Category: Gold News

Morning Snapshot: Gold starts the week on defensive footing

USAGOLD/Peter Grant/09-25-17

Gold starts the week in a defensive posture, but still within last Thursday’s range. No significant escalations of the North Korean situation has heightened risk appetite somewhat, and a firmer dollar has weighed on the yellow metal.

The Chicago Fed National Activity Index sank to -0.31 in August. The Dallas Fed index comes out later this morning. We’ll also hear FedSpeak from Dudley, Evans and Kashkari.

Japanese PM Shinzo Abe announced that he will dissolve the lower house of parliament this week and consolidate his political power amid the looming North Korean threat. “We must not give into the threat of North Korea. I hope to gain the confidence of the people in the upcoming election and push forward strong diplomacy,” said Abe.

Here in the States, Republicans are scrambling to revise their latest healthcare bill in order to avoid yet another defeat on that front. Another legislative failure would further undermine the majority party and the President, making it increasingly unlikely that the economic agenda will be advanced this year in any meaningful way.

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Posted in Gold News, Gold Price, Gold Views, Snapshot |

Sovereign wealth funds and the case for gold


WGC/Jennifer Johnson-Calari & Adam Kobor/09-20-17

As part of the World Bank’s Reserves Advisory Management Program, Jennifer Johnson-Calari and Adam Kobor helped both central banks and sovereign wealth funds to build their investment management operations. Today, Johnson-Calari heads JJC Advisory and Adam Kobor is Director of Investments at the New York University. Both believe gold has an increasing role to play in central bank and sovereign wealth fund portfolios.

Gold is nobody’s liability, its value deriving for millennia from its beauty and scarcity. As such, gold was the ultimate reserve currency held to settle transactions and back liabilities – first under the Gold and then the Dollar Standard.

…Over the last decade…gold has risen to new prominence for sovereign investors as a portfolio asset…

PG View: You should be holding some physical gold in your portfolio for all the same reasons central banks and sovereign wealth funds do…

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Posted in Gold News, Gold Price, Gold Views |

What Will Fed Decision Do To Gold Prices?

KitcoNews/Todd ‘Bubba’ Horwitz/09-20-17

Today is the big day which apparently everyone is waiting for. How will the Fed unwind the balance sheet? The facts are simple. They don’t have to unwind; they can take the bonds to maturity. The only reason for the Fed to unwind would be to create a backdoor rate hike by liquidating bonds in the open market. Lower bond futures create higher interest rates.

…Markets have a way of pricing in news long before the actual news comes out, and we will assume this is the case for the metals. The pattern suggests there is more upside and the selling is over for now.

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Posted in Gold News, Gold Price, Gold Views |

Gold’s fear trade intensifies on debt and equity risk


WGC/Frank Holmes/09-20-17

Global debt levels have reached unprecedented levels, pension deficits are rising and the US interest rate cycle is on the turn. Frank Holmes, chief executive of highly regarded investment management group US Global Investors, believes that investing in gold is a logical response to current, unnerving conditions.

“For centuries, investors and savers have depended on gold in times of economic and political strife, and its investment case right now is as compelling as it’s ever been.”
“Total global debt levels reached an astronomical US$217 trillion in the first quarter – that’s 327% of world GDP.”
“Gold’s investment case becomes even more compelling when we consider the US Federal Reserve’s next moves.”
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Posted in Debt, Gold News, Gold Price, Gold Views |

Morning Snapshot: Gold steady ahead of Fed

USAGOLD/Peter Grant/09-20-17

Gold begins the U.S. sessions slightly higher, as the consolidation ahead of this afternoon’s Fed policy announcement continues. Despite the past week of corrective/consolidative activity, the underlying trend remains positive.

The Fed is expected to hold steady on policy today, but announce some details about balance sheet normalization. The FOMC will also provide their economic projections and Janet Yellen will hold a press conference.

After President Trump’s fiery speech at the UN General Assembly, there is speculation that North Korea will respond with more missile tests. The longer and louder the sabers are rattled, the more likely it becomes that they are drawn.

