Author Archives: USAGOLD

USAGOLD’s Mobile Website

Who says you can’t take it with you?
In fact, you can take the gold market everywhere you go.

Prices. News. Opinion. Charts.
And you can order gold and silver
on your phone anytime!

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A quick heads up

Two weeks ago we reported on a surge in demand for silver American Eagles that emptied the US Mint of inventories.  We learn today that premiums on gold bullion coins, including the gold American Eagles, suddenly are up across the boards.  That though is only part of the story.  Wholesalers are now buying up available inventories of gold bullion coins wherever they can find them in anticipation of potential future shortages.

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Better Business Bureau Five Star Review

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Recent Better Business Bureau Client Review

“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., 1-31-2017

Scorecard: 38 43 48 five star reviews. Zero complaints.
A+ rating. Accredited since 1991.

[Link]

USAGOLD Recommendation: The precious metals industry is unique in the financial industry in that it is not subject to oversight or regulation by third-party government entities like the SEC or CFTC. As such, marketplace forums and feedback sites often serve as a replacement for investors attempting due diligence. While several options can be found, by far the most impartial and least susceptible to vested influence is the Better Business Bureau. When looking at a company’s BBB profile, don’t focus solely on the rating. To be honest, pretty much everybody has an ‘A’ or ‘A+’ rating. What is far more important to assess is the number and nature of complaints, number and caliber of positive and negative reviews, longevity with the BBB, as well as the number of ‘stars’ given a company through the actual customer review system.

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Introducing Our New Online Order Desk Department

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‘Collectible Coins’

We are pleased to announce the expanded availability of USAGOLD’s market leading offers of type sets, date runs, complete date sets, regional sets, and mint-mark sets of both U.S. and World gold coinage to our Online Order Desk, in a brand new section titled ‘Collectible Coins‘. These items can now be purchase anytime, day or night, via our secure, password-protected, live-pricing environment.

Contrary to the moniker ‘Collectible Coins’, many of our sets sell within a reasonable range of the spot gold value of the coins, and are typically offered at a discount to the cost of the coins individually. That said, items offered at this page are generally extremely limited in their availability, and represent unique, hard-to-find accumulation opportunities for heirloom-minded investors.

We invite you to peruse our current offerings. And, to commemorate the opening of this new section of our Online Order Desk, we’re offering some great, albeit short-lived discounts. All discounts expire Friday (9/21) at midnight! And check back often! New sets will be added all the time.

** $25 off any sets under $2500 **
** $75 off any sets over $2500 **

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A Chronology of History’s Black Swans

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Panics, mania, crashes and collapses from 400 BC to present

by Michael J. Kosares

We have had a steady stream of retrospection in conjunction with the tenth anniversary of the Lehman Brothers closure and the launch of the 2008 credit crisis – the crisis that never went away. As I read through some of the ruminations of the past few days (a small portion of it posted below), I could not help but recall a quote from the Roman philosopher Seneca. I ran into these words during my own research and writing at the time of the crisis:

“You say: ‘I did not think it would happen.’ Do you think there is anything that will not happen, when you know that it is possible to happen, when you see that it has already happened?”

Seneca penned that bit of wisdom in 62 AD during the reign of the Roman emperor Nero. They have held up well over the ensuing nearly twenty centuries of economic history.  The following is a repost of an article I wrote several years ago.


This chronology was compiled as an accompaniment to my short study on the four most commonly predicted worst-case economic scenarios – Black Swans, Yellow Gold: How gold performs during periods of deflation, chronic disinflation, runaway stagflation and hyperinflation. My original intent was to make a short list that would illustrate the frequency with which periods of economic breakdown made their appearance in the historical record. Little did I know how extensive a project it would become. So much so, that it became worthy, as you can see, of its own web page.

Panics, mania, crashes and collapses, as it turns out, are as common to financial history as thunderstorms to placid summer afternoons. They tend to show up suddenly, wreak more than their fair share of havoc, and recede into the history books only after endless discussion of their causes and cures. Whether brought on by popular delusion, unscrupulous market operators, misguided governments and/or central banks or some random, unforeseen shock, black swan events are part and parcel of the human experience and just as permanent a fixture in our collective history as wars and natural disasters.

Those who think it can’t happen here, or that this time around it’s different, should take note of the number of black swan events in American history alone. The record is formidable. Gold ownership is traditionally a form of battening down the hatches against these recurring storms and, for the minority who adhere to it, an effective and ever-ready defense. Nialls Ferguson, the economic philosopher, summed up what a good many were thinking in the wake of the 2008 meltdown when he said, “Those few goldbugs who always doubted the soundness of fiat money — paper currency without a metal anchor — have in large measure been vindicated. But why were the rest of us so blinded by money illusion?”

Why indeed. . .

* * * * * * * * * *

Sovereign Default of 400 BC (Syracuse, Greece) – Dionysius confiscates gold and silver money, re-mints it keeping the weight the same but changing the denomination from one to two drachmae — the first known official devaluation at the expense of the general population. A virulent inflation ensues.

Sovereign Default of 377 BC (Ephesus, Greece) – Gold and silver jewelry confiscated to pay budgetary deficit and avoid a collapse of the city-state, no compensation is paid to owners (reported by Aristotle).

Punic Wars Inflation of 241-146 BC (Rome) – Continuous debasement of gold and silver coinage to pay for wars against Carthage. Wealthy classes of savers, who saved in the form of metal, suffered greatest losses, heavily indebted masses did not object.

Sovereign Default of circa 200 BC (Miletus, Greece) – Economic depression, first instance of forced public bond subscription by citizens to pay the debts of bankrupt city-state.

Inflation Crisis of 64 AD (Rome) – Emperor Nero debased gold, silver and copper coinage as an indirect tax on Roman savers, policy ignited inflation and caused general impoverishment of the lower classes. This same devaluation tactic was used repeatedly by emperors during Rome’s decline and fall.

Inflation Crisis of 301 (Rome) – Emperor Diocletian minted an overvalued silver denarius and touched off a rapid and devastating price inflation, then speculative frenzy and social chaos.

Inflation Crisis of 1020 (China) – One of the first paper money printing schemes (S’ung Dynasty) to buy off potential invaders that led to rapid inflation.

(Note: China’s Cai Lun invented paper in 105 AD, so it is fitting that China would introduce the first paper banknotes in 806 AD. Upon Marco Polo’s return from China, he described its use as money: “All these pieces of paper are issued with as much solemnity and authority as if they were of pure gold or silver; and on every piece a variety of officials, whose duty it is, have to write their names, and to put their seals. And when all is duly prepared, the chief officer deputed by the Khan smears the Seal entrusted to him with vermilion, and impresses it on the paper, so that the form of the Seal remains printed upon it in red; the Money is then authentic. Anyone forging it would be punished with death.” It would follow too that the first abuses in the printing of paper money would occur where it was first issued.)

Hyperinflationary Crisis of 1166 (China) – Money printing scheme (Chin Dynasty) based on government monopoly of tea and salt to pay for war against Mongols led to hyperinflationary breakdown.

