Author Archives: USAGOLD

DMR–A sliver of light today at the end of the tunnel

DAILY MARKET REPORT

A tiny sliver of light flickered at the end of the tunnel this morning with gold bumping $2.50 higher at $1251.50. A slight improvement in China’s yuan was a help as was Europe’s coming to an agreement on immigration policy – an outcome that sent the euro higher on international markets.

The PCE Index, the Fed’s favorite inflation indicator, also offered a glimmer of hope by rising 2.3% (yoy) in May and exceeding the central bank’s 2% target level for the first time in six years. Chairman Powell mentioned recently interest rate policies would not be thrown off course if inflation were to exceed the target level, so the effect on gold and the dollar are likely to be limited in the short term.

Over the longer term though if inflation expectations begin to gather some momentum, current prices might attract some fresh buying in the gold market. MineLife’s Gavin Wendt summed it up this way for Bloomberg this morning, “The U.S. dollar has been the biggest beneficiary as investors’ first choice safe haven. This has indirectly led to gold-price weakness, as the dollar and gold typically move inversely to each other. With the emergence of inflation, gold is likely to find a bottom, as the dollar’s gains weaken.”

Quote of the Day
“If history teaches anything, it is that government cannot be trusted to manage money. When currency is not redeemable in gold, its value depends entirely on the judgment and the conscience of the politicians. (That is the situation in this country today.) Especially in an economic crisis or a war, the pressure to inflate becomes overwhelming. Any alternative may seem politically disastrous. Whether it be the Roman emperors repeatedly debasing their coinage, the French revolutionary government printing a flood of assignats, John Law flooding France with debased money, or the Continental Congress issuing money until it was literally “not worth a Continental,” the story is similar. A government in financial straits finds its easiest recourse is to issue more and more money until the money loses its value. The entire process is accompanied by a barrage of explanations, propaganda and new regulations which hide the true situation from the eyes of most people until they have lost all their savings.” – Scientific Market Analysis

Chart of the Day

Chart note:  “In 1982, back when I was a toddler,” says Sovereign Man’s Simon Black,  “the price of a Ford Mustang was $6,572. Today the cheapest Mustang starts at $25,680 according to Ford’s website. So a Mustang today is around 4x as expensive as it was 36 years ago. US Labor Department data from 1982 shows that average earnings were $309 per week, or $16,086 per year. That was enough to buy 2.45 Mustangs. Today’s earnings are $881 per week, or $45,812 per year. That’s only enough to buy 1.78 Mustangs.” A good way to fill the gap is through gold ownership.  A long-term gold holding has more than compensated for the destruction of the currency for those with patience and an understanding of the forces at work in the modern economy.  The chart above on the purchasing power of the dollar and gold since 1971 speaks volumes.

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Gold nudges lower as dollar seesaws and problems mount in Europe and China

Gold nudged slightly lower again today as the U.S. dollar seesawed in international markets. It dipped briefly below the $1250 mark overnight and is now trading at $1252.50, down 75¢ on the day. Silver is trading at $16.00, off 12¢ on the day. If gold finishes lower again today, it will be the fourth day in a row it has lost ground.

With the immigration problem in Europe threatening Angel Merkel’s German government and the trade wars doing damage to China’s stock market and currency, the dollar at the moment is the chief beneficiary of safe-haven capital flow. That could all come to a screeching halt though if the Trump administration were to suddenly decide that the strong dollar is undermining its trade policies. Conversely, China and Europe might decide that a stronger euro and yuan might be in their best interest. We invite you to scroll below for details.

Quote of the Day
“Monetary units have always been closely tied up with units of weight. For instance, the word ‘pound’ has been used to describe both the British monetary unit (£) and the weight (lb). The pound weight was originally based on wheat. In 1266, King Henry III decreed that the British unit referred to as the grain should be defined as the weight of a corn of wheat ‘well dried, and gathered out of the middle of the ear.’ Thirty-two grains were to be equal to a pennyweight, twenty pennyweights equal to an ounce, and twelve ounces added up to a pound. So the early English pound, otherwise known as the Tower pound, was comprised of 7,680 ‘well-dried’ grains from the middle of an ear of wheat.” – JP Koning, Bullion Star

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: China’s Shanghai Composite Index dropped another 27 points overnight to close at 2786. It is down about 9% since the January interim top at the 3550 level as part of downtrend in what some analysts have dubbed a bear market for Chinese stocks. A report from the National Institute for Finance and Development, a China government-sponsored think tank, warned yesterday that “. . .China is currently very likely to see a financial panic. Preventing its occurrence and spread should be the top priority for our financial and macroeconomic regulators over the next few years.” The report was published on the internet then subsequently removed. As reported here yesterday, China intervened in currency markets on Wednesday to slow the fall of the yuan but met with limited success. The currency was down sharply again today in Asian trading.

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DMR–Gold nudges lower as dollar seesaws and problems mount in Europe and China

Gold nudged slightly lower again today as the U.S. dollar seesawed in international markets. It dipped briefly below the $1250 mark overnight and is now trading at $1252.50, down 75¢ on the day.  Silver is trading at $16.00, off 12¢ on the day. If gold finishes lower again today, it will be the fourth day in a row it has lost ground.

With the immigration problem in Europe threatening Angel Merkel’s German government and the trade wars doing damage to China’s stock market and currency, the dollar at the moment is the chief beneficiary of safe-haven capital flow. That could all come to a screeching halt though if the Trump administration were to suddenly decide that the strong dollar is undermining its trade policies.  Conversely, China and Europe might decide that a stronger euro and yuan might be in their best interest. We invite you to scroll below for details.

Quote of the Day
“Monetary units have always been closely tied up with units of weight. For instance, the word ‘pound’ has been used to describe both the British monetary unit (£) and the weight (lb). The pound weight was originally based on wheat. In 1266, King Henry III decreed that the British unit referred to as the grain should be defined as the weight of a corn of wheat ‘well dried, and gathered out of the middle of the ear.’ Thirty-two grains were to be equal to a pennyweight, twenty pennyweights equal to an ounce, and twelve ounces added up to a pound. So the early English pound, otherwise known as the Tower pound, was comprised of 7,680 ‘well-dried’ grains from the middle of an ear of wheat.” – JP Koning, Bullion Star

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: China’s Shanghai Composite Index dropped another 27 points overnight to close at 2786.  It is down about 9% since the January interim top at the 3550 level as part of downtrend in what some analysts have dubbed a bear market for Chinese stocks.  A report from the National Institute for Finance and Development, a China government-sponsored think tank, warned yesterday that “. . .China is currently very likely to see a financial panic. Preventing its occurrence and spread should be the top priority for our financial and macroeconomic regulators over the next few years.” The report was published on the internet then subsequently removed.  As reported here yesterday, China intervened in currency markets on Wednesday to slow the fall of the yuan but met with limited success.  The currency was down sharply again today in Asian trading.

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Gold off this morning, not much in the way of news

Gold is off another $2.50 this morning at $1256.00 in a minor continuation of yesterday’s downtrend. Silver is down 8¢ at $16.21. Nothing new has surfaced in the way of market-altering news. Gold seems to be looking for direction in early trading. We will keep the DMR short today as there isn’t much to report, and point you immediately below for a couple quick, but interesting reads.

