Category: all posts

UK parliament in lockdown after terror incident

FT/Jim Pickard, Helen Warrell & Caroline Binham/-3-22-17

Britain’s House of Commons was suspended on Wednesday afternoon after a shooting incident at the entrance to Parliament, soon after a car mowed down a number of pedestrians on adjoining Westminster Bridge.

The UK police said they were treating it as a terrorist incident until they know otherwise.

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China prepares to counter any U.S. trade penalties: sources

Reuters/Kevin Yao/03-20-17

China’s government has been seeking advice from its think-tanks and policy advisers on how to counter potential trade penalties from U.S. President Donald Trump, getting ready for the worst, even as they hope for business-like negotiations.

The policy advisers believe the Trump administration is most likely to impose higher tariffs on targeted sectors where China has a big surplus with the United States, such as steel and furniture, or on state-owned firms.

China could respond with actions such as finding alternative suppliers of agriculture products or machinery and manufactured goods, while cutting its exports of consumer staples such as mobile phones or laptops, they said.

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G-20 meeting was ‘disappointing’ and ‘disturbing’: Yale’s Stephen Roach

CNBC/Eunice Yoon & Aza Wee Sile/03-20-17

Former Morgan Stanley Asia Chairman Stephen Roach said Monday that the G-20 financial leaders’ dropping their traditionally strong support of free trade was “disturbing” and reflected rising protectionism in the U.S.Watch movie online The Transporter Refueled (2015)

“It’s pretty disappointing when you get finance ministers from leading countries in the world who, out of the blue, are unable to validate the commitment to anti-protectionism which is the underpinning globalization,” Roach, a senior fellow at Yale University’s Jackson Institute of Global Affairs, told CNBC from the China Development Forum in Beijing.

“That’s an obvious reflection of the shifts in the political winds in the United States and indicative of a U.S. economy that is backing away from multilateralism,” Roach said. “It was a disturbing meeting.”

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UK will trigger Article 50 Brexit process on March 29

FT/George Parker/03-20-17

Theresa May will trigger the two-year Article 50 EU exit process on March 29.

Tim Barrow, Britain’s EU ambassador, informed the office of Donald Tusk, EU Council president, on Monday morning that the formal letter would be submitted to Brussels next Wednesday.

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Morning Snapshot: Gold firm as protectionism worries weigh dollar

USAGOLD/Peter A. Grant/03-20-17

Gold starts the first week of Spring generally well bid. The yellow metal has added modestly to last week’s gains as investors digest the outcome of the weekend G20 meeting.

For some G20 partners the refusal of the US to commit itself clearly to free trade marked the first step down a dangerous road. — Financial Times

Worries about protectionism are keeping the dollar on the defensive. According to a Reuters article, the Chinese government is already planning to retaliate against any trade penalties initiated by America. There could be a trade war brewing.

Britain’s EU ambassador, informed the office of Donald Tusk, EU Council president, that Teressa May will trigger Article 50 on March 29. That will formally begin the Brexit process.

Chicago Fed dove Evans was out today trying to rebuild inflation worries after the University of Michigan inflation expectations gauge fell to a record low last week. Evans said that three rate hikes this year were likely, but a fourth is possible should inflation pick up.

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Week in Review (Video) – March 17, 2017

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The Daily Market Report: Gold Poised for Solid Weekly Gain


USAGOLD/Peter A. Grant/03-17-17

Gold remains firm, poised for its first positive weekly close in three-weeks. The yellow metal rebounded smartly on Wednesday after the Fed announced policy and economic projections, extended higher yesterday and is maintaining the bulk of those gains today.

Minneapolis Fed dove Kashkari reiterated why he dissented on this week’s rate hike, noting that inflation remains below the Fed’s target and that slack in the labor market remains. He also said the Fed should come up with a plan to start reducing the balance sheet before raising rates further.

“I dissented because the key data I look at to assess how close we are to meeting our dual mandate goals haven’t changed much at all since our prior meeting,” said Kashkari. However, the FOMC statement specifically cited “realized and expected” inflation as a reason for the rate hike.

While the University of Michigan sentiment index (prelim) rebounded to 97.6 in February, the inflation expectations component tumbled to a record low! “[R]eal people’s expectations of inflation in the medium-term has collapsed to its lowest on record,” noted ZeroHedge.

