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FE Alpha Manager Cheveley: Why the macro supports buying gold now

FE TRUSTNET/Rob Langston/9-19-2017

“According to Investec, the precious metal tends to perform well once an interest rate hiking cycle starts. While this has begun the path for further rises remains uncertain. As a store of value, the yellow metal can also act as an inflation hedge in high or low inflationary environments. . .FE Alpha Manager Cheveley said the precious metal ‘works well in a real low rate environment’, where both inflation and interest rates are low.”

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AAA-rated manager buys gold for first time in seven years

“Citywire AAA-rated David Coombs has added gold to his multi-asset funds for the first time in seven years. . .

‘We are buying it because the UK is very vulnerable to recession. We bought this before the gilts sold off and we are loathed to buy long-duration gilts or index-linked bonds to help us mitigate economic risk. We feel that gold is a good diversifier for us.'”

USAGOLD note:  Note that Coombs is buying gold as a recession hedge.

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Yellen brushes aside inflation “mystery”

Bloomberg/Rich Miller/9-2-2017

“Federal Reserve Chair Janet Yellen acknowledged that the fall in inflation this year was a bit of a ‘mystery’ but suggested that the central bank was on course to raise interest rates again in 2017 nonetheless.”

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Gold drops below $1300 in initial reaction to Fed plan


Gold fell below the $1300 level in its initial reaction to the Fed’s balance sheet reduction program.  Silver followed suit.  Gold was down $9 today at $1301.  Silver was down 14¢ at $17.15.  In early Asian trading gold and silver are both level.

There is a sense of finality in the Fed’s actions today – the end of the easy money era. It comes at time when disinflation is deeply entrenched in the U.S. economy and deflation is quietly knocking on the door. Looking at the range of markets, we would classify today’s overall reaction as tepid at best.

We will be keeping a close eye on things here at our Live Daily Newsletter and we invite you to join us.

For more on today’s events, please scroll below.

Quote of the Day
“It’s just finally sinking in. The Fed has a credibility issue, even if you think they were going to follow through on their guidance, part of you didn’t believe it. Now, more and more people are starting to piece it together. What will be the impact on yield as money is destroyed and eliminated from the financial system?” – Bryce Doty, senior fixed income manager with Sit Investment Associates.

We invite you to sign-up for our free monthly newsletter available with appreciation to our current and prospective clientele. Immediate access.

News & Views
Forecasts, Commentary & Analysis on the Economy and Precious Metals
Next issue first week of October

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Today’s Fed Statement


For the record. . . .


Information received since the Federal Open Market Committee met in July indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have remained solid in recent months, and the unemployment rate has stayed low. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Hurricanes Harvey, Irma, and Maria have devastated many communities, inflicting severe hardship. Storm-related disruptions and rebuilding will affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Higher prices for gasoline and some other items in the aftermath of the hurricanes will likely boost inflation temporarily; apart from that effect, inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

In October, the Committee will initiate the balance sheet normalization program described in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; and Jerome H. Powell.

USAGOLD note:  In summation searching various sources, one more quarter point hike this year. Three next year possibly.  A gradual unwinding of the Fed’s $4.5 trillion balance sheet at $10 billion per month beginning next month and then gradually moving up quarterly $10 billion until it reaches $50 billion per month.  At that rate, it will be the mid-2020s before the balance sheet is “normalized” assuming of course life, politics and a bad economy do not intervene.

Could this be a message in a bottle delivered to Wall Street – a surreptitious exit of the party with the punch bowl when few are looking?

Upcoming problems break into two columns –  the psychological effects on the financial markets as this gets sorted out, and the knock-on effects no one foresees. No “been there, done that” to which we can all refer in this situation. . . . . .

It [the Fed’s balance sheet liquidation program] could be more disruptive than people think. . .That is a very different world you have to operate in, that’s a big change in the tide. All the main buyers of sovereign debt over the last 10 years – financial institutions, central banks, foreign exchange managers – will become net sellers now.” – Jamie Dimon, J.P. Morgan

“The faster growth never arrived despite Fed predictions for years that 3% annual GDP growth was right around the corner – in what has been the slowest expansion on record. But prices have risen in stocks, real estate, emerging market plays and other assets.  If the Fed calls that success on Mr. Bernanke’s terms, then shouldn’t the reverse happen as the Fed unwinds?” – Wall Street Journal editorial 9/19/2017

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Morning Snapshot: Gold moving sideways early

Gold continued to move quietly higher this morning with most of the markets waiting around to hear from the Fed.  Gold is trading in $1312 range up slightly from yesterday. Silver is trading flat at $17.32.  Gold reversed course late yesterday after President Trump’s latest salvo leveled at North Korea, coming off a low in the $1306 range yesterday.

