Category: Today’s top gold news and opinion

Smart money is moving into gold as volatility returns

NewsMaxFinance/Olivier Garrett/6-4-2018

“As you can imagine, these speakers usually don’t talk much about gold. They’re more concerned with stocks, funds, bonds, and the like.  But this year was different. I’ve never seen so many high-profile investors mention gold as a safety net—and that includes some who were previously hard-core gold bears.”

USAGOLD note: This article summarizes speeches on gold’s prospects from several top-notch analysts including Jeff Gundlach, David Rosenberg, Louis Gave, Mark Yusko and Grant Williams.

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Fed’s dilemma grows more acute after EM and Europe turmoil

Bank of India governor pleads for US central bank to relax tightening plans

Financial Times/Joe Rennison and Robin Wigglesworth/6-4-2018

USAGOLD note: This article focuses on the fine line the Fed must walk between an interest rate policy that further fuels the sell-off in other countries currencies and sovereign debt and its publicly stated goals of gradually raising rates and reducing its balance sheet. At the present, we have serious problems in Italy, Turkey, Indonesia and Argentina as capital flows out of these countries and into the U.S. dollar. These problems could accelerate. A number of other countries not presently in the headlines could find themselves the center of the unwanted attention. India, it would seem, has now drawn attention to itself with the plea from its central bank for the Fed to go easy. We should also keep in mind, as we have mentioned on this page previously, that industrialized, G7 level countries are not immune to a speculative attack on their currencies as well. Gold demand in these countries is likely to accelerate as the citizenry seeks shelter from the storm.

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Switzerland’s AHV moves into physical gold

IP&E/Barbara Ottawa/6-5-2018

“The tender marks a shift in the investment strategy for AHV/AVS, as it previously only invested in gold and silver via swaps. ‘The supervisory board has decided we are to invest in physical gold bars from now on,’ the fund told IPE in a statement.”

USAGOLD note: AHV/AHS is Switzerland’s government sponsored pension plan and the investment made was  700 million swiss francs – a large sum.  As time goes by, I believe we are likely to see more and more conservative money managers following AHV example and opting for physical gold ownership over its many counterparts.  The only way to truly hedge the financial system is to invest in gold in a form 100% detached from it – in the form of coins and/or bullion.  Owning swaps, ETFs, futures, options, stocks et al amounts to buying into the systemic risks the investor is attempting to hedge. AHV acknowledges as much at the link above.

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Jim Chanos: “Cryptocurrency is a security speculation game masquerading as a technological breakthrough”

Institute for New Economic Thinking/Lynn Parramore/6-4-2018

“At one blockchain gathering there were a set of rented Lamborghinis parked outside to entice the traders and day traders and retail investors: this, too, can be yours if you hop aboard the blockchain and bitcoin bonanza! I teach about a guy from the early 18th century called John Law. He was the architect of one of the great financial frauds of all time — the Mississippi scheme of 1718-20 in Paris. (He’s also the guy who founded New Orleans. He sent settlers there who named it after his benefactor, the Duc d’Orléans).”

USAGOLD note:  One of the more well-thought out and basic critiques of the bitcoin mania I have seen.  Well worth the visit to the link above. Worth a double red flag. . . . . .

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Gold hovers, 2018 Year of the Doldrums for investment markets thus far

Gold continued to hover in the mid-$1290s lacking any clear motivation to strike out in either direction – up or down. Gold owners might be a somewhat disappointed with their favorite precious metal being stuck in the doldrums.  The angst, though, might be somewhat relieved when it sinks in that all the markets have been stuck in the doldrums for much of 2018.

The Dow Jones Industrial Average is down 2.6% on the year.  Bonds have come down with a resounding thud. Commodities, which have received much attention thus far this year, have not responded in kind – up only 1.4% on the year.  The dollar has been the star performer among primary assets, but even so the gains have been less than inspiring – up 2.8% on the year.  Gold, as it turns out, is just one among many non-starters for 2018 with a paltry .7% gain thus far on the  year.