In the latest massive setback for the Federal Reserve, which is desperate to break the recent “deflationary mindset” to have gripped the US population (see Japan for the results), long term inflation expectations declined to the lowest level since 1980: an annual rate of 2.2% was expected in the next five years, down from 2.5% last month and 2.3% in December. Just 6% expected long term deflation. These lows were supported by the fewest complaints of rising prices eroding their living standards—just 6%, the lowest since 2002 and barely above the all-time low of 4%. — ZeroHedge

That all seems a little incongruous to me. If the UM inflation data are to be believed, the risk of inflation is probably a lot smaller than the Fed would have you believe. So why is the Fed raising rates on alleged inflation concerns?

Read the FT article I posted earlier this morning entitled A blind spot masks the danger signs in finance. The gist is that in keeping rates so low, policymakers were perpetuating economic gloom and a “deflationary mindset.” In raising rates, they are perhaps trying to inspire some optimism and inflation. Think of it as some monetary policy jujitsu . . .

Either that, or there is a legitimate concern that inflation is brewing and may explode onto the scene at any moment. One explanation for how that might happen was proffered by our own Mike Kosares in the March newsletter. If you haven’t read his piece yet, I encourage you to do so:

Will banks’ excess reserves fuel a new monetary crisis? Don’t look now but inflation and a new gold rush might be in our future

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King Ibn Saud’s 35,000 British sovereigns

Reading that story about the sovereigns in the piano this morning reminded me of the story of Saudi Arabia’s King Ibn Saud reproduced below as originally posted in 2015:

When Saudi Arabia’s King Ibn Saud sold oil concessions to the major oil companies in 1933, he demanded a payment of 35,000 British sovereigns — a coin many of you hold in your own sovereign wealth funds. The good king understood the difference between the value of gold and the value of a paper promise.

At the time, British sovereigns were valued at $8.24 each, or $288,365 for the 35,000 coin lot. The price of oil in 1933 was about 85¢ a barrel. A British sovereign, as a result, could buy about ten barrels of oil. Today those same sovereigns would bring a little less than $9 million at melt value ($256.50 each/$1090 per ounce gold price) and a barrel of oil is selling for about $44. Thus, a British sovereign can buy almost six barrels of oil — a statistic that gives you an inkling of gold’s current under-valuation. For gold to buy the same amount of oil now that it did in 1933, the price would have to go to $1880 per ounce.

MK 2017 note: Prices have changed but the point remains.  Gold is undervalued at current prices when weighed against the price of oil – even at the current reduced price ranges.


History buffs will appreciate this additional quote and comment from the September 2000 edition of News & Views:

“The only remaining problem was how to obtain that much gold. Because America had just gone off the gold standard, Socal’s efforts to dispatch the gold directly from the United States were turned down by Assistant Secretary of the Treasury Dean Acheson. But finally, the Guaranty Trust’s London office, acting on behalf of Socal, obtained thirty-five thousand sovereigns from the Royal Mint, and they were transported on a ship belonging to the P&O line. Care had been taken that all the coins bore the likeness of a male English monarch, and not Queen Victoria, which it was feared, would have devalued them in the male-dominated society of Saudi Arabia.” – Daniel Yergin, “The Prize”, on the signing of the first oil exploration concession with Saudi Arabia in 1933

The good King Ibn Saud, back in 1933, demanded 35,000 gold British Sovereigns in payment for oil exploration rights in his country. Had he known that he was sitting on a massive pool of oil that would make Saudi Arabia the most important piece of real estate in the world, he might have asked for more. Ibn Saud did however understand the ultimate value of a paper promise, hence the payment in hard, yellow metal. To this day, the Gulf (as it’s come to be known) becomes squeamish whenever it appears the Fed is printing too much paper currency.


Old British sovereigns, like the ones in the photo below, are a preferred acquisition among safe-haven gold IRA rollover investors. We now have a quality selection of George V sovereigns available at attractive bullion-related prices. We invite you to call the Trading Desk at 1-800-869-5115, extension #100 to learn more. British sovereigns were a guardian of wealth in 1933 and remain a guardian of wealth today.

Value+history+gold money = portfolio safety for the long run

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Authorities seek owner of gold stashed in piano

AP/3-16-2017

“British officials are trying to trace the owner of a trove of gold coins worth a ‘life-changing’ amount of money found stashed inside a piano. A coroner investigating the find on Thursday urged anyone with information to come forward. . . Anyone wanting to make a claim has until April 20, when coroner John Ellery will conclude his inquest.”

