Author Archives: News

German central bank completes move of €24bn worth of gold

FT/Claire Jones/08-23-17

Germany’s central bank has completed its plan to shift 54,000 gold bars from vaults in New York and Paris to beneath its Frankfurt headquarters without a major glitch.

The Bundesbank, one of the biggest holders of gold in the world, moved 674 tonnes from the vaults of the Federal Reserve Bank of New York and Banque de France, the French central bank, over the past four years in one of the biggest operations of its type. Each of the 53,780 bars weighs 12.5kg and is worth €440,000. In total, the haul is worth €23.7bn.

PG View: Germany got their gold back and it only took 4-years. The bars were tested and verified and presumably they are unencumbered by lease agreements. It still seems to me that someone might want to audit America’s gold holdings, rather then just allowing a cursory visit from the Treasury Secretary . . .

Posted in Gold News, Gold Price |

The Daily Market Report: Gold Firms on Heightened Political Uncertainty

USAGOLD/Peter Grant/08-23-17

Gold remains consolidative within last week’s range. Downticks seen yesterday have been reversed today and the bias remains to the upside after a new high for the year was established last week above $1300.

Today’s gains reflect heightened concerns of a government shutdown. In his speech yesterday in Phoenix, President Trump threatened to go to that extreme in an effort to secure funding for his promised boarder wall.

He also suggested the North American Free Trade Agreement’s days may be numbered. “I think we’ll end up probably terminating NAFTA at some point,” warned Mr. Trump, even as the U.S., Canada and Mexico recently began renegotiating the agreement.

With a debt ceiling debate also looming in the weeks ahead, there is considerable uncertainty about fiscal policy moving forward. While this may certainly have an impact on monetary policy, I doubt that Fed Chair Yellen will broach this subject when she speaks at Jackson Hole on Friday. Given that her topic is “financial stability,” there may be some opportunity to read between the lines.

Steve Hanke, professor of Applied Economics at Johns Hopkins University, highlighted gold as an important hedge in these uncertain times. “One always wants to have some gold and I think particularly now in troubled times. There’s so many potential black swans that could enter the scene so you want to hold gold as an investor right now,” Professor Hanke told Kitco News.

Posted in Daily Market Report, Gold News, Gold Price, Gold Views |

U.S. new home sales -9.4% to 571k pace in Jul, below expectations of 610k, vs positive revised 630k in Jun.

Posted in Economic Data |

U.S. Markit flash manufacturing PMI fell to 52.5 in Aug, vs 53.3 in Jul; services rose to 56.9, vs 54.7 in Jul.

Posted in Economic Data |

With debt-based assets at record high, gold prices are set to shine

Economic Times/Aasif Hirani/08-23-17

One of the biggest obstacles for debt-based assets is raising interest rate. We are currently at a major interest rate bottom.

This prospect of higher interest rates going forward will act as a strong wind pushing gold higher, while keeping debt-based assets such as bonds and equity markets down.

…Another concern of debt-based assets at record high was the report published by US Federal Reserve on the state of the US consumer. The US household today is in more debt than it was in 2007 (the collapse of debt bubble in form of US subprime mortgage).

According to New York Fed, “Flows of credit card balances into both early and serious delinquencies climbed for the third straight quarter— a trend not seen since 2009.” This is been happening for nine straight months. With stocks at all time high, there is bubble forming in debt based assets.

Posted in Gold News, Gold Price, Gold Views |

US stock futures in retreat amid Trump shutdown, Nafta threats

FT/Pan Kwan Yuk/08-23-17

US stocks are set to break their two day winning streak on Wednesday, with futures pointing to a lower opening after President Trump injected fresh uncertainty into the markets by threatening to shut down the government and pull out of the North American Free Trade Agreement.

…The moves come after President Trump lashed out at the media and his critics at a rally in Phoenix, Arizona last night, saying he would shut down the government if Congress did not pay for his proposed border wall. He also revived threats to end Nafta just days after officials from the US, Canada and Mexico began the laborious process of renegotiating the deal.

