Fed critic Jim Grant goes out on a limb and predicts a rate cut at this week’s meeting
CNBC/Matthew J. Belvedere/6-17-2019
“Jim Grant’s view, expressed on CNBC, puts him firmly in the minority on Wall Street. Grant has been a longtime critic of the Fed’s easy monetary policies since the 2008 financial crisis and what he views as the resulting dislocations in the market due to inflated asset prices.”
USAGOLD note: One can glean from this that Grant believes the Fed is willing to risk creating an ever greater financial bubble than the one we have now. It seems that if the Fed were to act ‘pre-emptively’ now, it would set-off a string of unwelcome central bank responses to keep respective currencies cheap against the dollar. That is where the upcoming G-20 conference could turn to be be a very important event and for more than just the possible meeting between Xi and Trump – with implications for the gold market.
Man credited with calling the 2008 crisis says the next 20 years in the stock market will ‘break a lot of hearts’
MarketWatch/Mark DeCambre/4-26-2019
“Jeremy Grantham, an investor credited with predicting the 2000 and 2008 downturns, told CNBC on Thursday that investors should get inured to lackluster returns in the stock market for the next two decades, after a century of handsome gains. ‘In the last 100 years, we’re used to delivering perhaps 6%,’ but the U.S. market will be delivering real returns of about 2% or 3% on average over next 20 years, the value investor and co-founder of Boston-based asset manager GMO told CNBC in a rare interview.”
USAGOLD note: Grantham, of course, is a Wall Street legend. So his blunt warning is difficult to ignore. When euphoria dominates stock market psychology, the contrarian opinion is heard as a whisper.
Repost from 4-27-2019
Better Business Bureau Five Star Review
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Recent Better Business Bureau Client Review
I made my first purchase of gold about 5 years ago and it was with USAGOLD. They answered all my questions and allowed me to buy a larger amount than they usually allow for a first time buyer. They trusted me and it worked out fine for both parties. Their BBB rating was a big factor in me trusting them. Other firms looked pretty sketchy and I didn’t want to spend that much money on a shaky firm. Since then I have purchased coins quite a few times from USAGOLD and have never been disappointed with the quality of the coins. The whole staff is very professional and courteous and are not pushy at all. They treat you as a friend, not a number. They remember me as soon as I tell them my name. That is a nice feeling. I will continue to buy from them and I highly recommend them.
Jim W.
Scorecard: 38 45 48 53 five star reviews. Zero complaints.
A+ rating. Accredited since 1991.
[Link]
USAGOLD Recommendation: The precious metals industry is unique in the financial industry in that it is not subject to oversight or regulation by third-party government entities like the SEC or CFTC. As such, marketplace forums and feedback sites often serve as a replacement for investors attempting due diligence. While several options can be found, by far the most impartial and least susceptible to vested influence is the Better Business Bureau. When looking at a company’s BBB profile, don’t focus solely on the rating. To be honest, pretty much everybody has an ‘A’ or ‘A+’ rating. What is far more important to assess is the number and nature of complaints, number and caliber of positive and negative reviews, longevity with the BBB, as well as the number of ‘stars’ given a company through the actual customer review system.
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Gold is Paul Tudor Jones’ favorite trade for the next 12-24 months
Bloomberg/Video Interview with Vonnie Quinn/6-12-2019
“Paul Tudor Jones, founder at Tudor Investment Corporation, explains why he views gold as the best trade over the next year to two years.”
USAGOLD note: “Gold,” he says, “has everything going for it.” A very interesting interview, Tudor Jones joins a long list of billionaires who have come out in recent weeks advocating gold ownership.
Repost from 6-13-2019
Here is how the yield curve inversions boost the gold price
Wall Street Window/Mike Swanson/6-10-2019
“The indicator on the bottom of this chart is the gap between the 3-month and 10-year US Treasury bond. As you can see it is now below zero, which means that the interest rate on the 3-month bond is higher than that of the 10-year. This is the very definition of an inverted yield curve and forecasts a future slowdown in the economy and future interest rate cuts from the Federal Reserve. Now as you can see this has happened twice in the past twenty years and both times it did gold soon broke out of a long-term resistance level to launch big massive gold bull runs that lasted for years.”