The Fed will announce its policy decisions today noon MT and Chairwoman Janet Yellen will hold a news conference at 12:30 MT.  We may have more for you then . . .

No surprise to readers who follow the USAGOLD blog, but confirmation neverthesess:

“Speculative positioning in gold,” reports Economic Times, “has been on the rise since mid-August wherein hedge funds and money managers were net longs at 138,566 contracts, which has now increased to 249,588 net longs as on September 5, clearly defining the road map for rising price of the yellow metal.

As far as investment demand goes, inflows in the SPDR gold trust have grown by 22 tonnes since August and the current holdings as on September 14 stood at around 838.64 tonnes, reflecting the incremental demand arising out of geopolitical worries.”

USAGOLD note:  We are not sure we would go along with the “demand arising out of geopolitical worries” as the chief reason professional investors are gold – a rather simplistic view.  There is considerably more going on with respect to gold than the roller coaster ride imposed by the North Korean situation.  Geopolitical concerns are one of many in the list of gold investor concerns – an important one but still on a longer list of factors.


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Gold reverses course after Trump speech


Gold reversed its downtrend late today after President Trump threatened North Korea with total destruction in a pivotal speech before the United Nations.  The threats pushed aside concerns about this week’s Fed policy meeting, at least momentarily.

Gold finished the day  up $3.53 at the $1311 mark  after tracking as low $1306 during daytime trading.  Silver followed gold’s lead finishing up 11¢ on day at $17.29. The reversal extended into Asian trading with gold tacking another $2 on the price as this is posted.  Silver is trading sideways.

Quote of the Day
“It would therefore take a huge leap of faith to say that crises won’t continue to be a regular feature of the current financial system that has been in place since the early 1970s. The near exponential growth of finance and its liberalisation since this point has encouraged this trend.” – James Read, Deutsche Bank strategist

Wondering what Deutsche Bank’s James Read is talking about?  Try this USAGOLD link. . . .Black Swans – A chronology of panics, mania, crashes and collapses from 400 BC to present.  The prudent are prepared.

Also, we invite you to sign-up for our monthly newsletter available free with appreciation to our current and prospective clientele. Immediate access. Therein, comments and concerns like Mr. Read’s are covered regularly.

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Sell-off pushes gold, silver lower


Gold traded down today on concerns about the upcoming Fed meeting – off $15.67 at $1307.40.  Silver took an even bigger hit on a percentage basis, down 36¢ on the day at $17.18.  In early Asia trading both are sideways at the $1309 and $17.20 levels respectively.

Gold’s sell-off started early in the day and did not encounter resistance until the price neared the $1300 level.  Ordinary profit taking should not be ruled out.  Reuters reports tonight that Friday’s “U.S. data showed hedge funds and other speculators had raised net long positions in the precious metal for nine straight weeks.”

Correction aside for a moment, gold is up for the year when measured in the major currencies.  Here is the scorecard through today’s trading:

British pound –> +4.8%
Euro –> +2.7%
Japanese yen –> +10.3%
Chinese yuan –> +10.6%
US dollar –> +13.6%

For more insights on today’s market activity, please scroll below. . . . . . .

Quote of the day
“A disgraceful milestone was reached this week when US government debt busted through the $20 trillion level and quickly went over $20.1 trillion. Can $21 trillion, or $25 trillion, be far ahead? Why not $40 trillion, so our grandkids and their grandkids can be even more indebted to the Chinese and other countries that buy our debt but aren’t very nice to us.” –– John Crudele, New York Post

“Few Americans know that, just after World War II, the United States owned most of the gold bullion on earth – about 22,000 metric tonnes.” So begins the September issue of News & Views under the headline When the United States Owned Most of the Gold on Earth.  What happened next laid the foundations for today’s massive federal government debt, a long-term secular bull market for gold and a long-term secular bear market for the dollar.  Herein lies the essential rationale for gold as a long-term portfolio asset, safe haven and friend to the concerned citizen.

For the full article and much more, we invite you to sign-up for our free newsletter available with appreciation to our current and prospective clientele. Immediate access.