The comments quickly dashed hopes that Washington will return to business as normal following a couple of tumultuous weeks that were marked by escalating US and North Korea tensions, outrage over Mr Trump’s response to the violence in Charlottesville, the departure of top US CEOs from the president’s advisory groups and the ousting of chief White House strategist Stephen Bannon.

Posted in Markets, Politics |

Morning Snapshot: Gold rebounds within last week’s range

USAGOLD/Peter Grant/08-23-17

Gold has rebounded, but remains narrowly confined within the range established last week. The yellow metal continues to be supported by political and geopolitical uncertainty and the attendant soft dollar.

Political uncertainty intensified after President Trump threatened to shut down the government in order to secure funding for the pledged border wall.

“If we have to close down our government, we’re building that wall.” — President Donald Trump

This morning we’ll see Markit PMIs, new home sales for July and EIA crude stocks for last week. We’ll also hear FedSpeak from Dallas Fed President Kaplan.

The market is unlikely to move significantly in either direction until after the speeches by Janet Yellen and Mario Draghi on Friday. While both are expected to stick to their respective scripts, Jackson Hole has been a venue where policy shifts have been floated in the past.

Posted in Gold News, Gold Price, Gold Views, Snapshot |

U.S. MBA mortgage market index -0.5% in the week ended 18-Aug; purchases -1.5%, refis +0.3%.

Posted in Economic Data |

Gold higher at 1290.99 (+7.54). Silver 17.10 (+0.094). Dollar lower. Euro higher. Stocks called lower. U.S. 10-year 2.18% (-3 bps).

Posted in Markets |

U.S.-North Korea Tensions Could Boost Gold Above $1,350 – Capital Economics

Kitco News/Anna Golubova/08-22-17

Unresolved tensions between the U.S. and North Korea are still very much on the table and can boost gold prices even further, according to a recent Capital Economics report.

“Until there is some certainty as to how the current situation between the U.S. and North Korea will evolve, we think that gold prices are likely to remain well supported and could even rise above $1,350 per ounce, which hasn’t been breached since the Brexit referendum last year,” Simona Gambarini, the U.K.-based research firm’s commodity economist, said Tuesday.

Posted in Geopolitical Risks, Gold News, Gold Price, Gold Views |

The Daily Market Report: Gold Dips as Dollar Firms Modestly

USAGOLD/Peter Grant/08-22-17

Gold is consolidating at modestly lower levels, but still generally at the high end of the recent range. The yellow metal remains underpinned by elevated political and geopolitical risks, while today’s uptick in the dollar weighs.

German ZEW Economic Sentiment slid to 10.0 in August, below expectations of 15.5, versus 17.5. Waning confidence in Germany diminishes the likelihood of any imminent tapering by the ECB. The recent rise in the euro appears to have stalled for now, buoying the dollar in the process.

ECB President Mario Draghi will speak at the KC Fed’s Jackson Hole symposium on Friday. While his topic will be “Fostering a Dynamic Global Economy,” the market will hope to glean any clues as to whether the desire to slow the growth of the balance sheet outweighs any concerns fostered by the incoming data.

I think both Draghi and Yellen — who speaks later on Friday — will likely stick with the respective scripts from recent policy meetings. Anticipated policy divergence or convergence will likely set the near-term path for the EUR-USD rate, which will obviously influence gold.

With a September rate hike by the Fed off the table and December looking increasingly questionable, Treasuries still seem undervalued relative to the current tightening prospects. If rates continue to retreat, so too shall the greenback.

Technically speaking, the dollar continues to look vulnerable. Key support in the dollar index is well defined by the low from May 2016 at 91.92. If that level gives way, there’s very little in the way of additional support until the 82.00/80.00 zone. That would imply potential for about another 10% decline in the greenback, which would provide a strong tailwind for gold.