Quote of the Day
“Reflect on what happens when a terrible winter blizzard strikes. You hear the weather warning but probably fail to act on it. The sky darkens. Then the storm hits with full fury, and the air is a howling whiteness. One by one, your links to the machine age break down. Electricity flickers out, cutting off the TV. Batteries fade, cutting off the radio. Phones go dead. Roads become impassible, and cars get stuck. Food supplies dwindle. Day to day vestiges of modern civilization – bank machines, mutual funds, mass retailers, computers, satellites, airplanes, governments – all recede into irrelevance. Picture yourself and your loved ones in the midst of a howling blizzard that lasts several years. Think about what you would need, who could help you, and why your fate might matter to anybody other than yourself. That is how to plan for a saecular winter. Don’t think you can escape the Fourth Turning. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted.” – William Strauss & Neil Howe, The Fourth Turning [1997]

Charts[s] of the Day

Chart courtesy of TradingEconomics.com

Chart note: Though China might be tempted to choose devaluation over selling U.S. debt as a tactic in the trade war, as Goldman Sach’s economists suggested yesterday, it creates other problems for the country that it has tried to avoid in the past – most notably capital flight. The fact of the matter is that China has chosen to do just the opposite since early 2014: It has sold U.S. debt and tried to keep the yuan in a tight band against the U.S. dollar. China’s foreign exchange reserves as a result went from nearly $4 trillion to just above $3 trillion. Meanwhile, the yuan has traded in a narrow channel between 14¢ and 16¢. Noted gold analyst, Martin Murenbeeld, in fact, recently suggested that the trade war would inevitably force the U.S. to devalue the dollar. (Please scroll below) Also, the Wall Street Journal reports this morning that today “China’s central bank appeared to intervene to stem the yuan’s decline.”

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DMR–Gold off this morning, not much in the way of news

Gold is off another $2.50 this morning at $1256.00 in a minor continuation of yesterday’s downtrend.  Silver is down 8¢ at $16.21.  Nothing new has surfaced in the way of market-altering news.  Gold seems to be looking for direction in early trading. We will keep the DMR short today as there isn’t much to report, and point you immediately below for a couple quick, but interesting reads.

Quote of the Day
“Reflect on what happens when a terrible winter blizzard strikes. You hear the weather warning but probably fail to act on it. The sky darkens. Then the storm hits with full fury, and the air is a howling whiteness. One by one, your links to the machine age break down. Electricity flickers out, cutting off the TV. Batteries fade, cutting off the radio. Phones go dead. Roads become impassible, and cars get stuck. Food supplies dwindle. Day to day vestiges of modern civilization – bank machines, mutual funds, mass retailers, computers, satellites, airplanes, governments – all recede into irrelevance. Picture yourself and your loved ones in the midst of a howling blizzard that lasts several years. Think about what you would need, who could help you, and why your fate might matter to anybody other than yourself. That is how to plan for a saecular winter. Don’t think you can escape the Fourth Turning. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted.” – William Strauss & Neil Howe, The Fourth Turning [1997]

Charts[s] of the Day

Chart courtesy of TradingEconomics.com

Chart note: Though China might be tempted to choose devaluation over selling U.S. debt as a tactic in the trade war, as Goldman Sach’s economists suggested yesterday, it creates other problems for the country that it has tried to avoid in the past – most notably capital flight.  The fact of the matter is that China has chosen to do just the opposite since early 2014: It has sold U.S. debt and tried to keep the yuan in a tight band against the U.S. dollar. China’s foreign exchange reserves as a result went from nearly $4 trillion to just above $3 trillion.  Meanwhile, the yuan has traded in a narrow channel between 14¢ and 16¢.  Noted gold analyst, Martin Murenbeeld, in fact, recently suggested that the trade war would inevitably force the U.S. to devalue the dollar. (Please scroll below) Also, the Wall Street Journal reports this morning that today “China’s central bank appeared to intervene to stem the yuan’s decline.”

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Gold down early on options expiration

DAILY MARKET REPORT

Gold is trading down $6.50 early in today’s session at $1259.50. Technical factors dominate trade with July options expiration on today’s agenda. Gold can sell-off sharply on options expiration day, but it can often recover just as quickly. That might be the case today as it is already up $5 from earlier low at$1254.50. Silver is down 5¢ on the day at $16.29.

Quote of the Day
Central bankers are coy about gold’s importance as a monetary metal. Former Fed Chair Benjamin Bernanke, at one of our hearings, claimed flatly that gold was not money. When I pressed Bernanke on why, then, do central banks hold gold, he declared that after a long pause that it was merely ‘tradition.’ He had no interest in my suggestion that the gold could be sold off to the American people if it’s not money. The point is that due to today’s impending crisis, many governments are now accumulating more gold—while others are holding onto what they have with the expectation it will once again be used in the monetary system.” – Ron Paul, former Congressman and presidential candidate [Emphasis added]

Chart of the Day

Chart note: This long term gold chart is drawn in log-scale. “Common percent changes,” says Investopedia of log-scale charts, “are represented by an equal spacing between the numbers in the scale. For example, the distance between $10 and $20 is equal to the distance between $20 and $40 because both scenarios represent a 100% increase in price.” On a linear chart the lesser values are compressed to the point that the viewer misses the strength of a price move, and the greater values are extended to a degree that they tend to dramatize a price move – up or down. The log-scale chart presents data in a more realistic framework without the drama. As you can see from the chart above, the upward trend of the gold price since the early 2000s is not nearly as strong as the move between 1970 and 1980 in percentage terms leading some analysts to believe that we have considerable upside yet to be charted.

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DMR–Gold down early on options expiration

DAILY MARKET REPORT

Gold is trading down $6.50 early in today’s session at $1259.50. Technical factors dominate trade with July options expiration on today’s agenda. Gold can sell-off sharply on options expiration day, but it can often recover just as quickly. That might be the case today as it is already up $5 from earlier low at$1254.50.  Silver is down 5¢ on the day at $16.29.

Quote of the Day
Central bankers are coy about gold’s importance as a monetary metal. Former Fed Chair Benjamin Bernanke, at one of our hearings, claimed flatly that gold was not money. When I pressed Bernanke on why, then, do central banks hold gold, he declared that after a long pause that it was merely ‘tradition.’ He had no interest in my suggestion that the gold could be sold off to the American people if it’s not money. The point is that due to today’s impending crisis, many governments are now accumulating more gold—while others are holding onto what they have with the expectation it will once again be used in the monetary system.” – Ron Paul, former Congressman and presidential candidate [Emphasis added]

Chart of the Day

Chart note:  This long term gold chart is drawn in log-scale. “Common percent changes,” says Investopedia of log-scale charts, “are represented by an equal spacing between the numbers in the scale. For example, the distance between $10 and $20 is equal to the distance between $20 and $40 because both scenarios represent a 100% increase in price.” On a linear chart the lesser values are compressed to the point that the viewer misses the strength of a price move, and the greater values are extended to a degree that they tend to dramatize a price move – up or down.  The log-scale chart presents data in a more realistic framework without the drama.  As you can see from the chart above, the upward trend of the gold price since the early 2000s is not nearly as strong as the move between 1970 and 1980 in percentage terms leading some analysts to believe that we have considerable upside yet to be charted.

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USAGOLD – Quality service and pricing since 1973

USAGOLD ranks among the most reputable gold companies in the United States with several thousand clients and multi-millions in annual revenue. Founded in the 1970s and still family-owned, we are one of the oldest and most respected names in the gold industry. Our unblemished, zero-complaints record and solid reviews with the Better Business Bureau testify to the exceptional customer service and professional excellence which sets us apart from the competition.

USAGOLD specializes in gold and silver coins and bullion delivered to our client’s safekeeping. For over 45 years, we have resolutely advocated owning precious metals for asset preservation purposes rather than speculation. Admittedly, this philosophy does not resonate with all prospective gold and silver owners, but if it does with you, we think you will find our firm a kindred spirit.

