Author Archives: USAGOLD

Gold down today on trend continuation

Gold was down today on a continuation of trends in place since mid-September. It finished at $1268.17 off $6.55 on the day.  Silver also tracked lower finishing the day at $16.57, down 4¢.  Both metals have had trouble finding solid footing amidst the unwinding of commodity exchange long positions and some short-selling.

Meanwhile, the World Gold Council reported earlier today that ETF inflows continued unabated as the price dropped in September. Thus far this year ETFs have added 192 tonnes of gold to their holdings. ETFs are the favored vehicle for funds and institutions  globally. In short, as speculators unloaded paper positions, physical accumulators loaded up.

Quote of the Day
“With its long history as a store of value independent of the financial system, gold is a natural investment for many German investors. In 2016, Kantar TNS surveyed more than 2,000 German investors on our behalf, revealing that:

• 59% of respondents agreed with the statement that gold will never lose its value in the long-term
• 48% agreed with the statement that owning gold makes me feel secure for the long-term • 42% agreed with the statement I trust gold more than the currencies of countries.

When asked why they invested in gold, 57% of bar and coin investors said it was to protect their wealth and 28% said it was to make good returns in the long-term. It is clear gold fulfils an important long-term, wealth preservation role in German investors’ portfolios.” – World Gold Council, Germany’s Golden Decade

In keeping with that quote from the World Gold Council, new visitors might be interested to know that USAGOLD agrees with German investors on gold’s role in the long-term investment portfolio.  Here is a page posted for high net worth investors that outlines our philosophy in that regard. . . .From that page:

Commonality is probably something you would not expect to find as an attribute of a brokerage firm, but when it comes to gold it is an important one. Having a similar world view goes a long way in establishing the common ground essential to a good working relationship. For over 40 years we have resolutely advocated owning gold for asset preservation purposes. Admittedly, this philosophy does not resonate with all prospective gold owners, but if it does with you, we think you will find our firm a kindred spirit.”


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Gold is up this year not just in dollars but in every major currency

Why it’s important to the typical gold investor

by Michael J. Kosares
Author: The ABCs of Gold Investing
Founder: USAGOLD

“Even those of us who have been tracking gold’s progress for decades frequently give in to the ease of quoting gold’s value in terms of fiat currency – most commonly in US dollars. And yet, we have it the wrong way round. Gold is in fact the centre of the economic universe, and all the fiat currencies (including cryptocurrencies) revolve around gold.” – Jeff Thomas, InternationalMan.com

Most gold investors are aware that major national currencies have been in an uptrend against the dollar since the beginning of the year. What might be surprising is the degree they are up against the dollar. Here is the scorecard:

Euro –– +10.3%
Japanese yen –– + 4.2%
Chinese yuan –– + 4.5%
Swiss franc –– + 5.1%
British pound –– + 8.9%
Australian dollar –– + 9.0%
Canadian dollar –– + 7.2%
(As of 9/27/2017)

Even more surprising is the degree to which gold has strengthened against those same currencies. Here is that scorecard:

Euro –– + 1.1%
Japanese yen –– + 8.0%
Chinese yuan –– + 6.5%
Swiss franc –– + 6.1%
British pound –– + 3.4%
Australian dollar –– + 2.1%
Canadian dollar –– + 3.2%
U.S. dollar –– + 11.5%
(As of 9/27/2017. See charts below.)

Gold and the dollar are often referred to as safe havens in the same breath, but what these numbers tell us is that – at least for now – gold increasingly has become the safe haven of choice. It is too early to know whether or not the across-the-board uptrend in gold will continue, but it is worth noting and monitoring. Clearly, significant capital is finding its way to the gold market globally and we suspect that institutional investors and funds have played the dominant role.

Why is gold’s appreciation against domestic national currencies important to the individual American gold investor?

It identifies an important trend in gold ownership taking hold in the top economies around the world – a developing investor mindset and response to host country monetary policies that could be of immense importance going forward. It is revealing that the same phenomenon has taken root concurrently in all eight of the countries represented by the currencies listed above.

The pattern reflects concern about central banks’ ability to lift local economies out of a persistent disinflationary malaise. It also suggests that for many investors gold, not the U.S. dollar, looks to be the safer and more productive alternative should things take a turn for the worse.