Posted in Daily Market Report, Gold News, Gold Price, Gold Views |

Gold Bulls Still In Control Ahead of Jackson Hole – Analyst

Kitco News/Sarah Benali/08-22-17

Heightened risk appetite in the marketplace put gold prices under pressure Tuesday, but one analyst says all the uncertainty should continue to support the metal.

“Regardless of the short-term losses, the yellow metal remains heavily supported by geopolitical risk and political drama in Washington,” noted Lukman Otunuga, market analysts for FXTM, in a report Tuesday.

Posted in Gold News, Gold Price, Gold Views |

Treasury unveils new sanctions on Chinese, Russian entities in push to pressure North Korea

CNBC/Jacob Pramuk/08-22-17

The United States is targeting Chinese and Russian entities and individuals with new sanctions in its push to pressure North Korea to back off its nuclear ambitions.

The Treasury Department on Tuesday said it would target 10 entities and six individuals who help already sanctioned people who aid North Korea’s missile program or “deal in the North Korean energy trade.” The U.S. also aims to sanction people and groups that allow North Korean entities to access the U.S. financial system or helps its exportation of workers, according to the Treasury.

“Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programs, and isolating them from the American financial system,” Treasury Secretary Steven Mnuchin said in a statement. “It is unacceptable for individuals and companies in China, Russia, and elsewhere to enable North Korea to generate income used to develop weapons of mass destruction and destabilize the region.”

Posted in Geopolitical Risks |

Gold slides, palladium hits highest since 2001

Reuters, via YahooFinance/Pratima Desai/08-22-17

Gold prices fell on Tuesday, under pressure from a stronger dollar ahead of an annual meeting of central bankers this week, while speculative buying pushed palladium to its highest since February 2001.

…Investors are waiting for speeches from European Central Bank President Mario Draghi and Federal Reserve Chair Janet Yellen at Jackson Hole Wyoming, for clues to the direction of interest and currency rates.

…”Palladium has been pushed up by speculative funds, there is nothing in the fundamentals to justify these levels,” a precious metals trader said, adding that a slowdown in U.S. auto sales over coming months would spike the bubble.

Posted in Gold News, Gold Price, Gold Views |

U.S. FHFA home price index +0.1% in Jun to 249.3, below expectations of +0.5%, vs +0.3% in May; +6.5% y/y.

Posted in Economic Data |

Morning Snapshot: Gold choppy at high end of range

USAGOLD/Peter Grant/08-22-17

Gold continues to trade within the recent range below $1300. Gold is oscillating as risk appetite ebbs and flows amid varied political and geopolitical risks. However, those risks should keep gold underpinned.

President Trump’s speech last night suggests the U.S. is in Afghanistan to stay. He also ratcheted-up pressure on Pakistan, calling them out for providing “safe havens for terrorist organizations.” Mr. Trump then called for a strategic counter-terror partnership with India, Pakistan’s primary regional rival.

The U.S. calendar has the FHFA home price index for June as well as the August Richmond Fed index. Later this week we’ll get July durable goods orders and big speeches in Jackson Hole from Fed Chair Yellen (financial stability) and ECB President Draghi (fostering a dynamic global economy).

Yesterday Treasury Secretary Mnuchin went to Ft. Knox to check on our gold. I’m happy that his assessment is that the “gold is safe.”

However, an audit of the reserve asset that makes up 74.5% of America’s total reserves still seems appropriate. Is the gold really safe if there are multiple claims on those ounces?

Posted in Gold News, Gold Price, Gold Views, Snapshot |

Gold lower at 1285.42 (-6.58). Silver 17.06 (+0.013). Dollar higher. Euro lower. Stocks called higher. U.S. 10-year 2.21% (+3 bps).

Posted in Markets |

Mnuchin’s Pre-Fort Knox Quip: ‘I Assume the Gold Is Still There’

Bloomberg/Saleha Mohsin & Alister Bull/08-21-17

U.S. Treasury Secretary Steven Mnuchin will check out the nation’s gold stash when he pays a rare official visit to Fort Knox on Monday — while keeping an open mind for future film projects.