So we should see 2018 for what it has been for most investments during its first five months – the Year of the Doldrums.

Quote of the Day
“Speculative bubbles have occurred throughout history. These episodes are characterized by a continuous sharp rise in the price of a particular asset or group of related assets, leading to further price increases driven by new speculators seeking profits through even higher prices. These higher prices are driven by the potential profits to be made through trading, rather than the earning capacity or economic value of the asset. These speculative manias then come to abrupt and dramatic endings, as expectations change and buyers quickly become sellers, in mass. The consequences are often disastrous, with the ensuing crash inflicting financial pain on the region or country involved. Euphoria turns to despair as the mandatory readjustment that takes place in the economy creates massive worker dislocation and great numbers of bankruptcies.” – Douglas French, Early Speculative Bubbles and Increases in the Supply of Money

Chart of the Day

Chart note: Since gold’s secular bull market began in the early 2000s, silver has kept up with its sibling metal in fits and starts. Presently, at a ratio of just under 79 to 1, silver is greatly undervalued relative to gold. The gap between the two metals, as you can see in the chart, has become accentuated in recent months leading some to think silver is overdue for a catch-up rally. There is precedent for such a rally. Silver trailed gold in 2009-2010 then spiked to close the ratio to 32 to 1 in 2011.  In early 2016 it again trailed gold then sharply accelerated beginning in April of that year to close the gap. Silver enthusiasts are hoping for similar performance in 2018, and we have seen some signs of a make-up rally.  The ratio’s interim peak came in March of this year at 81 to 1.

 

 

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US-China $100bn trade war nears as talks end without deal

Financial Times/Tom Mitchell/6-4-2018

“The world’s two largest economies remained on track to commence a $100bn trade war as early as this month, after a third round of China-US trade negotiations ended in Beijing on Sunday without a breakthrough.”

USAGOLD note:  The Financial Times, which is my base publication for obtaining global news, has been reluctant to use the words “trade war” in its day-to-day coverage.  It is worth noting that suddenly FT is willing to entertain the notion of “a trade war commencing as early as this month.”  Sometimes amidst the avalanche of information with which we are inundated on a daily basis, it is difficult to pin down the event or events of lasting importance.  This last breakdown in negotiations might be seen in future years as the point at which hopes for a settlement were dashed between China and the U.S. and there was no alternative left but for the combatants, as unpalatable as it might seem, to proceed on a war footing.  The markets, thus far, have taken this latest setback in stride, but the markets seem affected by little else these days beyond the effects of algorithmic trading in their day to day pricing.

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G7 or ‘G6 + Trump’

Reuters/David Ljunggren and Roberta Rampton/6-4-2018

USAGOLD note:  After the grilling and lecture party thrown for Treasury Secretary Mnuchin this past week at the G-7 meeting of finance ministers, one would have to think that the Quebec meeting of heads of state has the potential to become a circus of threats, counter-threats and posturing. . .with President Trump in the center ring.  It will be interesting to see how the president handles it.

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Falling Deutsche Bank shares reignite ‘black swan’ worries

MarketWatch/William Watts/6-2-2018

“‘To this observer (who has consistently warned about Deutsche Bank being the next Black Swan and the imbalances in the European banking system (particularly in Italy), the risks of a possible negative multiplier effect on other European financial intermediaries and on the region’s economic prospects is profoundly real,’ wrote hedge-fund manager Doug Kass in an email to clients Thursday.”

USAGOLD note:  One thing leads to another. . . .the problems stack up and suddenly with a loud noise something breaks.

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The long term destruction of the dollar

Simon Black/The Daily Bell/5-30-2018

“In 1982, back when I was a toddler, the price of a Ford Mustang was $6,572. Today the cheapest Mustang starts at $25,680 according to Ford’s website. So a Mustang today is around 4x as expensive as it was 36 years ago. US Labor Department data from 1982 shows that average earnings were $309 per week, or $16,086 per year. That was enough to buy 2.45 Mustangs. Today’s earnings are $881 per week, or $45,812 per year. That’s only enough to buy 1.78 Mustangs.”