Inflation Crisis of 1296, 1309, 1350 and 1374 (China) — Series of inflationary crises related to debased currency issuance by various dynasties, explosive credit and subsequent economic breakdowns.

Inflation Crisis of 1455 (China) – Excess issuance of paper money caused inflation to soar, paper currency eliminated as means of payment for several hundred years.

Medici Bank Collapse of 1494 (Florence, Italy) – Corruption, faulty investment, political intrigue and incompetent management brought down the famed Florentine bank — millions lost resulting in tyrannical taxes imposed on citizenry.

Inflation of 1520-1640 (Spain, Europe) – Gold and silver from the New World drove down the value of money leading to Europe-wide hyperinflation. Spain defaulted on its sovereign debts in 1557, 1560, 1575 and 1596.

Tipper and See-Saw Debt Crisis of 1621 (Holy Roman Empire) – States in Europe minted debased coinage that touched off an inflationary nightmare resulting in widespread riots, political instability and crippled economies.

Tulipmania of 1637 (Netherlands) – Speculative frenzy in tulip bulbs ruined thousands when the bubble burst.

South Sea Bubble of 1720 (Great Britain) – Collapse of inflated shares in the South Sea Company ruined investors; value depended on individuals willing to pay ever higher prices for shares, not company- generated profit.

Mississippi Bubble of 1720 (France) – Financial crisis and paper money scheme perpetrated by John Law based on exaggerated wealth and trade opportunities in Louisiana. French economy collapsed when the bubble burst.

Crisis of 1772 (Great Britain) – Triggered by collapse of a major London banking house.

Continental Currency Failure of 1779 (United States) – America’s first currency collapsed, George Washington complained that a “wagon load of money will scarcely purchase a wagon load of goods”, Spanish silver dollar cost 1.25 Continentals in 1777 and 500 Continentals in 1781.

Fiat money inflation of 1789 (France) – Over-issuance of paper money plunged nation into decade-long inflationary crisis leading ultimately to the French Revolution.

Panic of 1792 (United States) – Brought on by credit expansion of newly formed Bank of the United States and rampant speculation by prominent bankers.

Panic of 1796 (United States, Great Britain) – Precipitated by collapse of inflated land prices.

Debt panic of 1813 (Denmark) – Early sovereign default created internal financial crisis.

Panic of 1819 (United States) – End to first American boom-bust economic cycle fueled by unrestrained issuance of paper money through the Second Bank of the United States, encouraged speculation resulting in financial disaster.

Panic of 1825 (Great Britain) – Stock market crashed due to widespread failure of British banks, near collapse of the Bank of England.

Panic of 1837 (United States)– Deflationary breakdown in the United States caused 25% unemployment rate, bank collapses, business failures.

Panic of 1847 (Great Britain) – Financial markets collapsed following 1840s railroad boom with similar effects to the Panic of 1837, specie standard reinstituted as a result.

Panic of 1857 (Global) – First pervasive international economic breakdown. New York financial sector did not recover until after the Civil War Panic of 1866.

Panic of 1873 (United States, Europe) – So-called “Long Depression” lasting twenty years started with financial failures in Vienna and spread to rest of Europe and finally the U.S., resulting in widespread bank failures and railroad bankruptcies.

Panic of 1884 (United States) – Caused by tight credit following depletion of gold reserves in Europe and failure of two New York City banks with ripple effect to other banks.

Panic of 1890 (Great Britain) – Crisis triggered when Barings Bank nearly went bankrupt due to poor investments in Argentina. Bank of France bailed out British central bank.

Panic of 1893 (United States)– Gilded Age collapse and stock market collapse similar to 1873 triggered by shaky railroad investments and a coup in Argentina, also caused a run on gold at the U.S. Treasury.

Panic of 1896 (United States)– Commodity price deflation and a drop in U.S. silver reserves caused stock market collapse and minor economic depression.

Panic of 1901 (United States) – First crash on the New York Stock Exchange precipitated once again by speculation in railroad stocks.

Panic of 1907 (United States) – Major banking panic, run on deposits, stock market collapse (many feel that this panic led ultimately to the creation of the Federal Reserve System). JP Morgan organized bank bailout to keep financial failure contained.

Panic of 1910–1911 – The after-effects of the Sherman Anti-Trust Act, the break-up of Standard Oil caused slight depression.

Nightmare Hyperinflation of 1923 (Germany) – Inflation rate hit 3,250,000% per month at its peak, many blamed World War I reparations as the cause of the money printing binge that brought on the crisis. (Note: Similar hyperinflationary crises, though not as severe, occurred during the 1920s in Hungary, Poland, Austria and the Soviet Union.)

Wall Street Crash of 1929 (United States, Global) – The most devastating stock market crash in U.S. history launched the Great Depression of the 1930s.

Nightmare HyperInflation of 1944 (Greece) – Started with the German occupation and reached its peak after liberation. Citizens refused to accept the Drachma in commerce, the country became impoverished.

Nightmare Hyperinflation of 1946 (Hungary) – Worst inflation ever recorded, prices doubled every fifteen hours wiping out savings.

Stagflation Crisis of  1973 (United States, Global) – Global double-digit inflation rates and high unemployment caused by decoupling gold from the dollar and two associated dollar devaluations (1971, 1973).

Debt Crisis of 1982 (Latin America) – Excessive external debt triggered most serious capital crisis in Latin American history,  currency devaluations and  sovereign debt defaults.

Stock market crash of 1987 (Global) – Began in Hong Kong, spread to Europe and then the United States, the largest one-day percentage decline in history of Dow Jones Industrial Average (called Black Monday).

S&L crisis of 1989-1991 (United States) – Nearly one-fourth of U.S. savings and loan associations failed as the result of bad real estate loans and brought on a mirror real estate crash and disinflationary economic environment.

Asset bubble of 1990 (Japan) – Stock and real estate prices crashed launching Japan’s Lost Decade, deflationary/disinflationary crisis largely confined to Japan.

Scandinavian banking crisis of 1990 (Sweden, Finland) –  Currency and financial institution breakdown, real estate bust.

Pound sterling crisis of 1992–93 (Great Britain) – Speculative attack on British pound forced UK’s withdrawal from European Exchange Rate Mechanism and caused recession.

“Tequila Crisis” of 1994 (Mexico) – Sudden devaluation of peso touched off high inflation,  asset destruction, bank runs and  controversial bailout by the United States government.

Financial Crisis of 1997 (Asia) – Financial contagion affected several Asian nations, including stock market collapses, high inflation and unemployment, real estate busts and a general financial panic.

Monetary Crisis of 1998 (Russia) – Russia devalues ruble, defaults on its debts with knock-on effects globally, including an 11.5% drop in the Dow Jones Industrial Average in three trading sessions and the collapse of Long Term Capital Management.

Economic collapse of 1999 (Argentina) – Government defaults on sovereign debts causing bank runs, riots, capital flight. Overnight, the government freezes all bank accounts for 12 months. The economy grinds to a virtual halt.

Dot-com bubble bust of 2001 (United States) – Internet stock speculative frenzy ended in general stock market collapse and malaise that lasted for over a decade. Helped launch gold’s secular bull market.