“I assume the gold is still there,” the former Hollywood producer joked to an audience in Louisville, Kentucky, 40 miles (64 km) north of the U.S. Bullion Depository. “It would really be quite a movie if we walked in and there was no gold.”

… he will be only the third secretary of the Treasury who has gone inside the vault since it was created in 1936 by President Franklin Delano Roosevelt.

“We have approximately $200 billion of gold at Fort Knox,” said Mnuchin. “The last time anybody went in to see the gold, other than the Fort Knox people, was in 1974 when there was a congressional visit. And the last time it was counted was actually in 1953.”

PG View: Given that the gold reported to be held in Ft. Knox and with the New York Fed comprises 74.5% of America’s reserves, you’d think someone might have wanted to count it at some point within the last 64-years. Unless of course that might reveal an inconvenient truth. I’d be more worried about any encumbrances, more so than whether it’s actually there or not . . .

Posted in Gold News, Gold Price, Gold Views |

The Lost Lesson of the Financial Crisis

Project Syndicate/Mohamed A. El-Erian/08-17-17

Ten years ago this month, the French bank BNP Paribas decided to limit investors’ access to the money they had deposited in three funds. It was the first loud signal of the financial stress that would, a year later, send the global economy into a tailspin. Yet the massive economic and financial dislocations that would come to a boil in late 2008 and continue through early 2009 – which brought the world to the brink of a devastating multi-year depression – took policymakers in advanced economies completely by surprise. They had clearly not paid enough attention to the lessons of crises in the emerging world.

Anyone who has experienced or studied developing-country financial crises will be painfully aware of their defining features. For starters, as the late Rüdiger Dornbusch argued, financial crises can take a long time to develop, but once they erupt, they tend to spread rapidly, widely, violently, and (seemingly) indiscriminately.

In this process of cascading failures, overall financial conditions quickly flip from feast to famine. Private credit factories that seemed indestructible are brought to their knees, and central banks and governments are confronted with tough, inherently uncertain policy choices. Moreover, policymakers also have to account for the risk of a “sudden stop” to economic activity, which can devastate employment, trade, and investment.

Posted in Debt |

The Daily Market Report: Gold Recovers From Friday’s Retreat

USAGOLD/Peter Grant/08-21-17

Gold has retraced more than half of the pullback from Friday’s high just above $1300. Renewed geopolitical tensions, along with a weaker dollar, are buoying the yellow metal.

As U.S. and South Korean joint military exercises commence, the North Korean’s are rattling the saber once again. They seem worried that the war games may be used as cover for a preemptive strike and warned of a “merciless strike” in retaliation. This exercise continues through the end of the month, so I imagine tensions will remain elevated until then.

Political uncertainty remains elevated as well. Treasury Secretary Mnuchin was urged by some Yale classmates to resign over the weekend. He seems inclined to stay, but this would be devastating for tax reform and a resolution of the debt ceiling situation.

Mnuchin has already warned that the extraordinary measures enacted by Treasury to stay below the debt ceiling will have run their course at the end of September. That could lead to a potential default on some payments.

Under normal circumstances I would have every confidence that Congress would raise or suspend the debt ceiling; with of course the requisite eleventh-hour drama. After all, they have always done so in the past. This time might be different though. This from Bloomberg:

Trump is becoming increasingly isolated from the Republican establishment and the stability of his economic agenda, including even the simple matter of the U.S. government’s solvency, isn’t being taken for granted. — Bloomberg

It will be interesting to get a read on the earnestness of Congress once they return from the August recess and where they focus their priorities. If the uncertainty continues to build in the weeks ahead, gold should continue to act accordingly.

Posted in Daily Market Report, Gold News, Gold Price |

Gold’s Rally Against Oil Is Just Beginning

Bloomberg/Dani Burger & Guido Riolo/08-21-17

Even as some analysts decry that gold is looking expensive, the rally may be just getting going.