USAGOLD note:  A good way to fill the gap is through gold ownership.  A long-term gold holding has more than compensated for the destruction of the currency for those with patience and an understanding of the forces at work in the modern economy.  The chart below on the purchasing power of the dollar and gold tells the tale. . . . . . .

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DMR–Gold pushes higher in early trading, G-7 this week

Gold pushed higher in early trading today – up $5.50 at $1297 – as trade war concerns began to slowly seep into investor thinking.  Silver is up 12¢ at $16.52. National leaders from the G-7 will meet in Quebec this week amidst a contentious atmosphere unlike anything seen in recent years.  The dollar is down this morning giving impetus to gold’s upside.

Meanwhile, concerns continue to mount that Italy and its massive sovereign debt could trigger a general crisis for the euro and the European Union and beyond.  Carmen Reinhart, a Harvard economist who specializes in crisis analysis, warns of how problems with the euro can have a wider, contagion effect: “Farther afield,” she says in Project Syndicate article, “the weakness in the euro has translated into dollar strength, which means a sustained beating for emerging markets, particularly those with US dollar debt. The flight to quality that accompanies outbreaks of financial turbulence is reinforcing a shift away from some of the riskier asset classes of which emerging markets are a part. International equity markets have not been exempt from contagion.”

Quote of the Day
“However, the media credits or lambastes the president of the day as though he and he alone is in charge of the country. Whatever happens is treated as his accomplishment or failure. And, typically, presidents play into this—taking personal credit for perceived accomplishments within the country and disavowing blame for perceived failures. At present, the conservative media is emphasising low unemployment as an achievement, just as the liberal media did during the Obama Administration. And yet, since the Clinton Administration, the unemployment figures have been consistently fudged. Those who work only part-time are defined as ’employed.’ Those who have given up pursuing employment are removed from the unemployment equation. If those numbers were plugged back in, US unemployment would be in the double-digits—during both the Obama and Trump presidencies.” – Jeff Thomas, Mises Institute

Chart of the Day

Visualization courtesy of HowMuch.net

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G-7 finance chiefs condemn Trump tariffs

Bloomberg/Andrew Mayeda and Yuko Takeo/6-2-2018

“’It has been a tense and tough G-7. I would say it has been far more a G-6 plus one than a G-7,’ said French Finance Minister Bruno Le Maire. The EU has threatened to retaliate with duties on everything from American motorcycles to bourbon.”

USAGOLD note:  There is no mention in this article whether or not there were any discussions on foreign exchange, but as mentioned here last week, anything the Trump administration accomplishes in terms of trade concessions can be nullified by an overly strong dollar.  It does not look, though, like we have even gotten to first base on concessions.  Instead the rest of G-7, like China, is threatening retaliation.

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Beijing warns any new agreements void if U.S. implements tariffs

Reuters/Martin Quinn Pollard and Ben Blanchard/6-3-2018

“If the United States introduces trade sanctions including raising tariffs, all the economic and trade achievements negotiated by the two parties will be void.”

USAGOLD note:  Since the White House appears intent on imposing tariffs, it looks like the latest talks did not end well.

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EU lawmakers from Italy’s coalition parties voted for funds to quit euro

Reuters/Staff/6-1-2018

USAGOLD note:  Europe’s parliament rejected that proposal, according to this report, but all the League members voted for it and thirteen of fourteen of the Five-Star representatives, which gives us a pretty good idea where the new Italian coalition government stands on the euro.  The Italian bond market stabilized a few days ago when its finance ministry reportedly bought two-year notes on the open market artificially supporting the market.  Today that support seems to have disappeared into Italy’s widening financial black hole.

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DMR–Gold pushes lower but physical demand is up globally including in the United States

Gold pushed lower in early trading – down $5.50 at $1294.50 – on a strong non-farm payrolls report.  Silver is up 4¢ at $16.48.