Bank crisis of 2008 (Iceland) –  Banks’ collapse caused depositor run, sharp drop in value of Icelandic kronor.

Nightmare Hyperinflation of 2008 (Zimbabwe) – The worst 21st century hyperinflation thus far, a 79.6 billion per cent annual inflation rate at its peak in 2008.

Financial Crisis of 2008 (United States, Global) – Near collapse of global financial system caused extensive, widespread government bailouts and strong international safe-haven gold demand among private investors, institutions and central banks.

Sovereign debt crisis of 2010 (European Union) – Began in Greece and spread through most of Europe. Ongoing crisis precipitated fear among global investors about stability of Europe’s banking system and the euro currency bloc.

* * * * * * * * * *

Michael J. Kosares is the founder of USAGOLD and the author of “The ABCs of Gold Investing – How To Protect and Build Your Wealth With Gold.”

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Related reading:

Black Swans, Yellow Gold
How gold performs during periods of deflation,
chronic disinflation, runaway stagflation and hyperinflation

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References

Financial Crisis/Wikipedia
Hyperinflation/Wikipedia
Foreign Bonds: An Autopsy/Max Winkler (source ancient examples)
Ten Fascinating Economic Collapses/Richard Urban
China’s First Experience with Paper Money/Mike Hewitt

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Better Business Bureau Five Star Review

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Recent Better Business Bureau Client Review

“For more than a year now, I have been very concerned about an impending crisis in the financial markets and decided to diversify into gold coins. Thus, I visited a couple of high profile online-coin shops/discount dealers which advertise extensively over the internet and was immediately overwhelmed by the confusion and large spread in prices for the same coin. I also noticed that the BBB reviews of these firms were far from stellar with complaints about quality of the merchandise, spotted and/or marked coins, incomplete orders with substituted items, etc.

Since I was interested in a large order of several hundreds one-ounce coins, I got really concerned and realized that it is truly a wild world out there in the gold coin business. I needed to look for a trustworthy firm and went to the BBB. I immediately found USAGOLD which had received an A+ rating and had ZERO consumer complaint. I got in touch with Jonathan Kosares who immediately inspired me confidence.

I explained to him that I am a “safe-haven” investor not interested in a collection of exotic rare coins but rather in a Krugerrand-type of investment which ensures liquidity and price appreciation. After numerous phone conversations, Jonathan got a better understanding of my investment goals and slowly directed me towards pre-1933 certified coins which had added premiums currently at historic lows. He also explained to me, referring to the graphs on the USAGOLD website, that these premiums can typically reach values 2 to 3 times that of the underlying gold itself in times of financial crisis!

For someone like me, concerned by an impending meltdown of the markets, this was an ‘Eureka’ moment. Jonathan had truly identified – better than I could articulate myself – my investment goals. So far this year, I have made two purchases, the last one being very significant. Throughout, service was impeccable, delivery was fast and the coins were exactly as described. I could not be happier and I am looking forward to more purchases in the future, assuming the financial markets still hold…”

Scorecard: 38 45 48 five star reviews. Zero complaints.
A+ rating. Accredited since 1991.

[Link]

USAGOLD Recommendation: The precious metals industry is unique in the financial industry in that it is not subject to oversight or regulation by third-party government entities like the SEC or CFTC. As such, marketplace forums and feedback sites often serve as a replacement for investors attempting due diligence. While several options can be found, by far the most impartial and least susceptible to vested influence is the Better Business Bureau. When looking at a company’s BBB profile, don’t focus solely on the rating. To be honest, pretty much everybody has an ‘A’ or ‘A+’ rating. What is far more important to assess is the number and nature of complaints, number and caliber of positive and negative reviews, longevity with the BBB, as well as the number of ‘stars’ given a company through the actual customer review system.

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Favorite web pages

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King Ibn Saud’s 35,000 British sovereign gold coins

“In August, 2018 those same sovereigns would bring a little less than $10 million at melt value ($282.50 each/$1200 per ounce gold price) and a barrel of oil is selling for about $75. Thus, a British sovereign today can buy less than four barrels of oil — a statistic that gives you an inkling of gold’s current under-valuation.  For gold to buy the same amount of oil now that it did in 1933, the metal would have to go to $3186 per ounce.”

For the full story

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Flash Special!

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While they last
For those who think we might have hit bottom

70  Gold Canadian Maple Leaf (1 tr oz)

–– At 2% (!) over melt first-come, first-served ––

1-800-869-5115 x 100
Or order online anytime

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Afternoon Update

(USAGOLD – August 21, 2018) – As we suggested might be the case in this morning’s DMR, gold in fact did end up going positive today finishing at $1196.30 – up $4.60 on the day.  An appreciating yuan was the key factor. A stronger Japanese yen helped matters.  Also helping gold today were reports that Russia had added 800,000 ounces of gold to its reserves in July.  That puts Russia’s total gold reserve at just under 2000 tonnes – the fifth largest in the world. Gold is now up $20 from its $1174 low last Thursday.

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Degussa Market Report

Earlier today we promised reposting the latest Degussa Daily Market Report (Dr. Thorsten Polleit) in full.  It is now on the board further down the page.  It is highly recommended.  Please take special note of the accompanying charts.

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We now carry the new silver Krugerrand

FIRST YEAR OF ISSUE
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Available online HERE
(Anytime)

Or by calling the
ORDER DESK
1-800-869-5115 X100
(8am to 7pm weekdays MT)

In August 2018, for the first time in it’s 50+ year history, the South African mint released a Silver Krugerrand.  A one ounce coin minted to a purity of .999, the Silver Krugerrand mirrors it’s gold counterpart, with the reverse featuring the springbok and the obverse the bust of Paul Kruger, who played a significant role in South Africa gaining independence from Britain in the late 1800’s.  Offered at a slightly lower premium to the popular American Silver Eagle, the Silver Krugerrand is an attractive option for those looking to procure silver through one ounce government minted coins, at a slight lower cost per ounce.  Add in the intrigue of ‘first year of issue’, and these are a great option for building a position in silver, especially at current prices.

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No DMR today

But we will post an update later if anything interesting develops. . . . .

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Bridging the ‘fourth turning’ with gold

IN-DEPTH WEEKEND READING


The Fourth Turning –  the influential work by William Strauss and Neil Howe published in 1997 – uncannily predicted much of what has happened in America over the past twenty years. “The next Fourth Turning,” the authors predicted, “is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation, and empire.”

Howe designates 2008 as the start date for the current fourth turning. Since turnings typically last 20-23 years, it will end sometime between 2028 and 2031. That puts us about midway through the cycle.  At the moment, if the politicians, Wall Street and press accounts on the status of the economy are to be believed, the good times have arrived.  For many Americans, though, that arrival has some pretty dark clouds hanging over it – the deep political divisions, the escalating trade wars, the emerging nation debt and currency crisis, the overvalued stock market, the threat of rising interest rates –  and that is just a sampling of fourth-turning strata that worries global investors.  The nation despite the rosy outlook is a bit unnerved by it all.  For his part, Howe, who saw it coming, believes things could get much worse before before they get better.