When it comes time to pursue your first (or next) purchase, we invite you to learn first-hand why so many have chosen USAGOLD as their precious metals firm.

Call or drop us an e-mail.

1-800-869-5115
Ext#100
orderdesk@usagold.com

To end right, start right.
Choose the right portfolio mix with the right firm at the right price.
Choose USAGOLD – reliably serving physical gold and silver investors since 1973.
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DMR–Gold continues to drift, becalmed for now in the summer doldrums

DAILY MARKET REPORT

Gold continued to drift south today trading at $1267.50 and down $2.50. Silver is down 9¢ at $16.34. The dollar is also down while stocks are off about 275 as the Trump administration pushes even harder on China in the trans-Pacific trade dispute. Bloomberg deemed the latest escalation of the trade war “potentially irreversible.” In the background other concerns fester including a potential emerging country debt crisis and problems with sovereign debt in Europe. Over the weekend Credit Bubble Bulletin’s Doug Noland offered this well-conceived and concise summation of the situation in investment markets:

“At this point, the key market issue goes far beyond securities valuation. Too many years of too much ‘money’ chasing too few financial assets have imparted deep structural impairment. Or phrased differently, there has been too much ‘money’ playing the game; too much liquidity and leverage aggressively playing a historic speculative Bubble has wrecked the game. Financial markets have become maladjusted and dysfunctional, although much remains unrecognizable to the naked eye.”

Meanwhile, gold continues to drift – becalmed for now in the summer doldrums.

Quote of the Day
“A full-blown EM (emerging market) debt crisis is coming soon. It is likely to start in Turkey, Argentina or Venezuela, but it won’t end there. The panic will quickly affect Ukraine, Chile, Poland, South Africa and the other weak links in the chain. The IMF will soon run out of lending resources and will have to pass the hat among the richer members. But the Europeans will have their own problems, and the U.S. under President Trump is likely to reply, ‘America First,’ and decline to participate in bailing out the EMs with U.S. taxpayer funds.” – James Ricards, Daily Reckoning

Chart[s] of the Day

Chart note: These charts offer a sampling of the growth in external debt among emerging countries during the zero per cent interest rate era that began after the 2008 crisis. Argentina and Turkey are now the focal point of financial market interest, but the list of nation states with similar problems is long and growing longer. Most of that debt is denominated in dollars and tied to U.S. interest rates. “If the U.S. policy becomes tighter and there’s no comparable follow-through by other advanced economies,” says Harvard economist Carmen Reinhart, “the dollar strengthens. There you have a double-whammy.” Emerging country currencies as a group are down nearly 10% on the year as measured by the JP Morgan EM FX Index.

Reinhart is well-known for her book written with Kenneth Rogoff on the nature of financial crises, This Time Is Different – Eight Centuries of Financial Folly. Reinhart says the weaker nation states economically are in worse shape now than they were before the 2008 crisis. It would be shortsighted to think that a general debt crisis in emerging nations would fail to reach U.S. shores and Wall Street – particularly when you consider the sheer level of debt emerging countries have put on the books.


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Posted in Today's top gold news and opinion |

Gold continues to drift – becalmed for now in the summer doldrums

DAILY MARKET REPORT

Gold continued to drift south today trading at $1267.50 and down $2.50. Silver is down 9¢ at $16.34. The dollar is also down while stocks are off about 275 as the Trump administration pushes even harder on China in the trans-Pacific trade dispute. Bloomberg deemed the latest escalation of the trade war “potentially irreversible.” In the background other concerns fester including a potential emerging country debt crisis and problems with sovereign debt in Europe. Over the weekend Credit Bubble Bulletin’s Doug Noland offered this well-conceived and concise summation of the situation in investment markets:

“At this point, the key market issue goes far beyond securities valuation. Too many years of too much ‘money’ chasing too few financial assets have imparted deep structural impairment. Or phrased differently, there has been too much ‘money’ playing the game; too much liquidity and leverage aggressively playing a historic speculative Bubble has wrecked the game. Financial markets have become maladjusted and dysfunctional, although much remains unrecognizable to the naked eye.”

Meanwhile, gold continues to drift – becalmed for now in the summer doldrums.

Quote of the Day
“A full-blown EM (emerging market) debt crisis is coming soon. It is likely to start in Turkey, Argentina or Venezuela, but it won’t end there. The panic will quickly affect Ukraine, Chile, Poland, South Africa and the other weak links in the chain. The IMF will soon run out of lending resources and will have to pass the hat among the richer members. But the Europeans will have their own problems, and the U.S. under President Trump is likely to reply, ‘America First,’ and decline to participate in bailing out the EMs with U.S. taxpayer funds.” – James Ricards, Daily Reckoning

Chart[s] of the Day

Chart note: These charts offer a sampling of the growth in external debt among emerging countries during the zero per cent interest rate era that began after the 2008 crisis. Argentina and Turkey are now the focal point of financial market interest, but the list of nation states with similar problems is long and growing longer. Most of that debt is denominated in dollars and tied to U.S. interest rates. “If the U.S. policy becomes tighter and there’s no comparable follow-through by other advanced economies,” says Harvard economist Carmen Reinhart, “the dollar strengthens. There you have a double-whammy.” Emerging country currencies as a group are down nearly 10% on the year as measured by the JP Morgan EM FX Index.

Reinhart is well-known for her book written with Kenneth Rogoff on the nature of financial crises, This Time Is Different – Eight Centuries of Financial Folly. Reinhart says the weaker nation states economically are in worse shape now than they were before the 2008 crisis. It would be shortsighted to think that a general debt crisis in emerging nations would fail to reach U.S. shores and Wall Street – particularly when you consider the sheer level of debt emerging countries have put on the books.


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Bewildered markets, including gold, await the next twist of fate

DAILY MARKET REPORT

Financial markets, including gold, continue to stumble about in a decidedly bewildered state stunned, it would seem, by the fundamental changes unfolding in the global economy and cautiously awaiting the next twist of fate. The U.S. stock market just spent the past eight past sessions in decline, something it has not done in a very long time. The yield on treasuries lurches back and forth determined one day to react positively to the interest rate environment and and equally determined to react negatively the next. Commodities spurt higher based on inflationary expectations one day than track to the downside on dis-inflationary expectations the next. For its part gold can’t seem to establish itself firmly above the $1300 market, nor can it establish itself with any real conviction below the $1300 mark.

Today we have had more of the same though the yellow metal has managed to eke out a $2 gain at $1269.50. Carlos Guitierrez, former commerce secretary under George W. Bush and now head of the National Foreign Trade Council, summed up the future neatly when he told Financial Times yesterday, “The parties that will be most impacted are U.S. companies. They are going to report bad earnings. It is going to hurt the stock market. Even worse, we are going to put people out of work and it is going to spark inflation.”

Sounds like a prescription for future gold demand. . . . . .

Quote of the Day
“Our central bank monetary-led boom has made debt replace wealth for a long time. That’s not sustainable, of course. (We are ‘mining’ our soil for short-term gain.) We’ll see a return to the significance of productive stuff again I think, and that even includes farming – maybe especially farming. And the Midwest has a pretty good track record with productive stuff. Hard assets will matter again. But of course, I sound ridiculous even saying such things. Like a grumpy old grandpa.” – Mark Spitznagel, Universa Investments (as quoted by columnist, P.J. O’Rourke

Chart of the Day


Chart courtesy of TradingEconomics.com

Chart note: Last week we posted the chart showing that the Bank of Japan’s balance sheet debt holdings were even more burdensome and tenuous than that of the United States Federal Reserve. This chart shows European Central Bank’s balance sheet now at €4.56 trillion or $3.92 trillion – mostly in sovereign debt instruments issued by the European Union’s member states. Together the three central banks hold a mind-numbing nearly $13 trillion in debt instruments. The European Central Bank announced last week that it would halt its bond-buying operations by the end of 2018. Japan will continue with its quantitative easing program as long as it deems it necessary.