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A big piece to the China gold puzzle falls into place. . .

48% of its massive 2016 imports went to financial institutions, according to researchers at Singapore’s Bullion Star


“[U]sing the broadest definition of gold demand, SGE gold withdrawals are a suitable proxy for overall gold demand in China. This gold demand can be labelled as “Chinese Wholesale Gold Demand” and comprises two main categories, namely, consumer gold demand and institutional gold demand. Consumer gold demand generally refers to gold jewellery fabrication demand, retail physical gold bar and coin demand, and in some cases also includes industrial fabrication demand. Institutional demand can be viewed as individual and institutional investor purchases of gold bullion directly on the SGE trading bourse, and withdrawal of this gold from the SGE vaults.”

Chart courtesy of Bullion Star

MK note:  Bullion Star asserts an important finding in the Chinese gold trade question, i.e., the level of China’s huge imports, 2200 tonnes annually, taken up by Chinese institutions including some of their largest banks. Judging from the chart above that number is roughly 1050 tonnes or 48% of total imports.  Further, the Australian bank Maquarie reports a massive 3000 tonnes of inventory parked on financial institution balance sheets.  By contrast, China reports only 1842 tonnes in official reserves.  We must keep in mind the Peoples Bank of China owns the commercial banks and by proxy the gold on their balance sheets.

I suspect that the banks’ gold inventory could be significantly higher than Maquarie’s estimate when you take into account the massive Chinese imports over the past several years. Of course, much of this gold moves down line to their customers including wealthy individuals, other financial institutions and the retail gold business.

China’s financial institutions, in effect, comprise the greatest single end point to the London-Zurich-Shanghai physical gold pipeline – strong-handed buyers with plenty of capital emanating ultimately from the country’s massive national reserves. The consistent flow of physical gold bullion – mostly in the form of 32.15 troy ounce kilo bars – is part, if not the essence, of China’s national asset diversification program as stated years ago by governor of the Peoples Bank of China, Zhou Xiaochuan:

“At present, up to 12 trillion yuan stays in domestic residents’ saving accounts. The launch of individual gold investment, therefore, will allow residents to change currency assets into gold assets. At the macro level, it will expand channels for changing savings into investment, thus adjusting the money supply; in the micro aspect, allowing citizens to trade and keep gold can improve social welfare, benefiting both the country and the population. Moreover, with the dual attributes of common commodity and currency commodity, gold is a desirable instrument for hedging. Therefore, developing gold trade for individuals is practical.” – Zhou Xiaochuan, Governor, the People’s Bank of China

One more consideration: China is now engaged in policies designed to drive the yuan down against the dollar and potentially ratchet up domestic inflation. The net effect could end up being even more demand for the metal internally and pressure on global supplies externally.  Thus far this year, gold is up 9% in yuan.

More background on China’s pivotal role in the gold market
– the story as it developed over the years

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India gold demand jumps, festival season pushes physical purchases

The Hindu/PTI/9-17-2017

“The country’s gold imports recorded a three-fold jump to $15.24 billion during the April-August period of the current fiscal, Commerce Ministry data showed. . .The imports are expected to increase on account of the forthcoming festival season, which will start from the end of this month.”

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Gold, silver quiet in Asia to start the new week, Fed meeting on the agenda


Gold is down a tad in the overnight Asian market – off about $2 at $1318.60.  Silver is steady at $17.60.  A quiet night in the gold market thus far.

This week we have the Fed meeting – always a tricky, unpredictable event for the precious metals. Interest rates apparently are off the table.  The Fed, though, is expected to announce its plan to liquidate the $4.4 trillion in assets it acquired putting out the fires of the 2007-2008 debt crisis. Alan  Greenspan once referred to it as a “pile of tinder.” QE comes back to haunt the Fed and the financial markets – the ghost of crises past.

Quote of the day
“It [the Fed’s balance sheet liquidation program] could be more disruptive than people think. . .That is a very different world you have to operate in, that’s a big change in the tide. All the main buyers of sovereign debt over the last 10 years – financial institutions, central banks, foreign exchange managers – will become net sellers now.” – Jamie Dimon, JP Morgan

If you are a chart enthusiast, we have a couple pages at the USAGOLD website worth bookmarking.  These charts are presented in conjunction with the St. Louis Federal Reserve (FRED) and update automatically through the magic of the internet.  Both pages are  handy references used regularly to settle after-dinner disputes among family members and friends about the direction of the economy.