“The fourth turning,” he said in a MacroVoices interview last August, “is the final season of history, if you will, the final generation. And that is the period of crisis. That is the period when we tear down institutions that we’ve built, everything that’s dysfunctional. And we sort of rebuild things from scratch again. And it usually follows a period where—it’s bound up in a period – where there’s complete disgust, complete distrust with what we have.”

There is a certain amount of inevitability interlaced throughout Howe’s analysis and a good many will have a hard time accepting it for that reason – especially those who believe that somehow this period in economic history is going to be different from others.  Howe though sees strong similarities to the period just before and after World War II, the last fourth turning.

Once again his viewpoint, expressed almost a year ago, is uncanny:  “And then the crisis,” he says, “when all of these problems begin to coalesce into one huge problem. It’s when the Great Depression met all of these—the rise of fascism both in Asia and in Europe, and everything came together, currency wars, everything became part of a huge problem. Which, by the resolution, you see—and this is what happens at every fourth turning. All the little problems come together into a giant problem. And then the giant problem gets completely resolved.”


If you have an interest in the kind of analysis you are now reading, you might appreciate our monthly newsletter. You can sign-up for it here. Always timely and written for gold and silver owners or for those thinking about owning it.  Are you a prospective gold owner trying to make up your mind?  Your interest is welcome at no cost or obligation.


Is that not where we find ourselves today – in the current fourth turning?

“. . .I would say these are strong parallels that we see between the decade we’ve been living through and the 1930s,” he says. “Because it isn’t just what happens to/in the economy. I mean, you consider so many ways in which this last decade has recapitulated the 1930s, starting off with a financial crisis, worries about deflation, worries about declining fertility rates, and currency wars, and beggar thy neighbor policies, and radical attempts by monetary and ultimately fiscal policy to remedy the situation.”

Howe has something of a philosophical partner in the great Russian novelist, Leo Tolstoy who examined the role of fate in human affairs in his masterpiece novel, War and Peace. I am among the group that believes we are carried on great waves of history whether we like or not – what Tolstoy referred to as an historic “fatalism” to which we are all subject:

*We are forced to fall back on fatalism as an explanation of irrational events (that is to say, events the reasonableness of which we do not understand). The more we try to explain such events in history reasonably, the more unreasonable and incomprehensible do they become to us. Each man lives for himself, using his freedom to attain his personal aims, and feels with his whole being that he can now do or abstain from doing this or that action; but as soon as he has done it, that action performed at a certain moment in time becomes irrevocable and belongs to history, in which it has not a free but a predestined significance.

There are two sides to the life of every man, his individual life, which is the more free the more abstract its interests, and his elemental hive life in which he inevitably obeys laws laid down for him. Man lives consciously for himself, but is an unconscious instrument in the attainment of the historic, universal, aims of humanity. A deed done is irrevocable, and its result coinciding in time with the actions of millions of other men assumes an historic significance. The higher a man stands on the social ladder, the more people he is connected with and the more power he has over others, the more evident is the predestination and inevitability of his every action. ‘The king’s heart is in the hands of the Lord.’ A king is history’s slave.” – Leo Tolstory, War and Peace

Like Howe, I too believe that the “giant problem” will somehow find resolution, but my concern is getting across the bridge between the “final season of history” and its ultimate resolution – whatever fate might dictate. That is why I own gold personally and why I think every thinking investor should own it as well. The name of the game is to protect wealth and not leave the results of your life work on the table as the fourth turning moves into its final phases.

A diversification of about 10%-30%, in my view, will get the job done as it did in the first phases of the crisis from 2008-2009.* How high you go within that range depends upon on how strongly you feel about the dangers that lie ahead.

–– Michael J. Kosares, USAGOLD


Neil Howe interview (Courtesy of MacroVoices/Audio version)

* During the early stages of the crisis that began in 2008, gold moved sharply to the downside.  In January, 2008 the metal was trading in the $900 range.  By October, as the first wave of the crisis washed over the financial markets, it had fallen to $730 – a decline of roughly 20%.  Then as the full extent of the financial crisis became apparent and the Fed introduced money printing measures,  it began to rise reaching $880 by the end of 2008.  From 2009 to September 2011, gold rose to its all-time high of $1895 – a 215% gain in three years.

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Gold’s sharp rally late looks like short-covering

AFTERNOON UPDATE

(USAGOLD – August 17, 2018) – As you can see in the accompanying chart, most of gold’s $11 move to the upside this afternoon occurred late in COMEX trading. The sharp rally has the classic look of short-covering though we won’t have any data to back that hunch until the Commitment of Traders report is released next week. Many analysts over the past few weeks have pointed to the record short position in gold as cause to be optimistic. At some point, shorts need to cover their positions in order to lock-in their profits. Simultaneous to gold’s reversal, the dollar took an equally sharp tumble. Both moved in the absence of any notable or publicly disclosed political or economic news.

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Gold’s sharp rally late looks like short-covering

AFTERNOON UPDATE

(USAGOLD – August 17, 2018) – As you can see in the accompanying chart, most of gold’s $11 move to the upside this afternoon occurred late in COMEX trading.  The sharp rally has the classic look of short-covering though we won’t have any data to back that hunch until the Commitment of Traders report is released next week. Many analysts over the past few weeks have pointed to the record short position in gold as cause to be optimistic.  At some point, shorts need to cover their positions in order to lock-in their profits.  Simultaneous to gold’s reversal, the dollar took an equally sharp tumble.  Both moved in the absence of any notable or publicly disclosed political or economic news.

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Gold on the mend, import prices up 4.8% without tariff kicker

Gold prices are on the mend this morning after yesterday’s sharp selloff – up $4.50 at $1197.50.  Silver is up 8¢ and back over the $15 mark at $15.07. In addition to a boost from emerging country currencies stabilizing, gold was helped by import prices registering a 4.8% gain over July of last year – a number that does not include tariff and duties add-ons. Oil prices are back to the upside on reports that Saudi Arabia cut production and concerns about Iranian supply reductions as U.S. sanctions kick-in. All in all, though markets’ crisis atmosphere appears to be more subdued today, few believe things will remain quiet for long.

Quote[s] of the Day
“We will implement a retail price increase and incremental retailer programs to help offset the inflationary headwinds we and others in the industry are experiencing.” – Andrew Callahan, Chief Executive Officer, Hostess Brands (Bloomberg/Inflation is coming to a theater near you)

“Products that we import into the U.S. from China, all of those products are going to be ultimately affected by the tariffs. It’s about $3.6 million per quarter, but we plan to pass these tariff charges on to our customers.” – Richard White, Chief Financial Officer, Diodes, Inc. (Bloomberg/Inflation is coming to a theater near you)

Chart of the Day

Chart note 1: With the US dollar the centerpiece of interest the past few days, we thought it appropriate to post the long-term overlay chart of the gold price and the major-currency version of the US Dollar index. As you can see, the dollar has been in a secular, long-term decline against other major currencies since the early 1970s when the U.S. abandoned gold-backing for the currency and the world switched to free-floating gold and currency prices. Despite all the talk of a strong dollar and how Treasury secretaries historically back the concept, the reality is the opposite – a weak dollar when measured against its major competitors. In the end, unencumbered ownership of physical gold coins and bullion, as this chart amply illustrates, has proven to be a very effective defense in the on-going process.

