Category: PG

Peter Grant and Jordan Roy-Byrne Discuss Feasibility of Gold Peg

28-Sep (USAGOLD) — The following is a two part interview I did with China Central TV, although I just received the links from them today. Better late than never…

Part 1 of 2:

Part2 of 2:

Posted in Gold News, Gold Views, PG |

Gold sets new 16-week highs as FOMC minutes are suggestive of a more accommodative mindset at the Fed.

Posted in Gold News, PG |

Morning Snapshot

16-Jul (USAGOLD) — Gold began the week under pressure after failing to regain $1600 on Friday and amid heightened worries about Chinese economic growth. However, the yellow metal rebounded into positive territory early in the New York session after a disappointing June retail sales print weighed on stocks and prompted a new raft of negative US GDP revisions. Weaker prospects for US economic growth increases the likelihood of further Fed accommodations…possibly even QE3…

The IMF called on central banks — particularly the ECB — to do more to stimulate growth with lower interest rates and more liquidity after cutting its global growth forecast for 2013 to 3.9%, from 4.1% previously. Lower yields on sovereign debt that is perceived to be “safe” and ever-more liquidity is a recipe for higher gold prices, yet the yellow metal remains range bound. A very negative sentiment reading for gold has the contrarians salivating. Mark Hulbert who compiles the Hulbert Gold Newsletter Sentiment Index (HGNSI) said on Friday, “Some day, gold will wake up from its dreary, listless state and take off.”

USAGOLD’s own Jonathan Kosares wrote a piece last week examining some of the cyclical factors that tend to influence gold through the end of the year. Kosares notes that “on average, 2/3 of all gains for the year have come after the summer months.”

With gold trading well below the midpoint (1721.45) of its broad 1920.50/1522.40 range, global and US growth prospects waning, pressure on central banks to act escalating and with the market conceivably on the cusp of positive seasonal influences, now may be the ideal time to make that first gold purchase, or add to your existing holdings.

• US business inventories +0.3% in May, above market expectations of +0.2% vs negative revised +0.3% Apr.
• US retail sales -0.5% in Jun, well below expectations of +0.1%, vs -0.2% in May.
• NY Empire State index rebounded to 7.4 in Jul, above market expectations of 3.5, vs 2.3 Jun.
• Eurozone CPI -0.1% m/m in Jun, below expectations of unch, vs +0.1% in May; 2.4% y/y. Core 1.6% y/y.
• Eurozone trade balance (sa) €6.3 bln in May, vs downward revised €4.5 bln in Apr.
• India Monthly WPI 7.25% y/y in Jun, vs 7.55% in May.

Posted in Daily Market Report, Gold News, Gold Views, PG |

Morning Snapshot

02-Jul (USAGOLD) — Gold retreated in overseas trading on Monday as the euro fell and the dollar rebounded amid dissipating optimism about the ‘grand bargain’ reached at last week’s EU Summit. After all, what transpired last week was just another kick of the can down the road. And while one might argue that steps toward a tighter banking union are steps toward a more integrated Europe, the measures agreed to do little to address the underlying imbalances that precipitated the crisis.

By early New York trading however, the yellow metal was on the mend and had traded briefly back above the $1600 level. With the euro still under pressure and the greenback underpinned, it would seem that the safe-haven appeal of gold is reasserting itself. The 20 and 50-day moving averages have converged just below $1600, marking this area as important resistance.

With a new record high in the eurozone unemployment rate of 11.1% and inflation moderating, the ECB is widely expected to cut its refi rate by 25 bps on Thursday. There is also a camp that thinks the ECB will only adjust the deposit rate at this meeting, discourage banks from hoarding cash and keeping some powder dry in case the ‘europhoria’ from the summit completely evaporates.