Traders in the gold market continue to focus on the data and its potential effect on interest rate policy while pushing trade and geopolitical concerns to the background.  What they might be ignoring at their peril though is the Trump administration’s potential reaction to the problem of the strong dollar, as mentioned in the post immediately below on the on-going G-7 meeting.  At some point, the White House will need to address to what degree the strong dollar is undercutting its push to boost U.S. exports, and what form that will take is anyone’s guess.

Weak currencies across the globe are fueling renewed interest in gold coins and bullion as investors move to preserve assets against domestic currency deterioration.  Gold prices have risen sharply against a number of major currencies over the past few weeks including the euro, the British pound, the yuan as well as a number of emerging country currencies including the Mexican peso.

In the United States, American Eagle gold coin sales registered a strong rebound in May – up 433% from April, according to a Reuters report.  As mentioned here earlier in the week, in the era of algo-driven markets, the things that would make gold demand rise, do not always translate to the things that would make the price rise. In the longer run though, physical demand necessarily gets factored into the pricing equation.

Quote of the Day
“Gold is scarce. It’s independent. It’s not anybody’s obligation. It’s not anybody’s liability. It’s not drawn on anybody. It doesn’t require anybody’s imprimatur to say whether it’s good, bad, or indifferent, or to refuse to pay. It is what it is, and it’s in your hand.” – Simon Mikhailovich, Tocqueville Funds (with thanks to Ron Stoeferle and Mark Valek at Incrementum AG)

Chart of the Day

Chart note:  Gold’s performance since 2000 illustrates an investment particularly suited for the times. After 12 straight years of positive returns (2001-2012), we had one sideways year (2014) sandwiched between two years of declines (2013 & 2015).  Over the last two years (2016-2017), gold has once again delivered positive returns – a performance many gold market analysts view as a harbinger of things to come. Not a bad track record after all is said and done during times of rapid, and often unexpected changes in the financial markets and the economy.

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Escalating trade battle embroils G-7 finance meet

Business Times/6-1-2018

“Amid threats of imminent tariffs on metals and auto imports, escalating trade tensions between Europe and the United States were casting a shadow over a meeting of finance ministers from the world’s top economies. Long a bastion of multilateralism, the Group of Seven ministerial in a Canadian mountain resort will serve as the latest battleground for the discord now at the heart of the global economy.”

USAGOLD note:  The possibility of the trade battles spilling over to currency value is a very real one, and we might hear some rumblings along these lines the G-7 meeting which goes through Saturday.  Much of what the Trump administration would like to accomplish could be nullified by an overly strong dollar. Most, other than the United States, are walking a fine line between the merits of a weak currency and the dangers of capital flight out their respective currencies and into dollar-based instruments.  It’s not just about tariffs. My guess is that much will go on behind the scenes and little will reach the public venue until later – except the obvious anger of the participants and maybe their obvious confusion about a global economy that has been suddenly turned on its head.

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Goldman warns the rise of machines leaves markets exposed

Bloomberg/Luke Kawa/5-23-2018

“Computers are prized for their ability to process massive amounts of data better than humans. But it’s their relative inability to process a complex world that might lead machines to worry that humans know something they don’t when markets go haywire — and exit a situation in which they don’t have the upper hand, wrote strategists led by co-Chief Markets Economist Charles Himmelberg in a note.”

USAGOLD note:  Goldman joins us in their concern about the “rise of the machines” or as we have put it in the past “the madness of machines.”  This article does a very good job of outlining those very real dangers.

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Gold’s monetary rehabilitation

Gold-Eagle/Alasdair Macleod’6-1-2018

“There is a quiet revolution taking place in the monetary vacuum that’s developing on the back of the erosion of the dollar’s hegemony. It is perhaps too early to call what’s happening to the dollar the beginning of its demise as the world’s reserve currency, but there is certainly a move away from it in Asia. And every time the Americans deploy their control over global trade settlement as a weapon against the regimes they dislike, nations who are neutral observers take note and consider how to protect themselves, ‘just in case.'”