MK note:  This post is made in the public interest.

Ahem. . .

By the way, British sovereigns happen to be one of the most sought-after, accumulated and stored pre-1933 gold coins in the world.  We sell many thousands of this item annually.  Some go into safe deposit boxes.  Some get buried out on the property.  Some get stashed in the piano.  All are kept in the event of a social, political or financial breakdown, or some other unexpected catastrophe against all of which the gold British sovereign has been a direct hedge for centuries.

Posted in all posts, Author, MK |

“Accommodative”

Though not a new word to describe Fed policy intentions, using it in today’s statement in the context of obviously rising inflation and inflationary expectations is a new policy stance – one very favorable for gold and likely the Trump administration as well. It seems that the Fed is willing to chase the inflation rate rather than trump it (forgive the allusion), and as long as that’s the case, the markets will read inflation into the economic script for the future.

I think some were expecting “accommodative” to disappear from the Fed-speak particularly after Yellen’s speech earlier this month when she said the central bank is likely to pursue “a neutral” rates policy.  “A ‘neutral’ policy stance,” said Yellen pre-meeting,” is one where monetary policy neither has its foot on the brake nor is pressing down on the accelerator.”  Post-meeting, the word “accommodative” was still there though – like a bright and shiny gold coin sitting on the sidewalk waiting to be pocketed.  It was.  Gold and silver shot higher and so did stocks and even bonds.

All of this blends nicely with themes raised in our March newsletter:Watch movie online The Transporter Refueled (2015)

Will banks’ excess reserves fuel a new monetary crisis?
Don’t look now but inflation and a new gold rush might be in our future.
 

Posted in all posts, Author, MK |

“The West has been selling gold into a black hole. . . .”

Solving the secret behind the Chinese gold market

Epoch Times/Valentin Scmid/3-13-2017

“Here, Jansen points out a peculiarity regarding Asian buying: ‘Asian demand is strong when the price goes down. Western demand is strong when the price goes up. In April 2013, the gold price collapsed and a lot of gold was exported from the West to China, mostly from the U.K.’”

MK note:  The quote in the headline is from Koos Jansen, the Dutch researcher/expert on Chinese gold demand. It sums up the end result of the London-Zurich-Hong Kong-Shanghai gold pipeline which has been in operation for a number of years.  Most of the experts believe the black hole is likely to remain functional as long as the West can unearth or pry loose hard metal to feed it.  For those who are just now learning the dynamics of the gold market, this article deals with a key piece to the puzzle – China’s enduring interest in the yellow metal.  China, Jansen points out, doesn’t allow even one ounce of gold and silver to leave its shores once it enters.

Watch movie online The Transporter Refueled (2015)

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Morning Snapshot: Gold consolidates, awaiting Fed policy decision

USAGOLD/Peter A. Grant/03-15-17

Gold is consolidating around $1200 ahead of this afternoon’s Fed decision. A 25 bps rate hike is baked in the cake. Focus will be on the policy statement verbiage, the economic projections, forward guidance and what Chair Yellen has to say.

CPI accelerated in February to a 2.7% annualized pace, versus 2.5% in January. Again, given persistently tepid growth, inflation is likely the primary motivator for tighter policy.Watch movie online The Transporter Refueled (2015)

If hotter inflation is in the offing, gold should do well. However, if the Fed is going to keep hiking to keep inflation in check, they will sacrifice growth in the process.

Retail sales rose just 0.1% in Feb, which was in line with expectations. The strength seen in January was not perpetuated. The Empire State index and the NAHB Housing Market Index both beat expectations.

The Fed policy statement is out at 2:00ET. The economic projections and Yellen’s presser follow.

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

This is the most overvalued stock market on record – even worse than 1929

Marketwatch – Mar 13, 2017 – by Bret Arends

“Presently, we observe the broadest market valuation extreme in history,” writes the chairman of the cautious Hussman Funds investment group, “with the steepest median valuations on record, and the most reliable capitalization-weighted measures within a few percent of their 2000 peaks.”

On top of such warning signs as “extreme valuations, bullish sentiment, and consumer confidence,” he adds, “market action has deteriorated in interest-sensitive sectors… As of Friday, more than one-third of stocks are already below their 200-day moving averages.”

Don’t be fooled by the booming headline indexes. More NYSE stocks hit new 52-week lows last week than new 52-week highs, he notes.