• US manufacturing ISM fell to 49.7 in Jun, well below expectations of 52.0, vs 53.5 in May; prices 37.0, vs 47.5 in May.
• US construction spending +0.9% in May, above market expectations of +0.2%, vs positive revised +0.6% in Apr.
• Eurozone unemployment rate edged to a new record high of 11.1% in May, in-line with expectations, vs 11.0% in Apr.
• Turkey Q1 GDP 3.2% y/y, vs 5.2% y/y in Q4-11.
• Switzerland retail sales improves to +6.2% y/y in May, vs upward revised +0.2% in Apr.
• Switzerland SVME Manufacturing PMI rose to 48.1 in Jun, vs 45.4 in May.
• Eurozone Markit PMI – Manufacturing was revised higher to 45.1 in Jun, beating expectations of 44.8, vs 44.8 previously.
• UK CIPS Manufacturing PMI rose to 48.6 in Jun, beating expectations of 46.1, vs 45.9 in May.
• South Korea CPI slipped to 2.2% y/y in Jun, vs 2.5% in May.
• Japan Tankan Index (Large Manufacturers) -1 in Jun, vs -4 in May; Large Non-Manufacturers index rose to 8, vs 5 in May.
• China HSBC/Markit PMI – Manufacturing slipped to 48.2 in Jun, vs 48.4 in May.

Posted in Daily Market Report, Gold News, Gold Views, PG, Today's top gold news and opinion |

Morning Snapshot

27-Jun (USAGOLD) — Gold remains consolidative, yet defensive, ahead of the EU Summit commencing tomorrow. While the troika has laid out a ten-year roadmap for a fiscal consolidation of the EU, German Chancellor Merkel maintains her defiant opposition to shared debt.

You may recall that it took about 10-years for all the pieces for the union and the single currency to fall into place once the Maastricht treaty was signed. However, in the midst of today’s sovereign debt and banking crisis, I’m not sure the market will give Europe 10-weeks, let alone 10-years to work through its problems.

Perhaps realizing this to be true, and perhaps in anticipation of a less than harmonious outcome to the summit, the ECB seems to be floating a more dovish tone. Peter Praet, the central bank’s chief economist, suggested in an interview with FT Deutschland for release tomorrow that that there was no doctrine at the ECB prohibiting a drop in the refi rate below its current level of 1.0%. Similarly, Bloomberg reported today that ECB President Draghi is contemplating a cut in the deposit rate to 0%, and possibly even into negative territory, to stimulate bank lending. Goldman Sachs has already reacted by altering its expectations for the 05-Jul policy meeting from steady to a 25 bp cut.

The EUR-USD dipped to pressure support at 1.2442/37 once again and continued firmness in the dollar is keeping gold in check for the time being. If Merkel continues to rebuff pressure from her eurozone colleagues, one might expect the further pressure on the single currency post-summit. While this would offer further support of the dollar, it would be only because of weakness in the euro, rather than any real fundamental underpinning for the greenback. Despite all of our own fiscal issues here in America, the dollar would only look modestly more appealing relative to the euro. ‘The best looking horse at the glue factory’ is my preferred metaphor. At that point, investors may once again turn to gold as the only true safe-haven.

• US NAR pending home sales index surged 5.9% to 101.1 in May, above market expectations, vs 95.5 in Apr.
• US durable goods orders +1.1% in May, well above market expectations of +0.5%, vs negative revised -0.2% in Apr.
• Germany import price index -0.7% m/m in May, in-line, vs -0.5% in Apr; +2.2% y/y.
• Italy business confidence improves in Jun to 86.8 after downward revision to 84.2 for May.
• Germany CPI – Preliminary -0.1% m/m in Jun, above expectations of -0.2%, vs -0.2% in May; +1.7% y/y; EU harmonized +2.2%.

Posted in Daily Market Report, Gold News, Gold Views, PG |

Morning Snapshot

25-Jun (USAGOLD) — Gold is on the mend, having sold off last week following disappointment that the Fed wasn’t going to be forthcoming with additional accommodations beyond a 6-month extension of Operation Twist. However, the Fed did acknowledge that it was prepared to do more if the growth/employment picture deteriorated further. Given some pretty grim economic data in recent weeks (although today’s data was somewhat encouraging), investors are now looking forward to the next FOMC meeting on 31-Jul/01-Aug for the next round of QE.

Additionally, the situation in Europe continues to deteriorate with eurozone stocks taking a beating and spreads widening amid reports that German Chancellor Merkel continues to rejects eurobonds, eurobills and joint deposit insurance ahead of the EU summit. Well, if this stuff truly remains off the table, I doubt that anything meaningful will come out of the summit.