USAGOLD note:  There is little doubt that China, at the very least, is working toward making the yuan the reserve currency of Asia.  Alasdair Macleod provides a very good look at the foundational elements to that process and the the role gold is playing in it.

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Bundesbank: Germany’s gold repatriation program

Bundesbank/Carl Ludwig Thiele/5-31-2018

“Long relegated to the fringes of public attention, Germany’s gold reserves were thrust into the spotlight when turmoil erupted in global financial markets in late 2008 and the German general public suddenly began to take a different view of things. This change of mindset coalesced in a desire for greater security and a need for more information, particularly on Germany’s stock of gold reserves.”

USAGOLD note:  A detailed review of Germany’s gold repatriation program from the Bundesbank itself.  Worth visiting the link just for the photo of Germany’s gold reserves. . . . . . . .

Image: 50 year anniversary medal founding of Germany’s Bundesbank, 2007, 10 euro

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Italy’s political turmoil could mark the end of the EU, roiling global markets

CNBC/Bryan Borzykowski/5-31-2018

“Global stock markets rebounded yesterday after political crises in Italy and Spain sent stocks into a tailspin. Unfortunately, for investors things could get worse from here.”

USAGOLD note:  This article casually drops a bombshell number: Italy owes about $2.5 trillion in sovereign debts.

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Gold continues to bounce around the $1300 mark, looking like it has aspirations of going higher

DAILY MARKET REPORT

Gold continued to bounce around the $1300 mark this morning as a run of government reports reflected mostly benign economic circumstances. At the moment, it is up $2.50 on the day at $1305 and looking like it has aspirations of going higher.  If it does, it would not be without proper cause as there is more than the average number of economic threats rattling around the markets.  The dollar, too, has suddenly veered south over the past two days.

Commodities continue to move quietly higher, though it has not been a good day for oil thus far – down over 1.5% on the day.  By way of an update, the closely watched CRB is up 15% over the past year.  Gold, by contrast, is up only 3% over the past year leaving much room for improvement.  Gold tends to track commodities over extended periods.  The divergence at the end of the plot lines in the chart below is telling. . . . .

Chart courtesy of tradingeconomics.com

Quote of the Day

” . . . I suspect a staggering amount of ‘carry trade’ leverage has accumulated globally over this protracted speculative cycle. ECB policies have clearly spurred leveraged speculation throughout euro zone bond markets, especially the unsound periphery. Eastern Europe as well? There is surely massive leverage in U.S. Credit, most likely having played a prevailing role in the booming investment-grade corporate marketplace. We’re in the stage of the cycle where things look good. In the U.S., in particular, the New Era and New Paradigm mentality has taken deep root. The economy appears robust, bolstered by fantastic technological advancement and scientific development. The underlying instability of finance goes unrecognized; the global nature of Bubble Dynamics unappreciated. Meanwhile, markets again this week provided confirmation of the Unfolding Instability Thesis.” – Doug Noland, Credit Bubble Bulletin

Chart of the Day

Chart courtesy of Advisor Perspectives

Chart note:  There are a couple of things unsettling about this chart.  First is the sheer amount of investor margin debt present in the current stock market – over $650 billion.  Second is the correlation between the growth of that debt and ascent of the S&P 500.  With that amount of leverage in the stock market and the influence it has on price levels, if and when the margin calls arrive, the tumble could be fast and extreme. FINRA (Financial Industry Regulatory Authority) warns that “many investors may underestimate the risks of trading on margin and misunderstand the operation of, and reason for, margin calls.” Shades of 1929.

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Liquidity crisis looming

Financial Sense/Jim Puplava/5-3-2018

“On a daily basis, almost 90 percent of trading on exchanges is carried out through high-frequency trading and index investing, Puplava noted. In the words of recent FS Insider guest Don Coxe, markets are no longer driven by humans but by machines, and machines know the price of everything but the value of nothing. In the event of a major macro event or worse, a monetary event, we could see markets move down rapidly, such as happened during the Flash Crash and also the Taper Tantrum.”