Gold trends and indicators in chart form

Monetary trends and indicators in chart form

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Seesaw week ends on a down note for gold, silver


A seesaw week for gold ended today on a down note. Gold was off $13 from yesterday’s closing number in $1320 range. It began the week at $1321.  Silver followed suit ending the week at $17.57 – down 19¢. It was down 25¢ on the day.  Lest we forget, both metals were coming off highs for the year achieved last week. Profit-taking and contrary positioning are bound to show up on such occasions.

Professional investors, on the other hand, appear to be treating the seesaw action as a buying opportunity.  The GLD-ETF, where funds and institutions tend to concentrate their purchases, is up 4 tonnes over the past few days.

Next week we have the FOMC meeting.  Things could get interesting. . . .

Quote of the Day
“Gold and silver are in the beginning of these two [bull market] phases known as ‘Relief & Optimism’ which lasts another 2-3 years as the market begins to hit higher highs with sustained gains for longer periods of time and with fewer and shorter term pullbacks as investors begin to gain confidence and more people start to jump in, most of whom are usually professional investors such as hedge funds and money managers while the general public continues to ignore it.” – Commodity Trade Mantra (Are you still worried if gold is in a bull market? Let me show you.)

Last Friday the national debt surpassed $20 trillion with a massive one day addition of $318 billion.  In the September issue of our newsletter, we  shed light on why the national debt matters – an often overlooked consequence to the now immense load of red ink. We invite you to sign-up for our free newsletter available with appreciation to our current and prospective clientele. Immediate access.

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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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Japan snapshot: Flight to safe havens – gold, dollar

Yen drops like a rock . . . .

(Quoted in number of yen purchased with one dollar.  Yen declining when trend line is rising.)

. . . . while gold in yen jumps higher

(Chart courtesy of GoldChartsRUs)

See GOLD TODAY! One stop LIVE prices, charts, news & opinion (includes currencies)


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Gold jumps late on latest North Korea provocation


Gold jumped higher late today in response to the latest North Korean missile launch over Japan. It was already in recovery mode earlier today on favorable interpretations of two key government reports – consumer prices and jobless claims. At this posting, gold is trading in the $1331 range and up about $8 from yesterday’s closing levels.  Silver is up 7¢ from yesterday’s levels at $17.84.

Gold’s been on the proverbial seesaw this week, but on balance showing persistent underlying strength.  Asian trading is surprisingly quiet so far this evening. . . . .

Quote of the Day
“Although we respect the Fed’s independence we are concerned about economic growth. We’re doing everything we can — whether it’s tax reform, whether it’s regulatory relief, whether it’s trade — to create economic growth. And we’re less concerned about inflation at the moment.” – Treasury Secretary Steven Mnuchin

If you are new to the USAGOLD website, we invite you to kick back and stay awhile. Do a little interest-driven browsing.  We launched this website in 1997 and it has dutifully been providing guidance and market information to investors ever since.  One of the most highly referenced and visited web portals in the gold business, this website goes deep.  People are often surprised just how deep it goes.  As a launchpad, we offer a quick website tour that hits the high points and suggests links, but it’s the depth, practicality and ease of use that will keep you coming back.  WELCOME!


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Gold off today on profit taking, silver following suit. All’s quiet in Asia.


Gold had another minor reversal today at the hands of speculators taking short term profits. Silver tracked back as well, but less so.  Gold as this is posted is trading in the $1320 range – down about $11 on the day.  Silver is down about 15¢.  There was not much in the way of news.  Asian gold and silver markets are quiet again tonight – trading sideways.

Scroll down for a more detailed look at today’s events.  The post by USAGOLD founder, Michael Kosares, on William White’s recent Bloomberg television interview is worth reading. White says the economy is facing “more dangers now than 2007.”

Here are a couple of overlay charts – one on the year thus far and the other since 1970 – for newcomers who would like to better understand the oft-referenced correlation between the US dollar and gold.  Note particularly the distinct downtrend in the dollar against the other major currencies in the index since 1970 and against gold. That’s the real story.

(Please see “Surprise gold advocates” for portfolio advice from a couple folks in the know.)

Chart note: Despite all the discussion about beggar-thy-neighbor currency policies carried out by America’s competitors, it is the dollar – not the other major currencies  – that has suffered the worst depreciation since 1970.  The one year chart shows a similar relationship only over the shorter term.  The long term chart includes trend lines from 2000.