The rest of the calendar is light today, with August existing home sales and EIA crude stocks.

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Posted in Gold News, Gold Price, Gold Views, Snapshot |

Ray Dalio, founder of the world’s largest hedge fund, says ‘bitcoin is a bubble’


CNBC/Tae Kim/09-19-17

Bridgewater Associates founder Ray Dalio said Tuesday he is not a believer in cryptocurrencies.

“Bitcoin today you can’t make much transactions in it. You can’t spend it very easily,” Dalio said on CNBC’s “Squawk Box.”

“It’s not an effective storehold of wealth because it has volatility to it, unlike gold,” the hedge fund founder added. “Bitcoin is a highly speculative market. Bitcoin is a bubble.”

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Posted in Gold News, Gold Views, Markets |

The Daily Market Report: Gold Consolidates as Fed Considers Balance Sheet Normalization


USAGOLD/Peter Grant/09-19-17

Gold is consolidating near its two-week low with the two-day FOMC meeting now underway. Expect trading to be relatively subdued until the Fed announces policy tomorrow at 2:00ET.

The yellow metal remains calm, despite a rather significant escalation of of the geopolitical rhetoric at the UN General Assembly this morning. “The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea,” said President Trump. The DPRK will almost assuredly respond in some manner, further escalating an already extremely tense situation.

Jim Rickards was asked what brought gold down yesterday, he responded by tweeting, “Chatter about higher inflation, rate hikes, momentum, etc. None of it will come to pass, but it’s the flavor of the month.” Someone else asked how many rate hikes he saw for the rest of the year. “Zero” was the reply.

As the Fed ponders policy and whether to start winding-down it’s massive $4 trillion balance sheet, a Fed economist raised questions as to whether the build-up of that balance sheet via quantitative easing (QE) did any good at all.

“With respect to QE, there are good reasons to be skeptical that it works as advertised, and some economists have made a good case that QE is actually detrimental.” — St. Louis Fed economist Stephen D. Williamson

That assessment begs the question, did global central banks really need to go more than $20 trillion down the QE rabbit-hole in order to reach such a conclusion? I mean the BoJ had been at the QE game for nearly a decade, with little to show for it, before the Fed launched QE1 in late-2008. Perhaps there was a lesson to be learned there.

One thing a world awash in liquidity did accomplish was to inflate asset prices, particularly the stock market. If central banks take the monetary punch-bowl away, is that party about to end?

The ECB is apparently already having doubts about their plan to start tapering asset purchases, particularly with the euro reaching near three-year highs. Some at the central bank are in favor of keeping their options open to expand QE into 2018.

According to Reuters, “Hawks see the currency’s strength as testament to the euro zone’s strong economic growth, while doves fear it reflects weakness in the United States and Britain.” If the reality is ultimately revealed to be closer to the latter, easier Fed policy and a weaker dollar will prevail. And that should be bullish for gold.

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

Gold Price Consolidates As Fed Meeting Begins


KitcoNews/Peter Hug/09-19-17

Gold traded in a narrow range overnight, as traders set up into the Federal Open Market Committee meeting beginning today. Eyes and ears will also be tuned to the President’s speech at the U.N., where North Korea will certainly be a focus point. Gold is at a short-term crossroad. The trend for the dollar remains lower but bounces, as we have seen, are consistent with the pattern over the past few months. The market was positioned aggressively from the long side and profit taking was to be expected.

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Morning Snapshot: Gold consolidates at low end of recent range

USAGOLD/Peter Grant/09-19-17

Gold is consolidating at the low end of the recent range as the FOMC begins their two-day meeting. Heightened risk appetite and profit taking ahead of the Fed meeting has weighed on the yellow metal since last week.

Meanwhile, geopolitical and political tensions are seen as underpinning the market. While the dollar has firmed against the yen, driven by the risk-on attitude, the broader dollar remains weak.

Import and export prices rose more than expected in August, providing further evidence that inflation may finally be picking-up. I remain skeptical.

Housing starts dipped to 1.18M pace in August, just above expectations of 1.175M. Meanwhile, the U.S. Q2 current account gap widened to -$123 .1 bln, outside expectations of -$112.6, versus a revised -$113.5 bln (was -$116.8).

