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Gold reverses course after Trump speech

LATE REPORT

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

LATE REPORT

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

GoldSeek/BullionStar/9-17-2017

“[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

LATE REPORT

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

LATE REPORT

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

LATE REPORT

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.

LATE REPORT

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”


CLIENT ALERT
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.

Snips:

• 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. . . .

––MK


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

LATE REPORT

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

LATE REPORT

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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After hours gap-up in gold price

Gold gapped up in after hours trading driven by North Korea’s ballistic missile launch over Japan.  Gold is up $26 at $1317 on the day.  Silver is up 45¢ at $17.49.  Gold had already registered a strong performance today on factors covered below.


If you are new to USAGOLD, our Gold Today! page is a good place to follow the gold price action in real-time.  The page includes a constantly updating news feed with lots of news and opinion from solid sources in the U.S. and overseas.

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Where to buy gold

A quick guideline for choosing the right gold company

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

Updated Q3-2017

It is surprising how many prospective investors simply dive into gold and silver investing without much in the way of a consumer inquiry. That lack of simple due diligence has ended up costing a good many investors thousands of dollars, and sometimes even hundreds of thousands, before the damage is detected. Below you will find some brief but valuable guidelines to help you choose the right gold and silver company. It might be the most important decision you will make on the road to becoming a gold and silver owner.

Choose a company that has a solid track record

Ten years in the business is good; fifteen years or more is even better. Avoid the newcomers, the flashy discounters and the complicated online coin shops. These outlets are designed more for collectors and dabblers – or buyers out to make a quick, online purchase – than serious investors looking to hedge their portfolios.

Choose a company with a solid track record and longevity. It is the mark of a well-run business committed to its clientele.

Choose a company with strong credentials and a reputable history

A simple background check can go a long way in helping you circumvent a company with a history of problems and poor customer service. A quick visit to the Better Business Bureau’s online website can do wonders and save you a major headache down the road.

The BBB provides consumers with a company’s basic rating, verified online reviews and a list of complaints. (If a company does not have a BBB rating, treat it as a red flag.) Pay special attention to the complaints and how they were handled even if the company has managed to maintain a high rating.

A good many precious metals’ businesses that have gone bankrupt, or found themselves in legal difficulties in recent years, showed signs of something being wrong long before-hand in their rating and complaint record. Oftentimes, the BBB will post a warning about such businesses.

BBB reviews are another good source of consumer information. Make sure that the reviews are verified and noted as such by the BBB itself. Too often businesses stack their review section with reviews that have not been vetted officially by the BBB.

Choose a company with strong BBB credentials. Now more than ever, reputation matters.

Choose a company willing to spend time with you and answer your questions

The company that is abrupt at the outset is the company likely to give you short shrift in the future when you have a question or concern that needs to be addressed. Be especially wary of companies that use aggressive sales tactics. Seek out and develop a relationship with a company that handles your inquiry in a friendly, professional manner.

Choose a company willing to work with you. It will provide helpful guidance now and peace of mind in the future.

Choose a company willing to accomodate your timing

Even if you think that you might want to make a purchase at some point in the future, but for whatever reason are not ready now, it would be best to vet candidates ahead of time. By doing the spadework, you will know where to call when the time comes. It is also advisable to do some advance planning with respect to the specific items you might want to add to your portfolio.

Choose a company willing to be patient with your timing needs. It will be there for you when you need it. Hurried decisions made in the heat of a media-driven gold and silver frenzy can lead to mistakes. (Of course, the ideal is to follow the old rule: The best time to buy gold and silver is when everything is quiet.)

Choose a client-oriented company geared to helping investors

Many online companies are happy to take your order (no matter what it is) and then It’s good luck trying to make contact and get information when you need it – particularly when it comes time to sell or track a late delivery. Mostly interested in quick turnover, customer-oriented companies are order-takers rather than experienced, professional advisors. Client-oriented companies, and there are still a few around, tend to take more of an interest in developing a relationship that will serve both parties over the medium to long run.

