods and services produced by a country in any given year. This means the U.S. produced $20.5 trillion in goods and services over 2018. This is an impressive number in and of itself, seeing as total GDP for the entire world was about $80 trillion in 2017. Yet, what might be more impressive is breaking down GDP by each individual state, and then measuring each state against a foreign nation to see how each state fares in size. What the results show is nothing less than astounding.”
Chart and commentary courtesy of HowMuch.net, March 2019
“However, Colombia reported purchases of 5.4t in January, having last added to reserves in February 2018 at a more modest pace of just over 1ton. Standard Chartered expects Central-bank gold buying to remain intact this year.”
Reuters/Beijing Monitoring Desk
“The value of China’s gold reserves rose slightly to $79.498 billion in February from $79.319 billion at the end of January, as the central bank increased the total amount of gold reserves to 60.260 million fine troy ounces from 59.940 million troy ounces.”
USAGOLD note: That number equates to the amount China reported as an addition to its gold reserves. It just so happens to be the amount reported last month as well.
Repost from 3-7-2019
“U.S. wholesale prices barely increased last month after falling for three straight months, a sign there is little inflation pressure in the economy. The Labor Department says the producer price index — which measures price changes before they reach the consumer — rose 0.1 percent in February. It slipped 0.1 percent in January.”
USAGOLD note: In this counterintuitive environment for gold, when those things that would have driven it lower now drive it higher and vice versa, reports showing that inflation remains tame register as a positive. Go figure. . . .
World Gold Council/March 2019
“Gross purchases of 48 tonnes (t) and gross sales of 13t led to global gold reserves rising by 35 tonnes on a net basis in January, with sizeable increases from 9 central banks. This is the largest January increase in gold reserves in our records (back to 2002) and illustrates the recent strength in gold accumulation. Demand was concentrated amongst emerging market central banks with diversification the key driver in the face of ongoing geopolitical and economic uncertainty.”
Chart courtesty of the World Gold Council/GoldHub
“China has gone to great lengths to support its currency and would not devalue the renminbi to spur exports or combat trade frictions, the governor of the central bank said Sunday.”
USAGOLD note: The chart shows mixed success if the PBoC’s policy has been to support the yuan against the dollar. Since 2008 the yuan is up about 14.5%. From the late 2013 high point, it is down 10%. Over the past twelve months of the trade war (second chart), it is down almost 6.5%. The PBoC, though, might be swimming against the current these days with speculators apparently betting on the dollar in the on-going trade war.
“Federal Reserve Chairman Jerome Powell says political attacks by President Donald Trump played no role in the Fed’s decision in January to signal that it planned to take a pause in hiking interest rates. He also said in an interview broadcast Sunday that he can’t be fired by the president and that he intends to serve out his full four-year term.”
USAGOLD note: Nothing to see here. Just a coincidence. . . . . And then the Fed chairman went on to confirm for 60-Minutes a very dovish stance outlined in bits and pieces over the past few months.
“’I think a lot of the underwriting of that debt is weak. I think investors hold it in packages like the subprime packages … the same thing has happened. It’s called CLOs, or collateralized loan obligations,’ she added.”
USAGOLD note: Sounds ominous. . . . .Former Fed chair Yellen warns the situation could lead to “lots of bankruptcies in the non-financial corporate sector.” Few outside Wall Street ever even heard of CLOs. Now CNBC says the CLO problem could “spook” investors who recall the origins of the last crisis. With these revelations from Janet Yellen, the quiet problem of corporate debt will move to center stage.
Repost from 12-11-2018
“Belgium’s customs authority is advising companies that export to the UK to halt shipments after Brexit day to avoid customs chaos in the event of a no-deal scenario. Kristian Vanderwaeren, chief executive of Belgian customs, called for a ‘Brexitpauze’ after 29 March and said firms should do as much of their exporting as they can before new controls have to come in.”
USAGOLD note: One of the first tangible signs we have seen of Brexit reality. . . . . .
