Category: Daily Market Report

The Daily Market Report: Gold Firm Within the Recent Range

USAGOLD/Peter A. Grant/01-18-17

Gold is trading modestly lower on the day, but remains generally well bid within the uptrend that has emerged since gold bottomed late last year. The yellow metal is being weighed by a firmer dollar, but haven interest is limiting the downside.

Gold has risen for seven consecutive sessions. There’s still a lot of trading day left, so we could still see and eighth today.

CNBC reports that GLD has risen 13 out of the last 15 sessions through yesterday. That’s something that hasn’t happened since the summer of 2011.

After holding steady on policy today, Bank of Canada Governor Stephen Poloz warned that rate cuts were still on the table, citing “significant uncertainties.” Poloz specifically mentioned “material” risks to the Canadian economy if U.S. trade policies become more protectionist under President Trump.

Silver has gotten a lift this week as well, regaining the $17 level for the first time since mid-December and setting a 9-week high yesterday at 17.32. The technical picture for silver has improved markedly this week, with the 100-day moving average now within striking distance at 17.53.

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

Morning Snapshot: Gold consolidates recent gains

USAGOLD/Peter A. Grant/01-18-17

Gold is generally consolidative at the high end of the recent range. The dollar is a little firmer today, which has the yellow metal trading slightly lower in the day.

December CPI was inline with expectation. Later this morning we have industrial production, NAHB housing market index, Beige Book, TIC data and FedSpeak from Yellen and Kashkari.

The Bank of Canada will also announce policy. Steady as she goes is widely expected.

Posted in Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Trends Higher as Dollar Drops

USAGOLD/Peter A. Grant/01-17-17

Gold surged to fresh 8-week high as the dollar took a double hit: One from President-elect Trump and one from a sharp rebound in the British pound. The yellow metal is now up more than 5.5% YTD, and more than 8% from the December low.

The dollar index tumbled to a six-week low after President-elect Donald Trump told the Wall Street Journal that the dollar was “too strong.” So, what might the new President do about that?

That question should give dollar bulls pause. As I stated in this morning’s Snapshot, perhaps the easiest first step would be to appoint a couple doves to the two open seats on the Fed’s board of governors. That could disrupt the expectations of two or three rate hikes this year, pushing the dollar lower in the process. That would bode well for gold.

Today’s rebound in Sterling put further pressure on greenback. The pound rallied nearly 3% versus the dollar and almost 3% against the euro. While PM Theresa May confirmed there would be a hard-Brexit, the currency rebounded in classic ‘sell the rumor, buy the fact’ fashion. Ms. May confirmed that her government would be aggressively looking to strike the best trade deals possible and Parliament will get to vote on any deal struck with the EU. That all seemed to offer some level of relief to markets, but this is still going to be a cumbersome process fraught with risk.

Those Brexit risks, along with Mr. Trump’s penchant for shooting from the hip will likely keep markets on edge for the foreseeable future. Gold should then continue to benefit from safe-haven flows.

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

Morning Snapshot: Gold surges to 8-week highs

USAGOLD/Peter A. Grant/01-17-17

Gold continues to charge higher, buoyed larger by renewed weakness in the dollar. The yellow metal has pushed to a new 8-week high of 1218.90. Silver has reclaimed the 17-handle.

In a Wall Street Journal interview, President-elect Trump said the dollar was “too strong,” adversely impacting the ability of U.S. companies to compete globally. Mr. Trump seemed to be particularly concerned about the Chinese yuan “dropping like a rock.” Unvarnished rhetoric like that ought to strike fear in the hearts of dollar bulls and monetary policy hawks alike.

Easier policy is a sure-fire way to knock the dollar lower. There are two vacant seats on the Federal Reserve Board of Governors that President Trump will be able to fill immediately and they will presumably contribute to the shaping of monetary policy moving forward.

The dollar was further weighed by a rebound in the British Pound in the wake of Theresa May’s Brexit speech. While there will apparently be a hard-Brexit, assurances that Britain was not turning inward and that Parliament will get to vote on any deal struck with the EU seemed to temper pessimism somewhat.