Choose a company that takes an interest in you as a long-term client rather than a one-time customer. There is a great deal of difference between the two particularly if your goal is to become a successful gold and silver owner.

Choose a company that will not divert you from your objectives

Most investors come into the gold and silver market looking for a way to preserve their assets from potential financial or economic threats. Not every gold company, however, has asset preservation as its top priority.

Some tout leveraged accounts or high-end numismatics, for example, or graded and over-priced contemporary bullion coins, off brand bullion bars and jewelry items (to name a few of the wrong turns often taken by first-time investors), none of which serve the safe-haven aspirations of most gold and silver owners.

Choose a company that thinks like you do. Keep it simple. Buy well-known and established physical coins and bullion with a broad international market. Stick with highly liquid items and take delivery. It will enhance your chances at success.

Choose a company whose website you have explored

Before you even contact a gold company, it would serve your best interest to determine the real nature of its business. You can learn much by browsing a website and determining whether or not the company might be a good fit.

Choose a company with a well-run, agreeable website but don’t forget the rest of the due diligence outlined above.

Final Word

Choose the right company and it will help you stay the course on protecting your assets from economic uncertainties. Choose the wrong company and you can suddenly find yourself with more than you bargained for. Don’t jump in. Choose wisely. Choose carefully.

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The Daily Market Report: Gold Retreats From Above $1300


USAGOLD/Peter Grant/08-18-17

Gold probed briefly above $1300 in early New York trading, establishing new highs for the year, but these gains could not be sustained. The yellow metal is presently trading modestly lower on the day.

The retreat may have been simple profit taking ahead of the weekend, but the media is reporting a relief rally in risk assets on the apparent ousting of White House chief strategist Steve Bannon. While Bannon was perhaps one of the more divisive members of President Trump’s inner circle, I don’t quite understand why this is a risk-on event.

Nonetheless, stocks have rebounded and bonds and the yen have retreated along with gold. I suspect however that the departure of Mr. Bannon will do little to mitigate the ongoing drama in Washington; just as the ousting of Flynn, Spicer, Priebus, Scaramucci et al only amplified the political uncertainty.

That rising political uncertainty has been a driving force behind gold in recent months, which also magnifies to some degree the geopolitical uncertainty. Constant turnover within the President’s inner circle does nothing to clarify, nor improve the likelihood that his domestic agenda, trade and foreign policy will be advanced. That reality would seem to mark this dip in gold as yet another buying opportunity.

Earlier today, as gold was setting new highs, Zerohedge tweeted the following:

This is no surprise to our reader, nor those of the Zerohedge blog. However, I suspect it would come as a shock to many that only get their financial news from CNBC for example. Those investors that are still heavily allocated to shares, despite the frothiness of that market, are playing with fire. They could have diversified their portfolio with some gold this year and not paid any price in terms of performance to have that insurance.

Portfolios with a gold component tend to perform better over time anyway. It’s never too late to start building a hedge.

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Gold moving higher in Asia

Looks to be motivated by weaker Asian stock markets and dollar strength particularly against the Indian rupee and Japanese yen.

We will be tracking throughout the day.


At this posting:

Gold trading moderately higher at $1293, up $4.75 overnight.

Silver trading steady at $17.13, up  7¢.

Encouraging gold turnaround from lows during today’s U.S. trading session.

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Donald Trump isn’t the only factor behind 2017 gold rally

MarketWatch/Myra P. Saefong/08-17-17

Gold’s getting ready for a breakout above $1,300 an ounce and it’s not just because of investor jitters tied to President Donald Trump.

“The Trump presidency is one element contributing to the generally nervous atmosphere as far as geopolitics are concerned—an important element, but not the whole picture,” said George Milling-Stanley, head of gold investment strategy at State Street Global Advisors.

…“Other important elements include Russian President “Vladimir Putin’s territorial ambitions, the increasing belligerence of North Korea, the deteriorating relationship with Iran, significant differences of opinion with many traditional allies of the U.S., the fact that American troops are at risk in Afghanistan and Iraq, the intractable problems of the Middle East—including but not limited to ISIS and al Qaeda, Syria, and the worsening situation between Israelis and Palestinians,” he said.