Chart note 2: The declining tops and bottoms indicate long-term erosion in the value of the dollar and give credence to the argument in financial circles that we may be in the beginning stages of another major downturn similar to those launched in 1985 and 2002. The 2002 event corresponded with the launch of gold’s secular bull market. Among a group of major financial firms predicting that the U.S. dollar has peaked are Morgan Stanley, State Street Corp. and Wells Fargo & Co.

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DMR–Gold on the mend, import prices up 4.8% without tariff kicker

DAILY MARKET REPORT

Gold prices are on the mend this morning after yesterday’s sharp selloff – up $4.50 at $1197.50.  Silver is up 8¢ and back over the $15 mark at $15.07.  In addition to a boost from emerging country currencies stabilizing, gold was helped by import prices registering a 4.8% gain over July of last year – a number that does not include tariff and duties add-ons. Oil prices are back to the upside on reports that Saudi Arabia cut production and concerns about Iranian supply reductions as U.S. sanctions kick-in.  All in all, though markets’ crisis atmosphere appears to be more subdued today, few believe things will remain quiet for long.

Quote[s] of the Day
“We will implement a retail price increase and incremental retailer programs to help offset the inflationary headwinds we and others in the industry are experiencing.”  – Andrew Callahan, Chief Executive Officer, Hostess Brands (Bloomberg/Inflation is coming to a theater near you)

“Products that we import into the U.S. from China, all of those products are going to be ultimately affected by the tariffs. It’s about $3.6 million per quarter, but we plan to pass these tariff charges on to our customers.” –  Richard White, Chief Financial Officer, Diodes, Inc. (Bloomberg/Inflation is coming to a theater near you)

Chart of the Day

Chart note 1:  With the US dollar the centerpiece of interest the past few days, we thought it appropriate to post the long-term overlay chart of the gold price and the major-currency version of the US Dollar index.  As you can see, the dollar has been in a secular, long-term decline against other major currencies since the early 1970s when the U.S. abandoned gold-backing for the currency and the world switched to free-floating gold and currency prices.  Despite all the talk of a strong dollar and how Treasury secretaries historically back the concept, the reality is the opposite – a weak dollar when measured against its major competitors.  In the end, unencumbered ownership of physical gold coins and bullion, as this chart amply illustrates, has proven to be a very effective defense in the on-going process.

Chart note 2:  The declining tops and bottoms indicate long-term erosion in the value of the dollar and give credence to the argument in financial circles that we may be in the beginning stages of another major downturn similar to those launched in 1985 and 2002. The 2002 event corresponded with the launch of gold’s secular bull market. Among a group of major financial firms predicting that the U.S. dollar has peaked are Morgan Stanley, State Street Corp. and Wells Fargo & Co.

 

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Posted in Daily Market Report, Today's top gold news and opinion |

Alan Greenspan on the effect of cheap imports on interest rates and inflation – November, 2005

“Over the past decade or more, the gradual assimilation of these new entrants into the world’s free-market trading system has restrained the rise of unit labor costs in much of the world and hence has helped to contain inflation.

As this process has unfolded, inflation expectations have decreased, and accordingly, the inflation premiums embodied in long-term interest rates around the world have come down. The effective augmentation of world supply and the accompanying disinflationary pressures have made it easier for the Federal Reserve and other central banks to achieve price stability in an environment of generally solid economic growth.

But this seminal shift in the world’s workforce is producing, in effect, a level adjustment in unit labor costs. To be sure, economic systems evolve from centrally planned to market-based only gradually and, at times, in fits and starts. Thus, this level adjustment is being spread over an extended period. Nevertheless, the suppression of cost growth and world inflation, at some point, will begin to abate and, with the completion of this level adjustment, gradually end.

These global forces pressing inflation and interest rates lower may well persist for some time. Nonetheless, it is the rate at which countries are integrated into the global economic system, not the extent of their integration, that governs the degree to which the rise in world unit labor costs will continue to be subdued. Where the global economy is currently in this dynamic process remains open to question. But going forward, these trends will need to be monitored carefully by the world’s central banks.” – Alan Greenspan, NPR interview, 11-3-2005

USAGOLD note:  For more than a decade after Greenspan’s remarks, cheap imports continued to act as a brake on inflation.  Now courtesy of tariffs and sanctions, that brake has been released at least for the interim.  Whether or not it extends into the medium and long term depends upon the situation outlined in the previous post and note.

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Gold warms; its third day on the plus side

Gold is warming a bit as we head into the second half of summer having spent the past three days in positive territory, though modestly so. The yellow metal is trading in the $1216 range – up $2.50 on the day. Silver is up 7¢ at $15.49. It is still too early to call the positive pricing in recent days a turnaround, but at least we can say the metals are steady at current prices, even if the support seems somewhat tenuous. In a bit of a surprise given widespread anecdotal reports of price increases from various manufacturers and wholesalers over the past couple of weeks, producer prices came in unchanged this morning. Some among the financial commentariat will see the timid showing as supporting the secular stagnation argument and cause for the Fed to go easy on its interest rate plans. Others will see it simply as the lag between the reporting framework and reality. That, in a small way, might be adding to gold’s performance thus far today.

Quote of the Day
“One thing that might even be most disturbing of all, is that no real crisis ever ultimately expresses itself, which actually, oddly enough, may be the worst outcome of all. That is to say, everything we see about our world today, the rich getting richer, the poor getting poorer, democracy sort of ebbing away, people feeling powerless over their political lives, people feeling less and less a sense of civic participation or belonging, and we have kind of turned that up. There is an interesting book by Tyler Cohen. He is a very popular writer now, he wrote Average is Over and The Great Stagnation. He wrote a recent book called The Complacent Class. If you want to read a book about America’s future in the absence of a fourth turning, read that book. The real rate of return gets lower and lower, we kind of approach the stationary state, productivity growth kind of ebbs to nothing, we become a kind of nominal market society, but one in which all the markets are dominated by a few very large companies with enormous market power and concentration. In that kind of society, highly stratified, not feeling at all like what we think of as being America, is, I think, the scariest one, one in which global problems, problems of global order are not rectified. And it is one that disturbs me the most.” – Neil Howe, McAlvany Weekly Commentary, 7/7/2017

Chart of the Day

Chart note: During that 18-year period from 2000 to present, the one-year Treasury provided a positive real rate of return in only six years. The rest of the time, the real rate of return was negative. The real rate of return is also important in the context of Federal Reserve interest rate policy in that it signals the performance of the dollar against other currencies and gold. At the moment, the consensus opinion is that the Fed will keep interest rates below the inflation rate in order to keep the economy from swinging into a downturn, a situation causing some analysts to question the longer-term staying power of the recent rally in the dollar.