As long as the low interest rate environment and concerns about overvaluation in the stock and bond markets persist, asset managers and investors are likely to continue shifting resources to underpriced gold (and silver). Given forward guidance provided by the central banks, it appears those policies and concerns will be with us for years to come.

Thus far, gold’s performance against major currencies has flown under the radar in financial circles and outside the notice of the mainstream media. That is not likely to remain the case for long.


In the October issue of News & Views, we pick up where this article leaves off with a very important companion piece: How Professional Investors Radically Altered the Gold Market.  We also explore what has brought the Old Guard back into the precious metals market.  Last, we include a CLIENT SPECIAL ADVISORY in conjunction with the 20th anniversary of The ABCs of Gold Investing.
We invite you to sign-up for our free monthly newsletter with appreciation to our current and prospective clientele. Immediate access to this month’s edition.

Charts courtesy of Gold Charts$Us/Nick Laird.  With thanks.
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Gold sideways today, but up in Asian market

Late Report

Gold tracked sideways all day today with little to mention in the way of news or unusual trading activity.  Silver followed suit.  In Asia, however, both metals have registered a pulse.  Gold is up $2.60 at $1275.35 as this is posted.  Silver is up 7¢ at $16.72.

Quote of the Day
“Time is the soul of money, the long-view — its immortality. Hard assets are forever, even when destroyed by the cataclysms of history. It is the outlook that perpetuated the most competent and powerful aristocracies in continental Europe, well up through World War I and, in certain prominent cases, beyond; it is the mindset that has sustained the most fiscally serious democratic republic in the Western world, that of Switzerland. . .” – Marcia Christoff-Kurapovna, the Mises Institute

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September’s final numbers not as bad as some would have us believe

LATE REPORT

Gold finished the day down $8.94 at $1270.70.  Silver was down 8¢ at $16.55. The final numbers on the week and the month ending 9/29 are not as bad as some would have us believe:

Gold
Week:  Down $30.83 at $1279.70 [- 2.4%]
Month:  Down $ $41.51 at $1279.70 [- 3.1%]

Silver
Week:  Down 52¢ at $16.63 [- 3.0%]
Month:  Down 92¢ at $16.63 [- 5.2%]

Blame for the downside has been cast wide and far, but in the end, the corrections in both metals had more to do with profit-taking and a little piling-on here and there from the short side of the market than much else.  In keeping with that analysis, the CFTC reports in its Commitment of Traders report that large speculators cut their positions by a little over 10% last week. Over the past two weeks, large specs have cut their positions by about 20% following eight successive weeks of gains.

We should keep in mind that gold and silver registered their highs for the year at the beginning of the month before turning south.  The metals are trading sideways in Asia as this is posted.

Quote of the day
“Central banks must feel like they have stepped through a mirror, and who can blame them? They used to struggle to bring inflation down or keep it under control; now they toil to push it up. They used to fear wage increases; now they urge them on . They used to dread fiscal expansion; now they sometimes invoke it. Fighting inflation defined a generation of postwar central bankers; encouraging it could define the current one.

What is going on in this topsy-turvy world? Could it be that inflation is like a compass with a broken needle? That would be a dreadful prospect – central bankers’ worst nightmare. And what would be the broader implications for central banking?” – Claudio Borio, chief economist,  the Bank for International Settlements


In the October issue of News & Views, we explore how professional investors radically altered the gold market, why gold is up in every major currency and  what has brought the Old Guard back into the precious metals market.

We invite you to sign-up for our free monthly newsletter with appreciation to our current and prospective clientele. Immediate access to this month’s edition.


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Gold lifts itself from the canvas today, posts a gain

LATE REPORT

Gold lifted itself from the canvas today settling $5 higher at $1287.00 and up $10.50 from its intra-day bottom at $1276.50.  Silver was 4¢ higher at $12.83. Gold has spent most of September tracking to the downside from its $1356 high for the year posted at the beginning of the month.

More proof of professional investors buying the dip surfaced today when Lipper, the fund research firm, reported that precious metals commodity funds took in $977 million over the past week, their highest level of capital investment since July, 2016.  Gold ETFs also reflect investors buying on the correction. By contrast, Lipper reported, stock mutual funds and ETFs suffered almost $10 billion in withdrawals.