In the midst of a tumultuous month in U.S. politics and global security, traders have pushed gold futures to near a nine-month high. But if the history of gold’s relationship with oil is any guide, that surge may last longer than the flare-up in geopolitical tension.

…“Gold has rallied during the recent market setback and is now testing its key resistance level of $1,300,” Matt Maley, an equity strategist at Miller Tabak & Co., wrote in a note to clients. “That is the level that stopped rallies in both April and June, so if it can finally break above the level in any significant way, it’s going to be very positive for the yellow metal.”

Whether driven by technical factors or the threat of derailed U.S. economic growth, money managers are flocking to gold. Net-bullish bets on the metal are the highest since October, according to Commodity Futures Trading Commission data.

Posted in Gold News, Gold Price, Gold Views |

Yellen, Draghi Head to Jackson Hole Amid Inflation Unease

Bloomberg/Jeanna Smialek & Carolynn Look/08-21-17

As the world’s top central bankers gather in Wyoming this week, their relief about a stronger global economy will be tempered by a growing unease that inflation remains inexplicably low.
The most important market news of the day.

Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi will be among the officials addressing this year’s installment of the annual conference hosted by the Kansas City Fed. The summit, held at a Jackson Hole mountain retreat, comes as central banks in advanced economies creep toward the policy exit after years of unprecedented easing, even with outlooks are clouded by stubbornly tepid inflation.

Prices have been slow to pick up despite solid growth and falling unemployment, suggesting that the long-observed relationship between inflation and labor-market slack might have frayed. That puzzle will likely surface as the conference debates this year’s theme of “Fostering a Dynamic Global Economy” against the backdrop of the Grand Teton mountains.

“Inflation has been the big question mark, both here and abroad,” said Michelle Meyer, head of U.S. economics at Bank of America Corp. in New York.

Posted in Central Banks, Deflation, inflation, Monetary Policy |

Gold inches closer to $1,300 as U.S.-North Korea tensions return

MarketWatch/Sara Sjolin/08-21-17

Gold prices edged up and moved closer to the $1,300 level on Monday, boosted by a flight to perceived safer assets as the war of words between the U.S. and North Korea returned to the fore.

Gold for December delivery added $1, or 0.1%, to $1,292.60 an ounce, erasing an 80-cent drop from Friday. The contract briefly jumped above $1,300 in Friday’s session after a terrorist attack in Barcelona, Spain, and concerns about President Donald Trump’s pro-business agenda helped spark a rush to haven assets.

“Demand for gold is likely to remain high nonetheless, as the U.S. and South Korea began a joint military exercise earlier today. This could rekindle the conflict between the U.S. and North Korea, which had taken something of a back seat again recently,” analysts at Commerzbank said in a note.

Posted in Gold News, Gold Views |

Morning Snapshot: Gold firms as geopolitical tensions ratchet higher again

USAGOLD/Peter Grant/08-21-17

Gold firmed overseas as North Korea ramped-up the saber rattling in reaction to joint military exercises between the U.S. and South Korea commenced today. While the yellow metal was not able to sustain the initial probe above $1300 on Friday, further tests may be in the offing.

“The Korean People’s Army is keeping a high alert, fully ready to contain the enemies. It will take resolute steps the moment even a slight sign of the preventive war is spotted,” threatened the North Korean state-run newspaper Rodong Sinmun. According to CNN, they went on to warn that “neither Guam, Hawaii nor the US mainland can ‘dodge the merciless strike.'”

The economic calendar is quiet today. The Chicago Fed National Activity index fell to -0.01 in July, versus positive revised 0.16 in June. The eclipse later today will likely disrupt markets and commerce as everyone will be outside looking to the sky with cardboard sunglasses.

Later this week, focus will shift to the KC Fed’s Jackson Hole Symposium. Both Mario Draghi and Janet Yellen speak on Friday.