If you would like to see our take on what’s pushing gold and silver these days, you might want to sign-up for our free newsletter, available with appreciation to our current and prospective clientele. Immediate access. Weeks ago, we took the emphasis off North Korea (though we didn’t eliminate it as a cause) and put it on five other more enduring factors.  Those are the factors covered in the newsletter.  It was interesting to see that Goldman Sachs took the same tack last week.  (This gold note is under the heading, What is behind the ‘quiet’ summer rally in gold and silver.)

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

White raises major red flag warning

First a quick background check on William White so we know whether or not to grant his opinions more weight and status than the average analyst, this from an older, but still functional, Economist article titled The curious case of Willliam White (September, 2012):

“Most recently, we have William White, a brilliant Canadian economist who used to do research at the Bank of England and the BIS before taking over the Economic Development and Review Committee at the OECD. He is not, in other words, a nut who hides in the woods with gold bricks and canned food. Moreover, he (along with his colleague Claudio Borio), presented one of the earliest and most thoughtful warnings of the financial crisis back in 2003. Anyone with a brain ought to take him seriously, especially when he bucks the conventional wisdom.”

Overlooking the out-of-place “gold bricks and canned food” comment, it pretty much tells us that William White’s opinions should be taken seriously. It is not often that an economist of his stature goes off the reservation.

White, as hinted in the Economist profile, has consistently warned that the global economy stands at a precipice – that essentially the 2007 crisis was not an end but a beginning. If that stance sounds familiar, it should.  It falls in line with the fourth turning analysis covered here in previous posts.  Neil Howe, the author of The Fourth Turning, calls the 2007 crisis the catalyst for the protracted fourth turning now in progress and scheduled to end, by his estimate, sometime in the 2030s. (Please see “Historical inevitability and gold and silver ownership“)

White renews that warning in a Bloomberg interview on Monday (fittingly September 11) under the banner OECD warns “More dangers now than in 2007.” In that six minute interview, White keenly and concisely outlines the bind in which central bank find themselves and the depth of the problem that we need to guard against in our own investment plans. We recommend you take the time to watch it.

He concludes with a warning –

“We have to be cautious. We are in a very tough place . . .Be careful of what you do and be very cautious of the side effects because you might not like it.” 

In Ambrose Evans–Pritchard’s column, World faces wave of epic debt defaults, (January, 2016), he provides more detail on White’s analysis for those who would like to dig a little deeper.


• The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability. .

• “It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something.”

• The European banking system may have to be recapitalized on a scale yet unimagined, and new “bail-in” rules mean that any deposit holder above the guarantee of €100,000 will have to help pay for it.

In retrospect, central banks should have let the benign deflation of this (temporary) phase of globalisation run its course. By stoking debt bubbles, they have instead incubated what may prove to be a more malign variant, a classic 1930s-style ‘Fisherite’ debt-deflation.”

On the whole, I consider White’s argument one of the strongest  I have seen for gold and silver ownership as long-term safe haven hedges. The catalyst for that debt-deflation could be the realization in global financial markets that the central banks, as White describes it, have backed themselves into a corner over the past ten years with nowhere to go.  In other words, the next time around – the next time the black swan lands – we will be on our own, walking the high wire without a central bank safety net.

As displayed in the aftermath of the 2007-2008 go-around (see chart below), gold has proven itself to be an excellent hedge for the kind of disinflationary-deflationary breakdown William White fears. It rose by nearly three times over the period. (Silver’s performance was even better. It rose over three and a half times.)

The foregoing was a summary overview. Please follow the links throughout this post for the full story. . . . .

Goldman Sachs chief commodity analyst, Jeff Currie –

“If buying gold, don’t buy futures or ETFs.  Buy the real thing. . .The lesson learned was that if gold liquidity dries up along with the broader market, so does your hedge, unless it’s physical gold in a vault, the true hedge of last resort.”

Note:  Better yet, gold (and silver) in your hands. . . .


If you found this post helpful, you might want to sign-up for our free newsletter, available with appreciation to our current and prospective clientele. Immediate access. We regularly provide in-depth treatment to issues affecting gold and silver owners like the post you just read.


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Gold, silver subdued in Asia tonight


Coming off lows early today at the $1320 level, gold is now trading $14 higher in the $1334 range.  Silver followed suit ranging from a $17.70 low to trade at $17.84 as this is posted. The sharp, quick reversal in gold and silver will raise an eyebrow or two. The overnight market, though, is subdued.  Nothing much to report except for the Japanese yen taking a major hit today contributing to gold’s reversal.  For a short time, it broke the psychologically important 110 per $ mark.