Quote of the Day
“In an interview with Bloomberg, [World Gold Council’s Randall] Oliphant cited global political risks as impacting supply, yet countered that robust purchases from India and China should keep demand high. This, in his view, should push prices to as high as $1,400 an ounce in the near term and to record highs in the medium term. For context, gold peaked at an intraday high of just over $1,927 an ounce back in September 2011, and I would presume the “medium term” suggests a price target within the next two to five years, although Oliphant didn’t specify.”


News & Views – Forecasts, Commentary & Analysis on the Economy and Precious Metals
In-depth, cutting-edge coverage of the gold and silver markets for nearly 30 years. Valued for their insight, accuracy and reliability, our publications are linked and reprinted by a large number of websites both in the United States and around the globe.

We invite you to sign-up for our free newsletter available with appreciation to our current and prospective clientele. Immediate access to the September issue.  Access to the October issue will arrive by e-mail early next week.  It covers some interesting terrain.


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Gold continued its downtrend today

LATE REPORT

Gold continued its downtrend today shedding another $11.34 and finishing at $1282.61.  Silver held its own losing only 4¢ and finishing the day at $16.73.  Both metals are trading quietly early in Asian markets.  Both yesterday and today, gold spiked lower at precisely midnight ET.  The Japanese yen and Chinese yuan both chased gold lower oddly at the exact same time.  The whole move had the look of structured trading, but there is no way to verify the cause of the triple declines, i.e., the yen, the yuan and gold. Scroll down for a chart depicting the event, and we will leave it to you  to make your own call. . . . .

Quote of the Day
“[Y]ou can’t afford to try to time the market. What you have to do is study the long term elements, and you have to have a diversification plan that protects you when you’re wrong.” – Tony Robbins


Recent BBB client review
(One of 35 five star reviews published at the BBB website)

A trusted friend referred me to USAGOLD. As a novice, I was interested in their offer to teach. I got a good education. USAGOLD can be taken at their word, as good as gold – as the apt saying goes – a reliable, honest company. Comparing major online dealers often, still surprised what USAGOLD’s competitors do – higher prices, gimmicky products, odd procedures. . . I went slow and got it right, avoiding unaffordable mistakes. USAGOLD’s website, methods, and 4 Staff members on the phone with me – all models of clarity. I recommend USAGOLD continuing as a satisfied, now smarter, customer.” – M. Norman


 

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Gold surrenders yesterday’s gains

LATE REPORT

Gold surrendered today most of the gains it picked-up yesterday and more. It was down $16.50 on the day at $1293.95.  Silver was down 38¢ at $16.77.  In early Asia trading, both metals are trading sideways to up marginally.  Gold’s decline began in the overnight market and continued steadily through the day. The main culprit could simply be ordinary profit taking and re-positioning at the higher prices.

Quote of the day
“Even those of us who have been tracking gold’s progress for decades frequently give in to the ease of quoting gold’s value in terms of fiat currency – most commonly in US dollars. And yet, we have it the wrong way round. Gold is in fact the centre of the economic universe, and all the fiat currencies (including cryptocurrencies) revolve around gold.” – Jeff Thomas, International Man.com


If you are a chart enthusiast, we have a couple pages at the USAGOLD website worth bookmarking. These charts are presented in conjunction with the St. Louis Federal Reserve (FRED) and update automatically through the magic of the internet. Both pages are handy references used often to settle after-dinner disputes among family members about the direction of the economy. [smile]

Gold trends and indicators in chart form

Monetary trends and indicators in chart form


 

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Gold vaults higher, up $13.50 – 1.5% on the day

LATE REPORT

Gold vaulted higher at today’s open and stayed at elevated levels throughout the day.  The precious metal was up almost $13.50 (+1.5%) on the day at $1310.53.  Silver followed suit up 18¢ (+1.7%) on the day at $17.15.  The strong, sudden spike at the open coincided with remarks from North Korea’s foreign minister Ho that the “United States declared war on our country.” Both metals are up marginally in Asia as this report is posted.

Here’s what today’s action looks like on a chart.  Both metals are represented:

For greater detail, please scroll below. . . .