When the Fed announces policy tomorrow, they are widely expected to hold steady on policy. Markets are very interested to hear specifics on balance sheet normalization and to glean any clues as to the Fed’s intentions for December. That evidence might be found in the economic projections and Ms. Yellen’s press conference.

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The Daily Market Report: Gold Remains Corrective as Focus Shifts to Fed Meeting, Balance Sheet Unwind


USAGOLD/Peter Grant/09-18-17

Gold remains defensive as investors seem inclined to shrug-off the political and geopolitical worries and return favor to risk assets. Focus this week is on the FOMC meeting, which begins tomorrow, as well as the general debate at the UN.

The Fed is expected to hold steady on policy this month, amid persistent concerns over weak inflation. While the August inflation data were slightly warmer, the overall trend remains troubling.

“I’m not convinced the Fed is going to say the scare is over on the basis of one number,” said Tim Duy, a professor of economics at the University of Oregon. “It looks like there are persistent disinflationary trends in the data.” — FT

Despite the inflation concerns — and perhaps some mounting concerns about growth — the Fed is expected to announce they will begin normalizing their massive $4 trillion balance sheet. That process may begin as soon as October. That decision may be particularly interesting in light of what the dot-plots may say.

The Atlanta Fed’s GDPNow projection for Q3 growth was slashed to 2.2% last week, down significantly from 3.0% in the previous week. A number of banks and brokerage house have slashed their Q3 forecasts in the wake of recent soft data and in light of the economic effects of the recent hurricanes.

Continued weakness in the dollar against most currencies is still seen as a limiting factor on the downside for the yellow metal. While we’re hearing about dollar gains today, they are localized to the yen, as the risk-off trade from recent weeks gets unwound. The dollar index, which measures the greenback against a basket of currencies (including the yen), is looking decidedly less bullish.

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

Gold slips as equities and dollar surge ahead of Fed meeting

Reuters/Maytaal Angel/09-18-17

Gold hit a 2-1/2 week low on Monday as the dollar rose ahead of a two day Federal Reserve meeting and global equities surged.

The dollar hit an eight week high against the yen as data showing a pick up in U.S. consumer prices increased bets the Fed could raise interest rates again in December.

…”Gold could fall below $1,300 in the short term, but the question remains how people perceive the U.S. economy and the need for higher interest rates,” said Ole Hansen, head of commodity strategy at Saxo Bank.

PG View: The dollar is only “surging” against the yen, the dollar index is actually lower on the day.

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Morning Snapshot: Gold remains defensive ahead of Fed meeting

USAGOLD/Peter Grant/09-18-17

Gold remains in corrective mode. The yellow metal slipped in overseas trading to a fresh two-week low amid heightened risk appetite carried over from last week.

With the dollar still generally defensive and geopolitical tensions still elevated, downticks in gold seem to be position squaring ahead of this week’s FOMC meeting. While the Fed is expected to hold-pat, they may make an announcement about balance sheet normalization. A December rate hike remains a 50/50 proposition.

The two-day Fed meeting begins tomorrow. Also, tomorrow will be the General Debate at the UN General Assembly. North Korea will certainly be a hot topic.

The economic calendar is light today with the NAHB Housing Market Index for September and TIC data.

The Atlanta Fed’s GDPNow index for Q3 tumbled from 3.0% to 2.2% last week as hurricane effects take hold. Private GDP forecast are under pressure as well. All of this will give the Fed pause when it comes to further tightening this year.

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Gold Week in Review (Video), September 15, 2017

Related Links:

Prominent establishment economist William White warns “More dangers now than 2007”

Gold Is Going Higher And Here’s Why You Need More Of It

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Posted in Gold News, Gold Price, Gold Views, USAGOLD TV |

The Golden Solution to America’s Debt Crisis

Daily Reckoning/James Rickards/09-15-17

Right now, the United States is officially $20 trillion in debt. Over half of that $20 trillion was added over the past decade.