If that is the case and fiscal issues aren’t meaningfully addressed, George Soros has suggested the summit will be a “fiasco.” I suspect that Merkel will be treated like a piñata at the EU summit, other members will continue to beat on her hoping that some little prize will drop out.

• US Dallas Fed Index surges to 5.8 in Jun, on expectations of -2.0, vs -5.1 in May.
• US new home sales +7.6% to 369k in May, well above market expectations of 346k, vs 343k in Apr.
• Thailand Exports-CC USD +7.7% y/y in May, vs -3.7% in Apr.
• Singapore CPI +5.0% y/y in May, vs +5.4% in Apr.
• Taiwan M2 +4.4% y/y in May, vs +4.72% in Apr.

Posted in Daily Market Report, PG |

Gold As A Store Of Value

22-Jun (USAGOLD) — Brent Johnson of Santiago Capital provides some pretty compelling evidence as to why, after thousands of years, gold remains the preferred store of value. With a track record of that magnitude, the corrective/consolidative activity we’ve experienced over the past 9-months isn’t even a blip on the radar screen. As Johnson points out, “nothing has changed.”

Click on the full screen option (the little square with an arrow) to make the slides more visible.

Source: Santiago Capital

Posted in Gold News, Gold Views, PG |

The Daily Market Report

More Flailing About in Europe

22-Jun (USAGOLD) — Gold remains defensive in the wake of this week’s Fed disappointment, further dubious gyrations in Europe to mitigate the sovereign debt crisis and mounting global growth risks. Thus far, the low from early in the month at 1557.40 has contained the downside, and provides an intervening barrier ahead of the more important 1527.45/1522.40 lows that define the bottom of the range.

Further talk of a eurozone growth pact centered on a stimulus package that would amount to 1% of GDP, or about €130 bln. However, hope fizzled when it became apparent that funding for the plan would be largely reliant on existing measures and would likely include a mere €10 bln in “new money.” Meanwhile, the ECB confirmed that it would further relax its collateral requirements, opening the door — and its balance sheet — even more questionable assets. While providing additional liquidity to banks is necessary at this stage, such measures do absolutely nothing to resolve the underlying issues that perpetuate the crisis.

The IMF added its voice to the chorus calling for joint eurobonds and direct lending by the EFSF/ESM to stressed banks. This significantly escalates the pressure on Germany and its leader Angela Merkel, who continues to object to on the basis that Germany will likely get stuck with the tab.

Additionally, the IMF believes the ECB should resume its bond buying program or expand the money supply, which the central bank has seemed disinclined to do. Jens Weidmann of Germany’s Bundesbank has perhaps been the most vociferous objector, because he too is rightfully worried that German taxpayers will be left holding the bag.

With backing for “more Europe” in the eurozone is growing, Germany becomes increasingly more isolated as it continues to object. While admittedly, salvation of the great experiment that is the EU likely rests with Germany, one might find that “more Europe” is synonymous with “more Germany.” While this may seem like the lesser of multiple evils amidst the current situation of fiscal duress, one can be assured that periphery countries will object to increased German influence in their sovereign affairs down the road.

Posted in Economy, European Debt Crisis, Gold Views, PG |

The Daily Market Report

Spanish Bailout Relief is Short-lived

11-Jun (USAGOLD) — The market initially reacted favorably to the weekend agreement on a €100 bln bailout of the Spanish banking system. However, the relief rally in equities and the euro proved short-lived as the devil is apparently in the proverbial details.

By mid-morning in NY, the euro had given back all of its gains and was probing back below 1.2500. The Spanish IBEX index, which earlier had been up more than 6% turned negative on the day and and Spanish yields were back on the rise. It would seem that €100 bln bailout buys about half a day of relief…

I think there was broad acknowledgement that the bailout of the Spanish banks did nothing to solve the long-term problems of Spain or the eurozone as a whole. Focus was already shifting to next weekend’s Greek elections. However, when the debate started about where the funds for the bailout would come due to issues about subordination, the euphoria evaporated.

