Author Archives: News

Chinese agency Dagong cuts U.S. sovereign ratings to BBB+ from A-

Reuters/1-16-2018

“China’s Dagong Global Credit Rating Co, one of the country’s most prominent ratings firms, on Tuesday cut the local and foreign currency sovereign ratings of the United States, citing an increasing reliance on debt in the world’s largest economy. Dagong said in a statement that it cut the sovereign ratings to BBB+ from A- and also placed them on a negative outlook. . .

“The market’s reversing recognition of the value of U.S. Treasury bonds and U.S. dollar will be a powerful force in destroying the fragile debt chain of the federal government,” Dagong said.

USAGOLD note:  Lest we forget, less than a week ago rumors swirled that China would slow or curtail purchases of U.S. Treasuries. The threat was later denied by China’s Administration of Foreign Exchange.  Now Dagong’s rating downgrade throws a fresh log on that fire.

 

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Gold may test ultimate target for bulls this week

Scrap Register/1-15-2018

“As gold prices continue to make their way higher this week, the yellow metal could test its ultimate target for bulls, which is currently set at $1,357 — September’s high, said MKS PAMP trader Sam Laughlin. ‘We are likely to see further short squeezes over the near-term as the metal edges toward USD $1,350 and above this the September 2017 high around USD $1,357,’ Laughlin added.”

 

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Bundesbank looking to place some reserves into Chinese yuan

Reuters/Staff/1-15-2018

“Germany’s central bank is looking to place some of its currency reserves into yuan given the Chinese currency’s increased global role, although further preparatory work would be required to make a transaction, the Bundesbank said on Monday. ‘The decision to accept the yuan is part of a long-term strategy of diversification and reflects the increased role of the Chinese currency in the global financial system,’ Bundesbank board member Joachim Wuermeling said in a statement.”

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Dollar slide deepens against euro, yuan at two year high

Bloomberg/Natasha Doff and Samuel Potter/1-14-2018

“Despite the U.S. holiday, the dollar dominated trading on Monday as it headed for a fourth day of declines, weakening against almost every major currency. The euro’s jump weighed on European stocks, while gold gained.”

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Why 2018 is the year to buy gold

The Telepgraph/Laura Suter/1-14-2018

“[A[n analysis of market data shows that gold prices do not fall when rates rise: the theory is a ‘total fallacy’, according to Russ Mould, of AJ Bell, the investment shop. The graph shows that gold prices have actually increased after rises in interest rates from the US Federal Reserve, America’s central bank. “During the seven cycles of higher US interest rates the metal has on average gained 86pc. . .”

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CFTC Commitment of Traders – TD Securities

“Gold specs continued to increase their net length, as traders aggressively added to their longs while shorts only modestly increased their positions. A flat yield curve, a weak jobs report revealing still lackluster wage pressures suggest the US central bank may well be slower in raising rates than suggested by the dot plots.”

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Maund says “goldbugs could not hope to see a more positive picture than this”

Streetwise Reports/Clive Maund/1-12-2018

“When you are following the markets closely day after day it can be easy to lose sight of the big picture. So with the “everything bubble” getting closer to bursting, leading to universal mess and mayhem, there could not be a better time to look at the long-term picture for gold and silver, in order to see whether they are going to salute and go down with the ship, as they did in 2008, or constitute a lifeboat and a profitable means of escape for more fortunate investors. I am therefore pleased to be able to report that it will almost certainly be the latter, for reasons that we will now elucidate on the respective long-term charts for gold, then silver.”

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Feds collect record income taxes through December; still run $225 billion deficit

CNSNews/Terrence P. Jeffrey/1-12-2018

“The federal government collected record individual-income-tax revenues through the first quarter of fiscal 2018 (October through December), according to the new Monthly Treasury Statement. This was the last quarter before the new tax-cut law signed by President Donald Trump on Dec. 22 took effect. Despite taking in record individual-income-tax revenues, the federal government ran a deficit of approximately $225 billion during the quarter.”

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Investors turning to gold as inflation risks resurface

Bloomberg/Pimm Fox and Lisa Abramowicz/1-12-2018

Interview of Will Rhind, CEO, GraniteShares (Audio):

“Gold does not have counterparty risk. . .A bar of gold does not go bankrupt.”

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What has QE wrought?

Mises Institute/Ron Paul/1-12-2018

“I believe gold is in the early stage of the third major bull market since 1971, which started two years ago when gold was $1050/oz. If history is of any benefit, gold will be used in the coming monetary reform, whether it’s accomplished by the government or the market. But if the choice of a monetary unit turns out not related to something tangible, it will prove to be a first in history. Just because our current money is now a total fiat dollar, it can’t be used to justify a market developed fiat currency. We must remember that the dollar was originally defined as a weight of silver or gold. The destructive nature of the monetary event of Aug. 15, 1971 was a consequence of our government refusing to maintain the dollar’s relationship to something tangible, thus making it a fiat currency. This explains why we’re in such a mess. A fiat currency developed in the market, won’t solve the current financial crisis the world faces.” – Ron Paul, 1-12-2018

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Technical analysis implies gold breakout could be coming. . . .and a big one

GoldSeek/Jeff Clark/1-1-2018

“The gold price continues to squeeze tighter and tighter on a monthly basis, a technical sign that implies a breakout is coming. The ADX (Average Directional Index) measures the strength or weakness of a trend, and you can see that gold isn’t trending but instead is building energy.