Quote of the day
“Well, first of all, the best way to structure a portfolio is to have the right kind of balance in your portfolio, and some amount of gold. Gold serves a purpose. It is first of all, a diversifier against other assets. You know, we have this risk on, risk off thing. We also have a monetary system. The Bretton Woods monetary system began after World War II, and it had the dollar as the world’s reserve currency. There’s a risk there. There’s a lot of dollar denominated debt and so on. If somebody felt they didn’t want to hold that, and so you could have exposures to that.” – Ray Dalio, Bridgewater Associates [9/22/2017]


If you are new to the USAGOLD website, we invite you to kick back and stay awhile. Do a little interest-driven browsing. We launched this website in 1997 and it has dutifully been providing guidance and market information to investors ever since.

One of the most highly referenced and visited web portals in the gold business, this website goes deep. People are often surprised just how deep it goes. As a launchpad, we offer a quick website tour that hits the high points and suggests links, but it’s the depth, practicality and ease of use that will keep you coming back. WELCOME!


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Gold pushes back over $1300 mark, up $9 on day

North Korea’s Foreign Minister Ri says:

“North Korea has the right to shoot down U.S. warplanes as part of its right to self-defense under the United Nations charter. . . All options are on the table for North Korean response…The whole world should clearly remember it was the US who first declared war on our country.” (As reported by Reuters)

USAGOLD note: Move sudden.  Not sure if North Korea inspired or something else going on.  We will report back when we know more.

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Mass psychology supports the pricey stock market

Robert Schiller/New York Times/9-15-2017

“The C.A.P.E. ratio is above 30 today, compared with an average of 16.8 since 1881. It has been above 30 in only two other periods: in 1929, when it reached 33, and between 1997 and 2002, when it soared as high as 44.”

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Gold finishes the day up $6, but down $23 on the week

LATE REPORT

Gold finished up today to end a difficult week. On the day gold was up $6 at $1297.15; silver was up 5¢ at $16.97. On the week, gold finished down 1.7% (- $22.93); silver was down 3.4% (- 59¢).  It is the second week in a row gold and silver finished on the downside. The precious metals are being pushed in one direction by the increasingly dangerous threats from North Korea, and the other by concerns about Fed policy.

In the meantime, disinflation reigns and with it the ever-present financial system risks globally – a prospect elevating physical demand. As reported earlier today, gold ETFs inventories have risen this week as prices have fallen – an indication of professional money buying the dip.

Asia is closed.  Stay tuned.  We might put up a post or two over the weekend if anything interesting surfaces.  Have a pleasant weekend.

We invite  you to scroll – a useful review of the week’s events from a golden perspective awaits . . . .


In the upcoming issue of our monthly newsletter, we tell a forgotten story about the currency markets. Hint:  Gold is the hero of this tale and it provides clues as to where we might be headed in the future. We also offer a tribute to the 300th anniversary of Sir Isaac Newton’s inadvertent discovery of the gold standard. Mercifully, we are going to try avoid commentary on the Federal Reserve.

We invite you to sign-up for our free monthly newsletter with appreciation to our current and prospective clientele.


 

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OPINION: Hamilton on quantitative tightening’s impact on stocks, gold

GoldSeek/Adam Hamilton/9-22-2017

“Don’t let the complacent stock-market reaction this week fool you, quantitative tightening is a huge deal. It’s the biggest market game-changer by far since QE’s dawn! Starting to reverse QE via QT radically alters market dynamics going forward. Like a freight train just starting to move, it doesn’t look scary to traders yet. But once that QT train gets barreling at full speed, it’s going to be a havoc-wreaking juggernaut.”

USAGOLD Note:  Adam Hamilton, an old friend from our early days on the internet, often finds himself ahead of the crowd.  One sentence in his latest caught our eye:  “Just hearing a hurricane is coming is radically different than actually living through one.”  I would add a thought to the quote just above in conjunction with the hurricane analogy:  Markets have been known to anticipate just like some people will anticipate and prepare for a hurricane.  It might not take the juggernaut moving at full speed to move pricing in stocks, bonds, gold and silver. In this scenario, professional investors and hedge funds will  likely lead the way, and that is where most of the pricing power resides. . . . .

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Morning Snapshot: Gold, silver sideways this morning

The precious metals are moving sideways this morning – nothing new to report.  We refer you to last night’s LATE REPORT for our latest update on the current market.

More later if anything interesting develops. . . .Have a good day.

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Will silver outperform gold in the months ahead?