From an Investopedia report today:

“When times get tough, even some of the most prominent investors turn to safe alternatives. Now, Bridgewater Associates founder Ray Dalio has urged investors to consider picking up gold in light of heightening tensions between the U.S. and North Korea. The billionaire feels that the financials markets are at risk considering increasing geopolitical tensions both domestically and abroad, particularly in Asia.”

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Gold level in Asian trading after today’s push to lower levels


Gold is level in overnight trading after today’s push to lower levels.  Gold is  presently trading down $12 on the day at $1325.60 in FOREX trading.  Silver is down 21¢ at $17.81.

For the most part, today’s market action appears to be a correction from the 2017 highs gold posted end of last week. Traders in futures markets are cashing in profitable positions.  We shall find out whether or not the trading over the past two sessions will develop into a real correction.  The jury is still out. . . .

In a rather odd development, China apparently signaled speculators permission to short the yuan, according to a Wall Street Journal report this morning. The yuan is down sharply overnight in FOREX trading.  File this one under be careful what you wish for. . . . . .

The Treasury Department’s announced late this afternoon that the national debt transcended the $20 trillion level with a whopping $318 billion one time addition.  It looks like the federal government did not waste any time taking advantage of the Congressional go ahead to raise the debt limit.

From the Treasury Department:

In the September issue of our newsletter, we briefly shed some light on why the national debt matters – an often overlooked consequence to the now $20 trillion load of red ink. We invite you to sign-up for our free newsletter available with appreciation to our current and prospective clientele. Immediate access.

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Gold off in overnight trading

Gold is trading down about $7.50 in the overnight markets as this is posted. Silver is down 7¢.  It looks like Irma’s reduced category ranking to a 2 and quiet on the Korean peninsula let a little air out of the gold and silver rallies – at least for now. Too, it could be no more complicated than a continuation of Friday’s sideways to lower trading.

In Japan, stocks are up a little over 1%. Despite that strength, the yen is taking another beating in the FOREX markets.

As pointed out here a few days ago, the weak yen has been a consistent contributor to higher gold prices in overnight Tokyo trading. That post includes a worthwhile chart, if you haven’t seen it. It will be interesting to see if yen weakness wins out as the evening progresses.

Nothing much going on elsewhere at this writing.  Will report back if anything develops. . . . . .

Interesting quote from Goldman Sachs chief commodity analyst, Jeff Currie –

“If buying gold, don’t buy futures or ETFs.  Buy the real thing. . .The lesson learned was that if gold liquidity dries up along with the broader market, so does your hedge, unless it’s physical gold in a vault, the true hedge of last resort.”

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Gold + silver: The numbers – today, the week, the year –> catch-up below

Gold and silver traded sideways to down today after a solid week.  Gold finished the week up 1.9% ($1,321.21 ––> $1,346.29, +$25.08); silver finished the week up 2.2% ($17.55 ––>$17.95. + 40¢).  Gold’s upside Asian strength was blunted first in European trading then in New York on a slow day in most financial markets.

On the year thus far, gold is up 17% ($1,150.90 ––> $1,346.29, +$195.39); silver is up 13% ($15.90 ––> $17.95, + $2.05)

As for the events pushing gold and silver prices Monday through Thursday, we think you will find plenty to chew on in the long and illuminating roster of posts immediately below.  You can develop you own list of protagonists.

One quick comment on gold and silver’s performances since the beginning of the year:

The fact that gold has outperformed silver points to an apparent safe-haven bias among investors which, in turn, suggests a disinflationary bias toward the economy and financial markets.  We think that bias is in keeping with reality.  However, silver could play catch-up when private investors finally catch-on that something is going on.  This rally is led by global professional investors who are matching their public warnings about an overvalued stock market with diversifications into primarily gold via various investment avenues, including physical metal.  Both gold and silver have outperformed the stock market thus far in 2017.

DJIA (19,762 ––> 21,797, + 10.2%) (Surprise!)