Posted in Gold News, Gold Views, Snapshot |

Morning Snapshot: Gold Rises to 8-Week High

USAGOLD/Peter A. Grant/01-16-17

Gold rose in overseas trading to set a new 8-week high of 1208.58, despite a higher dollar this morning. The yellow metal remains underpinned by safe-haven demand, amid uncertainty ahead of the Trump inauguration and rising concerns over a hard-Brexit.

U.S. markets are closed today in observance of the Martin Luther King Jr. holiday. Look for trading activity to be muted after the European close as a result.

Posted in Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Poised For Third Consecutive Weekly Gain

USAGOLD/Peter A. Grant/01-13-17

Gold dipped modestly in early New York trading, but has since adopted a more consolidative tone just below $1200. The yellow metal appears poised to gain just over 2% this week, which would be its third consecutive weekly gain.

The surge earlier in the week to a 7-week high of 1206.93 lends considerable credence to the bullish technical tone that is developing. Gold is now comfortably above the 20- and 50-day moving averages, as well as the 20-week moving average. Momentum remains clearly to the upside.

We like the fundamentals as well: Physical demand in both the east and west is back on the rise. Recent U.S. economic data have been mixed, which is tempering the post-election optimism. This is also weighing somewhat on expectations that the Fed will hike 3 times this year.

The World Bank is forecasting 2.2% GDP growth this year. Atlanta Fed President Dennis Lockhart thinks it will be more like 2%, noting that it is difficult to predict what impact any fiscal stimulus might have at this point. That’s pretty anemic more-than 7-years into the recovery.

President-elect Trump chose not to elaborate on infrastructure spending during his highly anticipated press conference earlier in the week. That seemed to really disappoint investors.

The Dow has failed to satisfy the 20,000 objective, even as the national debt continues its unstoppable march to $20 trillion. Expansion of the money supply is accelerating as well.

It all paints a generally favorable picture for gold and hearkens back to January of 2016, where we saw a similarly impressive start to the new year. The 2016 rally lasted until midyear, wracking up gains in excess of 30% before the corrective pressure emerged.

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

Morning Snapshot: Gold consolidating recent gains

USAGOLD/Peter A. Grant/01-13-17

Gold is consolidating recent gains, trading slightly lower, just below the $1200 level. Even with the setback from yesterday’s 7-week high, the yellow metal is up more than 2% on the week.

December retail sales slightly missed expectations. The miss in retail sales ex-autos was more pronounced. PPI rose in line with expectations in December.

The dollar remains defensive as optimism over the Trump election has cooled somewhat more recently. If the dollar remains under pressure, it will likely provide a tailwind for gold.

Posted in Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Trades Above $1200 For First Time Since November

USAGOLD/Peter A. Grant/01-12-17

Gold surged overseas to trade above the 1200 threshold for the first time since late-November. The yellow metal set a new 7-week high at 1206.93 as U.S. yields and the dollar fell and stocks continued to struggle ahead of the 20,000 level.

Risk appetite dwindled in the wake of yesterday’s Trump presser; which was long on protectionist rhetoric and short on fiscal stimulus details. This seems to have led to a repricing of the economic optimism that developed in the wake of the November election.

I posted a couple articles this morning that suggest that gold is actually undervalued, even with the yellow metal up nearly-7% since the mid-December lows that were notched just before the Fed initiated their second 25-bps rate hike in more than a decade.

The article that suggests gold is “cheap” insurance no matter what the Fed does is prescient. The author believes that if more robust economic activity is in the offing, the Fed will likely be behind the curve on inflation. That means that real rates will remain negative, “or at best near zero.” That will bode well for gold.

Alternatively, if the economy falters, the Fed will likely be quick to ease monetary policy in reaction. In fact, the two rate hikes — and almost certainly the first one — were implemented to give the Fed some clearance above the zero-bound should this very thing happen.

[T]he case for gold as insurance and also as a solid long-term investment is as strong as ever. — Olivier Garret

This is a risk that I’ve written about many times over the past several years. “We are in the seventh year of economic expansion. Historically, we are overdue for a broad-based market contraction,” warns Mr. Garret.

In today’s Precious Metals Update from Capital Economics, analyst Simona Gambarini says, “We think that the case for gold as a strategic reserve asset remains strong.” While she is speaking about the official sector, the same can be said for the individual investor.

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

Morning Snapshot

USAGOLD/Peter A. Grant/01-12-17

Gold surged in overseas trading to reclaim the $1200 handle. A new 7-week high was established at 1206.93 as both U.S. yields, stocks and the dollar came under pressure.