The longer this consolidation goes on, and the greater the buildup in energy, the bigger the breakout will be. In fact, [tech-analyst Dominick Graziano] told me that ‘long-term consolidations are the most powerful when they finally break out.’… The technical picture doesn’t tell us when this breakout will occur, but as he says a new all-time high could be in the cards if it breaks to the upside. “

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Fed’s Dudley warns that tax cuts putting economy on an ‘unsustainable path’

CNBC/Jeff Cox/1-11-2018

“The comments echo recent remarks from Fed Chair Janet Yellen, who said in November that escalating public debt and deficits “should keep people awake at night.”

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Move over Fort Knox: Here’s an actual look inside Russia’s gold vaults

SilverDoctors/1-10-2018

“Photos from main gold storage of Central Bank of Russia. Almost 1800 tons of gold is stored here. This is the main storage of gold in Russia. This makes Russia to be number six in the world by gold storage.”

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Will the dollar survive the rise of the yuan and the end of the petrodollar?

Mises Institute/Alasdair Macleod/1-10-2018

“This might seem a frivolous question, while the dollar still retains its might, and is universally accepted in preference to other, less stable fiat currencies. However, it is becoming clear, at least to independent monetary observers, that in 2018 the dollar’s primacy will be challenged by the yuan as the pricing medium for energy and other key industrial commodities. After all, the dollar’s role as the legacy trade medium is no longer appropriate, given that China’s trade is now driving the global economy, not America’s.”

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China sets new records for gobbling up the world’s commodities

Bloomberg/Pratish Narayanan/1-12-2018

“China continues to gobble up the world’s commodities, setting new records for consumption of everything from crude oil to soybeans.”

USAGOLD note:  As mentioned in last night’s LATE REPORT, China’s appetite for commodities might be what was behind the overnight rally in the gold market.

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David Rosenberg: Fed taking on role of ‘serial bubble blower’

CNBC/Jeff Cox/1-11-2018

“David Rosenberg, chief economist and strategist at Gluskin Sheff, warns that the Fed may be continuing to inflate a bubble in stocks. . .  The criticism is familiar: Through low interest rates and trillions of dollars in bond buying, the Fed has created a credit bubble of low-cost cash coursing through the economy and, more particularly, risk assets like stocks and corporate bonds.”

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US producer prices fall for first time in nearly 1 1/2 years

Reuters/1-11-2018

“Coming on the heels of a report on Wednesday showing a sharp moderation in import prices in December, the weak PPI report might temper expectations that inflation will accelerate this year even though its correlation with consumer prices has weakened.”

USAGOLD note:  Everyone is anticipating inflation but the numbers just aren’t backing it up.  That’s not to say things aren’t going to change because there are numerous signs that they will, but at the moment disinflation rules the roost.

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Warning: The smart money and the smartest money both smell inflation

Gold Eagle/Graham Summers/1-11-2018

“So when a seismic change takes place, currencies and bonds pick up on it LONG before stocks do. With that in mind consider that the $USD is collapsing, having gone almost straight down for 12 months. Now consider that the US Treasury bond market, is falling in price, resulting in yields spiking above their 20-year downtrend. BOTH of these assets are forecasting the same thing: INFLATION.”

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Oil traded over $70 briefly a short while ago

. . .now at $69.80.  Up roughly $15 since October.  Leading the renewed commmodity “inflation trade.”

Related see: Gold and copper may have more room to run in 2018, Bank of China says

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China denies it may slow purchases of U.S. government bonds

VOA News/1-11-2018

“China is denying a published report that it may slow or even stop purchasing U.S. Treasury bonds. . . . In a statement posted on its website Thursday, China’s State Administration of Foreign Exchange said the Bloomberg story was either misinformation or ‘fake news.'”

USAGOLD note:  Bloomberg published the original report quoting London-based analysts for the  Bank of China, China’s central bank.  The denial, as stated above, is coming from China’s State Administration of Foreign Exchange. Which one is to be believed?  Which one is the real representation of China’s intent, i.e., carries more weight? Fake news, political gamesmanship or a real policy change?  We are likely to hear more on the subject over the next several days.

As it stands, over the last 12 month period, as reported in the Treasury Department’s TIC data,  China increased its holdings in U.S. Treasuries by 6.6% or $73.5 billion.  From August to October, 2017, however, China reduced its holdings from $1.2 trillion to $1.189.  As time passes, it will all come out in the numbers. The next Treasury release is January 17th and it will report November numbers.