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Soros view ‘ridiculous’ says Morgan Stanley CEO

Bloomberg/Tom Mackenzie and Christopher Anstey/5-31-2018

“Morgan Stanley Chief Executive Officer James Gorman said that investor George Soros’s contention another major global crisis may be in store is unrealistic, and that the Federal Reserve will probably hike interest rates three more times in 2018 despite recent volatility.”

USAGOLD note:  Famous last words or the voice of reason?

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Threat of trade brawl hangs on Trump’s looming tariff deadline

TRADE WARS

Bloomberg/Richard Bravo/5-31-2018

“The European Union is bracing for President Donald Trump to open another front in his confrontation with the bloc, as the EU’s top negotiator prepares for the U.S. to impose either tariffs or quotas on metals imports from America’s closest allies.”

USAGOLD note:  Stepping back and looking East and West, the trans-Pacific, trans-Atlantic trade wars look to be accelerating not diminishing with all sides digging in their heels and threatening worse.  Then there’s the NAFTA problems. . . . . .

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Euro inflation kicking up – an early warning sign?

USAGOLD note:  Trading Economics reports this morning that “the annual inflation rate in the Euro Area is expected to rise to 1.9% in May” boosted mainly by rising oil prices.  This could be an early warning sign that rising oil prices will push up national inflation rates.

Chart courtesy of tradingeconomics.com

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More speculation on how the Fed will react to Europe’s problems

Credit Bubble Bulletin/Doug Noland/5-2018

“I don’t expect the Powell Fed to turn hawkish. Indeed, if things unfold as I expect the Fed will surely turn more cautious with rate hikes. But I also believe the new Chairman would rather not come quickly to the market’s defense. Markets are long overdue for removing the training wheels. Interestingly, John Authers’ Friday evening FT article was titled ‘Lack of ‘Powell Put’ Tightens Financial Conditions.’ Akin to Italy’s debt load, the true status of the Fed (and global central banker) put will be a greater concern now that financial conditions have begun to tighten and asset markets have turned more vulnerable.”

USAGOLD note:  We recommend a visit to Noland’s weekly analysis.  Much food for thought . . . He says “we are now on contagion watch.”  Europe will exert pressure on the Fed to go easy. Contrary to press reports that U.S. banks are insulated from Italy and greater Europe’s problems, those conclusions are doubtful in a world of interconnected loan and trading books involving billions, if not trillions, of dollars.  To ignore the situation in Europe is to play with fire.

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Gold steady in dollar terms, but up sharply in the euro since mid-May

DAILY MARKET REPORT

Gold is steady this morning at $1301 balancing a calmer Europe, at least for the moment, with a sharp drop in the dollar. Though the price remains range bound in dollar terms in and around the $1300 level, it has been a different story in euro terms. Since mid-May, when investors first began to worry about events in Italy, the price is up nearly 4% from €1090 per ounce to €1130 early yesterday.  The Trump administration is forging ahead full force on $50 billion worth of tariffs on Chinese imports. Tensions are once again heating up in the Middle East.

In its most recent Market Report, Degussa, the Swiss gold refinery, sums up nicely why demand for gold is likely to remain strong in the months and years to come:

“What does it mean for gold’s value proposition? First, gold does not appear to be expensive at the current price. In fact, there is reason to assume that it is (to borrow a term from the investment world) undervalued. Second, gold – if you look at it as a form of money – offers a hedge against the vagaries of the fiat money world. It cannot be debased by central banks’ money printing, and it does not carry a default or counter-party risk. Reflected upon from this perspective, gold certainly has not lost its shine for the long-term oriented investor. This becomes clear once the investor realizes that gold is not an investment instrument but a form of money – in fact, the best and most honest kind of money available.”