Investor optimism has been tempered in the wake of President-elect Trump’s presser yesterday; where he seemed to focus on trade protectionism, while failing to offer specifics on his infrastructure spending plans. This has dimmed risk appetite, boosting both gold and bonds.

Initial jobless claims recouped much of the big drop in the previous week. Import prices rose 0.4% in December, below expectations of +0.7%.

Lots of Fedspeak coming up today. Yellen, Harker, Evans, Lockhart, Bullard and Kaplan are all slated to speak.

Posted in Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Firm Following Trump Presser

USAGOLD/Peter A. Grant/01-11-17

Gold edged higher in overseas trading to set yet another 6-week high. While the yellow metal came under some pressure in advance of President-elect Trump’s press conference, those losses were quickly retraced as Mr. Trump began to speak.

Investors are hoping to glean clues as to what types of policies might be implemented in the early days of the Trump administration. They are understandably hoping that the post-election surge in confidence will be validated and perpetuated.

Whether Trump’s policies will be able to snap the U.S. economy out of its doldrums remains to be seen. The stock market seems to have liked what they heard, with the Dow trading back within 200 points of the magical 20,000 level.

After the U.S. national debt hit $19,952,808,638,850.59 yesterday, I asked this question: Will the national debt hit $20T before Dow hits 20k?

As each approaches their own big round “20”, I wondered just how big is the near-$20T national debt compared to our stock market. It is in fact larger than the market cap of the entire S&P500! The VisialCapitalist has a great infographic from last year on the topic.

Make note of the following as well: The The U.S. national debt is 155x larger than all gold mined globally in a year. In fact, all of the world’s physical currency, gold, silver, and bitcoin combined equates with just 65% of the national debt.

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

Morning Snapshot: Gold well bid, despite firmer dollar

USAGOLD/Peter A. Grant/01-11-17

Gold remains well bid, having set another new 6-week high overseas at 1191.32. The yellow metal is sustaining recent gains, despite a firmer dollar this morning. Short-term focus remains on 1200.

The U.S. economic calendar is light today with EIA data and the IBD/TIPP Economic Optimism Index. NY Fed President Dudley will speak on banking culture and regulation at 1:20 ET. President-elect Trump is holding a presser at 11:00 ET. There is a $20 bln 10-year note reopen today.

Posted in Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Surges to 6-Week Highs

USAGOLD/Peter A. Grant/01-10-17

Gold extended to the upside in early New York trading to reach a new 6-week high of 1190.61. The yellow metal has been buoyed by good physical demand early in the new year, with an additional tailwind provided by a dollar and stock market that may be looking a little toppy.

Coin News Net reports that first day sales of 2017 America Silver Eagles surged 36% versus last year. Silver Eagle sales reached 3,747,500 for that one day, surpassing last year’s total 2,756,500 coins; which marked the beginning of a pretty robust first-half of 2016.

First day Gold Eagle sales were 68,000 combined ounces. That marks a 13.3% increase over the 60,000 ounces sold on the first day of availability in 2016.

We noted late in 2016 that things seemed to be shaping up very similarly to last year, where the metals bottomed late in the year near a Fed rate hike. The rise seen since the mid-December lows and the impressive surge in America Eagle demand further validates that outlook. Gold is up more than 6% from the lows, while silver is up more than 8%. Both metals are trading comfortably above their 20-day moving averages. Gold slightly exceeded its 50-day moving average today, while silver has broken through convincingly as it moved within striking distance of $17.

In a SeekingAlpha article I posted earlier today, the author notes: “The reason why gold always moves higher over the long term is because the money supply is consistently expanding.” He goes on to say, “It’s the growth of M2 that ultimately determines how much gold is worth (in USD).”

So let’s take a peak at where gold is relative to M2:

Wow! If M2 growth is really the ultimate determinant of the price of gold in dollars, it sure looks like gold is grossly undervalued. The recent rebound in gold demand may be in part due to investors’ recognition of this reality. The acceleration in M2 growth also suggests to me that the dollar has become overvalued as a result of even modest monetary policy divergence.

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

Morning Snapshot: Gold remains firm near 6-week highs

10-Jan (USAGOLD) — Gold is consolidating at the high end of the recent range. The yellow metal eked out a new 6-week high overseas at 1187.64, with focus now squarely on 1200.