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DMR–Bewildered markets, including gold, await the next twist of fate

DAILY MARKET REPORT

Financial markets, including gold, continue to stumble about in a decidedly bewildered state stunned, it would seem, by the fundamental changes unfolding in the global economy and cautiously awaiting the next twist of fate. The U.S. stock market just spent the past eight past sessions in decline, something it has not done in a very long time. The yield on treasuries lurches back and forth determined one day to react positively to the interest rate environment and and equally determined to react negatively the next.  Commodities spurt higher based on inflationary expectations one day than track to the downside on dis-inflationary expectations the next. For its part gold can’t seem to establish itself firmly above the $1300 market, nor can it establish itself with any real conviction below the $1300 mark.

Today we have had more of the same though the yellow metal has managed to eke out a $2 gain at $1269.50. Carlos Guitierrez, former commerce secretary under George W. Bush and now head of the National Foreign Trade Council, summed up the future neatly when he told Financial Times yesterday, “The parties that will be most impacted are U.S. companies. They are going to report bad earnings. It is going to hurt the stock market.  Even worse, we are going to put people out of work and it is going to spark inflation.”

Sounds like a prescription for future gold demand. . . . . .

Quote of the Day
“Our central bank monetary-led boom has made debt replace wealth for a long time. That’s not sustainable, of course. (We are ‘mining’ our soil for short-term gain.) We’ll see a return to the significance of productive stuff again I think, and that even includes farming – maybe especially farming. And the Midwest has a pretty good track record with productive stuff. Hard assets will matter again. But of course, I sound ridiculous even saying such things. Like a grumpy old grandpa.” – Mark Spitznagel, Universa Investments (as quoted by columnist, P.J. O’Rourke

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: Last week we posted the chart showing that the Bank of Japan’s balance sheet debt holdings were even more burdensome and tenuous than that of the United States Federal Reserve.  This chart shows European Central Bank’s balance sheet now at €4.56 trillion or $3.92 trillion – mostly in sovereign debt instruments issued by the European Union’s member states. Together the three central banks hold a mind-numbing nearly $13 trillion in debt instruments.  The European Central Bank announced last week that it would halt its bond-buying operations by the end of 2018.  Japan will continue with its quantitative easing program as long as it deems it necessary.

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Posted in Today's top gold news and opinion |

DMR–Gold recovering this morning from yesterday’s Sintra inspired downdraft

DAILY MARKET REPORT

Gold is staging something of a recovery this morning from yesterday’s downdraft trading at $1268 and even on the day. Silver is down 2¢ at $16.32. Gold broke to the downside late in yesterday’s session responding, as best we can gather, to statements at the Sintra central bank conference from the ECB’s Draghi and Nowotny, the Fed’s Powell, BoF’s Villeroy, BoJ’s Kuroda and others.

Those statements reinforced the split in interest rate policies between the United States and the other participants. That divergence between the perceived hawkish U.S. stance and the rest of the world’s dovish positioning was interpreted as bullish for the dollar and bearish for the rest of the world’s currencies. The result was yesterday’s sell-off. In this new and highly complicated financial order, though, nothing can be taken as given. The dollar index is trading down this morning and gold is recovering from yesterday’s lows.


An observation. . . . .

It is going to be awhile before the present turmoil settles into something recognizable. Market players and investors from institutions and hedge funds to small private investors alike are asking themselves some down-to-earth questions:

1. “Is the world a safer place than what it was before all of this happened?”

2. “Is the trade war likely to be a quick or will it become a long, drawn-out war of attrition?”

3. “Have the markets already priced-in the shock of what is quickly becoming a new world order or we are on the threshold of something more consequential?”

And last but certainly not least. . .

4. “Is my money safer where it is now or do I need to acknowledge that things have changed, perhaps radically, and make some necessary adjustments?

Today Germany’s Daimler, the manufacturer of Mercedes Benz, issued a warning that its profits would be undermined by China’s tariffs on U.S. imports. Stocks for Europe’s automobile manufacturers dropped sharply as a result. The announcement amounts to the recognition of a new way of doing business and one, by the way, that is not specific to Daimler. There are likely a good many similar epiphanies in the waiting both on the corporate level and among private investors as well.

Quote of the Day
“For those that have invested across assets – and especially over time – gold’s role as a safe haven is a familiar one. A refuge from panic is defined by confidence in stability and liquidity. The precious metal’s capacity to play that critical outlet has been proven over centuries. This particular status has only solidified itself over recent years, however, as some of the favorite alternatives have been materially distorted by financial conditions. In particular, government bonds from top credit rated countries have seen their value eroded substantially by dramatic rise of stimulus programs. It is that same diversion for safety that caters to the more prolific ‘anti-fiat’ appeal in the commodity. More and more, the threat of a wide risk aversion promotes the appeal of the metal as Dollar, Yen and Swiss franc find themselves undermined by circumstance.” – John Kicklighter, NASDAQ Daily FX

Chart of the Day

Chart note: With the US dollar the centerpiece of interest the past several weeks, 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.

 

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Posted in Today's top gold news and opinion |

Gold recovering this morning from yesterday’s Sintra inspired downdraft

Gold is staging something of a recovery this morning from yesterday’s downdraft trading at $1268 and even on the day. Silver is down 2¢ at $16.32. Gold broke to the downside late in yesterday’s session responding, as best we can gather, to statements at the Sintra central bank conference from the ECB’s Draghi and Nowotny, the Fed’s Powell, BoF’s Villeroy, BoJ’s Kuroda and others.

Those statements reinforced the split in interest rate policies between the United States and the other participants. That divergence between the perceived hawkish U.S. stance and the rest of the world’s dovish positioning was interpreted as bullish for the dollar and bearish for the rest of the world’s currencies. The result was yesterday’s sell-off. In this new and highly complicated financial order, though, nothing can be taken as given. The dollar index is trading down this morning and gold is recovering from yesterday’s lows.


An observation. . . . .

It is going to be awhile before the present turmoil settles into something recognizable. Market players and investors from institutions and hedge funds to small private investors alike are asking themselves some down-to-earth questions:

1. “Is the world a safer place than what it was before all of this happened?”

2. “Is the trade war likely to be a quick or will it become a long, drawn-out war of attrition?”

3. “Have the markets already priced-in the shock of what is quickly becoming a new world order or we are on the threshold of something more consequential?”

And last but certainly not least. . .

4. “Is my money safer where it is now or do I need to acknowledge that things have changed, perhaps radically, and make some necessary adjustments?

Today Germany’s Daimler, the manufacturer of Mercedes Benz, issued a warning that its profits would be undermined by China’s tariffs on U.S. imports. Stocks for Europe’s automobile manufacturers dropped sharply as a result. The announcement amounts to the recognition of a new way of doing business and one, by the way, that is not specific to Daimler. There are likely a good many similar epiphanies in the waiting both on the corporate level and among private investors as well.