If you would like to see our take on what’s pushing gold and silver these days, you might want to sign-up for our free newsletter, available with appreciation to our current and prospective clientele. Immediate access. Weeks ago, we took the emphasis off North Korea (though we didn’t eliminate it as a cause) and put it on five other more enduring factors.  Those are the factors covered in the newsletter.  It was interesting to see that Goldman Sachs took the same tack this past week.  (This gold note is under the heading, What is behind the ‘quiet’ summer rally in gold and silver.)

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Tokyo gold market

Given the growing importance of the yen/gold trade in Japan and the influence it has in the overnight market for the United States, we have added the Tokyo Commodity Exchange (TOCOM) hours of operation and a Tokyo time clock to our Gold Trading Hours page.

Your visits to the page are welcome.  It is a handy reference that gets quite a bit of global traffic.

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U.S. wholesale sales -0.1% in Jul, below expectations of +0.5%, vs negative revised +0.4% in Jun; inventories +0.6%

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Gold up overnight in Asia on yen strength

Gold showing overnight strength. Up about $4.00 as this is written, broke $1350 at $1353.  Silver trading over $18 at $18.18. Gold and silver both registered unusually strong performances today in New York trading.  Gold was up $14 and silver was up 30¢.

Gold strength in overnight Asia trading has shown a consistent pattern over the past few months with much of the strength coming from a strong Japanese yen.  For years, Asia has pretty much  followed the New York/London lead which flattened the overnight (Asia) price flow. Things have changed.  Some analysts have begun to refer to the yen as a “safe haven.”  That might seem counter-intuitive given the situation in which Japan finds itself next door to North Korea, but the market calls the tune.  Of course there’s no safe haven like gold, and that’s why investors are buying it. (Gold is up in yen over this period.)

Take a look at the overlay immediately below.  It tells an interesting story. Keep in mind that the yen is quoted in yen per dollar, so the yen overlay looks inverse. The chart downtrend (red line) is really an uptrend and vice versa. Note the direct relationship between the yen and the gold price. Tonight’s jump in gold neatly coincides with the yen’s improvement.

For the full picture on gold strong performance today, please scroll below. Pete Grant’s Daily Market Report is a must read today!

We’ll keep an eye on this chart and you can too here.  Play with the chart tools.  You’ll figure out how to draw it yourself.

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When the United States Owned Most of the Gold on Earth

Gold’s legacy told indelibly in one straightforward chart

by Michael J. Kosares
Author, The ABCs of Gold Investing: How To Protect and Build Your Wealth With Gold
Founder, USAGOLD

Few Americans know that, just after World War II, the United States owned most of the gold bullion on earth – about 22,000 metric tonnes. In fact by 1945, it owned over 80% of the gold held by nation-states and central banks – an impressive display of economic power. Now it owns just over 8000 metric tonnes, which represents about 42% of the total global reserve.

The lost 14,000 tonnes were expended in defense of the $35 per ounce gold benchmark price established under the 1944 Bretton Woods Agreement. In addition to the fixed price of gold, the U.S dollar came to represent a fixed weight of gold, i.e., 1/35th of a troy ounce, and the rest of the world’s currencies were then pegged to the dollar. The United States agreed under Bretton Woods to redeem gold from the other signatories at the rate of $35 per ounce should any of the participants determine that gold might be a better alternative for a portion of their reserves than U.S. dollars. “The dollar,” American policy makers were wont to say, “was as good as gold.”

Germany, France get the idea dollar not as good as gold

All proceeded in orderly fashion with little in the way of redemptions from the massive U.S. stockpile until the 1960s. Then a group of European nation-states, led by Germany and France, got the idea that U.S. inflationist economic policies had undermined the dollar, making gold a bargain at $35 per ounce. In other words, they came to the conclusion that the dollar was not as good as gold.  Steadily, over a decade long period, they exchanged dollars for gold at the U.S. Treasury’s gold window. By the early 1970s, 14,000 tonnes of gold – or 64% of the stockpile – had departed the U.S. Treasury for European shores never to return.

In 1971 President Richard Nixon finally decided enough was enough. He closed the so-called gold window, devalued the dollar against gold, and freed the greenback to trade at market prices against other currencies. Fully abrogating the Bretton Woods Agreement, Nixon declared, in one of the more famous quotes of his presidency, “we are all Keynsians now.” The era of global fiat money, with a fiat U.S. dollar as its centerpiece, had begun.