And it looks like annual deficits will be at the trillion dollar level sooner than later when projected spending is factored in.

Basically, the United States is going broke.

…There’s only one solution left, inflation.

PG View: Despite massive and extraordinary efforts totaling in excess of $4 trillion, the Fed has failed to generate even 2% inflation. What does Rickards suggest? “The Fed can call a board meeting, vote on a new policy, walk outside and announce to the world that effective immediately, the price of gold is $5,000 per ounce,” says Rickards. Voila! Massive inflation.

“History shows that raising the dollar price of gold is the quickest way to cause general inflation. If the markets don’t do it, the government can. It works every time.” — James Rickards
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Posted in Debt, Gold News, Gold Price, Gold Views, U.S. Dollar |

The Daily Market Report: Gold Retreats Within The Range Ahead of Weekend


USAGOLD/Peter Grant/09-15-17

Gold has returned to a short-term defensive posture going into the weekend, seemingly ignoring the latest North Korean provocation and a softer dollar. However, these two items should in fact limit the downside in the yellow metal.

North Korea launched another missile early on Friday that overflew Japan. The recent missile launches, along with the nuclear test and bellicose rhetoric has heightening calls for the re-militarization of Japan. South Korea responded to the DPKR missile launch by test firing missiles of its own.

The UN passed increased sanctions on North Korea earlier in the week. The Security Council is meeting again today. U.S. ambassador to the UN Nikki Haley said she has “no problem kicking [the North Korean issue] to General Mattis because I think he has plenty of options.” General James Mattis is the U.S. Secretary of Defense and Haley’s statement may reflect a belief that more direct action may be warranted, rather than more talk and more sanctions.

The dollar index has retraced more than 61.8% of this week’s corrective rally, returning focus to the downtrend. If the dollar is destine to trend lower, beyond the multi-year low set last Friday, it should have a bullish impact on gold.

Today’s round of weak economic data adds to the expectations that the Fed will hold steady on policy next week. Whether or not the Fed will announce details on balance sheet normalization at the end of this FOMC meeting remains to be seen. Prospects for a December rate hike remain a coin-toss.

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Geopolitical Developments Fail To Boost Gold

KitcoNews/Jim Wyckoff/09-15-17

Gold prices are near steady in early New York trading Friday, despite overnight developments on the geopolitical front. The yellow metal continues to see a corrective technical pullback and some profit taking from the shorter-term futures traders after prices last week hit a 12-month high.

The marketplace is so far showing a very muted reaction to news North Korea has fired another ballistic missile over Japan. The U.N. Security Council is holding an emergency meeting today on the matter.

Reports of a bomb explosion in a London subway indicate the incident was a terror attack.

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Posted in Geopolitical Risks, Gold News, Gold Price, Gold Views, North Korea |

Morning Snapshot: Gold retreats, but remains within yesterday’s range

USAGOLD/Peter Grant/09-15-17

Gold is trading lower, but within the confines of yesterday’s range. The yellow metal shrugged off North Korea’s latest missile launch, perhaps as such expectations had been previously priced in by the market.

South Korea test-fired missiles of its own in response to the latest provocation. The DPKR missile was the second to overfly Japan in less than a month. This, along with the recent bellicose threats to “sink” Japan, is driving conversations about increasing Japan’s military capabilities.

If Japan and South Korea were to increase military spending, China would likely respond in kind. That may result in an Asian arms race. And when a country has a lot of high tech weaponry, there’s always some faction that wants to use them . . .

Disappointing U.S. economic data should limit the downside for gold as well. Both August retail sales and industrial production missed expectations by significant margins. The Empire State Index for September, but not as much as was expected. The initial University of Michigan consumer sentiment reading for September comes out later this morning.

The dollar index has now retraced more than 61.8% of its recent correction, returning focus to the downside. The weaker dollar should underpin gold as well, suggesting the dip in gold is a buying opportunity.

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Gold up from two-week low as dollar extends losses

Reuters/Marcy Nicholson & Jan Harvey/09-14-17

Gold rebounded from a two-week low on Thursday as North Korea threatened the United States and Japan, and the dollar softened despite strong U.S. consumer inflation data, which could allow further interest rate increases from the Federal Reserve.