In a nutshell: Run.

According to the World Bank, the total U.S. stock market is now valued at more than 150% of annual gross domestic product. That is way above historic norms, and about the same as it was at the market extreme of 2000.

According to Yale finance professor Robert Shiller, the S&P 500 SPX, +0.04% now trades on a cyclically adjusted price-to-earnings ratio of 30, compared to a historic fair value for this measure of about 16.

[Link]

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Crash guru warns the Dow could plunge to 14,800 – and today’s a date to watch

Marketwatch – March 13, 2017 – by Barbara Kollmeyer

And he’s extremely concerned about what this year could bring for investors. “The timeline is rapidly approaching” for the next potential Dow meltdown, said Jadeja, who shares his techniques via workshops and seminars. Timelines are at the heart of his predictions, which he bases on repeating cycles in the market that are connected to specific times.

And here’s the crux of Jadeja’s concerns: If the rally inspired by last year’s presidential election continues, the Dow industrials could hit that 22,000 level — but if it fails, the pullback could be steep, or even steeper, based on history.

One level down would take the DJIA to 18,600, while moving two full levels lower would bring it to the aforementioned 14,800 level.

“If the Dow Jones reaches 22,000, then there’s a strong opportunity for it to fall back,” Jadeja said. “It’s nothing to do with trend lines or channels. These green lines are based on units of time and move forward step by step.”

There’s just one more reason why Jadeja is so uneasy about this year, and into 2018. Stocks are in the midst of a seven-year cycle that only comes around every 84 years, according to the chartist. (Check out that 84-year chart here on Business Insider) . The current cycle stretches back to 2011 and ends in 2018 — and that’s why he’s more convinced than ever that stocks could be in for a bumpy ride.

“The first concern is that every time the market has gone into a blue time window it has gone down. Now we’re in even bigger time windows, the 84-year cycle …,” he said.

“My concern is that because we’re in that big time window and the Dow is reaching for the upper green line, those two things together are like fireworks about to go off,” he said.

[Source]

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SEC rejects bitcoin ETF in blow to digital currency

FT/Adam Samson/03-10-17

US securities regulators late on Friday rejected an application that would have let the Winklevoss twins list an exchange-traded fund that tracks bitcoin, marking a blow to the digital currency.

Bitcoin tumbled by 12.3 per cent to $1,069 following the news from the SEC. It had hit an all-time high of $1,277.7 on Monday.

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Week in Review (Video) – March 11, 2017

Headlines we just have to talk about: Gold Executives Say Good Assets Are ‘Hard to Come By’ – Bloomberg

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The Daily Market Report: Gold Steadies Post-NFP


USAGOLD/Peter A. Grant/03-10-17

Gold caught a bit of a bid following this mornings better than expected jobs report, but subsequently lost momentum. The yellow metal is now consolidating just above $1200.

Nonfarm payrolls rose 235k in February, above expectations of 196k. The jobless rate ticked lower to 4.7%, as was expected. Hourly earnings were somewhat disappointing at +0.2% and the average workweek held steady at 34.4 hours.

This pretty much makes a rate hike next week a lock. The FOMC begins its two day meeting on Tuesday, March 14 and will announce policy and their economic projections on Wednesday, March 15. Janet Yellen will also hold a press conference that day and hopefully field some questions about mounting growth risks.

Adding to the volatility today is a Bloomberg article that says “European Central Bank policy makers considered the question of whether interest rates could rise before their bond-buying program comes to an end.” Citing Reuters, ZeroHedge suggested the discussion was apparently brief and without broad support.

Nonetheless, the euro surged to 3-week highs against the dollar as the bund/Tnote spread collapsed. “It’s a bit odd that you would continue to ease with QE and hike rates at the same, so we’re struggling to understand this a bit,” Rabobank strategist Lyn Graham-Taylor told Reuters.

I concur, it seems that if you want to tighten policy, the first thing you do is slow the growth of the balance sheet and then stop asset purchases altogether. And then raise rates. I don’t see that the ECB gains anything in doing it in reverse order; but who says central bankers have to make sense.

So, with even the ECB now reportedly at least cautiously discussing tighter policy, is the global economy and financial system really out of the woods? Janus bond guru Bill Gross thinks not.

In his March Investment Outlook, Gross warns “our highly levered financial system is like a truckload of nitro glycerin on a bumpy road. One mistake can set off a credit implosion . . .”