Had the United States refrained from its defense of the $35 benchmark, it would still own about 75% of the present 29,000 tonne global gold reserve. As it is, Nixon’s revocation of the Bretton Woods architecture set the stage for the modern gold market. You can see the result in the chart immediately below. From it, I can draw three conclusions:

–– First, we are now in the 46th year of a super-cycle, secular bull market in gold that began in 1971 – a bull market directly tied to the fate of the now fiat U.S. dollar.

–– Second, the very same conditions which created that bull market are still in place today – nothing has changed fundamentally.

–– Third, as long as the same cause and effect remain in place, we can assume gold will continue to make sense as a long-term portfolio hedge.

Some will agree with those conclusions. Some will not. Some are on the learning curve, and it is to that group this piece is largely addressed.

Chart courtesy of GoldChartsRUs/Nick Laird with thanks

In the end, it is the times that need to be hedged

Those who do not agree with those conclusions, it has been my experience, will continue to put their faith in the stock and bond markets and ignore the precious metals. There is no amount of persuasion that will convince them to do otherwise, and to try is pretty much a waste of time. Most importantly, whether they care to acknowledge it or not, they will put their faith ultimately in the federal government and the Federal Reserve.

Those who do agree will continue to hedge their portfolios with the precious metals, just in case the long history of economic breakdowns beginning with 1971 repeats itself yet again. To this group, the proper diversification is a small price to pay, a matter of practical financial planning that, in these times, provides some much-needed peace of mind. As for an end game to all this, they will keep in mind one of history’s immutable lessons – sometimes the problems become too large for the government and central bank to control.

For those on the learning curve, a post I made at the USAGOLD blog recently titled “Historical inevitability and gold and silver ownership – In the end it’s the times that need to be hedged” would be an informative follow-up to what you just read, another piece in the puzzle. It got significant play on the wider internet and speaks to the possibilities of an end game from the perspective of Strauss and Howe’s fourth turning.

You have just read the lead article for the September edition of News & Views – USAGOLD’s monthly newsletter.  To gain immediate, FREE  access to the rest of the newsletter, we invite you to  to sign-up here.   In this month’s chart rich edition, we cover the ‘quiet’ summer rally in gold and silver; the dramatic shift in central banks’ role in the gold market since the 2008 financial crisis; the relevance of the upcoming Shanghai Exchange oil futures contract convertible to gold. . . .and more.  All from the perspective of the gold owner.

One more chart for those who want the complete picture:

Chart courtesy of GoldChartsRUs/Nick Laird with thanks

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Gold continues uptrend today, up almost 18% on the year

Decent day today. Gold continued its uptrend improving by $8.74 at $1341.57 and showing carryover strength, at this writing, in the aftermarket.  Gold, as shown in the chart below, is trading at 2017 highs and up almost 18% on the year. Asia opens momentarily. It will be interesting to see if we get carryover from U.S. trading.

Stay tuned. . . .We’ll update if anything interesting develops.

There are a number of other factors at work in the gold market. Scroll below for full details.

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Gold, silver up in Asia trading

North Korea announces successful H-bomb test.

Gold is up $10.80 at $1335 this posting.  Silver is up 17¢ at $17.89.  Dollar trading lower against yen, euro . . . . .DJIA futures  down 75.

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Gold gets strong bounce off $1300 level today, silver in tandem

Good day today. Gold up $14 at $1321 per ounce.  Silver up 18¢ at $17.55 per ounce. Gold mounted a defense of the $1300 level in overseas trading that carried over to day time trading in the United States. (first chart below)  Silver traded in concert with gold.

The metals also closed out a strong month coming out of the annual summer doldrums with a solid move to the upside (second chart below.)  For the month of August, gold is up 4% (+$53.00) and silver is up 5% (+87¢).

For more detailed information, please scroll below. 

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Strike gold on your smartphone

USAGOLD’s mobile market monitor

Our mobile pages are one of the hidden gems at the USAGOLD website.  Principally designed as a service to our busy clientele, Google picked up on several pages ranking them one to three under mobile searches. Those search listings refer a steady stream of new visitors daily. It is very user friendly and delivers up-to-the minute prices, news and opinion  on the gold market.

We welcome your visit to our mobile hub page. From there you can navigate to the pages that interest you when you are on the go. . . . .

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Gold rally gathers pace in overseas trading

Gold is up about $7 in overseas trading at $1325.  Silver is up another 12¢ at $17.63 as metals’ strong performance yesterday carried over to trading in Asia and Europe.  At this posting, DJIA futures are off 135 and the euro is trading at the $1.20 mark.  Scroll for more. . . .

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