USAGOLD note: The reasons for those previous massive bull runs are twofold. The first has to do with economics. The Fed immediately talked up and inaugurated stimulus programs to keep the economy from rolling over to a deflationary depression and financial panic. The second has to do with market psychology. The possibility of a systemic breakdown ran at fever pitch causing a worldwide influx of capital into the gold market. The two together amount to the disinflationary argument for gold ownership and one we have made for a long time here at USAGOLD. The best strategy is to understand what’s at work in this economic milieu and make your purchases ahead of the clamor when it becomes evident to the masses.
Repost from 6-11-2019
Gold reverses overnight downtrend, now up marginally on the day
(USAGOLD – 6/17/2019) – Gold has reversed an overnight downtrend that took it just below the $1335 mark. It is now trading at $1342 up $1 from Friday’s close and $7 from the overnight bottom. Silver is up 2¢ at $14.91. Since vaulting to the $1355 level on Friday, gold has retraced some of its gains (from the $1280 interim bottom at the end of May) but looks now like it might be regaining its footing.
Financial markets, in general, are in abeyance this morning and weighing potential outcomes from this week’s FOMC meeting. The Fed will be addressing serious market concerns about a possible recession and the ill-effects of the U.S.-China trade war at its meeting tomorrow and Wednesday. Though most analysts feel a rate decrease will not come until July, there is a lingering cloud of unpredictability hanging over this meeting. A surprise of some kind is not out of the question.
Quote of the Day
“One thing that amazes me about the current cohort of global central bankers is the lack of insight into the fact that their extreme loose monetary policy and financial repression may actually be making deflation in the real economy worse despite clearly succeeding in creating rampant inflation in financial assets. To be sure some of the major players in the central banking orbit, such as ex-Fed Governor Kevin Warsh, have broken out of the QE group-think that grips the minds of central bankers. Warsh has openly stated that financial repression has exacerbated, rather than cured, our economic ills.” – Albert Edwards, SocGen
Chart of the Day
Chart note: This chart shows the connection between inverted rates and recessions. Some say that the rate inversions predict recessions, other say inversions create recessions. Either way, central banks tend to stimulate economies when recessions surface or even prior to their surfacing. The next Federal Reserve Open Market Committee meeting occurs Tuesday and Wednesday and we should know more about its rate stance by Wednesday afternoon.
Currency markets expose a crucial flaw in Trump’s China tariffs
Bloomberg/Katherine Greifeld/6-14-2019
“After Trump raised tariffs on $200 billion of Chinese imports last month, the yuan quickly fell toward 7 per dollar — a level not seen since the financial crisis. The drop effectively reduced the price of Chinese imports in dollars and has blunted the cost shock of higher tariffs. (The same thing happened with the peso following a similar threat against Mexico in late May; the peso plunged over 2% in less than an hour.)”
USAGOLD note: The hole in this argument is that China does not appear to have a great deal of interest in allowing significant depreciation of the yuan and it has the reserves to mount a credible defense of the yuan if it so chooses. History has shown that the free market ultimately overrides currency interventions so we will have to see how all of this works out. Goldman recently suggested a 2019 Sino-American version of the Plaza Accord might be imminent. That agreement between Japan and the United States under similar circumstances in 1985 allowed for a depreciation of the dollar against the yen.
Beijing stockpiles on gold to hedge against potential economic downturn
“A more accurate interpretation is that China, like many other countries, is watching very closely global economic indicators, in anticipation that the global economy may be heading towards gloomier days. As it strives to buffer its people from the harmful effects of a downturn, the Chinese are responding in a routine manner to protect themselves against potential headwinds by making safe investments to protect coffers and shoring up reserves of the US dollar and gold, both of which tend to rise in value when the international economy slows down.”