Quote of the Day
“For those that have invested across assets – and especially over time – gold’s role as a safe haven is a familiar one. A refuge from panic is defined by confidence in stability and liquidity. The precious metal’s capacity to play that critical outlet has been proven over centuries. This particular status has only solidified itself over recent years, however, as some of the favorite alternatives have been materially distorted by financial conditions. In particular, government bonds from top credit rated countries have seen their value eroded substantially by dramatic rise of stimulus programs. It is that same diversion for safety that caters to the more prolific ‘anti-fiat’ appeal in the commodity. More and more, the threat of a wide risk aversion promotes the appeal of the metal as Dollar, Yen and Swiss franc find themselves undermined by circumstance.” – John Kicklighter, NASDAQ Daily FX

Chart of the Day

Chart note:  With the US dollar the centerpiece of interest the past several weeks, 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.

 

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DMR–Gold trading circumspectly this morning, quiet summer day in markets

DAILY MARKET REPORT

Gold is trading circumspectly this morning in and around the $1275 mark and level with yesterday’s closing number.  Silver is also running sideways.  A statement from Fed chairman Powell that the central bank will stay the course on raising interest rates, which normally might have undermined the price, is balanced with concerns about the intensifying trade war between the U.S. and China.  The commodities complex and U.S. dollar are also level on the day with stocks displaying marginal weakness. In short. . .a quiet day summer day in the markets.

Quote of the Day
“If we don’t quite know what the future holds, there is little point in getting carried away by very fancy mathematical calculations of optimal portfolios. Don’t rely on past data to be a good guide. Try to think through what mix of assets gives you the best chance of surviving some big event. That must mean including assets that are negatively correlated or uncorrelated in your portfolio. . . .And I am very struck by the fact that over many many years, central banks, governments and individuals have always, despite the protestations of economists, held some gold in their portfolio. Obviously, there is no high running return, but when unexpected things happen, particularly when governments rise and fall, then gold is a means of payment that everyone is always prepared to accept. And I think that’s why even central banks have always had a role in their portfolios for gold.” – Mervyn King, former Governor of the Bank of England

Chart of the Day

Chart note: When the United States abandoned the gold standard in 1971 and freed currencies to float against one another, the fiat money era began. We are still in that era today. This chart shows the performance of gold from the early 1900s to 1971 when gold backed the dollar, and the era from 1971 to present when it did not. Gold has had its ups and down since 1971, but clearly, over the long run, in the absence of an official gold standard, individual investors have been well-served by putting themselves on a private gold standard, as Mervyn King suggests above.

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Better Business Bureau Five Star Review

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Recent Better Business Bureau Client Review

“Thank you so much for your high rating for USAGOLD, Denver. They were recommended by a close friend and I researched them on your website in Oct 2009 and have been in touch with them ever since. I am now in full trust with their extraordinary business of great integrity and expertise. I will always deal with them . . Again, thank you for your expert ratings.” – Elan C., 8-29-2017

Scorecard: 38 45 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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Gold pushes to lower levels with trade wars and lower commodity prices providing impetus

DAILY MARKET REPORT

Gold pushed to lower levels in early New York trading in a move that began overnight in Asia. It is trading at $1275 – down $6 on the day – with a Trump administration promise to escalate the U.S.-China trade war, and an additional response from China to respond in kind, seemingly the main impetus.

On the one hand, traders are betting that a slowdown in China’s economy would result in lower commodity prices. On the other hand, widespread tariffs are likely to push price inflation higher in the United States. At the moment, the prospect of lower commodity prices has the upper hand in gold’s pricing. The dollar is higher this morning as a result while gold and silver are following the rest of the commodity complex to lower ground. In a trend that started in Asia yesterday, global stock markets continued their sell-off overnight and the Dow looks poised to open about 350 points lower.

Quote of the Day
Mr. Powell’s plain-speaking approach is refreshing. He is the antithesis of ‘Greenspeak.’ The new Chairman is clear, concise and devoid of obfuscation. He’s no ideologue. There are no glaring idiosyncrasies, for a change. Powell appears the adept and confident leader, yet he demonstrates an admirable humility when it comes to pontificating about today’s exceedingly complex backdrop. The Chairman has also abandoned much of the academic narrative that too often ensures economic analysis and discussion turn hopelessly convoluted and divorced from reality.” – Doug Noland, Credit Bulletin

Chart of the Day

Chart note: Gold gets its share of press, not all of it good. In recent months, the financial media have hammered away at the mistaken notion that gold does not do well in a rising interest rate environment. Nothing could be further from the truth as revealed in our Chart of the Day. Since the Fed started raising interest rates in late 2015, gold has been in a strong, sustained uptrend. The Fed funds rate has gone from .12% in November, 2015 to 1.70% today. Gold simultaneously has gone from $1062 to $1300 as of yesterday’s close for a gain of 22% during the initial stages of this rate raising period.
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DMR–Gold pushes to lower levels with trade wars and lower commodity prices providing impetus

DAILY MARKET REPORT

Gold pushed to lower levels in early New York trading in a move that began overnight in Asia.  It is trading at $1275 – down $6 on the day – with a Trump administration promise to escalate the U.S.-China trade war, and an additional response from China to respond in kind, seemingly the main impetus.

On the one hand, traders are betting that a slowdown in China’s economy would result in lower commodity prices. On the other hand, widespread tariffs are likely to push price inflation higher in the United States.  At the moment, the prospect of lower commodity prices has the upper hand in gold’s pricing.  The dollar is higher this morning as a result while gold and silver are following the rest of the commodity complex to lower ground. In a trend that started in Asia yesterday, global stock markets continued their sell-off overnight and the Dow looks poised to open about 350 points lower.

Quote of the Day
Mr. Powell’s plain-speaking approach is refreshing. He is the antithesis of ‘Greenspeak.’ The new Chairman is clear, concise and devoid of obfuscation. He’s no ideologue. There are no glaring idiosyncrasies, for a change. Powell appears the adept and confident leader, yet he demonstrates an admirable humility when it comes to pontificating about today’s exceedingly complex backdrop. The Chairman has also abandoned much of the academic narrative that too often ensures economic analysis and discussion turn hopelessly convoluted and divorced from reality.” – Doug Noland, Credit Bulletin

Chart of the Day

Chart note: Gold gets its share of press, not all of it good. In recent months, the financial media have hammered away at the mistaken notion that gold does not do well in a rising interest rate environment. Nothing could be further from the truth as revealed in our Chart of the Day. Since the Fed started raising interest rates in late 2015, gold has been in a strong, sustained uptrend. The Fed funds rate has gone from .12% in November, 2015 to 1.70% today. Gold simultaneously has gone from $1062 to $1300 as of yesterday’s close for a gain of 22% during the initial stages of this rate raising period.
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Posted in Today's top gold news and opinion |

A word on gold’s $23 drop on Friday. . . . .

OPINION

The opening salvo does not make a battle, let alone a war

The Law of Long-Term Time Preference – Those who plan, invest and execute long-term win. Win-win decisions, looking to the long term with short-term work and sacrifice, are historically the tickets to success in all areas of life – short-term sacrifice for long-term benefits, deferred gratification rather than instant gratification. This is the difference between wealth and poverty, between class and trash. Those who make primarily fear-based, ego-based, selfish, win-lose, lose-lose, emotional and/or short-term decisions as their primary mode of operation in life nearly always end up miserable, often as losers in a comprehensive sense in life. Such people are walking tornadoes to be avoided.” – R.E. McMaster, A Layman’s Guide to Golden Guidelines for Wise Money Management [Link]

Successful investors have a philosophy, usually carefully cultivated, that they rely upon no matter what happens in the markets in the short-run. Successful investors are rarely shaken by short-term events and, rarer still, guilty of short-term thinking.