The NFIB Small Business Optimism Index rose to 105.8 in December. That’s up from 98.4 in November and is consistent with the general rise in economic and consumer optimism since the election.

Later this morning we’ll see November wholesale sales, JOLTS job openings for November and IBD/TIPP Economic Optimism Index. There is also a $24 bln 3-year note auction and a $45 bln 4-week bill auction.

Posted in Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Rebounds to Set 4-Week Highs

09-Jan (USAGOLD) — Gold has eked out new 5-week highs above 1185.04, buoyed by a softer dollar and a stock market that refuses to validate all those Dow 20,000 hats. There is also apparently some heightened doubts about the Fed’s call for three more rate hikes this year.

The 10-year yield is down 5 bps point today, which is checking the dollar’s recent rise. FedSpeak today has been generally towing the dot-plot line, but with some caveats. Boston Fed President Rosengren said the timing will depend on incoming data, global conditions and fiscal policy. Atlanta Fed President Lockhart says it’s too early to estimate the likely impact of any fiscal policy on GDP, but he only sees 2% growth.

That to me suggests that growth risks remain, and tighter policy is not going to help alleviate those risks. As we’ve noted repeatedly in recent years, we’re long past due for a recession. Since the Great Depression, the U.S. has suffered thirteen recessions. The periods of economic growth between recessions have been as long as 120-months, and as short as 12-months. The average is just over 59-months. The current recovery has just entered its 91st month.

It remains to be seen what impact President-elect Trumps fiscal policy might have on the economy and that uncertainty was reflected in Lockhart’s speech today. However, an important follow-on question about fiscal spending is where the revenue to pay for it is going to come from.

The likely answer to that is debt. With the national debt fast approaching $20 trillion and interest rates on the rise, there will likely be some repercussions. Will the positives outweigh the negatives. Time will tell.

Posted in all posts, Daily Market Report, Gold News, Gold Views |

Morning Snapshot: Gold rebounds to pressure last week’s highs

09-Jan (USAGOLD) — Gold is back on the rise to start the new week. With U.S. Treasuries higher this morning as well, the bid seems to be safe-haven in nature.

The yellow metal is up more than $8, recouping most of Friday’s pullback. Last week’s high at 1185.04 marks intervening resistance ahead of the $1200 level.

Today’s calendar is quite thin with only November consumer credit and the Fed’s LMCI. However, there is a plethora of FedSpeak from Evans, Lacker, Rosengren and Lockhart.

Posted in Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Consolidates Gains Notched Earlier In the Week

06-Jan (USAGOLD) — Gold is consolidating gains recorded earlier in the week. While there’s still quite a bit of the trading day left, the yellow metal appears poised to notch about a 2% gain for this week.

Today’s jobs release was a mixed bag. The headline nonfarm payrolls number came in at +156k, below expectations of +175k. However, there were net back-month revisions totaling +20k. The unemployment rate edged higher to 4.7%, in line with expectations. Average hourly earnings rose 0.4%, on expectations of +0.3%.

Not great, but not bad either. The market seems to be focusing on the 2.9% annualized wage growth, the highest since 2009. Rising wages further bolsters the re-inflation meme, which in the end should be good for gold.

Bonds came under renewed pressure and stocks rose, buying the dollar in the process. However, gold seems largely increasingly unperturbed by gains in the greenback.

In other data, we saw factory orders plunge by 2.4%, the biggest monthly drop seen in several years. That despite a marked rise in defense related order.

Some of that can be attributed to the three-year rise in the dollar, which resulted in the dollar index reaching 14-year highs earlier this week. That is all being reflected in the ever-widening trade gap. The U.S. trade gap widened to -$45.2 bln in November, outside expectations of -$42.4 bln.

In the weeks ahead attention will be squarely on the inauguration of Donald Trump and his first 100-day policy priorities. Mike put up a great post earlier this morning, suggesting that “Mr. Trump, knowingly or not, is attempting to stand a 20-year economic paradigm on its head.” That paradigm is globilization and the resulting downward pressure on prices.

If inflation expectations begets actual inflation, the Fed is likely to find itself behind the curve as usual. In that event, gold is likely to really shine.