USAGOLD note: China’s official sector gold acquisitions are nothing new. They have been going on for over a decade and for the reasons the author mentions. We continue to believe that the announcements of increases to their gold reserves of late are after the fact. At some point, China will reveal its real gold reserve number and it will likely jolt the market. The roughly 15 tonne additions per month now being announced, we believe, are just the tip of the iceberg.
Chart courtesy of TradingEconomics.com
Wealthy Americans say financial worries hurt their mental health
Bloomberg/Lananh Nguyen/5-14-2019
“Even relatively wealthy Americans are so worried about their finances that it’s affecting their mental and physical health. That’s one of the findings in a Bank of America Corp. survey of more than 1,000 people in the U.S. who have enough investable money to qualify as “mass affluent.” Financial concerns affected the mental health of 59% of respondents, while 56% said their physical health has been hurt.”
USAGOLD note: One wonders how many among that 59% are properly diversified – and by that we mean with gold as part of the portfolio mix. (Too many see diversification as the proper mix between stocks and bonds.) Want less stress – or no stress? Diversify and let others fret.
Image by TheVisualCapitalist/Jeff Desjardins
Why the next bear market could shave 35% off the Dow
MarketWatch/Mark Hulbert/5-14-2019
“How severe? A simple econometric model whose inputs are past bear markets and CAPE values predicts that, if a bear market were to begin from current levels, the Dow would tumble 35.3% Though that’s less severe than the 2007-2009 bear market, it still would sink the Dow below 17,000. Bulls take note.”
USAGOLD note: A numbers based approach worth that might be particularly useful for those who refuse to recognize that bear markets can be very difficult experiences.
Previewing the upcoming FOMC meeting
Federal Open Market Committee meeting – June 18 -19, 2019
Fed could deliver dovish shock
Investopedia/Edward Moya/6-13-2019
“The Fed is in the middle of correcting a couple of policy and communication mistakes, and the markets should not be caught off guard if the central bank decides to deliver a surprise rate cut at June 18-19 meeting. While the Fed is historically slow to act, it has laid out the groundwork to officially signal a shift from a tightening bias to an easing one.”
The Fed won’t cut rates at its June meeting. Here’s why
“Not moving next week essentially comes down to three factors, according to Fed watchers: The looming G-20 summit at which the U.S. and China, at least theoretically, could reach a trade agreement; a desire not to be seen as overly influenced by the financial markets and President Donald Trump’s hectoring; and the desire to avoid making December’s rate hike look like a policy mistake.”
USAGOLD note: Cosmetics and substance about to collide?
Fed faces Hobson’s Choice
Credit Bubble Bulletin/Doug Noland/6-15-2019
“The global yield collapse is not so much in response to economic weakness and trade war risks. The global financial system is an accident in the making. China is an accident in the making. Markets are demanding: ‘Give us rate cuts and prepare for aggressive QE – or we’ll give you central bankers the type of vicious market dislocation you are not prepared to contend with!’ The Fed is faced with the Hobson Choice of either stoking the Bubble or waiting for incipient ‘risk off’ – and hoping it possesses the firepower to hold things together. Markets bet confidently the Fed lacks the fortitude to wait.”
USAGOLD note: Mr. Trump himself has made it abundantly clear that he is in step with those market demands. We will get an idea this week where the Fed stands. As someone said recently, it used to be that the Fed was responsible for removing the punch bowl from the party. Now the punch bowl is glued to the table.
The Fed tries to predict politics
Financial Times/James Politi/6-15-2019
“When Jay Powell stepped up to the podium at the Federal Reserve Bank of Chicago earlier this month, he delivered what in Fed-speak amounted to a thunderbolt. Talking about the impact of ‘trade negotiations’ between the US and China, the Fed chairman said: ‘We are closely monitoring the implications of these developments for the US economic outlook and, as always, we will act as appropriate to sustain the expansion.’”