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DMR–Gold warms; its third day on the plus side

DAILY MARKET REPORT

Gold is warming a bit as we head into the second half of summer having spent the past three days in positive territory, though modestly so.  The yellow metal is trading in the $1216  range – up $2.50 on the day. Silver is up 7¢ at $15.49.  It is still too early to call the positive pricing in recent days a turnaround, but at least we can say the metals are steady at current prices, even if the support seems somewhat tenuous.  In a bit of a surprise given widespread anecdotal reports of price increases from various manufacturers and wholesalers over the past couple of weeks, producer prices came in unchanged this morning.  Some among the financial commentariat will see the timid showing as supporting the secular stagnation argument and cause for the Fed to go easy on its interest rate plans.  Others will see it simply as the lag between the reporting framework and reality.  That, in a small way, might be adding to gold’s performance thus far today.

Quote of the Day
“One thing that might even be most disturbing of all, is that no real crisis ever ultimately expresses itself, which actually, oddly enough, may be the worst outcome of all. That is to say, everything we see about our world today, the rich getting richer, the poor getting poorer, democracy sort of ebbing away, people feeling powerless over their political lives, people feeling less and less a sense of civic participation or belonging, and we have kind of turned that up. There is an interesting book by Tyler Cohen. He is a very popular writer now, he wrote Average is Over and The Great Stagnation. He wrote a recent book called The Complacent Class. If you want to read a book about America’s future in the absence of a fourth turning, read that book. The real rate of return gets lower and lower, we kind of approach the stationary state, productivity growth kind of ebbs to nothing, we become a kind of nominal market society, but one in which all the markets are dominated by a few very large companies with enormous market power and concentration. In that kind of society, highly stratified, not feeling at all like what we think of as being America, is, I think, the scariest one, one in which global problems, problems of global order are not rectified. And it is one that disturbs me the most.” – Neil Howe, McAlvany Weekly Commentary, 7/7/2017

Chart of the Day

Chart note: During that 18-year period from 2000 to present, the one-year Treasury provided a positive real rate of return in only six years.  The rest of the time, the real rate of return was negative.  The real rate of return is also important in the context of Federal Reserve interest rate policy in that it signals the performance of the dollar against other currencies and gold.  At the moment, the consensus opinion is that the Fed will keep interest rates below the inflation rate in order to keep the economy from swinging into a downturn, a situation causing some analysts to question the longer-term staying power of the recent rally in the dollar.

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Gold stages strong recovery in overnight markets, China yuan policy and Iran sanctions major influences

Gold staged a strong recovery overnight bouncing off lows at $1207 to trade as high as $1216 in overnight markets. It has since backed off a bit in early New York trading – now at $1213.50 on the day and up $4.50. Silver is also up trading at $15. Gold is supported by two ongoing influences this morning – China’s reinforcing of intentions to stabilize the yuan and the America’s imposition of sanctions on Iran. The first sends a signal to speculators to tread carefully shorting the yuan. The second drives home the reality of oil supply disruptions and the heightening of tensions throughout the Middle East.

Quote of the Day
“It doesn’t matter where the crisis begins. Once the tsunami hits, no one will be spared. The stock market is going to correct in the face of rising credit losses and tightening credit conditions. No one knows exactly when it’ll happen, but the time to prepare is now. Once the market corrects, it’ll be too late to act. That’s why the time to buy gold is now, while it’s cheap. When you need it most, once the crisis hits, it’ll cost a fortune.” – James Rickards, Daily Reckoning

Chart of the Day

Chart note: This chart illustrates Rickards’ point made in our Quote of the Day about the escalating cost of gold during crisis periods. During the 1970s, an inflationary crisis moved prices radically higher with 1980 registering the greatest increase right at double the previous year. The disinflationary crisis of the 2000s also instigated significant year over year increases with 2006 posting the largest at nearly 36%. For those who understand the inevitability of business and economic cycles, the time to buy gold is when everything is quiet – in times like the present.

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DMR–Gold stages strong recovery in overnight markets, China yuan policy and Iran sanctions major influences

DAILY MARKET REPORT

Gold staged a strong recovery overnight bouncing off lows at $1207 to trade as high as $1216 in overnight markets. It has since backed off a bit in early New York trading – now at $1213.50 on the day and up $4.50. Silver is also up trading at $15.  Gold is supported by two ongoing influences this morning – China’s reinforcing of intentions to stabilize the yuan and the America’s imposition of sanctions on Iran.  The first sends a signal to speculators to tread carefully shorting the yuan.  The second drives home the reality of oil supply disruptions and the heightening of tensions throughout the Middle East.

Quote of the Day
“It doesn’t matter where the crisis begins. Once the tsunami hits, no one will be spared. The stock market is going to correct in the face of rising credit losses and tightening credit conditions. No one knows exactly when it’ll happen, but the time to prepare is now. Once the market corrects, it’ll be too late to act. That’s why the time to buy gold is now, while it’s cheap. When you need it most, once the crisis hits, it’ll cost a fortune.” – James Rickards, Daily Reckoning

Chart of the Day

Chart note:  This chart illustrates Rickards’ point made in our Quote of the Day about the escalating cost of gold during crisis periods.  During the 1970s, an inflationary crisis moved prices radically higher with 1980 registering the greatest increase right at double the previous year. The disinflationary crisis of the 2000s also instigated significant year over year increases with 2006 posting the largest at nearly 36%.  For those who understand the inevitability of business and economic cycles, the time to buy gold is when everything is quiet – in times like the present.

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Gold tumbles in Asia, Europe; stages minor recovery in U.S.

Gold took a bit of a tumble in Asian and European markets overnight trading at one point just below $1208 before staging a minor recovery. It is now trading at the $1211.50 level in U.S. markets – down $2.00 on the day – as China’s yuan and Japan’s yen stubbornly track lower. Currency traders, at this juncture, seem poised to test China’s support of the yuan signaled late last week. Silver is down 5¢ this morning at $15.33. The markets in general seem to be off to a tenuous start for the week with stocks on the downside and bond yields steady ahead of a heavy issue of Treasuries through mid-week and inflation numbers on Thursday and Friday.

Quote of the Day
“Meanwhile, China instability and trade fears see EM markets take another leg lower, with particular market concern for the highly levered Asian economies. De-risking/de-leveraging dynamics attain self-reinforcing momentum, as contagion effects engulf the global ‘periphery.’ Fears of global financial fragility and economic vulnerability see risk aversion begin to gravitate toward the ‘core.’ Fears of EM central bank and Chinese selling of U.S. Treasuries overwhelm safe haven buying, as de-risking/de-leveraging dynamics see a widening of Credit spreads and illiquidity begin to impact ‘core’ fixed-income markets. In such a problematic global scenario, I ponder whether Beijing might perceive it’s playing with a relatively stronger hand than their U.S. adversary. Meanwhile, contagion effects would set their sights on the ‘periphery of the core.’ This just doesn’t seem all that far-fetched.” – Doug Noland, Credit Bubble Bulletin

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: If you follow the on-going trade war between the United States and China with even passing interest, you have no doubt come across references to China selling U.S. Treasuries as its ultimate hole card. This chart shows something that few, including many financial journalists, acknowledge: China has been unloading exchange reserves since 2014 when they peaked at nearly $4 trillion. Most of those reductions, which have taken China’s reserves to a little over $3 trillion (a 25% reduction) came as part of its policy to smooth the yuan exchange rate against the dollar and prevent wholesale capital flight. It is unclear at this juncture to what extent China would be willing to drain reserves in defense of the yuan in the future. Trading Economics, as the chart shows, projects further reserve reductions in the future.