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

Morning Snapshot: Gold modestly defensive after jobs report

06-Jan (USAGOLD) — Gold remains modestly lower on the day, shrugging off this morning’s U.S. jobs report. The yellow metal remains on track to register a second consecutive higher weekly close.

U.S. nonfarm payrolls for December rose 156k, missing expectations of +175k. However, upward back-month revisions offset, as did the slightly larger than expected rise in hourly earnings. The jobless rate edged up to 4.7%, in line with expectations.

The U.S. trade gap widened to -$45.2 bln in November, outside expectations of -$42.4 bln, vs revised -$42.4 bln in October. The dollar being at or near multi-year highs is really starting to be problematic.

Gold has been incredibly resilient in the face of years of dollar gains, if that headwind is removed, the yellow metal could really soar. If there is a concerted effort to knock the dollar lower in order to underpin the U.S. economy, the wind shifts to gold’s back.

Posted in Gold News, Gold Views, Snapshot |

Morning Snapshot: Gold continues to trend higher early in the new year

05-Jan (USAGOLD) — Gold continues to gain ground early in the new year, buoyed by a weaker dollar. This is looking more and more like a repeat of last year with each uptick.

The yellow metal is up more than $10 and is pressuring a 5-week high at 1181.43. Meanwhile, the dollar index has fallen through support at 102.13, establishing 3-week lows.

The day ahead of the big December jobs report, we’ve seen some mixed data on that front: The ADP jobs survey came in below expectations at +153k, perhaps revealing some downside risk to the +175k median expectations for payrolls. However, initial jobless claims plunged a whopping 28k last week, even as continuing jobless claims are on the rise.

The market is already discounting the drop in claims as being holiday-related. It will likely be reversed to a large degree in the week or weeks ahead.

Posted in Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Extends to the Upside on Heightened Physical Demand

04-Jan (USAGOLD) — Gold has extended to the upside, setting a new 4-week high at 1167.90. The yellow metal is getting a boost from the resurgent physical demand from both China and India, as well as a slowing of outflows from gold-backed ETFs.

“Physical demand from China and India is quite strong at the moment,” NAB analyst Vyanne Lai told Reuters. China and India are the two largest consumers of gold in the world.

Gold tends to get a seasonal boost this time of year from Asian buyers ahead of the Lunar New Year. Pressure on the yuan may further amplify this demand.

In addition, the recent efforts in India to crack down on the underground economy has resulted in a serious cash shortage and may be contributing to reinvigorated interest in gold. Going back to late-2015, the Modi government had also been attempting to exact greater control over the gold market, by imposing an excise tax and encouraging utilization of the Gold Monetisation Scheme and government issued gold bonds. There were rumors late in the year that the government would also seek to limit household gold holdings.

However, the cash shortage and perhaps the unspoken longer-term goals of all this government intervention may be overriding any concerns about holding the world’s most recognized safe-haven asset. Keep in mind, the “war on cash” is not only occurring in India; and I fear it is a war that is just getting started.

I think this is also driving demand for the crypto-currency bitcoin, which is up dramatically over the past several months; trading at a 3-year high above $1,000. But make no mistake, bitcoin is not an effective safe-have.

Dan McCrum, writing for the FT yesterday, likened bitcoin to a pyramid scheme:

As a phenomenon bitcoin has all the attributes of a pyramid scheme, requiring a constant influx of converts to push up the price, based on the promise of its use by future converts. So the ultimate value for bitcoin will be the same as all pyramid schemes: zero. — Financial Times

A bitcoin, existing as a series of ones and zeros on your computer is no substitute for actual physical gold that you can hold in your hand. The same can be said for real gold versus the dollars that exist in your bank or brokerage account.

That is also very much true for the gold that is alleged to back any ETF holdings you might have. There is no substitute for the real thing.

Posted in all posts, Daily Market Report, Gold News, Gold Views |

Morning Snapshot: Upside follow-through in gold

04-Jan (USAGOLD) — Gold has extended to the upside, setting new 4-week highs above 1165.80. The yellow metal is being driven by increased demand out of China and India. The recent outflow from gold-backed ETFs has also been staunched.

The dollar index has backed off yesterday’s 14-year high providing an additional tailwind for gold, but the yellow metal seems to be largely ignoring persistent strength in the greenback and the recent rise in U.S. yields as well.