A North Korean state agency threatened to use nuclear weapons to “sink” Japan and reduce the United States to “ashes and darkness” for supporting a U.N. Security Council resolution and sanctions over its latest nuclear test.

“These types of comments create a certain bid underneath the market,” said Phillip Streible, senior commodities broker for RJO Futures in Chicago.

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The Daily Market Report: Inflation Ticks Up, But Is That Good or Bad?


USAGOLD/Peter Grant/09-14-17

Gold is consolidating within the recent range, having rebounded from earlier intraday downticks. Persistent political and geopolitical tensions continue to offer support to the yellow metal.

Slightly warmer than expected consumer inflation data for August pushed gold briefly to new 2-week lows. However, hopes that higher inflation may insight the Fed to raise interest rates one more time this year seems to be negligible.

The probability of a rate hike when the Fed meets next week remains virtually nonexistent. The odds of hike in December have returned to about a 50/50 proposition.

Greg Ip of the Wall Street Journal wrote an article yesterday that says that trend inflation is now 1.5%. It’s the new “normal” and the Fed has created asset bubbles by maintaining the 2% target.

Ip contends the Fed has two options: They can continue to force the issue and let the bubbles in stocks and real estate continue to inflate, or they can “ditch the 2% target and accept 1.5% as the new inflation trend.”

Both options are unappetizing, but the second distinctly more so. If Ms. Yellen eventually concludes lower inflation reflects a trend rather than noise, prepare for unemployment to drop much more and interest rates to stay low for a lot longer — with an attendant rise in financial and economic volatility. — Greg Ip

“Lower trend inflation has much graver implications for the economy than appreciated,” Ip warns. Giving up on the 2% target would also deal a rather severe blow to Fed credibility.

The Fed has essentially painted themselves into a corner. Getting out of that corner is likely to have dire consequences.

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

Gold aims to halt 4th-straight drop even after hotter-than-expected inflation reading


MarketWatch/Rachel Koning Beals/09-14-17

Gold prices traded mixed Thursday, though still risk a fourth-straight drop while trading near September lows, after a snapshot of consumer-level inflation came in hotter than expected.

That report—which showed the consumer price index rose 0.4% in August for the biggest rise since January—could hold implications for the likelihood of further interest-rate tightening this year, a likely negative development for gold. Rent and gas prices drove prices higher last month, while the less-volatile core index rose a cooler 0.2%.

…The Fed has been concerned with the weak readings, raising some doubts that the central bank will hike rates again this year. However, if inflation starts to pick up again in coming months, expectations for a December rate increase are likely to be rekindled, as select Fed members have insisted they want policy to be a step ahead of inflation.

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Morning Snapshot: Gold dips on CPI beat, but quickly bounces back

USAGOLD/Peter Grant/09-14-17

Gold dipped briefly to a new low on the week after CPI for August came in just above expectations. The pickup in inflation, albeit slight, perhaps breathes a little life back into the prospect for one more rate hike before year-end.

U.S. CPI rose 0.4% in August, above expectations of +0.3%, versus +0.1% in July; +1.9% y/y. Core CPI was up 0.2%, in line with expectations; +1.7% y/y.

The BoE held steady on rates, as was widely expected. However, there were two dissents and the MPC believes “some withdrawal of monetary stimulus is likely to be appropriate over the coming months.” The prospect of tighter policy ahead pushed Sterling to new one-year highs.

North Korea let loose with another salvo of bellicose rhetoric in the wake of the latest UN sanctions, threatening to “sink” Japan and turn the U.S. into “ashes and darkness.” Amid speculation of another impending missile test, the yellow metal should remain underpinned by elevated geopolitical tensions.

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Gold dipped briefly to new low for the week on CPI beat, but back higher on the day.

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The Daily Market Report: Gold Remains Defensive, But Downside Seen as Limited


USAGOLD/Peter Grant/09-13-17

Gold slipped deeper into the range as the GOP leaders talked about a path forward on tax reform. Though absent specifics, the prospect of some legislative advancement on this front further stoked risk appetite, which weighed on the yellow metal.