USAGOLD note: Fed meetings do not usually bring out the best in gold, but this time could be different with the level of uncertainty rattling around markets. In that same speech, Powell said tools used during the credit crisis – near-zero rates and quantitative easing – are likely to be deployed again, a course of action to which the Fed had not committed publicly before. He also said that it was time to retire the word “unconventional” when referring to those tools. At first, the gold market pretty much ignored that change in philosophy, but now it seems to be sinking in along with the longer-term implications.
COT–Gold specs sharply boost bullish bets 2nd week
–– Now posted ––
Commitment of Traders reports for Tuesday, June 11, 2019
GOLD • SILVER • US DOLLAR INDEX
Commentary by Zac Storella, CountingPips
[LINK]
‘Bond King’ Jeffrey Gundlach bets on gold, sees rising recession chances, dollar decline
“DoubleLine CEO Jeffrey Gundlach is betting on gold. ‘I am certainly long gold,’ Gundlach said in an investor webcast Thursday. He added his trade is based on the expectation that the dollar will finish the year lower.”
USAGOLD note: It is not surprising that Gundlach is a gold owner given his current perceptions not just about the dollar but about the stock and bond markets as well. Gold may be the only logical refuge.
Capitalism vs. socialism. And the winner is …
“The morality and strength of capitalism (or free enterprise, free markets, whatever term you choose for the U.S. economic system) is that it allows people to succeed by meeting the needs and wants of others. People in a capitalist society are constantly trying to come up with ways to make everyone’s lives better. The failures critics blame on capitalism are caused by the mistakes of government, not an economic system that rewards hard work and innovation. Those failures are many.”
USAGOLD note: Margaret Thatcher said it best: “The problem with socialism is that you eventually run out of other people’s money.”
Repost from 5-23-2019
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Gold – Past, present and future
Dr. Moneywise says: Gold has a past. I suspect it has a future. We live in a time when currencies and financial markets have become political enterprises – creations of the world’s governments and central banks. Since we have never seen times like these, when so much depends on the monetary largesse of the policy-makers, no one really knows where the future might lead us. Uncertainty reigns and, when that is the case, history teaches us that gold demand rises proportionally and at times impressively so.
“Why is it,” asks Nathan Lewis in a Forbes magazine article, “that the collective intelligence (let’s be generous) of today’s central bankers, and indeed all the central bankers since 1971, cannot outperform a yellow rock? This probably strikes some as bizarre, but it has always been thus. Way back in 1928, in a book called The Intelligent Woman’s Guide to Socialism and Capitalism, George Bernard Shaw declared: “You have to choose … between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold.”
Whether or not gold is the best basis for money may be a moot point. On the other hand, whether or not private investors should own it because the money is not gold-backed remains a vital question. The gift of gold – the one passed from generation to generation from ancient times to present – is the protection it offers against a profligate government, an unpredictable economy, unstable financial markets and a myriad of additional threats to private wealth. The gift of gold, in short, is peace of mind.
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Morgan Stanley tells investors to play defense as cycle indicator flashes ‘downturn’
“Investors should brace for market turmoil over the next 12 months. That’s the warning from Morgan Stanley’s cross-assets team, who says their cyclical indicator has flipped to ‘downturn’ from ‘expansion,’ a shift that has historically led to weaker returns for stocks and other risky assets, along with an elevated chance of a recession. In a note dated on Sunday, the bank advised market participants to go on the defensive, eschewing U.S. stocks for the safety of Treasurys and cash.”
USAGOLD note: There’s one other alternative that Morgan Stanley may have skipped in its recommendations. It is yellow, shiny and it comes in the form of coins and bullion. Best of all, when you own it in physical form, it is not simultaneously someone else’s liability.
Repost from 6-3-2019
‘Where can you still put your trust in today’s often cynical world?’
ETF Daily News/Frank Holmes/6-10-2019
“Americans’ trust in institutions, from the federal government to banks to the news media, has been deteriorating for decades. Sixty years ago, three quarters of Americans expressed faith in the government to do the right thing “most of the time” or ‘just about always.’ Today, only one in five people, a near-record low, believes our leaders make decisions in the country’s best interest.”