Today’s calendar is light with December auto sales and the minutes from the December FOMC meeting. The big focus this week is Friday’s release of December jobs data. Median expectations for nonfarm payrolls is +175k. The jobless rate is expected to tick higher to 4.7%.

Posted in Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Jumps to tart New Year, Despite Dollar Strength

03-Jan (USAGOLD) — Gold eked out a new 3-week high on the first trading day of the year. The yellow metal jumped after early gains in yields, stocks, oil and the dollar all reversed course.

Initially we were impressed by gold’s resilience after U.S. 10-year yields neared 2-year highs around 2.60%, which prompted the dollar index to set a new 14-year high of 103.82. However, after a stunning $3 reversal in oil, yields tumbled and the dollar backed off those highs, buoying gold in the process.

Political uncertainty seems to be helping to underpin gold as well. Ian Bremmer’s Eurasia Group goes so far as to call the current environment a “geopolitical recession.”

This year marks the most volatile political risk environment in the postwar period, at least as important to global markets as the economic recession of 2008. It needn’t develop into a geopolitical depression that triggers major interstate military conflict and/or the breakdown of major central government institutions. But such an outcome is now thinkable, a tail risk from the weakening of international security and economic architecture and deepening mistrust among the world’s most powerful governments. — Eurasia Group

This is reflective of our own words of caution, dating back to the Brexit vote last summer. Political and geopolitical uncertainty will likely drive investors to safe-haven investments such as gold. Add to that the escalating concerns over hacking and investors have a pretty compelling case for moving at least a portion of their wealth into a physical asset that they can maintain in their own possession.

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

The Daily Market Report: Gold ends the year with more than an 8% gain

30-Dec (USAGOLD) — Gold is mildly defensive on the last trading day of the year, retracing a portion of Thursday’s solid gains. Nonetheless, the yellow metal appears poised to notch its first positive annual performance in four-years.

At this point it looks like gold will close around 8.5% higher for the year. Silver is on track to record and annual gain of about 15%. Not too bad when you consider that the metals have been under pressure for the last five-months!

Meanwhile, CNNMoney reported today that the major U.S. stock indices will end the year up “between 8% and 14%.” However, those too have come under pressure during the trading day. For now, the eagerly anticipated DJIA 20,000 level will have to wait until next year . . . or maybe even longer.

On that note, I was reminded that yesterday marked the 27th anniversary of the 38,957.44 all time high in the NIKKEI 225. At the time, it was not de rigueur to wear kooky hats proclaiming the inevitability of the next ‘big-round-number’, but man, wouldn’t you love to have a “NIKKEI 40,000” hat from back in the day?!

The index hasn’t been anywhere close to that level since; even with the massive QE efforts of the BoJ. Of the approximately ¥10 trillion worth of ETFs on the BoJ’s balance sheet, more than half are tied to the Nikkei 225.

One of these days, one of those Dow XX,XXX hats are going to be the kiss of death. It may not be 20,000, but one of these days . . .

Gillian Tett of the FT points out today that political risks in the the developed world have ramped up significantly in the past year:

Most notably, 2016 was the year when western markets were rocked by political shocks almost as startling as anything seen recently from the emerging markets world. In 2017 investors will probably confront even more political risk in the “developed” world that will make asset values look more volatile. — Gillian Tett

Heightened political risk can substantially amplify other risks. The implosion of the Renzi government in Italy for example, is going to make it much harder to resolve the developing banking crisis.

Ms. Tett warns that even greater political risks in 2017 is “bad news for anybody who hates market volatility.” One asset class that may benefit in such an environment is a safe-haven like gold.

Additionally, recent events suggest we may be getting closer to cyber warfare that could pose considerable risk to the traditional banking and financial services industry. The U.S. has retaliating against Russia for recent cyber attacks that perportedly influenced the recent U.S. Election. Vladimir Putin responded by saying, “we reserve the right to retaliate.”

We have maintained for some time — and now it may be a better idea than ever — that investors keep a portion of their wealth outside the traditional (electronic) banking/financial system. A stash of gold and/or silver coins held in your possession can’t be hacked or electronically disappeared.

On behalf of everyone here at USAGOLD, I would like to wish each and every one of you a happy and prosperous new year.

