Author Archives: News

Federal Reserve to review strategies on monetary policy in 2019

Financial Times/Mamta Badkar, Joe Rennison and James Politi/11-15-2018

“In a statement on Thursday, the Fed said it would review the ‘strategies, tools and communication practices’ it uses to convey monetary policy.”

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’28 months of work undone in hours’: The City of London reacts to the chaos of Theresa May’s crumbling Brexit deal

Business Insider/Will Martin/11-15-2018

“Dr Daniel Harenberg, senior economist with Oxford Economics, says that the only certainty right now is uncertainty, and that this is likely to cause chaos in the markets.  ‘About the only thing that seems sure now is that the next few months will see considerable political upheaval, triggering bouts of significant market volatility,’ he wrote to clients.”

USAGOLD note:  We need to remind ourselves that the City of London is still the center of the international gold trade.  We have yet to see any analysis as to how a failed Brexit agreement is likely to affect the gold trade – all those interlocking counterparty agreements between London and continental institutions.  It would be remiss to think that it would not have an effect.


Image by Diliff [GFDL (http://www.gnu.org/copyleft/fdl.html), CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/) from Wikimedia Commons [Edited]

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Old and new central bank gold buying accelerates sharply

ETF Daily News/Allen Sykora/11-4-2018

“Metals Focus is looking for global central-bank net gold purchases of up to 450 tonnes this year, which would top 390 and 375 the last two years, Liang said. If so, this would reverse a four-year gradual decline in net bullion buying since 2014, with last year’s total down by 42% from the multi-decade high of 646 tonnes in 2013, the consultancy said.”

USAGOLD note:  And there might be other purchases that no one knows anything about. . . .


Repost from 11/4/2018

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Pound tumbles and gilts rally on fears for Brexit deal

Financial Times/Frederica Coco and Richard Blackden/11-15-2018

“Having been stuck in a tight range in early trading on Thursday, the pound tumbled 1.8 per cent to below the $1.28 mark after [Brexit secretary Dominic]  Raab said he could not in ‘good conscience’ support the deal. UK government bonds rallied, with the yield on the benchmark 10-year bond falling 10 basis points to 1.4 per cent.”

USAGOLD note: The euro is falling as well. . .

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Paulson & Co keeps stake in gold investments during third-quarter: filing

Reuters/Renita D. Young/11-14-2018

“Paulson & Co, led by longtime gold bull John Paulson, kept its stake in gold investments during the third quarter of 2018 while other heavyweights including Soros Fund Management LLC, Jana Partners LLC and Caxton Corp remained unexposed to the metal.”

USAGOLD note:  Some speculate in the metal, other buy and hold.  Paulson is in the latter category like Ray Dalio as reported here yesterday.

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U.S. budget deficit jumps to $100 billion at start of fiscal year

Bloomberg/Sarah McGregor/11-13-2018

“The U.S. recorded a $100.5 billion budget deficit in October, an increase of about 60 percent from a year earlier, as spending grew twice as fast as revenue.”

USAGOLD note: And that is the political deficit. . .The real addition to the national debt for the month of October was right at $184 billion!  As posted by the Treasury Department (Treasury Direct):

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Italy defies EU request to present revised budget

TheGuardian/Angela Giuffreda/11-14-2018

“Luigi Di Maio, the deputy prime minister and leader of the anti-establishment Five Star Movement, which is ruling in coalition with the far-right League, said the government was committed to maintaining its deficit target of 2.4% but it would move forward with plans to cut taxes, introduce a universal basic income and lower the retirement age.”

USAGOLD note:  Looks like Italy and Brussels are hurtling toward a head-on crash. . .

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Ray Dalio’s faith in gold is unshaken

Bloomberg/Luzi Ann Javier/11-13-2018

“Not even gold’s second quarterly straight decline was enough to shake billionaire hedge-fund manager Ray Dalio’s confidence in gold. Dalio’s Bridgewater Associates maintained its holdings in SPDR Gold Shares, the largest bullion-backed ETF, at 3.9 million shares, and its stake in iShares Gold Trust, the second-largest, at 11.3 million shares in the third quarter, according to a regulatory filing Tuesday.”

USAGOLD note:  The latest on Dalio’s gold positions. . . .

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Janet Yellen says the US trade deficit is likely to get even bigger.

Quartz/Gwynn Guilford/11-13-2018

“Speaking at a conference in Beijing, Janet Yellen said that the steady rise in US interest rates is pushing up the value of the dollar, which will likely cause the US trade gap to widen further, according to Bloomberg (paywall).”