It would be the “the beginning of the process . . . to achieve for the first time in a generation, overhauling our tax system and giving middle class families a much deserved break,” said House speaker Paul Ryan. However, details of that plan won’t be out until September 25. At that point, the political wrangling will begin in earnest.

According to Politico, completing a budget with tax language included won’t happen until mid-October. It’s worth noting that the new fiscal year starts October 1. Of course we now have a fairly long history of tardy budgets; and in some recent years, no budget at all.

Mike posted an excellent interview earlier today with economist William White, who contends that we face
“more dangers now than in 2007.” That’s a pretty startling — and candid — admission from a establishment policymaker. As Mike suggests, it is a warning that should be taken seriously.

White’s main area of concern is the rapid accumulation of debt in various countries around the world. This is something we’ve written about ad nauseam, both in the years leading up to the financial crisis and in the years following.

The financial crisis at its core was a debt crisis and you don’t extract yourself from a debt crisis by going deeper into debt, which is exactly what we’ve done. It bought some time to be sure, but we’ve squandered that time by failing to address the underlying issues.

Politicians are loathe to address the debt, because you need to either cut spending or increase revenue (taxes). Neither is terribly popular with voters.

By doing nothing, the politicians pushed the problem off on central bankers who crafted extraordinary monetary policy to support massive debt burdens. Low rates and weak currencies. However, there is only so much they can do once rates are at — or slightly below — zero and their balance sheets become bloated.

There is another day of reckoning coming and the time to begin building your protective hedges is as far in advance of that day as possible. If as White suggests, the dangers are greater today than they were a decade ago, the time to buy gold is now.

As a reference, note that the price of gold in the second week of September 2007 was $707. Over the next 4-years, the price of gold rose 172% to 1920.84 before the smoke cleared.

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Gold little changed amid firmer equities, weaker dollar

Reuters/Apeksha Nair/09-13-17

Gold held steady on Wednesday amid firmer equities and a softer dollar, with safe-haven demand for the metal supported after U.S. President Donald Trump urged tougher measures against North Korea.

…”You look at the Asian equity markets, it’s looking for a new high. That tells you something. People want to take risk,” said Dominic Schnider at UBS Wealth Management in Hong Kong.

PG View: The less harsh UN sanctions suggest that tensions may have moderated somewhat between the U.S. and the DPKR. A lower chance of military conflict is helping to stoke risk appetite.

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Morning Snapshot: Gold consolidates within range established early in the week

USAGOLD/Peter Grant/09-13-17

Gold is consolidating corrective losses seen earlier in the week. Heightened risk appetite is applying the pressure, while persistent political and geopolitical risks underpin the yellow metal.

U.S. PPI rose 0.2% in August, below expectations of +0.3%, versus -0.1 in July. Core PPI rose just 0.1%, also below expectations. Tomorrow we’ll get July CPI. The ongoing absence of inflation is going to make it difficult for the Fed to further tighten policy this year.

Further unwinding of December rate hike expectations will keep pressure on the dollar. This week’s correction in the greenback has already lost momentum, with the bias definitely to the downside. Further retracement of Monday’s gains in the dollar index would shift focus back to the multiyear low set last week at 91.13. A weak dollar will continue to provide a tailwind for gold.

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The Daily Market Report: Gold Recovers From Intraday Downticks


USAGOLD/Peter Grant/09-12-17

Gold is recovering intraday from earlier corrective pressures stemming from this week’s revival of risk appetite. While stocks remain elevated, the dollar seems to have quickly lost upside momentum, which is helping to underpin the yellow metal.

The Treasury Department reported yesterday that the national debt quickly vaulted the $20 trillion mark last week, following the most recent suspension of the debt ceiling. This allowed Treasury to borrow once again with abandon; no longer dependent on the off-book “extraordinary measures” that had prevented a sovereign default for the past several months.

As focus shifts to next week’s FOMC meeting, the previous paragraph tells you everything you need to know about why rates need to remain low and why the long-term trend in the dollar will remain bearish. A September rate hike remains off the table and steady policy in December remains more likely than not.