Lawrie Williams/SharpsPixley/9-15-2017

“Our long expressed view is that the GSR [gold-silver ratio) will revert back to the 65 level or below – how soon this will happen we are not sure.  However at $1,400 gold, which we see as a possibility even this year, a GSR of 65 would mean a silver price of around $21.50 – a rise of over 20% from where it is now.  That doesn’t look to be an unreasonable target, although it may take longer than four months to get there.”

USAGOLD note:  We note an interesting phenomena of late.  The old guard is back in the market at these prices and one of their interests is to balance their gold holdings with silver.  In the past most of these investors were purely gold buyers and had never owned silver before.  Now, they want to own silver for the upside potential, but they also see it as a safe-haven.  This group tends to stick with the American Eagle one-once silver bullion coin pictured above.

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James Rickard on the Fed’s asset reduction program

Daily Reckoning/James Rickards/9-21-2017

“The Fed wants you to think that QT (Quantitative Tightening) will not have any impact. Fed leadership speaks in code and has a word for this which you’ll hear called ‘background.’ The Fed wants this to run on background. Think of running on background like someone using a computer to access email while downloading something on background.

This is complete nonsense. They’ve spent eight years saying that quantitative easing was stimulative. Now they want the public to believe that a change to quantitative tightening is not going to slow the economy.

They continue to push that conditions are sustainable when printing money, but when they make money disappear, it will not have any impact. This approach falls down on its face — and it will have a big impact.”

USAGOLD note:  As we mentioned in a previous report, we are in an economy deeply mired in disinflation with deflation knocking quietly on the door. The markets are wary.  Investors are still buying gold.  The SPDR gold ETF  total gold weight was up 199,539 ounces yesterday to 27,400,195 ounces, or .7%.  Over the past four weeks it is up 5.84%.

During the whole period, the investment business had a pretty good idea what the Fed would announce.  Keep in mind that the gold ETFs are dominated by professional investors.  They know disinflation is ingrained in this economy and they are buying for defensive, safe-haven purposes, i.e., as a disinflation hedge. The following chart covers holdings in all the ETFs Aug 22 thru yesterday – an interesting buy-the-dip divergence.


Chart courtesy of GoldChartsRUs
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Gold staging recovery in Asia trading

LATE REPORT

Gold is staging something of minor recovery in the overnight Asia market – up $4.00 at $1296.00 from earlier closing levels and about $6 from the $1288 low posted in intraday trading.  Silver is tagging along for the ride – up about 6¢ at $17.04 from closing levels and 20¢ from intra-day lows at $6.84.  Reports have surfaced tonight that North Korea’s Minister of Foreign Affairs threatened test detonation of a hydrogen bomb in the Pacific Ocean.

More later if warranted. To catch up on today’s action, please scroll further down the page. . . . .

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Morning Snapshot: Gold stays on downside track

Gold remains on a downside track this morning.  It broke the $1300 barrier in Asian overnight trading, continued down in Europe before leveling out, at least temporarily, in early U.S. trading.  From noon MT yesterday when the Fed published its announcement, gold is down $22 at $1292.00. Silver over the same time frame is down 40¢ at $16.98.  On the day thus far gold is down about $7 and silver 14¢ from yesterday’s closing levels.

The reaction to the Fed’s interest rate and asset reduction program has been tepid across the markets with only short-term U.S. Treasuries a beneficiary.

 

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USAGOLD’s September Gold Buyers’ Special

SPECIAL OFFER PAGE/Historic British sovereigns

“It is estimated that only 1% of all gold sovereigns that have ever been minted are still in collectible condition. It is this relative rarity in relation to bullion coins and bars that leads to leverage whereby, in gold bull markets, the value of these coins increases by more that the actual price of gold.” – Money Week, “Why you should buy gold sovereigns”


We have placed hundreds of thousands of historic British sovereigns with our clientele, but never at a premium this low. . .9% over the melt value.  Modern American Eagles in the one-quarter ounce size fetch a higher premium . . .10.5%.  We only have a thousand  at that price and, as always it’s first-come, first-served. We are also offering at attractive pricing 500 King George V sovereigns in brilliant uncirculated state of preservation – the “collectible condition” referenced in the Money Week quote above.

Those of you who have participated in these specials in the past know how quickly we can sell out, especially when it is a price-based offer.