USAGOLD note:  Janet Yellen thinks the dollar is too strong?

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Silver 2019 recovery seen on strong tech, beta to gold

BullionVault/Adrian Ash/11-8-2018

“Instead, he now expects ‘explosive growth’ to come from auto-sector demand for silver as the world shifts away from internal combustion engines. Electric vehicles and hyrid-electric vehicles will account for more than half of global automotive silver demand by 2040 said Thomson Reuters GFMS (now re-named Refinitiv) in its World Silver Survey 2018, produced for the Silver Institute of miners, refiners, dealers and fabricators.”

USAGOLD note:  Silver still has its roots in industrial demand. A such the burgeoning of uses in the electric automobile industry is of great interest. The 84-1 ratio is also raising a few eyebrows.

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Bank of France partners with JPMorgan to boost gold bullion services

Reuters/Peter Hobson/11-12-2018

“The French central bank’s second deputy governor Sylvie Goulard wrote in the Alchemist, the magazine of the London Bullion Market Association (LBMA), that it had partnered with “a large commercial bank” to offer swaps, leases and gold deposits from Paris. Sources said the bank was JPMorgan, one of the world’s largest bullion trading banks and a member of a group that settles trades in London’s $25 billion a day gold market.”

USAGOLD note:  We alluded to the French interest in competing with London for gold bullion banking business last week, i.e., the same Alchemist article referenced above. This article solves the mystery as to the identity of the “large commercial bank” mentioned in the Alchemist article as its trading partner. As the UK moves towards Brexit, France moves to replace the Bank of England for official sector bullion business in the European Union.

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Higher gold price vindicates Indian Central Bank’s investment plan

ScrapRegister/11-12-2018

“Gold purchase plan of Reserve Bank of India seems to be paying off as the monthly valuation gains have touched an eight month high with investor demand for a safe haven rallying the yellow metal.”

USAGOLD note: This report from RBI offers justification for the burgeoning trend among global central banks to increase their gold holdings in these unsettled times.


Metropolitan Museum of Art [CC0], via Wikimedia Commons [Edited]

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In bullish shift, investors start buying gold ETFs

Barron’s/Myra Saefong/11-9-2018

“’These numbers are very encouraging,’says George Milling-Stanley, head of gold strategy at State Street Global Advisors, who worked on the 2004 launch of the largest gold-backed ETF, the SPDR Gold Shares (ticker: GLD). The numbers ‘confirm our view that investors are once again turning to gold as a defensive asset, offering some protection against the unexpected, whether these tail risks are macroeconomic or geopolitical in nature.’”

USAGOLD note:  Funds and institutions are the principal users of gold and silver ETFs.

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Saudi Arabia to cut oil exports amid signs of new surplus

Bloomberg/Grant Smith, Elena Mazneva, Mahmoud Habboush and Mohammed Sergie/11-11-2018

“Saudi Arabia signaled it will reduce oil exports by as much as half a million barrels a day in December, the first tangible sign that OPEC is starting to trim output as it faces an oversupplied market in 2019.”

USAGOLD note:  Let’s not forget that Saudi Arabia increased output to replace sanctioned Iranian production.  Those sanctions went into effect just last week. It will interesting to see how the market reads Saudi Arabia’s change of heart.  Saudi compliance on oil production, as shown in the chart below, has been an important factor in oil’s decline in recent weeks.

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Gold-Silver COT reports – Friday release

GoldSeek/11-9-2018

[Last week’s report]

[This week’s full report]

USAGOLD note: Given the strong interest in the record COT short positions in gold and silver, we plan to make these GoldSeek reports a regular Friday feature. So please check back on Friday afternoons for the latest reports. We will make a comment or two when warranted.

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Gold prices fall amid inflation concerns [huh?]

Investing.com/11-9-2018

USAGOLD note:  Above is the actual headline to the article.  Sorry.  Had to laugh. We added the “huh?” As we have noted before: In this whacky, upside down, Alice in Wonderland financial environment – wherein good news for gold is bad news and bad news is still bad news – the day-to-day headlines might seem nearly irrelevant in determining the price direction.  Along the way, though, we suspect that the clock will stop running backward – rising inflation will come to actually mean rising inflation, and not something else, and rising inflation will come to mean higher gold prices.