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Historical inevitability and gold and silver ownership

In the end, it’s the times that need to be hedged.

by Michael J. Kosares, USAGOLD

The Wall Street Journal’s editorial writer, Daniel Henninger, registers some very important observations in the wake of the troubling events in Charlottesville. Charlottesville, he attempts to point out, is symptomatic of something much deeper ingrained in the American psyche. “Some may say,” writes Henninger, “the Charlottesville riot was the lunatic fringe of the right and left, with no particular relevance to what falls in between. But I think Charlottesville may be a prototype of a politics that is drifting away from traditional norms of behavior and purpose.”  Aptly, the editorial is titled, “The Politics of Pointlessness.”

Any thoughtful individual who has witnessed the chaos in Washington would say that something has gone fundamentally wrong with our system of governance and it began way before Donald Trump entered the White House.  Through all of this I keep coming back to the seminal book published in 1997 by William Strauss and Neil Howe titled The Fourth Turning.  In that book the authors predicted much of what has happened in America over the past twenty years.

Fourth turnings are a time of crisis that can last 20-23 years

The fourth turning is a time of crisis – an overturning of the existing social and economic order. The start date of the current fourth turning, according to Neil Howe, is 2008.  Since turnings typically last 20-23 years, it will end sometime between 2028 and 2031.  So a lot of water will run under the bridge before it’s all over.

I listened to a compelling, recent interview of Neil Howe at the MacroVoices website – a thorough review of the ideas in the book and a lengthy look at what might be next. (The full interview transcript is linked below.)  To elaborate on my short description immediately above, here is Mr. Howe’s own description  of a fourth turning along with a few other important quotes from that interview:

 –– “The fourth turning is the final season of history, if you will, the final generation. And that is the period of crisis. That is the period when we tear down institutions that we’ve built, everything that’s dysfunctional. And we sort of rebuild things from scratch again. And it usually follows a period where—it’s bound up in a period where there’s complete disgust, complete distrust with what we have.”

–– “And I would say these are strong parallels that we see between the decade we’ve been living through and the 1930s. Because it isn’t just what happens to/in the economy. I mean, you consider so many ways in which this last decade has recapitulated the 1930s, starting off with a financial crisis, worries about deflation, worries about declining fertility rates, and currency wars, and beggar thy neighbor policies, and radical attempts by monetary and ultimately fiscal policy to remedy the situation.”

–– “I think we can be too mesmerized by the fact that the last fourth turning we had started with the Great Depression and ended with World War II. I think there are more possibilities. We could be defeated on a fourth turning. We could completely unravel on a fourth turning, giving the amazing popularity of these dystopian or alternative history drama shows on HBO and Netflix today really spelling out those scenarios.”

–– “And then the crisis, when all of these problems begin to coalesce into one huge problem. It’s when the Great Recession met all of these—the rise of fascism both in Asia and in Europe, and everything came together, currency wars, everything became part of a huge problem. Which, by the resolution, you see—and this is what happens at every fourth turning. All the little problems come together into a giant problem. And the giant problem gets completely solved.”

–– “So in politics we see volatility is incredibly high. If there were a political index—there is a political index, there’s a political uncertainty index which actually you can go on FRED and look at it, which is amazingly high levels compared to where it was for the last 20 or 30 years. There is a political index, but it’s very high right now as opposed to the market index which is very low. So, if you’re doing valuation divided by some measure of volatility, which is kind of your basic complacency index, that’s at record high levels now in markets. But you’d have to say complacency is at record low levels in our political and civic life. We’re totally nervous. We even, I think, to some extent, fear that we’ve lost any kind of public square, the ability to even have a public discourse on every issue. I think that that is a real problem.