In the U.S., credit of $65 trillion is roughly 350% of annual GDP and the ratio is rising. In China, the ratio has more than doubled in the past decade to nearly 300%. Since 2007, China has added $24 trillion worth of debt to its collective balance sheet. Over the same period, the U.S. and Europe only added $12 trillion each. — Bill Gross

It’s like we learned nothing at all from the financial crisis and ensuing Great Recession. Instead we borrowed even more aggressively from our collective futures, but never really generated enough momentum to achieve escape velocity.

Now we’re even more leveraged than ever before and one mistake could lead to Bill Gross’ worst case scenario. KABOOM!

As a hedge against that risk, savvy investors are scaling out of overvalued stocks and bolstering their gold holdings. As Gross eludes to in his outlook (citing Will Rogers), the return of your money is far more important at some point than the return on your money. Nothing preserves wealth like physical gold in your procession.

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Strong demand surge at the gold ETFs start of year

World Gold Council/3-10-2016

“At the end of February, total holdings in gold-backed ETFs and similar products stood at 2,246.1t (72.2 moz), up 90.6t from January. These holdings were valued at US$90.7bn, 8% higher than a month earlier.”

MK note:  We’ve been reporting on the surge in ETF purchases for several weeks now.  Following up on the previous post on a hedge fund manager’s commitment to gold, this chart is indicative of professional interest in gold.  As you can see, that interest is strong and on both sides of the Atlantic.  German interest in ETF gold, obviously a reflection of concern with the French election and future of the euro,  is particularly strong – up 16% in February.  Private investors at the moment are content to sit on the sidelines while the professionals scoop up what they see as cheap gold.  Don’t allow yourself to be mesmerized by the stock market and neglect gold. . . . . . .I will leave you with this cartoon from our old friend, Ed Stein.  It kind of says it all. . . . . .

Posted in all posts, Author, MK |

Why I own gold now, by investor of $2.8 billion

What investment/David Thorpe/3-10-2017

“Cutler has around 5 per cent of the fund deployed in gold. He told What Investment, ‘if you look at the different possible economic scenarios we are faced with now. The first is that we are all going to become like Japan, with no growth, and very low bond yields. Well, the number one reason not to own gold is that it pays no income, but in this scenario, bond yields are very low or negative so nothing pays an income, and that’s good for gold.’

Cutler continued, ‘The second scenario people look at right now is that we end up like in the 1970s, with stagflation, very high inflation and very little growth. Well in times of very high inflation, gold does well as a store of value. It did well the last time we had this scenario.’”

MK note:   That’s the way I see it as well.  Neat, simple and directly to the point.  Either way you are protected with an adequate diversification in gold and silver coins.

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Gold to jump $200 by end of year, Bank of America says

9 Mar 2017 – CNBC

Gold may be under pressure in the run-up to the next Federal Reserve rate hike, but prices are expected to rally by around $200 by the end of the year, according to the corporate and investment banking division of Bank of America.

In a research note Thursday, analysts at Bank of America Merrill Lynch highlighted its recent dip but said there were reasons for optimism. “While tighter monetary policy is not bullish, inflation and a range of uncertainties, including European elections and protectionism should support the yellow metal. As such, we see prices at $1,400 (per troy ounce) by year-end”.

[LINK]

JK Note:
Haven’t we seen this before? Gold goes down as the market digests an impending rate hike, only to recover it’s decline and then some in the weeks and months that follow. It would appear that BOA sees the same story playing out yet again. For our clients, this represents a gift of sorts, to acquire insurance at a nice little discount. And given the multitude of uncertainties afflicting the global economy and international politics today – uncertainties that BOA suggests will ‘out-bull’ the interest rate headwinds for the yellow metal – that insurance is as important (and potentially lucrative) as ever.

Also, a quick update on this month’s special offer, featuring the ‘Proof-like’ Schillings pictured above, in addition to beautiful 10 Kroner ‘Mermaids’ and heavily discounted 20 Franc Angels. Our offer is now a bit better than 1/2 sold out in just under 2 days of availability.

Details for the offer can be accessed via the following link: http://www.usagold.com/gold/special/currentspecialoffers.html

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Morning Snapshot: Gold remains under pressure ahead of jobs data and FOMC

USAGOLD/Peter A. Grant/03-09-17

Gold is confined to a narrow range, but still defensive ahead of tomorrow’s jobs report and the FOMC meeting next week. The yellow metal has been under pressure over the last two-weeks as as March rate hike expectations — driven by hawkish FedSpeak — moved dramatically higher.