TIC Data/U.S. Treasury Department

 

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“Look to be aggressive amidst dips. . .”

Gold Eagle/Christopher Aaron/1-10-2018

“Having observed the strength of gold’s surge following the successful retest of its long-term 2011 – 2017 downtrend three weeks ago, the theme for gold now becomes one of working to overcome 2016 highs over the intermediate term. Our focus must therefore change from one of concern that the retest might fail, which implies a more conservative posture, to the health of the long-term basing pattern that is now rounding upward in terminal fashion. We believe new highs for the move that began in 2015 are in store for this year. Retracements will still occur and they will be scary at times, but in the establishment of a new rising trend we should look to be aggressive amidst dips and not fearful on corrections.

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Gold and copper may have more room to run in 2018, Bank of China Says

Bloomberg/Mark Burton/1-10-2018

“’In a world of upbeat economic growth, USD weakness, falling bond prices and elevated equity valuations, the commodities revival should come into full bloom,’ said analysts led by London-based Xiao Fu, the commercial bank’s head of commodity market strategy.”

USAGOLD note:  Combine this with the news posted earlier that China may be vacating the U.S. Treasuries market and you get a volatile brew . . . and, from the sound of things, Chinese surpluses flowing ever more readily into gold and other hard commodities instead of U.S. debt.

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2018 market and macro outlook

GluskinSheff/David A. Rosenberg/1-10-2018

“As I dig into my memory bank, this backdrop is eerily similar to 1988, 1999, and 2006. And what we know about each of those years is that the one that followed was the last of the cycle. So if the past is a precedent, we had better enjoy the next twelve months. The economic expansion and bull market won’t necessarily end in 2018, but they will be on their last legs, nonetheless.”

USAGOLD note:  A year or so to prepare. Rosenberg is highly respected.  Those cycle ending years, in case you overlooked it, preceded crises and two of them (2006, 1999) preceded significant movement in the gold price triggered by safe-haven buying.

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China weighs slowng or halting purchases of U.S. Treasuries

Bloomberg/1-10-2018

“The market for U.S. government bonds is becoming less attractive relative to other assets, and trade tensions with the U.S. may provide a reason to slow or stop buying American debt, the thinking of these officials goes, according to the people, who asked not to be named as they aren’t allowed to discuss the matter publicly.”

USAGOLD note:  Major news.  China is America’s biggest creditor.  And don’t discount the spillover effect.

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Gundlach says “commodities will outperform in 2018”

Bloomberg/John Gittelson and Ranjeetha Pakiam/1-9-2018

“Commodities always rally sharply — much more sharply than they have so far — late in the business cycle as we lead into a recession.”

USAGOLD note:  Not sure if we go along with the inevitability of a recession at this point, but commodities could move higher in 2018 even if we aren’t headed into a recession.  Oil, as it often does during commodity rallies, is leading the way.

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TD Securities: Gold has potential to reach $1375 an ounce

Scrap Register/1-10-2018

“Considering that investors seem ready to take hefty long gold positions, even as equity markets are surging, it is quite possible that the yellow metal could attempt to hit $1,357 an ounce in the not-too-distant future. A move toward $1,375 an ounce is also possible should the market believe the U.S. central bank will be gentle in their-rate hike signaling.”

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Early warning signs in COT positioning

Real Investment Advice/Lance Roberts/1-9-2018

“This past weekend, I discussed the surge in market exuberance in terms of both individual and professional investors. Of course, such surges in exuberance are generally indicative of the ‘capitulation phase’ as the last of the ‘holdouts’ finally jump back into a market which ‘can seemingly never go down.’ But therein lies the danger. It worth noting that despite the ‘hope’ of more fiscal support for the markets, longer-term conditions currently persist which have led to rather sharp market reversions in the past.”

USAGOLD note:  What “dumb money” is doing by the charts. . .

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Bill Gross: “Bond bear market confirmed.”

Bloomberg/Brian Chappatta/1-9-2018

“We’re seeing a lot of overseas buyers who would come in every time we’d have a move close to these levels who aren’t coming in anymore,” said Michael Franzese, New York-based head of fixed-income trading at MCAP LLC, a broker-dealer. “That’s kind of scaring me a little bit. One eye is constantly on the exit button.”

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U.S. crude hits three-year high as prices climb in tight market

Reuters/Devika Krishna Krumar/1-9-2018

“We expect oil demand growth to outpace non-OPEC supply growth in both 2018 and 2019,” Standard Chartered analysts said in a note. “In our view, the back of the Brent and WTI curves are both still underpriced. We do not think that prices below $65 per barrel are sustainable into the medium term.”

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Gold is beating everything since the Fed raised rates

Bloomberg/Eddie Van Der Welt/1-9-2017

“Gold’s outperformed most major assets since the U.S Federal Reserve last month raised interest rates — even bitcoin.”

USAGOLD note:  Short, informed defense of gold’s December rally by Jeff Rhodes, Rhodes Precious Metals Consultancy. (Video)

 

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