Image by Furfur [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)]
Financial Times/Delphine Strauss/3-8-2019
“The world’s leading central banks were heading for the exit from crisis-era stimulus policies as recently as December. But in just a few weeks, global monetary policy has gone into reverse, with the Federal Reserve putting rate rises on hold and peers — from the Bank of England to the Reserve Bank of Australia — following its dovish lead.”
USAGOLD note: The sudden shift among central banks in less than a couple of months time is still being digested by the financial markets. The events at the end of last week, though, seemed to incite a call to action among investors that included a move to precious metals. Gold and silver responded with strong advances to the upside.
“‘I want a strong dollar but I want a dollar that does great for our country, not a dollar that’s so strong that it makes it prohibitive for us to do business with other nations and take their business,’ Trump said. He didn’t mention Powell by name, but referenced ‘a gentleman that likes raising interest rates in the Fed, we have a gentleman that loves quantitative tightening in the Fed, we have a gentlemen that likes a very strong dollar in the Fed.'”
USAGOLD note: Just when you get around to thinking that the Fed is doing the President’s bidding, the president says it’s not so – not by a long shot.
Repost from 3-2-2019
Bloomberg/Evgenia Pismennaya and Anna Andrianova
“Kyrgyzstan hopes to have half of reserves invested in bullion. ‘Rules of the game are changing,’ central bank governor says What do you do when your two biggest trading partners are embroiled in economic standoffs with the U.S.? You buy as much gold as you possibly can.”
USAGOLD note: Kyrgyzstan’s reasoning resurrects Nobel economist Robert Mundell’s advice to the European Union at the time of the euro’s launch to keep a strong gold reserve as a hedge against currency vulnerabilities. One would have to think that other nation states similarly positioned will diversify with gold if the trade wars become more entrenched and lingers for any length of time. Currency stability will likely become an issue.
Repost from 6-20-2019
“U.S. Mint spokesman Michael White released the following statement Feb. 21: ‘Market fluctuations have resulted in a temporary sellout of 2018 and 2019 silver bullion. Production at the Mint’s West Point facility continues, and when sales resume, silver bullion will be offered under allocation. The Mint is working closely with its suppliers in order to meet the demand of its authorized purchasers.’”
USAGOLD note: Posted sales for February are 2,157,500 one-ounce American Silver Eagles after 4,017,500 in sales for January. The combined months surpass the first two months of 2018 by a substantial margin and indicate rising interest among investors. As of this morning, USAGOLD has ample supply and our pricing has not yet been affected. That, though, is subject to change without notice. In the past instances of mint suspensions and allocation programs, premiums have moved higher – sometimes overnight and without any prior warning.
We invite you to order at our Online Order Desk or call (1-800-869-5115)
Repost from 2-26-2019
“Italy is preparing to become the first G7 country to formally endorse China’s controversial Belt and Road global investment drive, in a move that has drawn a sharp response from the White House and causing alarm in Brussels.”
USAGOLD note: For those who think China’s controversial commercial outreach is restricted to the Far East only. As Financial Times points out, Italy’s initiative with China will create waves in both Brussels and Washington.
The Street/Kevin Curran/3-6-2019
“But [NewYork Fed president John Williams] added that the macro data making Fed decisions difficult right now include slowdowns in Europe and China that can hamper demand for U.S. exports. He also cited the uncertainty of Brexit and ongoing trade negotiations between America and its trading partners. Williams also cited a potentially slowing U.S. economy as a reason for the Fed to show patience on rate hikes.”
USAGOLD note: The markets might interpret these remarks in a speech by Williams today at the Economic Club of New York as suggesting a halt in rate hikes rather than a flexible stance.
“Investors are pulling cash from the world’s largest gold exchange-traded fund at the fastest pace in more than a year as easing trade tensions push buyers out of safe-haven assets, said commodities brokerage SP Angel.”