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DMR–Gold tumbles in Asia, Europe; stages minor recovery in U.S.

DAILY MARKET REPORT

Gold took a bit of a tumble in Asian and European markets overnight trading at one point just below $1208 before staging a minor recovery. It is now trading at the $1211.50 level in U.S. markets – down $2.00 on the day – as China’s yuan and Japan’s yen stubbornly track lower.  Currency traders, at this juncture, seem poised to test China’s support of the yuan signaled late last week.  Silver is down 5¢ this morning at $15.33.  The markets in general seem to be off to a tenuous start for the week with stocks on the downside and bond yields steady ahead of a heavy issue of Treasuries through mid-week and inflation numbers on Thursday and Friday.

Quote of the Day
“Meanwhile, China instability and trade fears see EM markets take another leg lower, with particular market concern for the highly levered Asian economies. De-risking/de-leveraging dynamics attain self-reinforcing momentum, as contagion effects engulf the global ‘periphery.’ Fears of global financial fragility and economic vulnerability see risk aversion begin to gravitate toward the ‘core.’ Fears of EM central bank and Chinese selling of U.S. Treasuries overwhelm safe haven buying, as de-risking/de-leveraging dynamics see a widening of Credit spreads and illiquidity begin to impact ‘core’ fixed-income markets. In such a problematic global scenario, I ponder whether Beijing might perceive it’s playing with a relatively stronger hand than their U.S. adversary. Meanwhile, contagion effects would set their sights on the ‘periphery of the core.’ This just doesn’t seem all that far-fetched.” – Doug Noland, Credit Bubble Bulletin

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: If you follow the on-going trade war between the United States and China with even passing interest, you have no doubt come across references to China selling U.S. Treasuries as its ultimate hole card.  This chart shows something that few, including many financial journalists, acknowledge:  China has been unloading exchange reserves since 2014 when they peaked at nearly $4 trillion.  Most of those reductions, which have taken China’s reserves to a little over $3 trillion (a 25% reduction) came as part of its policy to smooth the yuan exchange rate against the dollar and prevent wholesale capital flight. It is unclear at this juncture to what extent China would be willing to drain reserves in defense of the yuan in the future. Trading Economics, as the chart shows, projects further reserve reductions in the future.

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Gold feels the stirrings of a breeze ‘midst the summer doldrums

Gold, lately becalmed in the annual summer doldrums, felt the first stirrings of a breeze this morning – rising nearly $11 to trade at the $1219 level. Silver was similarly disposed trading 22¢ higher at $15.54. Two factors of interest converged to put a breeze in gold’s sails – a less than gratifying jobs report and word that China had intervened “to cushion the yuan, ” as Bloomberg tells it. The Japanese yen, as has been its practice of late, quickly followed the yuan higher.

For those just learning about gold, we will repeat something we have written about often here. It is not sufficient to simply report that gold is down because the dollar is up, as much of the mainstream financial media is wont to do.

Instead, we should be constantly aware that there is usually something else driving the market behavior. So why would China defend the yuan when a weaker currency might be seen as in its best interest? The short answer is to curtail capital flight – money leaving China (or Japan for that matter) to a safer destination – and not to be ignored, to issue a warning to speculators shorting the yuan that China is prepared to spoil the party if need be.

In the interest of posting this report quickly, we will shorten it this morning to the above with a promise to update if market movement and information availability warrant it.

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Gold feels the stirrings of a breeze ‘midst the summer doldrums

DAILY MARKET REPORT

Gold, lately becalmed in the annual summer doldrums, felt the first stirrings of a breeze this morning – rising nearly $11 to trade at the $1219 level. Silver was similarly disposed trading 22¢ higher at $15.54.  Two factors of interest converged to put a breeze in gold’s sails – a less than gratifying jobs report and word that China had intervened “to cushion the yuan, ” as Bloomberg tells it.  The Japanese yen, as has been its practice of late, quickly followed the yuan higher.

For those just learning about gold, we will repeat something we have written about often here. It is not sufficient to simply report that gold is down because the dollar is up, as much of the mainstream financial media is wont to do.

Instead, we should be constantly aware that there is usually something else driving the market behavior.  So why would China defend the yuan when a weaker currency might be seen as in its best interest?  The short answer is to curtail capital flight – money leaving China (or Japan for that matter) to a safer destination – and not to be ignored, to issue a warning to speculators shorting the yuan that China is prepared to spoil the party if need be.

In the interest of posting this report quickly, we will shorten it this morning to the above with a promise to update if market movement and information availability warrant it.

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Posted in Today's top gold news and opinion |

Gold meanders, Sino-U.S. trade muddle deepens as both sides dig in heels

Gold wandered listlessly this morning as both sides in the Sino-U.S. trade dispute dug in their heels – one calling for wider and sharply higher tariffs, the other stating that it would not be pushed around. The yellow metal managed a small gain in Asia only to lose the advantage in European trading. As this report is posted, it is trading at $1215, down $2 on the day. Silver is even at $15.41.

The hardening of positions on both sides, coupled with the inability to get negotiations off the ground, has soured the mood in financial markets across the spectrum and around the world. A statement in this morning’s Wall Street Journal from “a senior administration official” summed up the deteriorating state of affairs: “Communications remain open. There are conversations about whether to have fruitful negotiations or not.” So we are having a conversation about whether or not we are going to have a conversation. We’ll let that one stand on its own. . .That same article linked the latest threat of tariff increases from 10% to 25% to the devaluation of the yuan.

Quote of the Day
“What does it mean for gold’s value proposition? First, gold does not appear to be expensive at the current price. In fact, there is reason to assume that it is (to borrow a term from the investment world) undervalued. Second, gold – if you look at it as a form of money – offers a hedge against the vagaries of the fiat money world. It cannot be debased by central banks’ money printing, and it does not carry a default or counter-party risk. Reflected upon from this perspective, gold certainly has not lost its shine for the long-term oriented investor. This becomes clear once the investor realizes that gold is not an investment instrument but a form of money – in fact, the best and most honest kind of money available.” – Degussa Market Report

Chart of the Day

Chart note: China’s yuan is down nearly 9% against the dollar since the beginning of the year. In competition with the yuan particularly in Asia, the yen has mimicked the yuan and movement in the two obviously has pushed the dollar higher. All of these currencies on a longer timeline, including the dollar, are in the process of being debased informally by their respective governments in terms of their overall purchasing power giving substantial credence to today’s Quote of the Day.