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

Morning Snapshot: Gold backs off of near 3-week highs

30-Dec (USAGOLD) — Gold has retreated modestly in the wake of yesterday’s solid gains, even as the dollar remains under pressure. With only Chicago PMI on the calendar and a long holiday weekend ahead, trading is likely to be subdued. However, the yellow metal is 3% off the cycle low that was established last week. Upside follow-through early in the new year would lend some additional credence to the bottoming scenario that seems so strikingly similar to trading a year ago.

Posted in all posts, Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold jumps more than 1%

29-Dec (USAGOLD) — Gold has surged by more than 1% ahead of the new year, buoyed by a softer dollar and the loss of upside momentum in the stock market this year. The much ballyhooed Dow 20,000 level remains elusive this far.

This year’s price action in gold is very reminiscent of last year’s: A year ago, gold was being declared dead as the Fed hiked rates for the first time in nearly a decade. There were expectations that further normalization of monetary policy was in the offing for the new year.

It took a whole year for the Fed to initiate that next rate hike. In the interim, gold rallied nearly 30% through July of this year. As it began to look like another rate hike was indeed being queued-up, gold came under pressure in the latter half of the year. That anticipated tightening is now out of the way and there is some understandable skepticism about when the next hike might come.

Some trusted FedWatchers believe the central bank will be on hold at least through Q1 and some don’t see another hike until June. We will undoubtedly see rate hike expectations ebb and flow with the incoming economic data, much as we did this past year.

There are some differences for this upcoming year of course; most notably the impending inauguration of Donald Trump. We’ll like get a better feel for the policies he’d like to implement within the first one-hundred days of his presidency. However, it may take until midyear to see any actual results. Will the optimism that emerged post-election be validated? Is the national debt about to explode higher? Is inflation finally going to take hold?

We’ll be watching all of this quite closely, and with great interest, as 2017 unfolds. We’ll also be watching to see if gold’s low is in place and a brighter new year is going to emerge. It all feels very familiar though.

Posted in all posts, Daily Market Report, Gold News, Gold Views |

Morning Snapshot: Gold firms as dollar slips

29-Dec (USAGOLD) — Gold is edging higher, buoyed by a softer dollar and a bit of a bounce in the euro. Nonetheless, the Italian banking crisis — centered on Monte de Paschi — continues to develop. With the ECB and Germany demanding that creditors and depositors bear the burden of a bailout, depositors at least are not surprisingly running for the exist.

“It’s a national tragedy,” said Marco Elser, a Rome-based partner at Lonsin Capital Ltd., a British investment firm. “Monte Paschi survived the Inquisition, the unification of Italy, fascism and two world wars. But it couldn’t survive the mismanagement and corruption of bankers and politicians in the 21st century.” — Financial Post

It’s become a good old-fashioned bank run. That of course has driven up the expected scope of the bail-out/in to $9.2 bln according to the ECB. The risks here remain considerable.

The U.S. advance trade gap grew to -$65.3 bln in November, well outside expectations of -$61.6 bln, versus -$61.9 bln in October. This offers further confirmation that dollar gains are indeed having a detrimental impact on U.S. exporters.

Initial jobless claims fell 10k last week, but ongoing jobless claims rose 63k. EIA data, ag prices and M2 come out later today.

Posted in Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Underpinned Despite Continued Dollar Strength

28-Dec (USAGOLD) — Gold is maintaining a consolidative tone around the 1140 level. Price action is being constrained by thin holiday trading conditions and persistent dollar strength.

However, the dollar strength is really more about euro and sterling weakness. The former is being weighed by ongoing concerns about the Italian banking system as well as ECB policy. The latter is being pushed lower by Brexit related growth risks and worries about further deflation in the housing market.

U.S. pending home sales disappointed in November, falling 2.5%, as rising mortgage rates took a bite out of demand. Following the Fed’s move to hike rates for only the second time in more than a decade, 30-year mortgage rates have pushed decided above 4% to 2-year highs.

It’s also worth noting that debt issued by banks has reached a new record high of $6.6 trillion. Half of that is corporate debt and about a third of that is household debt. That means that corporations and households are as leveraged, or nearly as leveraged as they were right before the financial crisis struck.

That is especially troubling when you consider the still rather tenuous footing the economy is on. Even a moderate shock could cause this house of cards to collapse.