USAGOLD Order Desk
1-800-869-5115
Extension #100
or
orderdesk@usagold.com


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S&P cuts China’s credit rating, says rising debt is stoking economic, financial risks

Reuters /Jason Lee/0-21-2017

“S&P Global Ratings downgraded China’s long-term sovereign credit rating on Thursday, less than a month ahead of one of the country’s most sensitive political gatherings, citing increasing risks from its rapid build-up of debt. S&P’s one-notch downgrade to A+ from AA- comes as Beijing grapples with the challenges of containing financial risks stemming from years of credit-fueled stimulus needed to meet ambitious government economic growth targets.”

USAGOLD note:  Gold demand within China hardly needs a boost but this news will provide it nevertheless.  This announcement came after Asian markets closed.

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Fed, Bank of Japan policy divergence

Bloomberg/Lorcan Roche Kelly/9-21-2017

“Overnight, the Bank of Japan kept monetary policy unchanged, with a surprise dovish dissent in the 8-1 vote as newly-appointed Goushi Kataoka said that policy needed to be more accommodative to reach the bank’s inflation target by 2019. The divergence between the Fed and the BOJ pushed the yen lower, with the currency trading at 112.40 per dollar. . .”

USAGOLD note:  The yen started the year at 115 and it’s now trading at 112.4, so it is actually up against the dollar on the year. When you zoom out from the day to day noise, the reality comes into focus.

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FE Alpha Manager Cheveley: Why the macro supports buying gold now

FE TRUSTNET/Rob Langston/9-19-2017

“According to Investec, the precious metal tends to perform well once an interest rate hiking cycle starts. While this has begun the path for further rises remains uncertain. As a store of value, the yellow metal can also act as an inflation hedge in high or low inflationary environments. . .FE Alpha Manager Cheveley said the precious metal ‘works well in a real low rate environment’, where both inflation and interest rates are low.”

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AAA-rated manager buys gold for first time in seven years

“Citywire AAA-rated David Coombs has added gold to his multi-asset funds for the first time in seven years. . .

‘We are buying it because the UK is very vulnerable to recession. We bought this before the gilts sold off and we are loathed to buy long-duration gilts or index-linked bonds to help us mitigate economic risk. We feel that gold is a good diversifier for us.'”

USAGOLD note:  Note that Coombs is buying gold as a recession hedge.

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Yellen brushes aside inflation “mystery”

Bloomberg/Rich Miller/9-2-2017

“Federal Reserve Chair Janet Yellen acknowledged that the fall in inflation this year was a bit of a ‘mystery’ but suggested that the central bank was on course to raise interest rates again in 2017 nonetheless.”

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Gold drops below $1300 in initial reaction to Fed plan

LATE REPORT

Gold fell below the $1300 level in its initial reaction to the Fed’s balance sheet reduction program.  Silver followed suit.  Gold was down $9 today at $1301.  Silver was down 14¢ at $17.15.  In early Asian trading gold and silver are both level.

There is a sense of finality in the Fed’s actions today – the end of the easy money era. It comes at time when disinflation is deeply entrenched in the U.S. economy and deflation is quietly knocking on the door. Looking at the range of markets, we would classify today’s overall reaction as tepid at best.

We will be keeping a close eye on things here at our Live Daily Newsletter and we invite you to join us.

For more on today’s events, please scroll below.

Quote of the Day
“It’s just finally sinking in. The Fed has a credibility issue, even if you think they were going to follow through on their guidance, part of you didn’t believe it. Now, more and more people are starting to piece it together. What will be the impact on yield as money is destroyed and eliminated from the financial system?” – Bryce Doty, senior fixed income manager with Sit Investment Associates.


We invite you to sign-up for our free monthly newsletter available with appreciation to our current and prospective clientele. Immediate access.

News & Views
Forecasts, Commentary & Analysis on the Economy and Precious Metals
Next issue first week of October

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Today’s Fed Statement

9/20/2017

For the record. . . .

_____________

Information received since the Federal Open Market Committee met in July indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have remained solid in recent months, and the unemployment rate has stayed low. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Hurricanes Harvey, Irma, and Maria have devastated many communities, inflicting severe hardship. Storm-related disruptions and rebuilding will affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Higher prices for gasoline and some other items in the aftermath of the hurricanes will likely boost inflation temporarily; apart from that effect, inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

In October, the Committee will initiate the balance sheet normalization program described in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; and Jerome H. Powell.