A big nonfarm payrolls miss tomorrow could totally derail those expectations, but if the ADP survey that came out yesterday is any indication, the jobs data are likely to be in-line at a minimum. Growth risks continue to be ignored, so it must be inflation that the Fed is really worried about.

Import and export indexes released this morning likely stoked those concerns further. U.S. import prices rose 0.2% in February, above expectations of +0.1%, versus a positive revised +0.6% in Jan (was +0.4%). Export prices rose 0.3% on expectations of +0.1%, versus a positive revised +0.2% (was +0.1%).

Initial jobless claims rebounded 20k last week, reversing the 19k drop to 44-year lows in the previous week.

The ECB held steady on policy, as was widely expected. While QE will continue and the easing bias is clearly intact, Mario Draghi hinted that a slow move toward a neutral stance was in the offing. We’ll see about that . . .

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Why ‘digital gold’ won’t ever kill off the real thing

The Conversation/Dirk Baur/3-7-2016

Piles of 20 Italian Lira

“Gold has often been referred to as a relic. But from a behavioural perspective, this may also mean it is ingrained in our subconsciousness and related actions. Put differently, as long as humans remain tangible, it is likely that they maintain a desire to hold real and tangible assets.

Very few companies on the US stock exchange, for example, are older than 50 years. By comparison, gold has existed for thousands of years and any gold coin or gold bar will most likely outlive any company and their stocks and bonds. Put together, it is unlikely that a company that sells claims on gold, such as a gold ETF, will beat physical gold’s longevity.”

MK note:  That’s the bottom line on ETFs, bitcoins and the like. . . . . . . . .Wannabes, not gonnabes.  At least in the sense what constitutes real gold ownership.  Good article for the thinking gold owner. . . . . . .The Italy 20 lira gold coins pictured above are over 120 years old, still reflect the purchasing power of gold in international markets despite their age and have survived the many turns in Italy’s history.  One hundred and twenty years from now that will not have changed. “As long as humans remain tangible, it is likely that they maintain a desire to hold real and tangible assets.”

Speaking of old and valuable gold coins. . . .

USAGOLD’s
March Special Offer

‘Proof-Like’ Schillings, Kroner ‘Mermaids’, ‘Hefty’ 50 Francs, and Deeply Discounted Angels…and a raffle!

We do not see the Austrian 100 Schillings and Mermaids often and the number offered – 50 and 165 respectively – is very low.  These items are likely to be subscribed quickly.

Posted in all posts, Author, MK |

Morning Snapshot: Gold slides further on ADP beat

USAGOLD/Peter A. Grant/03-08-17

Gold slid further in overseas trading to five-week lows after the ADP employment survey came in much stronger than expected, perhaps creating some upside risk for Friday’s nonfarm payrolls report. Yields and the dollar are up on heightened rate hike expectations.

The ADP survey came in at +298k on expectations of +195k. Consensus for February nonfarm payrolls is +198k and the jobless rate is expected to tick lower to 4.7%.

A March rate hike was largely unexpected up until a couple weeks ago and then hawkish FedSpeak ramped up considerably. Now it seems all-but a sure thing, even as Q1 growth prospects have eroded.

Q4 productivity was left un-revised at 1.3%, below expectations of a positive revision of 1.5%; Unit Labor Costs held steady at 1.7%.

Wholesale sales data for January comes out later this morning. Expectations are for a 0.7% rise.

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

News & Views – Forecasts, Commentary & Analysis on the Economy and Precious Metals

Will banks’ excess reserves fuel a new monetary crisis?
Don’t look now but inflation and a new gold rush might be in our future


Find out why this chart important to investors.

This issue of News & Views is published in the clear.  In it, the important but generally overlooked issue of commercial bank excess reserves is explored in detail. The monetary inflation created in the wake of the 2008-2009 financial crisis never disappeared, it just went into hiding.  Now, years later, it has begun to surface as an unexpected response to the Fed’s interest rate policies.  Learn what’s behind this largely unforeseen turn in monetary events, how it is affecting the economy now and what it might mean for the future, including its likely impact on the gold market.


If you would like to receive future issues of our newsletter, we invite you to register here at no obligation.