[End quotes]

Historical inevitability and portfolio preparation: Gold and silver ownership

There is a certain amount of inevitability in Howe’s analysis that a good many will have a hard time accepting, but I am among the group that believes that we are carried on great waves of history whether we like or not.  That is why cycle theory has always appealed to me since my early days in the investment business.  I chose to become a gold and silver broker (back in 1973) because I have always believed that there are good and bad times economically, and when the bad times roll around, that is when you want to be sure that you have made preparation, and most advisedly well ahead of the trouble. Markets cycle.  Politics cycles.  Economies cycle.  Nature, by the way, cycles.  And when you really put on your thinking cap, that tells you why everything else cycles.

Gold and silver, unequivocally, remain the best choice to preserve capital during the secular downslopes – in times like these.  Whenever you watch what’s going on out there and you can’t seem to figure out why people are behaving the way they are, just remember that we are in the grips of a fourth turning and this is the way it is going to go and, as Howe points, it could get considerably worse.


If you have an abiding interest in the kind of analysis you are now reading, you might appreciate our monthly newsletter compiled and written by Michael J. Kosares, the author of the popular investor guideline,  The ABCs of Gold Investing: How to Protect and Build Your Wealth with Gold (Third Edition).  You can sign-up for it here.  Always timely.  Written for gold and silver owners or for those thinking about it.  Your interest is welcome.


My concern is getting across the bridge between the great crisis that may still be ahead of us and the resolution that comes at the end of fourth turning.  That is why I own gold personally and why I think every thinking, well-established individual financially should own it as well.  The name of the game is to protect wealth and not leave your life work on the table when the crisis hits with full force.  A diversification of about 10%-30%, in my view, will get the job done. How high you go within that range depends upon on how strongly you feel about what is going on.

Why I put so much stock in the book, The Fourth Turning

You may wonder why I put so much stock in Strauss and Howe’s The Fourth Turning.  Besides making a great deal of sense as a view of how we as human beings move through history from one generation to the next, the authors presciently predicted the 2008 financial crisis eleven years before it happened.

From The Fourth Turning:

“The next Fourth Turning is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation, and empire.”

Talk about hitting the nail on the head.  The last two sentences tell it all as we now live through the experience.  I have always said that the gold and silver owner can afford to sit back and watch the show with a certain amount of detachment and comfort knowing you have done your best to protect your assets.  Gold certainly worked for its owners during the first stage of the fourth turning when gold went from roughly $700 per ounce to nearly $2000 at its peak before working back to current price levels. Silver did equally well going from roughly $16.50 to over $50 at its peak.

They are likely to work in the next stage of the cycle as well.  As we watch the social, economic and political implosion unfolding around us, you begin to wonder whether or not it has come time for the great middle of America to kick back a bit and take a more detached approach to the problems, and that is what Daniel Henninger is driving at in his editorial.

Neil Howe in his interview mentions a “political uncertainty” chart available at FRED in the quote section above.  I think he may have been talking about this chart, but even if it isn’t, it tells the same story.  As you can see, economic uncertainty has been running at a high level since the year 2000 and in direct correlation to gold’s secular bull market. Since 2008, for good reasons, the uncertainty has been running at consistently high levels and on a hair trigger. The current lull might simply be the calm before the next storm which, in my opinion, is already visible on the horizon.

I will end by returning to Daniel Henninger’s thoughtful editorial this morning and recommend that you read it in full along with Neil Howe’s interview.  Howe’s interview transcript and Henninger’s editorial are both linked immediately below.  Unfortunately, Henninger’s full article is not published in the clear, but Fox posted the beginning with a link to the full article.  Here is the thought with which he ends the piece.  It’s a good one.

“Amid the torrent, an odd paradox emerges:  People are consuming more content and detail about politics than ever, and more people than ever are saying, ‘I have no idea what is going on.’ Someone is at fault here, and it is not the absorbers of the information.  Charlottesville is being pounded into the national psyche this week as paroxysm of white nationalism.  On current course, the flight from politics is going to look like rational behavior.”


Neil Howe interview (Courtesy of MacroVoices/Audio version can be accessed at the MV link.)
Daniel Henninger editorial (Wall Street Journal, 8/17/17)
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