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India bar, coin demand picks up during Q3: WGC

Scrap Register/11-8-2018

“The picture was similar elsewhere in Asia. A fall in the gold price, tumbling equity markets and depreciating currencies in Vietnam, Thailand, Indonesia and Malaysia boosted bar and coin demand. But other country specific factors were in play.”

USAGOLD note:  We suspected and noted in the past that this would be the case.  The trend, in our view, is likely to continue long after this latest emerging market crisis finds resolution.

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China’s foreign exchange reserves take a big drop

TradingEconomics/11-7-2018

“China’s foreign exchange reserves fell by USD 33.93 billion to USD 3.053 trillion in October of 2018, below market expectations of USD 3.06 trillion. It is the lowest value since April of 2017 and the biggest monthly decline in forex reserves since December of 2016 amid a further drop of the yuan, suggesting the central bank has been intervening to avoid further decreases in the currency. Meanwhile, the value of gold reserves increased to USD 71.968 billion at the end of October, from USD 70.327 billion at the end of September. Foreign Exchange Reserves in China averaged 995876.03 USD Million from 1980 until 2018, reaching an all time high of 3993212.72 USD Million in June of 2014 and a record low of 2262 USD Million in December of 1980.” [Emphasis added.]

USAGOLD note:  Whether or not China defends the yuan has been an issue for the gold market of late, so this hard evidence of a defense is worth noting. The mentioned increase in nominal value in its gold reserves looks like a revaluation due to higher gold prices over the past three months, not an increase in the overall weight.

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Taleb says world more fragile today than in 2007

Bloomberg/Video Interview with Eric Schatzker/10-31-2018

“Nassim Nicholas Taleb, scientific advisor at Universa Investments, discusses the factors causing global fragility, hidden liabilities in global markets, and what he sees as safe trades in the current market. He speaks with Bloomberg’s Erik Schatzker on Bloomberg Markets.”

USAGOLD note:  When asked how it all plays out and if there is anything that he sees as safe in a global financial system on the verge of another crisis,  Taleb says he owns “some gold, which I am confused about, and land. . .” He does not elaborate on why he is confused about gold.  Taleb, as most of you already know, made his mark in the financial world by predicting the 2007-2008 crisis and writing the now famous book, The Black Swan – The Impact of the Highly Improbable.

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Investors dump Treasuries after strong wage data

Financial Times/Joe Rennison and Nicole Bullock/11-2-2018

“The 30-year Treasury yield climbed to a four-year high on Friday, after accelerating wage growth fanned fears over faster Federal Reserve interest rate increases and added to a deepening bond market sell-off.”

USAGOLD note:  The strong jobs report also stated a 3.1% increase in average wages – a strong number that indicates inflationary pressure beginning to build in the economy. It’s that part about “deepening” the bond market sell-off that will be worrisome to Wall Street. All eyes will be on next week’s record sale of U.S. sovereign debt the results of which could bleed over to the stock market. Please see below.


Higher hedging costs threaten US debt auctions/NewsMax/11-2-2018

“The U.S. government’s debt sales to raise $29 billion of fresh cash next week face uncertainty about foreign demand as the cost to hedge dollar-denominated assets recently hit a 2018 high for European and Japanese investors.The U.S. Treasury Department said on Wednesday it will sell a total of $83 billion of fixed-rate securities including record amounts of 10-year and 30-year debt next week as a part of its quarterly refunding.”

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Gold-Silver COT reports – Friday release

GoldSeek/11-2-2018

[Last week’s report]

[This week’s full report] 

USAGOLD note:  Given the strong interest in the record COT short positions in gold and silver, we plan to make these GoldSeek reports a regular Friday feature. So please check back on Friday afternoons for the latest reports. We will make a comment or two when warranted.

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Trump asks cabinet to draft possible trade deal with China

Bloomberg/Jenny Leonard, Saleha Mohsin and Jennifer Jacobs/11-2-2018

“Trump asked key cabinet secretaries to have their staff draw up a potential deal to signal a ceasefire in an escalating trade conflict, the people said, adding that multiple agencies are involved in the drafting of the plan.”

USAGOLD note:  A pre-election surprise that could accrue as a positive for gold. The yuan is up sharply again this morning. . . . .

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Banque de France and Gold: Past and Future

The Alchemist/Sylvie Goulard, deputy governor, Bank of France/November, 2018

“After 1971 when President Richard Nixon decided to end the dollar’s convertibility, gold lost its monetary role. Then came a slow decline and, by the time of the 2008 financial crisis, gold had become an ordinary metal commodity. The financial crisis acted as a wake-up call for gold – investors lost confidence in financial assets and wanted real, physical assets. This proved to be an opportunity for gold and for the Banque de France.”