Editor’s note: The charts in this edition of our newsletter, offered in conjunction with the St. Louis Federal Reserve (FRED), are live, interactive and updated automatically. To monitor changes, we invite your return visits.

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Week in Review (Video) – March 3, 2017

Posted in all posts, USAGOLD TV |

The Daily Market Report: Gold Recovers From Earlier Losses, Led by Silver


USAGOLD/Peter A. Grant/03-01-17

Gold was under modest pressure to begin the U.S. session, weighed by a higher dollar and stock market. However, the pullback could not be sustained and the yellow metal quickly rebounded to trade higher on the day and more than $10 off the intraday low.

Stocks were encouraged by President Trump’s address to Congress yesterday; where he highlighted his plans to lower corporate taxes, deregulate and spend $1 trillion on infrastructure. While light on the details of how all this will be accomplished, stocks love that kind of talk.

The dollar took it’s cues from hawkish FedSpeak heard late on Tuesday, which upped the odds for a March rate hike and three hikes in total this year. San Fransisco Fed President Williams said he doesn’t “see any need to delay” raising rates further. Meanwhile, even NY Fed dove Dudley thinks the case for tighter policy “has become a lot more compelling” since the election of Donald Trump.Watch movie online The Transporter Refueled (2015)

The dollar index jumped to a seven week high as yields on U.S. Treasuries rebounded. However, the yellow metal continues to show good resilience in the face of this market action, likely on rising inflation expectations.

U.S. data were mixed again today: Personal income and manufacturing ISM came in better than expected. However, PCE and construction spending disappointed.

Silver is looking particularly good, keeping the pressure on 18.50. More than 50% of the entire decline from last summer’s high at 21.13 to the December low at 15.60 has already been retraced. With the 50-day moving average poised to cross above the 100-day and the 20-day MA attempting to cross the 200-day, we could see the dominant uptrend really validated.

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

Week in Review (Video) – February 24, 2017

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How France scrapping the euro could go beyond a ‘Lehman moment’

CNBC/Karen Gilchrist/2-24-2017

“Make no mistake, there is the world of difference between tearing up bilateral and multilateral trade agreements, and, unwinding a monetary union as far reaching in scope as the EMU (economic and monetary union) project,” Deutsche Bank said in a note Tuesday. “It is the difference between a benign global risk event and something that has the potential to go beyond a ‘Lehman’s moment’.

MK note:  Two essential mental plug-ins come to mind.  One, Marine LePen who promises a Frexit referendum is ahead in the polls.  Two, the last time France voted on the EU it was on the question of a European constitution and it voted “against.”  Note Deutsche is not calling Frexit a “Lehman moment,” but “beyond a Lehman moment.”

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Gold cracks psychological $1250 mark in overnight surge

UPDATE – Gold higher in Asian/European markets, cracks $1250 mark convincingly, carryover on Treas Sec Mnuchin comments that low rates to continue.  Gold headed to three month high and fourth straight weekly gain; silver 9th straight weekly gain (Bloomberg says longest streak of weekly gains for silver since 2006).  General sentiment working in gold and silver’s favor.  Market led by professional investors.  David Einhorn confirms strong gold position in Greenlight Capital citing risk of inflation, Trump uncertainties. Dow futures off 80.

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The Daily Market Report: Gold Remains Generally Well Bid at High-End of Range


USAGOLD/Peter A. Grant/02-22-17

Gold edged higher in early trading to approach the high for the year at 1244.71, but slipped later in the session on some political maneuvering in France that lessened Frexit concerns somewhat. The euro rallied, knocking the dollar off its intraday highs.

In a surprise move, French centrist politician François Bayrou threw his support behind Emmanuel Macron. Whether that will be sufficient to derail Marine Le Pen’s chances remains to be seen. Nonetheless, the market seems to be viewing Frexit risks as being somewhat diminished.

The minutes of the January 31-February 1 FOMC meeting revealed that “many” members of the committee saw a chance for another rate hike “fairly soon.” That leaves March on the table, but it surely is no lock. Gold recovered intraday on the non-event.

Fed Governor Powell expressed that the Fed remains on a gradual tightening path with risks fairly balanced. He went on to say that shrinking the balance sheet should be considered once the Fed funds rate is “well away” from the zero bound. More policy vagueness . . .

This will leave the market to focus on the political and geopolitical risks that have been primarily keeping the yellow metal underpinned. Rate hike expectations will continue to wax and wane on incoming data leading into the March FOMC meeting.

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