USAGOLD has always nurtured the belief that gold should not be purchased principally as a speculative investment, but more as an asset accumulated for long-term asset preservation in the form of coins and bullion. That, in fact, is a viewpoint it shares with the bulk of its clientele. Thus, if the gold price takes a powder like it did on Friday, the event can be put into its proper perspective even if that sell-off continues. It is not, after all, the end of the world. It is not even the end of the gold market. Gold’s adversaries, though, no doubt will seize on the occasion come Monday as if it were in order to advance their own agendas.

In my view, Friday’s downside came the result of confusion over what several financial news outlets called the ‘most important week of the year.’ Japan went dovish. The European Union went dovish. China, not to be forgotten, went dovish. And here is where the confusion lies: The Federal Reserve went dovish as well with its announcement to open the excess reserve monetary spigot – a policy that could serve as a buffer to reducing its balance sheet even if as it continues to raise rates.

Professional investors, according to a Bloomberg report on Friday, took the announcement as such increasing their long gold positions on the COMEX at midweek. Bloomberg took those funds and institutions to task for their decision. We will see how it all comes out in the wash as we lurch further along this new but treacherous monetary highway.

We should keep in mind that all of this is occurring as the battle lines are being drawn for the escalating trade wars. The actions of the central banks should not be considered in a vacuum. No country wants their currency to stand out like the nail that needs to be hammered, and that includes the United States. Much of what the Trump administration would like to accomplish by way of reducing the trade deficit would be threatened if the dollar were to continue to be “the healthiest horse in the glue factory,” as former Wyoming senator Alan Simpson once colorfully put it.

In short, I would not be surprised to see the Trump administration take steps – perhaps quietly, perhaps not so quietly – to reverse the dollar’s rapid rise since the beginning of 2018, though such a policy of course should not be seen as a given. Who will win out in the currency battle in the larger trade war remains to be seen, but the opening salvo does not make a battle, let alone a war.

Returning to the philosophy among long-term gold investors mentioned at the top of the page, USAGOLD experienced the opposite of what many might have expected on Friday – a noticeable and immediate increase in buying interest on a sharp price break, something we haven’t experienced in a long time.

– Michael Kosares (6-17-2018)

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A word on gold’s $23 drop Friday. . . .

OPINION

The opening salvo does not make a battle, let alone a war

The Law of Long-Term Time Preference – Those who plan, invest and execute long-term win. Win-win decisions, looking to the long term with short-term work and sacrifice, are historically the tickets to success in all areas of life – short-term sacrifice for long-term benefits, deferred gratification rather than instant gratification. This is the difference between wealth and poverty, between class and trash. Those who make primarily fear-based, ego-based, selfish, win-lose, lose-lose, emotional and/or short-term decisions as their primary mode of operation in life nearly always end up miserable, often as losers in a comprehensive sense in life. Such people are walking tornadoes to be avoided.” – R.E. McMaster, A Layman’s Guide to Golden Guidelines for Wise Money Management [Link]

Successful investors have a philosophy, usually carefully cultivated, that they rely upon no matter what happens in the markets in the short-run.  Successful investors are rarely shaken by short-term events and, rarer still, guilty of short-term thinking.

USAGOLD has always nurtured the belief that gold should not be purchased principally as a speculative investment, but more as an asset accumulated for long-term asset preservation in the form of coins and bullion.  That, in fact, is a viewpoint it shares with the bulk of its clientele. Thus, if the gold price takes a powder like it did on Friday, the event can be put into its proper perspective even if that sell-off continues.  It is not, after all, the end of the world.  It is not even the end of the gold market. Gold’s adversaries, though, no doubt will seize on the occasion come Monday as if it were in order to advance their own agendas.

In my view, Friday’s downside came the result of confusion over what several financial news outlets called the ‘most important week of the year.’  Japan went dovish.  The European Union went dovish.  China, not to be forgotten, went dovish.  And here is where the confusion lies:  The Federal Reserve went dovish as well with its announcement to open the excess reserve monetary spigot – a policy that could serve as a buffer to reducing its balance sheet even if as it continues to raise rates.

Professional investors, according to a Bloomberg report on Friday, took the announcement as such increasing their long gold positions on the COMEX at midweek. Bloomberg took those funds and institutions to task for their decision. We will see how it all comes out in the wash as we lurch further along this new but treacherous monetary highway.

We should keep in mind that all of this is occurring as the battle lines are being drawn for the escalating trade wars. The actions of the central banks should not be considered in a vacuum. No country wants their currency to stand out like the nail that needs to be hammered, and that includes the United States. Much of what the Trump administration would like to accomplish by way of reducing the trade deficit would be threatened if the dollar were to continue to be “the healthiest horse in the glue factory,” as former Wyoming senator Alan Simpson once colorfully put it.

In short, I would not be surprised to see the Trump administration take steps – perhaps quietly, perhaps not so quietly – to reverse the dollar’s rapid rise since the beginning of 2018, though such a policy of course should not be seen as a given. Who will win out in the currency battle in the larger trade war remains to be seen, but the opening salvo does not make a battle, let alone a war.

Returning to the philosophy among long-term gold investors mentioned at the top of the page, USAGOLD experienced the opposite of what many might have expected on Friday – a noticeable and immediate increase in buying interest on a sharp price break, something we haven’t experienced in a long time.

– Michael Kosares (6-17-2018)

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Posted in Today's top gold news and opinion |

Gold, dollar react sharply to dovish central banks

DAILY MARKET REPORT

The markets in general today are reacting to the U.S. imposition of high tariffs on $50 billion in imports from China, and a subsequent threat from China that it will retaliate. The gold market in particular, though, is reacting to separate decisions by the Bank of Japan and the European Central bank on monetary policy. The ECB went hawkish on its QE program promising to halt it by the end of the year but it went dovish on interest rates. Japan was even more dovish than the ECB announcing it would keep rates at near zero while continuing to aggressively pursue its quantiative easing program. Meanwhile, the Federal Reserve appears to have become a bit more dovish itself, as reported here yesterday. The net result of all this dovishness has been to send the dollar on a sharp upward trajectory this morning and gold into a tailspin.

The yellow metal is down $18.50 on the day at $1286. Silver, likewise, is down 30¢ on the day at $16.87. The short-term results are in. Let’s see what happens once the markets have had a chance to digest the full implications of what has been a chaotic and volatile past few days.

Quote of the Day
“Significant increases in inflation will ultimately increase the price of gold. Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection. I view gold as the primary global currency. It is the only currency, along with silver, that does not require a counter-party signature. Gold, however, has always been far more valuable per ounce than silver. No one refuses gold as payment to discharge an obligation. Credit instruments and fiat currency depend on the credit worthiness of a counter-party. Gold, along with silver, is one of the only currencies that has an intrinsic value. It has always been that way. No one questions its value, and it has always been a valuable commodity, first coined in Asia Minor in 600 BC.” – Alan Greenspan, former chairman of the Federal Reserve

Chart of the Day

Chart note: The United States Federal Reserve is not the only central bank to build a tenuous balance sheet. In fact, the Bank of Japan has outdone it with its 541,000 billion yen portfolio, or nearly $4.9 trillion (as opposed to the Fed’s $4.1 trillion). Not be deterred by big numbers, the Bank of Japan as of yesterday has pledged to continue building its bond portfolio for the foreseeable future. The United States on the other hand has halted its quantitative easing program and has begun to liquidate its bond holdings.