USAGOLD note: Holmes takes the same tack as many American investors worried about the stability of our institutions. “As an investor,” he says, “I continue to have great faith in gold as a store of value during times of economic and geopolitical uncertainty.”
Repost from 6-10-2019
The USAGOLD Website – A guiding light for current and would-be clientele since 1997
Welcome newcomers!
When the USAGOLD website was established in 1997, there was no Google, no Facebook, no I-Tunes, no Amazon. Instead there was just a handful of scattered websites trying to figure what this new technology was all about and how it could be used to some advantage. We were among that group. Our idea of innovation in those early days was two spinning globes on either side of the USAGOLD logo. We marveled at it; considered it state of the art. If you would like to witness that piece of technology in action, you can see it here at the WaybackMachine. (Don’t laugh.)
But being among the first on the internet to have spinning globes was not our only achievement. We were also among the first to sponsor a Daily Market Report (1996), a Discussion Group (1997), Live Prices and Charts (2007) and a Mobile Website (2011) – to mention just a few of our ground-breaking internet ventures. We await the next wave of innovation so that we can offer even more value to our regular visitors.
Through our 22-year presence on the world wide web, the philosophy underlying our website has always been a simple one – to act as a guiding light for our current and prospective clientele by providing a state of the art information portal coupled with a reliable and competitive brokerage service. We had and still have no aspirations beyond that, and that pinpoint focus has paid dividends beyond anything we would have imagined in 1996.
From a humble beginning (When you visit the WayBackMachine, take special note of the number of visitors registered on our counter!) we have grown to over 600,000 visitors per month currently and there have been times when that count has been significantly higher. USAGOLD today remains one of the most highly referenced and visited web portals in the gold business. We once had a client tell us of visiting the Gold Souk in Dubai and being surprised that so many merchant stalls had USAGOLD on their computer screens.
If you would like to gain a better understanding of what USAGOLD has to offer to you as a current or prospective client, the menu at the top of the page is good place to start. For a full site outline including links and page descriptions. . . . . .
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Table of Contents
Gold rises sharply on Mideast tensions
(USAGOLD – 6/14/2019) – Gold rose sharply in overseas markets last night after Secretary of State Mike Pompeo blamed Iran for the tanker attacks in the Gulf of Oman. That strength carried over to the COMEX open in New York where it is now trading at $1350 – up $5.50 after being up $9 yesterday. Though the tanker attacks are the clear catalyst for the upside, safe-haven demand and the price were already in a steady upward trajectory on recession, trade and interest rate concerns. Silver is up 3¢ at $14.98. Technical analysts have long identified the $1350-$1360 price level as strong overhead resistance for gold.
Stay tuned. We will update this afternoon if anything of interest develops.
Quote of the Day
“If we don’t quite know what the future holds, there is little point in getting carried away by very fancy mathematical calculations of optimal portfolios. Don’t rely on past data to be a good guide. Try to think through what mix of assets gives you the best chance of surviving some big event. That must mean including assets that are negatively correlated or uncorrelated in your portfolio. And I am very struck by the fact that over many many years, central banks, governments and individuals have always, despite the protestations of economists, held some gold in their portfolio. Obviously, there is no high running return, but when unexpected things happen, particularly when governments rise and fall, then gold is a means of payment that everyone is always prepared to accept. And I think that’s why even central banks have always had a role in their portfolios for gold.” – Mervyn King, former Governor, the Bank of England
Chart of the Day
Chart note: This chart shows how both the dollar and gold reacted to the start of the credit crisis from late 2007 to late 2008. The initial reaction for gold was a strong move to the upside. For the dollar, it was the opposite – a strong move to the downside. Then in early 2008 as the dollar strengthened, gold declined. But for both that slice of price history was more a beginning than an end. In the ensuing three years (not shown), as the depth of the crisis became apparent and central banks launched stimulus policies, gold kicked into overdrive rising from the $720 level to nearly $1900 per ounce. The US Dollar Index declined by about 18% over the same period.