USAGOLD note:  In summation searching various sources, one more quarter point hike this year. Three next year possibly.  A gradual unwinding of the Fed’s $4.5 trillion balance sheet at $10 billion per month beginning next month and then gradually moving up quarterly $10 billion until it reaches $50 billion per month.  At that rate, it will be the mid-2020s before the balance sheet is “normalized” assuming of course life, politics and a bad economy do not intervene.

Could this be a message in a bottle delivered to Wall Street – a surreptitious exit of the party with the punch bowl when few are looking?

Upcoming problems break into two columns –  the psychological effects on the financial markets as this gets sorted out, and the knock-on effects no one foresees. No “been there, done that” to which we can all refer in this situation. . . . . .

It [the Fed’s balance sheet liquidation program] could be more disruptive than people think. . .That is a very different world you have to operate in, that’s a big change in the tide. All the main buyers of sovereign debt over the last 10 years – financial institutions, central banks, foreign exchange managers – will become net sellers now.” – Jamie Dimon, J.P. Morgan

“The faster growth never arrived despite Fed predictions for years that 3% annual GDP growth was right around the corner – in what has been the slowest expansion on record. But prices have risen in stocks, real estate, emerging market plays and other assets.  If the Fed calls that success on Mr. Bernanke’s terms, then shouldn’t the reverse happen as the Fed unwinds?” – Wall Street Journal editorial 9/19/2017

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Morning Snapshot: Gold moving sideways early

Gold continued to move quietly higher this morning with most of the markets waiting around to hear from the Fed.  Gold is trading in $1312 range up slightly from yesterday. Silver is trading flat at $17.32.  Gold reversed course late yesterday after President Trump’s latest salvo leveled at North Korea, coming off a low in the $1306 range yesterday.

The Fed will announce its policy decisions today noon MT and Chairwoman Janet Yellen will hold a news conference at 12:30 MT.  We may have more for you then . . .

No surprise to readers who follow the USAGOLD blog, but confirmation neverthesess:

“Speculative positioning in gold,” reports Economic Times, “has been on the rise since mid-August wherein hedge funds and money managers were net longs at 138,566 contracts, which has now increased to 249,588 net longs as on September 5, clearly defining the road map for rising price of the yellow metal.

As far as investment demand goes, inflows in the SPDR gold trust have grown by 22 tonnes since August and the current holdings as on September 14 stood at around 838.64 tonnes, reflecting the incremental demand arising out of geopolitical worries.”

USAGOLD note:  We are not sure we would go along with the “demand arising out of geopolitical worries” as the chief reason professional investors are gold – a rather simplistic view.  There is considerably more going on with respect to gold than the roller coaster ride imposed by the North Korean situation.  Geopolitical concerns are one of many in the list of gold investor concerns – an important one but still on a longer list of factors.

 

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Gold reverses course after Trump speech

LATE REPORT

Gold reversed its downtrend late today after President Trump threatened North Korea with total destruction in a pivotal speech before the United Nations.  The threats pushed aside concerns about this week’s Fed policy meeting, at least momentarily.

Gold finished the day  up $3.53 at the $1311 mark  after tracking as low $1306 during daytime trading.  Silver followed gold’s lead finishing up 11¢ on day at $17.29. The reversal extended into Asian trading with gold tacking another $2 on the price as this is posted.  Silver is trading sideways.

Quote of the Day
“It would therefore take a huge leap of faith to say that crises won’t continue to be a regular feature of the current financial system that has been in place since the early 1970s. The near exponential growth of finance and its liberalisation since this point has encouraged this trend.” – James Read, Deutsche Bank strategist


Wondering what Deutsche Bank’s James Read is talking about?  Try this USAGOLD link. . . .Black Swans – A chronology of panics, mania, crashes and collapses from 400 BC to present.  The prudent are prepared.

Also, we invite you to sign-up for our monthly newsletter available free with appreciation to our current and prospective clientele. Immediate access. Therein, comments and concerns like Mr. Read’s are covered regularly.


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Sell-off pushes gold, silver lower

LATE REPORT

Gold traded down today on concerns about the upcoming Fed meeting – off $15.67 at $1307.40.  Silver took an even bigger hit on a percentage basis, down 36¢ on the day at $17.18.  In early Asia trading both are sideways at the $1309 and $17.20 levels respectively.