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Posted in Today's top gold news and opinion |

DMR–Gold, dollar react sharply to dovish central banks

DAILY MARKET REPORT

The markets in general today are reacting to the U.S. imposition of high tariffs on $50 billion in imports from China, and a subsequent threat from China that it will retaliate. The gold market in particular, though, is reacting to separate decisions by the Bank of Japan and the European Central bank on monetary policy. The ECB went hawkish on its QE program promising to halt it by the end of the year but it went dovish on interest rates. Japan was even more dovish than the ECB announcing it would keep rates at near zero while continuing to aggressively pursue its quantiative easing program. Meanwhile, the Federal Reserve appears to have become a bit more dovish itself, as reported here yesterday. The net result of all this dovishness has been to send the dollar on a sharp upward trajectory this morning and gold into a tailspin.

The yellow metal is down $18.50 on the day at $1286. Silver, likewise, is down 30¢ on the day at $16.87. The short-term results are in. Let’s see what happens once the markets have had a chance to digest the full implications of what has been a chaotic and volatile past few days.

Quote of the Day
“Significant increases in inflation will ultimately increase the price of gold. Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection. I view gold as the primary global currency. It is the only currency, along with silver, that does not require a counter-party signature. Gold, however, has always been far more valuable per ounce than silver. No one refuses gold as payment to discharge an obligation. Credit instruments and fiat currency depend on the credit worthiness of a counter-party. Gold, along with silver, is one of the only currencies that has an intrinsic value. It has always been that way. No one questions its value, and it has always been a valuable commodity, first coined in Asia Minor in 600 BC.” – Alan Greenspan, former chairman of the Federal Reserve

Chart of the Day

Chart note:  The United States Federal Reserve is not the only central bank to build a tenuous balance sheet.  In fact, the Bank of Japan has outdone it with its 541,000 billion yen portfolio, or nearly $4.9 trillion (as opposed to the Fed’s $4.1 trillion). Not be deterred by big numbers, the Bank of Japan as of yesterday has pledged to continue building its bond portfolio for the foreseeable future.  The United States on the other hand has halted its quantitative easing program and has begun to liquidate its bond holdings.

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Posted in dailyquotes |

Gold up firmly in early trading Thursday

We believe that gold’s strong showing since yesterday mid-afternoon is related to Fed chairman Powell’s statement on excess reserves at the end of his press conference opening statement yesterday.

If you are in the catch-up mode, please see the two posts immediately below.  We will have an in-depth Daily Market Report on this and other important developments posted later this morning, so please stop back.

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Gold up firmly in early trading Thursday

We believe that gold strong showing since yesterday mid-afternoon is related to Fed chairman Powell’s statement on excess reserves at the end of his press conference opening statement yesterday.

If you are in the catch-up mode, please see the two posts immediately below.  We will have an in-depth Daily Market Report on this and other important developments posted later this morning, so please stop back.

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Posted in Today's top gold news and opinion |

Gold drifts sideways as signs of inflation’s return begin to materialize

Gold continues to drift sideways as it awaits, along with the rest of the financial markets, the end of the Fed’s policy meeting and its announcement release early this afternoon. Fed chairman Jerome Powell will hold a press conference shortly thereafter. Trading at $1297 in the early going and up $1.50 on the day, gold is being helped this morning by producer prices which surged .5% in May (a 6% rate annualized). Following on the consumer price report yesterday, which showed retail prices up by nearly 3%, inflation expectations are likely to move to the forefront among financial market participants. Though not likely to alter the Fed’s predetermined course of action, these are the first solid signs that the much-anticipated return of inflation might actually be materializing.

Quote of the Day
“If you ever needed more proof that central banks have crushed these markets, there you have it. The belief that nothing matters other than an inconsequential rate hike some time over a year from now in euro land or whether the Fed will make the ever so bold move of raising the IOER by only 20 basis points speaks volumes. And it isn’t being complimentary. It’s a truly bizarre construct to judge the import and implications of every event through the lens of whether green-pack Eurodollar futures jump or dump half a point. Especially when it’s intermingled for show with nonsense about demographic trends sure to produce a precise outcome 30 years from now. No wonder the smart money is investing in artificial intelligence programs that don’t listen to this tripe.” – Richard Breslow, Bloomberg “Trader Notes”

Chart of the Day

Chart note: We beg your forgiveness if you have seen this chart before, but we think it worth re-posting on a regular basis to demonstrate gold’s strong performance as a portfolio holding over a long period of time – especially for newcomers. It shows the average annual price of gold since 1970. It is meant to dispel the notion that gold is somehow volatile or unpredictable and as a result unreliable as a long-term portfolio safe haven. To the contrary, it shows gold living up to its reputation as precisely the opposite – stable in the face of rapidly changing economic circumstances, predictable in that it reacts directly to those circumstances and reliable in that has performed as advertised over an extended period of time – the extent of the fiat money era that began in 1971.

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DMR–Gold drifts sideways as signs of inflation’s return begin to materialize

Gold continues to drift sideways as it awaits, along with the rest of the financial markets, the end of the Fed’s policy meeting and its announcement release early this afternoon.  Fed chairman Jerome Powell will hold a press conference shortly thereafter.   Trading at $1297 in the early going and up $1.50 on the day, gold is being helped this morning by producer prices which surged .5% in May (a 6% rate annualized).  Following on the consumer price report yesterday, which showed retail prices up by nearly 3%, inflation expectations are likely to move to the forefront among financial market participants. Though not likely to alter the Fed’s predetermined course of action, these are the first solid signs that the much-anticipated return of inflation might actually be materializing.

Quote of the Day
“If you ever needed more proof that central banks have crushed these markets, there you have it. The belief that nothing matters other than an inconsequential rate hike some time over a year from now in euro land or whether the Fed will make the ever so bold move of raising the IOER by only 20 basis points speaks volumes. And it isn’t being complimentary.  It’s a truly bizarre construct to judge the import and implications of every event through the lens of whether green-pack Eurodollar futures jump or dump half a point. Especially when it’s intermingled for show with nonsense about demographic trends sure to produce a precise outcome 30 years from now. No wonder the smart money is investing in artificial intelligence programs that don’t listen to this tripe.” – Richard Breslow, Bloomberg “Trader Notes”

Chart of the Day

Chart note: We beg your forgiveness if you have seen this chart before, but we think it worth re-posting on a regular basis to demonstrate gold’s strong performance as a portfolio holding over a long period of time – especially for newcomers.  It shows the average annual price of gold since 1970. It is meant to dispel the notion that gold is somehow volatile or unpredictable and as a result unreliable as a long-term portfolio safe haven. To the contrary, it shows gold living up to its reputation as precisely the opposite – stable in the face of rapidly changing economic circumstances, predictable in that it reacts directly to those circumstances and reliable in that has performed as advertised over an extended period of time – the extent of the fiat money era that began in 1971.

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Posted in Today's top gold news and opinion |

Gold listless as we move into the summer doldrums – traditionally the best time of year to buy gold

Gold continued to meander listlessly either side of the $1300 level looking for an incentive to move in one direction or the other. Nothing though seems to materialize of sufficient import to move it off the dime – not even an anti-climactic meeting between the U.S. and North Korea, not even a rancorous G-7 summit meeting, not even the threat of rising inflation, not even the long-term onus of price-elevating trade wars (which I believe we are going to find out are easier to start than to end). . . .So it goes.