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Gold meanders, Sino-U.S. trade muddle deepens as both sides dig in heels

DAILY MARKET REPORT

Gold wandered listlessly this morning as both sides in the Sino-U.S. trade dispute dug in their heels – one calling for wider and sharply higher tariffs, the other stating that it would not be pushed around.  The yellow metal managed a small gain in Asia only to lose the advantage in European trading.  As this report is posted, it is trading at $1215, down $2 on the day.  Silver is even at $15.41.

The hardening of positions on both sides, coupled with the inability to get negotiations off the ground, has soured the mood in financial markets across the spectrum and around the world.  A statement in this morning’s Wall Street Journal from “a senior administration official” summed up the deteriorating state of affairs:  “Communications remain open.  There are conversations about whether to have fruitful negotiations or not.”  So we are having a conversation about whether or not we are going to have a conversation.  We’ll let that one stand on its own. . .That same article linked the latest threat of tariff increases from 10% to 25% to the devaluation of the yuan.

Quote of the Day
“What does it mean for gold’s value proposition? First, gold does not appear to be expensive at the current price. In fact, there is reason to assume that it is (to borrow a term from the investment world) undervalued. Second, gold – if you look at it as a form of money – offers a hedge against the vagaries of the fiat money world. It cannot be debased by central banks’ money printing, and it does not carry a default or counter-party risk. Reflected upon from this perspective, gold certainly has not lost its shine for the long-term oriented investor. This becomes clear once the investor realizes that gold is not an investment instrument but a form of money – in fact, the best and most honest kind of money available.” – Degussa Market Report

Chart of the Day

Chart note:  China’s yuan is down nearly 9% against the dollar since the beginning of the year.  In competition with the yuan particularly in Asia, the yen has mimicked the yuan and movement in the two obviously has pushed the dollar higher.  All of these currencies on a longer timeline, including the dollar, are in the process of being debased informally by their respective governments in terms of their overall purchasing power giving substantial credence to today’s Quote of the Day.

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Posted in Today's top gold news and opinion |

DMR–The Fed meets. Gold goes down. Like clockwork.

DAILY MARKET REPORT

The Fed meets. Gold goes down. Like clockwork.

This week is no exception though the past three days’ downside has been mild compared to Fed week performances in the recent past. This afternoon we are scheduled for an announcement on what transpired at the meeting. That announcement is not expected to contain any surprises.

That said there is this nettlesome problem of every other major nation state easing monetary policy while the United States tightens. The dollar has been the unwelcome beneficiary in this process. China, Japan, Europe and most of the rest of the world, on the other hand, have watched with gratification as their currencies have sagged. The president has commented notably on the situation and the Fed chairman, even before the president’s comments, seemed to be treading lightly.

“Recent pressure from the president is having no impact on how they [the Fed] respond to data,” Priya Misra, head of global rates strategy at TD Securities recently told Bloomberg. “Ultimately, they will do what is right for the economy.”

That, I imagine, is cipher for saying that the Fed will continue on the path of raising interest rates despite the European Union and the ECB acting in concert to keep the euro down, Japan and the BoJ acting in concert to keep the yen down and China and the PBoC acting in concert to keep the yuan down. The Fed for its part continues on an interest rate path designed, it asserts, to provide space for lowering rates the next time a crisis occurs – a crisis, by the way, that could very well be instigated by the Fed raising rates.

Nevertheless, though unlikely, a minor surprise could be in the offing. If so, it would probably be in the direction of helping gold, not hindering it.

As it is, gold is down $4.50 on the day at $1220. Silver is down 11¢ at $15.44.

Quote of the Day
“I have a rather simple Bubble definition: ‘A self-reinforcing but inevitably unsustainable inflation.’ Most Bubble discussions center on the deflating rather than the inflating phase. A focus of my analysis is the progressively powerful dynamics that fuel Bubble excess, along with attendant distortions and maladjustment – and how they sow seeds of their own destruction. The ongoing ‘global government finance Bubble’ is unique in history. Rarely has market intervention and manipulation been so widely championed. Never have governments and central banks on a concerted basis inflated government debt and central bank Credit. And almost a full decade since the crisis, the massive inflation of ‘money’-like government obligations runs unabated – across the continents.” – Doug Noland, Credit Bubble Bulletin

Chart of the Day

Chart note: This chart summarizes the relationship between U.S. government debt and the purchasing power of the dollar since the early 1970s when the United States abandoned gold and launched the era of fiat money and an ever-expanding national debt. In that period of time, the national debt has gone from $302.6 billion to $2.1 trillion and the dollar has lost nearly 87% of its purchasing power.

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Posted in dailyquotes |

DMR–The Fed meets. Gold goes down. Like clockwork.

DAILY MARKET REPORT

The Fed meets.  Gold goes down. Like clockwork.

This week is no exception though the past three days’ downside has been mild compared to Fed week performances in the recent past.  This afternoon we are scheduled for an announcement on what transpired at the meeting.  That announcement is not expected to contain any surprises.

That said there is this nettlesome problem of every other major nation state easing monetary policy while the United States tightens. The dollar has been the unwelcome beneficiary in this process. China, Japan, Europe and most of the rest of the world, on the other hand, have watched with gratification as their currencies have sagged.  The president has commented notably on the situation and the Fed chairman, even before the president’s comments, seemed to be treading lightly.

“Recent pressure from the president is having no impact on how they [the Fed] respond to data,” Priya Misra, head of global rates strategy at TD Securities recently told Bloomberg. “Ultimately, they will do what is right for the economy.”

That, I imagine, is cipher for saying that the Fed will continue on the path of raising interest rates despite the European Union and the ECB acting in concert to keep the euro down, Japan and the BoJ acting in concert to keep the yen down and China and the PBoC acting in concert to keep the yuan down.  The Fed for its part continues on an interest rate path designed, it asserts, to provide space for lowering rates the next time a crisis occurs – a crisis, by the way, that could very well be instigated by the Fed raising rates.

Nevertheless, though unlikely, a minor surprise could be in the offing. If so, it would probably be in the direction of helping gold, not hindering it.

As it is, gold is down $4.50 on the day at $1220.  Silver is down 11¢ at $15.44.

Quote of the Day
“I have a rather simple Bubble definition: ‘A self-reinforcing but inevitably unsustainable inflation.’ Most Bubble discussions center on the deflating rather than the inflating phase. A focus of my analysis is the progressively powerful dynamics that fuel Bubble excess, along with attendant distortions and maladjustment – and how they sow seeds of their own destruction. The ongoing ‘global government finance Bubble’ is unique in history. Rarely has market intervention and manipulation been so widely championed. Never have governments and central banks on a concerted basis inflated government debt and central bank Credit. And almost a full decade since the crisis, the massive inflation of ‘money’-like government obligations runs unabated – across the continents.” – Doug Noland, Credit Bubble Bulletin

Chart of the Day

Chart note:  This chart summarizes the relationship between  U.S. government debt and the purchasing power of the dollar since the early 1970s when the United States abandoned gold and launched the era of fiat money and an ever-expanding national debt.  In that period of time, the national debt has gone from $302.6 billion to $2.1 trillion and the dollar has lost nearly 87% of its purchasing power. 

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Posted in Today's top gold news and opinion |