Posted in Gold News, Gold Views, Snapshot |

Chicago Fed National Activity index fell to -0.01 in Jul, vs positive revised 0.16 in Jun.

Posted in Economic Data |

Gold higher at 1288.16 (+4.27). Silver 17.05 (+0.071). Dollar lower. Euro higher. Stocks called easier. U.S. 10-year 2.18% (-1 bp).

Posted in Markets |

Stability concerns focus at Fed ahead of Yellen speech

Reuters/Howard Schneider/08-18-17

The stock market’s steady rise, still low long-term bond yields and a sagging dollar are girding the Fed’s intent to raise interest rates again this year despite concerns about weak inflation, according to comments this week from Fed officials and analysts anticipating remarks next week by Chair Janet Yellen.

Minutes of the July Federal Open Market Committee meeting released this week flagged a division among policymakers focused on weak inflation as a reason to stall further rate increases and those who feel still loose financial conditions pose a risk the Fed needs to counter.

…”I would not be surprised to see Chair Yellen outline a similar argument at Jackson Hole — namely, that financial conditions are a piece of the puzzle that currently support maintaining a gradual pace of tightening,” analysts from NatWest Markets Strategy wrote in a morning note.

Posted in Central Banks, Monetary Policy |

The Daily Market Report: Gold Retreats From Above $1300

USAGOLD/Peter Grant/08-18-17

Gold probed briefly above $1300 in early New York trading, establishing new highs for the year, but these gains could not be sustained. The yellow metal is presently trading modestly lower on the day.

The retreat may have been simple profit taking ahead of the weekend, but the media is reporting a relief rally in risk assets on the apparent ousting of White House chief strategist Steve Bannon. While Bannon was perhaps one of the more divisive members of President Trump’s inner circle, I don’t quite understand why this is a risk-on event.

Nonetheless, stocks have rebounded and bonds and the yen have retreated along with gold. I suspect however that the departure of Mr. Bannon will do little to mitigate the ongoing drama in Washington; just as the ousting of Flynn, Spicer, Priebus, Scaramucci et al only amplified the political uncertainty.

That rising political uncertainty has been a driving force behind gold in recent months, which also magnifies to some degree the geopolitical uncertainty. Constant turnover within the President’s inner circle does nothing to clarify, nor improve the likelihood that his domestic agenda, trade and foreign policy will be advanced. That reality would seem to mark this dip in gold as yet another buying opportunity.

Earlier today, as gold was setting new highs, Zerohedge tweeted the following:

This is no surprise to our reader, nor those of the Zerohedge blog. However, I suspect it would come as a shock to many that only get their financial news from CNBC for example. Those investors that are still heavily allocated to shares, despite the frothiness of that market, are playing with fire. They could have diversified their portfolio with some gold this year and not paid any price in terms of performance to have that insurance.

Portfolios with a gold component tend to perform better over time anyway. It’s never too late to start building a hedge.

Posted in all posts, Daily Market Report, Gold News, Gold Views |

Trump Has Decided to Remove Bannon, New York Times Reports

Bloomberg/Justin Sink/08-18-17

President Donald Trump has decided to remove Stephen Bannon from his role as White House chief strategist, though the timing of his departure is unclear, the New York Times reported.

The departure of Bannon, the chief executive of Trump’s presidential campaign and an architect of his election victory, removes a champion of conservative populism from the White House. The former chairman of Breitbart News, Bannon served as a link to the so-called “alt-right” movement attuned to the attitudes and opinions of the president’s base.

Trump is still debating the time and manner of Bannon’s exit and may still change his mind, the Times reported, citing two administration officials.

PG View: Why this is a risk-on event is lost on me.

Posted in Politics |

Gold retreats from above $1300 as rumors of another impending firing within President’s inner-circle sparks a rebound in risk appetite (according to reports). Or it could just be profit taking ahead of the weekend.

Posted in Gold News, Gold Views |