Meanwhile, Chris Vermeulen writing for Investing.com today wants us to “Please notice that the recent price lows, originating near the start of 2016 all the way through current price activity, are continually higher. Even the current price rotation, near the right edge of the chart, is still higher than the previous low price rotation near the middle of 2017. Ladies and Gentlemen, we have an uptrend already in place for gold. The ‘rope-a-dope breakout’ that we are suggesting is right around the corner. It’s the potential for a $1370 price break that has been setting up since June 2016.”

It would be even more of a ‘rope-a-dope’ breakout if it launches during the depths of the annual summer doldrums. I distinctly recall the dominant market psychology in the summer of 2009. The financial crisis was in full swing, but gold was stuck in the low $900s and languished there with the usual complaints that it had “lost its luster,” was “no longer a safe haven,” etc etc etc. . . .the usual litany. By the end of August it had moved to the $1000 level – from there it began its ascent to the all-time highs at the $1900 per ounce. As the old saying goes, the best time to buy gold is when everything is quiet.

Note:  If you haven’t taken note of our June special offer, it is worth your attention – old Swiss 20 francs priced competitive with contemporary small-sized bullion coins. Typically, it sells at a premium – sometimes a stiff premium – over other historic pre-1933 gold coins. These kinds of offers don’t come along very often and we have already had strong participation. Our last three offers sold out in a matter of days and, as always, it is first-come, first-served.

Quote of the Day
“Early summer is the weakest time of the year seasonally for gold, silver, and their miners’ stocks. With traders’ attention diverted to vacations and summer fun, their precious-metals interest and investment demand wane considerably. Thus this entire sector, and often the markets in general, suffer a seasonal lull this time of year. But these summer doldrums offer the best seasonal buying opportunities of the year.” – Adam Hamilton, Zeal LLC

Chart of the Day

Chart note: The gold price from January, 2016 to present highlighting the trend’s rising lows referenced in today’s market report.

 

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DMR–Gold listless as we move into the summer doldrums – traditionally the best time of year to buy gold

Gold continued to meander listlessly either side of the $1300 level looking for an incentive to move in one direction or the other.  Nothing though seems to materialize of sufficient import to move it off the dime – not even an anti-climactic meeting between the U.S. and North Korea, not even a rancorous G-7 summit meeting, not even the threat of rising inflation, not even the long-term onus of price-elevating trade wars (which I believe we are going to find out are easier to start than to end). . . .So it goes.

Meanwhile, Chris Vermeulen writing for Investing.com today wants us to “Please notice that the recent price lows, originating near the start of 2016 all the way through current price activity, are continually higher. Even the current price rotation, near the right edge of the chart, is still higher than the previous low price rotation near the middle of 2017. Ladies and Gentlemen, we have an uptrend already in place for gold. The ‘rope-a-dope breakout’ that we are suggesting is right around the corner. It’s the potential for a $1370 price break that has been setting up since June 2016.”

It would be even more of a ‘rope-a-dope’ breakout if it launches during the depths of the annual summer doldrums.  I distinctly recall the dominant market psychology in the summer of 2009.  The financial crisis was in full swing, but gold was stuck in the low 900s and languished there with the usual complaints that it had “lost its luster,” was “no longer a safe haven,” etc etc etc. . . .the usual litany.  By the end of August it had moved to the $1000 level – from there it began its ascent to the all-time highs at the $1900 per ounce.  As the old saying goes, the best time to buy gold is when everything is quiet.

Note:  If you haven’t taken note of our June special offer, it is worth your attention – old Swiss 20 francs priced competitive with contemporary small-sized bullion coins. Typically, it sells at a premium – sometimes a stiff premium – over other historic pre-1933 gold coins. These kinds of offers don’t come along very often and we have already had strong participation. Our last three offers sold out in a matter of days and, as always, it is first-come, first-served.

Quote of the Day
“Early summer is the weakest time of the year seasonally for gold, silver, and their miners’ stocks. With traders’ attention diverted to vacations and summer fun, their precious-metals interest and investment demand wane considerably. Thus this entire sector, and often the markets in general, suffer a seasonal lull this time of year. But these summer doldrums offer the best seasonal buying opportunities of the year.” – Adam Hamilton, Zeal LLC

Chart of the Day

Chart note:  The gold price from January, 2016 to present highlighting the trend’s rising lows referenced in today’s market report.

 

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Posted in Today's top gold news and opinion |

Gold in the Attic

Every once in a while we rummage around USAGOLD’s creaky old attic and dust-off a golden vignette from our storied past. The following short discussion first appeared in our monthly client letter in September, 2016. It is titled . . . . .

Copernicus on the debasement of money

I recently ran into this interesting quote from Copernicus included in his “Essay on the Coinage of Money” (1526):

“Although there are countless scourges which in general debilitate kingdoms, principalities, and republics, the four most important (in my judgment) are dissension, [abnormal] mortality, barren soil, and debasement of the currency. The first three are so obvious that nobody is unaware of their existence. But the fourth, which concerns money, is taken into account by few persons and only the most perspicacious. For it undermines states, not by a single attack all at once, but gradually and in a certain covert manner.”

Up until I came across this essay a few weeks ago, I was not aware that Copernicus had applied his genius to the insidious effects of currency debasement. This ground-breaking essay probably influenced both John Maynard Keynes (See quote top left) and Thomas Gresham of “bad money drives out good” fame. Ironically both Keynes and Copernicus were referencing currency debasement episodes in Germany. For what might have inspired Gresham, you will need to read the essay. Cobden Center’s Ralph Benko says Copernicus’ essay has been translated into English several times yet those translations remained difficult to obtain for students of the monetary arts and sciences.  It has remained mostly the property of elite historians.” Above we link Edward Rousen’s translation that you might keep company with the knowledgeable elite.

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Posted in Gold in the Attic, Today's top gold news and opinion |

DMR–Gold, financial markets curiously subdued as complex market realities unfold

Gold pushed over the $1300 mark this morning in subdued trading typical of the annual summer doldrums. It is up $2 on the day $1301, but up $7 from its overnight lows. Silver is 15¢ higher at $16.92 and quietly closing the ratio gap between the two metals (now at 77 to one).

Curiously, the reaction to the obvious breakdown in relations among G-7 countries has been subdued in financial markets thus far this morning. At the same time, if there is any market unease about yesterday’s CNBC report that the Fed might put an early end to interest rate hikes and quantitative tightening, it isn’t apparent on this quiet Monday morning.

Perhaps tomorrow’s meeting between the U.S. and Korean leaders preoccupies market thinking at this juncture. Then again it might all come down to something more basic. Perhaps market players across the spectrum – funds, institutions and private investors – simply need time to sort out the overwhelming complexities of the general unraveling predicted in Strauss and Howe’s Fourth Turning. . . . . . . and how to react to it.

Quote of the Day
“I grew up in a purely urban family. We had no relatives in the country. I’m born in 1944. When I was a baby, my mother could only buy food because she still had some gold coins. Without gold I would have starved. She always told me that. Therefore, this generation already has a certain gold affinity. In extreme times of crisis, this is one of the few things left to be accepted. Gold was the only thing left to the people of the city at that time. Before the silver cutlery was also traded at the farmer.” – Ewald Nowotny, European Central Bank governor

Chart of the Day

Chart note: The currency problem in Turkey has become something of a poster child for a more generalized deterioration occurring in a number of emerging countries. This chart shows gold priced in Turkish lira. The inflation rate as quoted by official sources is just over 12%, but Steve Hanke, economics professor at Johns Hopkins University, estimates the real inflation rate at closer to 39%. The Turkish lira itself is down almost 20% year to date against the dollar and Turkey’s citizens are moving to gold coins and bullion as a preferred store of value.

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Posted in dailyquotes |