USAGOLD note:  This fascinating article tells of France’s present effort to make Paris a center for gold banking that rivals London.  The Bank of France, founded by Napoleon, will offer “gold investment services,” says Goulard,  “[that] have until now only been offered from London, it recently became possible for the Banque de France to offer them also from Paris, thanks to a partnership with a large commercial  bank that is active in the gold market. As a result, with the improvements in the Banque de France’s vaults, and the innovations in its service offering, Paris could gradually re-emerge as a key marketplace for gold.”

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Bolton calls national debt ‘economic threat’ to U.S.

Bloomberg/Toluse Olorunnipa/10/31/2018

 “‘It is a fact that when your national debt gets to the level ours is, that it constitutes an economic threat to the society,’ Bolton said. ‘And that kind of threat ultimately has a national security consequence for it.’”

USAGOLD note: This article is a bit vague as to what that “national security consequence” might be.  An obvious one is that interest payments eat up what might otherwise be spent on the national defense. Perhaps that is what has Mr. Bolton worried – particularly with interest rates on the rise.

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World Gold Council reports a surprise jump in investor gold demand, continued strong interest from central banks

World Gold Council/11-1-2018

“Bar and coin investors took advantage of the price dip; demand rose 28% y-o-y. Stock market volatility and currency weakness also boosted demand in many emerging markets. China – the world’s largest bar and coin market – saw demand rise 25% y-o-y. Iranian demand hit a five-and-a-half year high. . . . . . .Central bank gold reserves grew 148.4t in Q3, up 22% y-o-y. This is the highest level of net purchases since 2015, both quarterly and y-t-d, and notable due to a greater number of buyers.”

USAGOLD note:  Good news this morning from the World Gold Council – a sharp increase in global demand from most sectors, though ETF demand declines.

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A private survey shows China’s factory activity unexpectedly grows

CNBC/Huileng Tan/10-31-2018

“Chinese factory activity expanded slightly in October despite an ongoing trade dispute with the U.S., a survey of small and medium-sized enterprises in China showed. On Thursday, Caixin and IHS Markit reported October Purchasing Managers’ index (PMI) was 50.1 for October, beating analysts’ expectations. . . A reading above 50 indicates expansion, while a reading below that signals contraction.”

USAGOLD note:  This report is likely to go by the boards quietly today.  It is important to file for future reference though in that it shows growth in the Chinese economy, albeit minor, at a time when most economists expected a major slowdown.  Strength in China’s economy in turn is good news for commodities in general and gold and silver in particular.

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Euro quest for reserve status deflated by rise in political risk

Bloomberg/Anooja Debnath, Charlotte Ryan, and Katherine Greifeld/11-1-2018

“Europe’s dream of turning the euro into a global reserve currency that can rival the dollar got another reality check.”

USAGOLD note:  In turn, recent setbacks for the euro –Angela Merkel’s withdrawal from the political stage and Italy’s debt problems – are likely to encourage gold demand within Germany and the rest of the European continent. . . . . .This article features a chart on global currency reserves worth noting.  The U.S. dollar, according to IMF data, still holds the lion share of global reserves at 62.3% with the euro at 20.3%.

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Wages and salaries jump by 3.1%, highest level in a decade

CNBC/Jeff Cox/10-31-2018

“Employment costs rose more than expected in the third quarter in a sign that more inflation could be brewing in the U.S. economy.”

USAGOLD note:  In this whacky, upside down, Alice in Wonderland financial environment – wherein good news for gold is bad news and bad news is still bad news – the day-to-day headlines might seem nearly irrelevant in determining the price direction.  Along the way, though, we suspect that the clock will stop running backwards – higher wages will come to mean higher inflation and higher inflation will come to mean higher gold prices.

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Treasury sees 2018 borrowing needs surging to $1.34 trillion

Bloomberg/Randall Woods/10-29-2018

“The U.S. Treasury Department said government borrowing this year will more than double from 2017 to $1.34 trillion as the Trump administration finances a rising budget deficit.”

USAGOLD note:  The national debt as of this morning stands at $21.697 trillion. . . . .

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Germany repatriates about half of its gold reserves

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

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

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

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

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

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

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

–– USAGOLD


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

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

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