Those vagaries have become all too apparent over the past few days – particularly if you happen to take residence in Europe.

Quote of the Day
“[T]he trigger for a crisis could be anything if the system as a whole is unstable. Moreover, the size of the trigger event need not bear any relation to the systemic outcome. The lesson is that policymakers should be focused less on identifying potential triggers than on identifying signs of potential instability.This implies that paying attention to macroeconomic “imbalances” may pay bigger dividends than trying to assess financial instability through highly disaggregated “risk maps” of the sort currently being encouraged by the G20 and the IMF. The latter are not only expensive to monitor, but potential rupture points in the financial fabric can change rapidly in real time.Perhaps more important, serious economic and financial crises can have their roots in imbalances outside the financial system.” – William White, chairman of the Paris-based economic and development review committee at the Organization for Economic Co-operation and Development.

Chart of the Day


Chart courtesy of tradingeconomics.com

Chart note: Italy’s political crisis spilled over to its bond market yesterday spiking the yield on its 10-year bond to over 3%. Since the beginning of May, when concerns about Italy’s political stability began to make headlines, the yield on its 10-year bond has gone from 1.77% to 3.16% as of yesterday. The market stabilized last night, but few see the crisis as passing its high point. Bloomberg cited Swedbank’s Par Magnusson and Filip Andersson as saying in a report to clients that “The Italian house is on fire, and it will spread if someone doesn’t pull out the fire extinguisher soon. Italy may become severely injured, but the EMU may die.” The euro suffered a major setback yesterday declining .75% against the U.S. dollar to $1.153 while all of Europe seemed to go into crisis mode overnight. Italy sneezes. Europe catches a cold. . . .or maybe worse.

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Specter of Euro crisis could force Federal Reserve to slow rate hike plans

CNBC/Patti Domm/5-29-2018

“‘The chaos in Europe is pushing down U.S. interest rates so money is flowing to the U.S., fleeing Europe, making people think, that [with falling interest rates], coupled with the rising dollar, that the Fed responds by maybe having second thoughts about the trajectory of Fed policy,’ said Marc Chandler, head of foreign exchange strategy at Brown Brothers Harriman. ‘It also is a risk to the real economy because Europe’s a big trading partner.'”

USAGOLD note:  There’s some justification for this thinking.  If the Fed backs off on its interest rate plan, it could ignite a rally in the gold market.  The Fed may have no choice. The situation in Europe, Asia and emerging countries instigated by the strong dollar may need to be addressed before things spin out of control. June will be too early for the Fed to make a move but it could make a reference to the situation in its statement.  Putting rates on hold in September is not out of the question.  Italy’s debt to GDP ratio, by the way, is nearly 132% – a big number and climbing.  Greece, Europe’s bad boy, has a debt to GDP ratio of 176% not too far from the 180% peak that almost sent it over the edge. Germany, the standard for stability in Europe, has a 62% debt to GDP ratio.

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Crisis in emerging countries proves gold, not Bitcoin, is a hedge currency collapse

Seeking Alpha/Austrolib/5-29-2018

“The Turkish lira, Brazilian real, and Argentine peso are all down heavily against the US dollar. Gold priced in these currencies has risen at nearly the same rates as they have collapsed in dollar terms, meaning gold is successfully hedging against currency collapse. Bitcoin priced in these currencies is still falling over the same time frame.”

USAGOLD note:  Imagine yourself in one of these countries facing the reality of a collapsing currency.  Are you really going to choose Bitcoin over gold if it gets down to cases and your wealth is on the line?  Really??

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Soros bets heavy on European financial crisis

Bloomberg/Nishant Kumar/5-29-2018

USAGOLD note:   According to this article, Soros has placed a $256 million bet against stocks “from Stockholm to London.”

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Dow down almost 500 on Italy concerns, volatility spikes

CNBC/Thomas Franck and Alexandra Gibbs/5-29-2018

USAGOLD note:  U.S. banks are taking a hit. . .Volatility Index spikes almost 40%.

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