It seems that if the funds came from the new European Stability Mechanism (ESM) — as was the original plan — private bondholders would be immediately subordinated. That sparked a debate about whether the funds could come from the existing — but winding down — European Financial Stability Fund (EFSF), which doesn’t require subordination of the private bondholders. I think the market flashed-back to earlier in the year when there was a lengthy drawn-out process to get private Greek bondholders to “volunteer” for haircuts.

There have also been comparisons to the US TARP program, but as PIMCO’s Bill Gross pointed out via Twitter this morning: U.S. TARP bought [preferred] stock. EU buys senior Spanish debt. Big difference.

…well as it turns out, some in the EU are trying to ensure that it’s not even senior debt.

So why should Spain’s private bondholders be protected? Because I think there is a fear that the private bondholders throughout the periphery would stampede to liquidate their exposures if they got the sense that they were about to be subordinated to the ESM. Yields would rise further and the crisis would deepen.

While gold was unable to sustain overseas tests back above $1600, it remains comparatively buoyant, well above the low end of the range at 1527.45/1522.40. In attempting to paper over the Spanish banking crisis — with not nearly enough wallpaper — it didn’t take long for the market to realize that it’s going to take a lot more than €100 bln to provide even a short-term solution. Meanwhile, the broader eurozone debt crisis continues to fester, as do the fiscal crises in the US, the UK and Japan, amid ongoing risks of a hard-landing in China.

There quite frankly isn’t enough fiat on the planet to paper-over all of it…but that likely wont stop global policy makers from trying. And that’s exactly why many central banks, sovereign wealth funds, pensions, hedge funds and individual investors are clamoring for the protection of physical gold. Do you have enough gold in your portfolio?

Posted in Daily Market Report, Debt, Economy, European Debt Crisis, PG, Today's top gold news and opinion |

Morning Snapshot

04-Jan (USAGOLD) — Gold is back below $1600 as yesterday’s improved risk appetite — driven by better than expected manufacturing data — proved short-lived. A more risk averse stance emerged today after two ECB dollar liquidity tenders garnered $31.7 bln uptake from eurozone banks. While this was lower than the $33.0 bln allotted in the 21-Dec operation, it is still a disturbingly high number, indicative of ongoing strains within the European banking system.

On top of that, the banks also parked a record high €453.2 bln at ECB overnight facility. So commercial banks in the EU are still clamoring for dollars, while hoarding euros with the ECB. This would suggest a troubling level of uncertainty that bodes ill for growth prospects and may suggest a rise in concerns about a possible breakup of the EU. Greece threatened this very thing earlier in the week if their latest round of bailout funds were not released in a timely manner.

As long as this uncertainty prevails, the quid pro quo that the ECB was expecting — we provide you with unlimited cheap euros and you plow them back into periphery sovereign bonds — seems unlikely to be honored.

The euro came under renewed selling pressure and all of yesterday’s gains have been erased. This buoyed the dollar, which in turn took some of yesterday’s shine off the yellow metal.

Portugal saw its short-term borrowing costs fall as it sold €1 bln in 3-month bills with an average yield of 4.346%, down from 4.873% in early December. There was also a solid 1.27 bid cover in today’s €4.057 bln German 10-year bund auction, but the market seemed nonplused. French yields rose ahead of Thursday’s OAT auction, amid persistent market chatter of an impending downgrade. Italy and Spain will be selling debt next week and there are real concerns that Italy in particular may have difficulty moving about €100 bln in redemption and coupon payments coming due early in the new year. Will the ECB step in to fill the demand void if one does indeed develop?

• US factory orders jumped 1.8% in Nov, in-line with expectations, vs positive revised -0.2% in Oct.
• Eurozone Markit PMI – Composite revised up to 48.3 in Dec, vs 47.9 preliminary print. Services revised up to 48.8, vs 48.3.
• Eurozone HICP inflation decelerated in Dec to 2.8% y/y, in-line with expectations, vs 3.0% y/y in Nov.
• UK CIPS Construction PMI 53.2 in Dec, vs 52.3 in Nov.

Posted in PG, Today's top gold news and opinion |