As for the plan to normalize the balance sheet, that remains to be seen . . . It is most certainly a form of tightening, that many are anticipating will begin this year. However, it will most assuredly begin small and can be easily halted or even reversed if inflation remains weak and/or risks to growth intensify.

With political uncertainty in Washington elevated, economic help from the fiscal side is still very much in doubt. This will weigh on the decision making process of the FOMC as well.

The reality is that since the financial crisis, our central bank has been financing the national debt at rates that don’t truly reflect the risk. They seem to have some perhaps unfounded hope that growth will eventually reignite and and they will be able to walk-back the extraordinary accommodations that they instituted.

Are we really at that point? It doesn’t feel like it; and with the national debt on the rise again (believe me, the debt ceiling will be raised or suspended in December as well) one has to wonder who will buy all this new debt if not the Fed . . .

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Gold Is Going Higher And Here’s Why You Need More Of It


KitcoNews/Daniela Cambone/09-12-17

A long time neutral voice in the gold industry has turned noticeably bullish. Jeff Christian, managing director for New York based research consultancy CPM Group says gold is headed much higher in the next three years. “We thought gold would find a bottom in 2015 and that by 2020 we could see gold set a new record gold price in nominal terms, above $1,700 an ounce.” Christian adds that his firm conducted extensive research around the ideal gold allocation in today’s world. Since the early 1980s, most portfolio managers allocated a 5-10% holding in gold. This model, Christian says, had not been updated in years. “Given everything that is happening, in terms of risk reward, it is now 27-30%.”

PG View: Christian specifically says that higher allocation to gold should be in physical metal.

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Gold slips as investors pile into equities

Reuters/Jan Harvey/09-12-17

Gold fell to its lowest in more than a week on Tuesday as easing concerns over North Korea’s nuclear ambitions and the impact of Hurricane Irma tempered demand for the metal as a haven from risk while the dollar strengthened.

World stocks hit record highs for a second straight day on Tuesday as investors opted for nominally higher risk-assets over havens such as gold, bonds and the Japanese yen.

…”The North Korea story has had (an impact) on the price of gold, but these geopolitical events tend to be quite limited in time,” Natixis analyst Bernard Dahdah said. “The market accommodates surprisingly quickly when things calm down.”

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Morning Snapshot: Gold defensive on heightened risk appetite

USAGOLD/Peter Grant/09-12-17

Gold remains defensive amid renewed stock market optimism as Irma weakens and North Korea remains quiet in the face of fresh UN sanctions. U.S. yields are higher, underpinning the dollar amid heightened risk appetite.

The U.S. calendar is light today with JOLT job openings for July and the NFIB Small Business Optimism Index for August, which ticked higher. Focus remains on inflation data later in the week and then next week’s FOMC meeting.

“We are done trying to prod the regime to do the right thing, we are now trying to stop it from having the ability to do the wrong thing,” said U.S. ambassador to the UN Nikki Haley yesterday. She did rattle the saber some as well by saying, “[I]f the North Korean regime does not halt its nuclear program, we will act to stop it ourselves.”

The new sanctions cap oil imports, but did not go so far as to completely block imports. Perhaps that’s a chip to still be played if the DPKR continues to advance their nuclear and missile programs.

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Dollar Finds Bid, Gold lower, As Weekend Events Turn Out Better Than Expected

KitcoNews/Peter Hug/09-11-17

Metals sold off at the Asian open, as the U.S. dollar bounced off recent lows. Hurricane Irma thankfully was not as catastrophic as first expected and North Korea paused on an expected missile launch. The cost of Irma will be significantly below that of Harvey, and there were fears that a second catastrophe would have significantly impacted U.S. growth. North Korea may have had a moment of clarity, deciding not to prod the U.S. psyche ahead of today’s remembrance of Sept. 11. The dollar bounce will remain a reprieve not a reversal in trend, until the U.S. develops a coherent fiscal policy. As such, metals should be bought on any sustained dip. Gold should find support at the $1,328 level.

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