This poses quite a conundrum for the Fed moving forward. Given that the national and corporate debt are at new highs and household debt is nearly there, further rate hikes pose considerable risks.

It seems the Fed will have to take a far more cautious approach early in the new year than many are expecting. If a more dovish tone prevails in the week ahead, much of the recent losses in the bond market, and gains in the dollar, could get reversed. That very well could put a floor under gold as well.

Posted in all posts, Daily Market Report, Gold News, Gold Views |

The Daily Market Report: Gold Gives Back Much of Overseas Gains After Consumer Confidence Beat

27-Dec (USAGOLD) — Gold rebounded in overseas trading, reaching a one-week high of 1150.96 before retreating back into the range. Gains were initially capped by persistent dollar strength, but today’s better than expected consumer confidence number perpetuated the risk-on environment that has emerged since last month’s U.S. election, pushing gold back to only modestly higher on the day.

The heightened risk appetite is driving investors out of their safe-havens to over-weight stock positions on the belief that Donald Trump will be a tax-cut and spend President. Those investors seem to be looking past the destabilizing debt that will accumulate as a result of such policies.

The national debt is already nearing a staggering $20 trillion dollars. The stronger dollar and rising interest rates only exacerbate the problem because it makes servicing this monster all the more difficult.

The Wall Street Journal suggested earlier today that gold’s initial rebound was associated with rising inflation expectations. If that is the case, rising consumer confidence should in fact be a positive, as heightened consumption drives prices. Yet we’ll have to see if Donald Trump’s claim of a shoppers spent $1 trillion on Christmas this year is really true.

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

Morning Snapshot: Gold higher, despite persistent dollar strength

27-Dec (USAGOLD) — Gold rebounded in Asian trading, reportedly on heightened Chinese demand. The yellow metal was up more than $17 at one point, but prices moderated intraday as the dollar remained firm. Nonetheless, gold remains up more than $8 on the day.

The U.S. calendar is light today with Case-Shiller home price index for October and December consumer confidence. The latter is expected to rise to 108.3 as optimism continues to dominate in the wake of the U.S. election.

The risk-on environment has seen some investors moving out of their paper gold positions and piling into stocks. However, as Mike noted in a post yesterday, physical gold demand through Q3 is the fourth best we’ve seen since the financial crisis began nearly a decade ago.

Posted in all posts, Gold News, Gold Views, Snapshot |

The Daily Market Report: Gold Holding Support Despite 14-year Highs in Dollar

20-Dec (USAGOLD) — Gold turned back defensive within the recent range, weighed by further dollar strength. However, losses in the yellow metal stalled shy of last week’s low at 1122.50.

The greenback was lifted by renewed weakness in the euro, which was hit by the terror attack in Germany and persistent concerns about the Italian banking system. Yen weakness provided additional lift to the dollar after the BoJ maintained their ultra-accommodative policy stance, with no indication of any hawkishness whatsoever, despite a “moderate recovery trend.”

Keep in mind how resilient gold has been relative to the gains in the dollar (and the record highs in stocks). Gold is near 10-month lows, while the dollar was setting 14-YEAR highs today. The last time the dollar index and the EUR-USD rate were at these levels, gold was trading around $350!

Trading is going to get increasingly thin as we get closer to the long holiday weekend. That may lead to some volatility, but this still appears to be unfolding much like last year. And in fact, we saw similar losses into year end in the two-years prior to that. We’ll have to wait to see if we get a recovery early in the new year, as we have in recent years past. Keep the faith.

This is my last post before Christmas. I will be back at my desk on Tuesday, 27-Dec. Until then, on behalf of everyone here at USAGOLD, I wish you a very merry Christmas and happy holidays.

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

Morning Snapshot: Gold weighed by dollar strength

20-Dec (USAGOLD) — Gold has retreated into the range as the dollar jumped to new cycle highs. The dollar was boosted when the BoJ confirmed it would maintain it’s ultra-accommodative policy stance, weighing on the yen. Additionally, a terror attack in Germany pushed the euro to a new 14-year low against the dollar.

Investors seem inclined to look past the risks and eye the 20,000 benchmark for the DJIA. With risk appetite elevated, gold has fallen out of favor among speculators. However, the wealth preservation minded physical buyers know a bargain when they see it.

Posted in all posts, Gold News, Gold Views, Snapshot |