USAGOLD note: In last Saturday’s special update, we alluded to this probability as part of a “broader liquidation” accelerating gold’s downside last Friday. Trend followers pile into the market on seemingly slight provocation and pile back out just as readily – all part of the process of gold moving from weak to strong hands.
“Bank of Italy’s Governor Ignazio Visco said on Monday the country’s reserves of gold belonged to the central bank and could not be used to fund government spending.”
USAGOLD note: Here we are again witnessing an argument among principal players over the sovereign nature of a barbarous relic that has no relevance in the modern monetary system [sigh. . .]
Image courtesy of © Degussa Goldhandl 2019
Quartz India/Nupur Anand/2-22-2019
“The biggest Indian wedding season isn’t as glittery this year. For gold prices are off the charts, fuelled by gathering clouds of economic turmoil across the world.”
USAGOLD note: Gold prices are up in India because its currency, the rupee, is weakening in global markets (See chart below) – a trend, we would assume, that many in India believe could worsen. Though this article is pessimistic about demand, sometimes demand can hold steady or increase despite higher prices in times when the citizenry sees the currency as weakening further. Too, the rise over the past year is about 9%. Is that really enough to put a serious damper on wedding sales? It will be interesting to see how the season actually turns out this year.
Chart courtesy of bullionrates.com
Repost from 2-29-7-2019
“Talk to Wall Streeters about Modern Monetary Theory and they tell you Jerome Powell was right: The manifesto for free-spending governments is a terrible idea -– and if it’s ever implemented, America can expect a nightmarish financial future. But right now, the $15.6 trillion U.S. Treasury market seems to be as relaxed about budget red ink in practice as the MMTers are in principle.”
USAGOLD note: Until it jumps up to bite. . . .One recalls the comment from Citigroup chief executive Chuck Prince in 2007: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” Wall Street always dances until it can dance no more. Then it politely requests a bailout.
SeekingAlpha/Mark J. Perry/3-3-2019
“It’s pretty difficult to even comprehend how ridiculously large the US economy is, and the map above helps put America’s Gross Domestic Product (GDP) of $20.5 trillion ($20,500,000,000,000) in 2018 into perspective by comparing the economic size (GDP) of individual US states to the entire national output of other countries.”
USAGOLD note: Revealing article that has little to do with the price of gold. . . . .
“No one has a view, and everyone is positioned accordingly.”
Financial Times/Robin Wigglesworth
“This may seem strange. After all, global equities have just notched up their best month in more than three years, as the panic that gripped investors in December has dissipated. The bond market has also clawed back most of the losses it suffered last year, helped by the US Federal Reserve’s abrupt decision to pause interest rate increases and willingness to re-examine how quickly it will sell its bond holdings.”
USAGOLD note: We highly recommend this Robin Wigglesworth article for a more in-depth look at the financial market introspection to which we alluded briefly in yesterday’s (2-3-2019) Daily Market Report.
Repost from 2-5-2019
“The goal is to place a lander on the lunar surface to mine and process regolith for water, oxygen, metals and an isotope called helium-3, which may prove useful for fueling future fusion reactors.”
USAGOLD note: Sounds like something out of an old Star Trek episode. . . . .
“According to international media reports, Uzbekistan expects to increase its gold reserves to 430 tons between 2020 and 2024 as the country looks to develop its domestic gold deposits. The reports said that purchase could start this year as the central bank plans to buy 81.37 tons of gold.”
USAGOLD note: Uzbekistan joins a growing list of countries directing domestic gold production into central bank reserves following the example of China, Russia and others.
MarketWatch/LinglingWei and Bob Davis/3-3-2019
“Despite the remaining hurdles, the talks have progressed to the extent that a formal agreement could be reached at a summit between President Donald Trump and Chinese President Xi Jinping, probably around March 27, after Xi finishes a trip to Italy and France, individuals with knowledge of the plans said.”
USAGOLD note: On-again, off-again, now on-again . . .