Gold’s sell-off started early in the day and did not encounter resistance until the price neared the $1300 level.  Ordinary profit taking should not be ruled out.  Reuters reports tonight that Friday’s “U.S. data showed hedge funds and other speculators had raised net long positions in the precious metal for nine straight weeks.”

Correction aside for a moment, gold is up for the year when measured in the major currencies.  Here is the scorecard through today’s trading:

British pound –> +4.8%
Euro –> +2.7%
Japanese yen –> +10.3%
Chinese yuan –> +10.6%
US dollar –> +13.6%

For more insights on today’s market activity, please scroll below. . . . . . .

Quote of the day
“A disgraceful milestone was reached this week when US government debt busted through the $20 trillion level and quickly went over $20.1 trillion. Can $21 trillion, or $25 trillion, be far ahead? Why not $40 trillion, so our grandkids and their grandkids can be even more indebted to the Chinese and other countries that buy our debt but aren’t very nice to us.” –– John Crudele, New York Post


“Few Americans know that, just after World War II, the United States owned most of the gold bullion on earth – about 22,000 metric tonnes.” So begins the September issue of News & Views under the headline When the United States Owned Most of the Gold on Earth.  What happened next laid the foundations for today’s massive federal government debt, a long-term secular bull market for gold and a long-term secular bear market for the dollar.  Herein lies the essential rationale for gold as a long-term portfolio asset, safe haven and friend to the concerned citizen.

For the full article and much more, we invite you to sign-up for our free newsletter available with appreciation to our current and prospective clientele. Immediate access.


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Gold, silver quiet in Asia to start the new week, Fed meeting on the agenda

LATE REPORT

Gold is down a tad in the overnight Asian market – off about $2 at $1318.60.  Silver is steady at $17.60.  A quiet night in the gold market thus far.

This week we have the Fed meeting – always a tricky, unpredictable event for the precious metals. Interest rates apparently are off the table.  The Fed, though, is expected to announce its plan to liquidate the $4.4 trillion in assets it acquired putting out the fires of the 2007-2008 debt crisis. Alan  Greenspan once referred to it as a “pile of tinder.” QE comes back to haunt the Fed and the financial markets – the ghost of crises past.

Quote of the day
“It [the Fed’s balance sheet liquidation program] could be more disruptive than people think. . .That is a very different world you have to operate in, that’s a big change in the tide. All the main buyers of sovereign debt over the last 10 years – financial institutions, central banks, foreign exchange managers – will become net sellers now.” – Jamie Dimon, JP Morgan


If you are a chart enthusiast, we have a couple pages at the USAGOLD website worth bookmarking.  These charts are presented in conjunction with the St. Louis Federal Reserve (FRED) and update automatically through the magic of the internet.  Both pages are  handy references used regularly to settle after-dinner disputes among family members and friends about the direction of the economy.

Gold trends and indicators in chart form

Monetary trends and indicators in chart form

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Seesaw week ends on a down note for gold, silver

LATE REPORT

A seesaw week for gold ended today on a down note. Gold was off $13 from yesterday’s closing number in $1320 range. It began the week at $1321.  Silver followed suit ending the week at $17.57 – down 19¢. It was down 25¢ on the day.  Lest we forget, both metals were coming off highs for the year achieved last week. Profit-taking and contrary positioning are bound to show up on such occasions.

Professional investors, on the other hand, appear to be treating the seesaw action as a buying opportunity.  The GLD-ETF, where funds and institutions tend to concentrate their purchases, is up 4 tonnes over the past few days.

Next week we have the FOMC meeting.  Things could get interesting. . . .

Quote of the Day
“Gold and silver are in the beginning of these two [bull market] phases known as ‘Relief & Optimism’ which lasts another 2-3 years as the market begins to hit higher highs with sustained gains for longer periods of time and with fewer and shorter term pullbacks as investors begin to gain confidence and more people start to jump in, most of whom are usually professional investors such as hedge funds and money managers while the general public continues to ignore it.” – Commodity Trade Mantra (Are you still worried if gold is in a bull market? Let me show you.)


Last Friday the national debt surpassed $20 trillion with a massive one day addition of $318 billion.  In the September issue of our newsletter, we  shed light on why the national debt matters – an often overlooked consequence to the now immense load of red ink. We invite you to sign-up for our free newsletter available with appreciation to our current and prospective clientele. Immediate access.


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