May deficit surges to $208 billion, 42% higher than last year
“The federal deficit in May reached $208 billion, surging 42 percent over last May’s monthly deficit figure, according to new Treasury Department data released Wednesday. The figure put the cumulative deficit for the eight months of fiscal 2019 at $739 billion, within range of the full 2018 deficit, which amounted to $779 billion, according to the Treasury figures. Treasury estimates that the full deficit will exceed $1 trillion by the time the fiscal year wraps up at the end of September.”
USAGOLD note: That $208 billion monthly figure is extraordinary. And that is under relatively strong economic circumstances. What happens if/when the recession hits? The rhinoceros in the room. . . . . . .
Why gold might be a better investment than bonds or stocks
Seeking Alpha/Daniel Schonberger/6-12-2019
“At the end of August 2018, I published an article where I argued that everybody should own physical gold. At the time of publication, gold was trading at $1,200 and has since then increased almost 12%. That by itself is certainly a decent return, but when comparing it to the three major US indices, it gets even better. The Dow Jones Industrial Average lost 1.01% since then, the S&P 500 lost 0.36% and the Nasdaq-100 lost even 2.38% and gold has quite easily outperformed the US stock market since summer 2018.”
USAGOLD note: Schonberger’s comparison speaks for itself. . . . . .
Gold wins with no end in sight to U.S.-China trade war – Bank of America
Kitco/Neils Christienson/6-12-2019
“Gold could be one of the big winners as the trade war between the U.S. and China continues to escalate with no end in sight, according to one American bank. Analysts at Bank of America Merrill Lynch reiterated their call that gold prices could push through $1,400 an ounce this year as geopolitical and trade uncertainty weighs on global economic growth.”
USAGOLD note: Bank of America joins the chorus on the prospects for gold under the current circumstances.
This time isn’t different – Howard Marks
“Billionaire investor and Oaktree Capital Management Co-Chairman Howard Marks is worried to hear investors say ‘this time it’s different’ or openly wonder if the historic bull market and economic success ‘can only get better forever.’ In a 12-page letter sent to Oaktree clients on Wednesday, Marks questioned nine financial theories he’s heard in recent meetings, including the notion that central bank policy can lead to evergreen market success and that economic recessions can be consistently delayed.”
USAGOLD note: Markets cycle. Linear thinking, when it comes to markets, is rarely rewarded.
US blames Iran for Gulf of Oman tanker attack
“Mike Pompeo, the US secretary of state, has blamed Iran for attacks in the Gulf of Oman that severely damaged two oil tankers, sparked a surge in crude prices and heightened tensions in the Middle East.”
USGOLD note: For those wondering why gold started the day quietly and ended it with a bang. . . . .
The puzzle of electrum coins
Bullion Star/JP Koning/6-8-2019
“The classic story for the adoption of coinage involves the efficiency gains that society enjoys when trade can be conducted by tale rather than by weight. Tale is a sum or a tally. All modern payments are done by tale. A payor counts up the right amount of coins (or notes), then passes the stack to the payee who – if they wish – can glance at the inscription on each coin’s face to ensure that it is legitimate. Circulation by tale is a convenient way of doing business.”
USAGOLD note: Koning guides us on an exploration of ancient numismatics and monetary economics – a study of electrum coins created by Lydia’s King Croesus from whom grew the legend of King Midas and the Midas touch.
Image courtesy of the British Museum Collection/Lydia, croesid, 550BC
Better Business Bureau Five Star Review
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Recent Better Business Bureau Client Review
“Before investing in gold I really didn’t have a clue about what or how much to invest in. I came across the USAGOLD website and found an excellent resource for both first time and seasoned buyers. My representative has always provided me with useful and trustworthy analysis related to the markets and trends that has further informed my purchase decisions. Transactions are timely and handled with a high degree of professionalism and integrity. I cannot recommend this company highly enough.” – Y.O., 5-14-2018
Scorecard: 38 45 48 53 five star reviews. Zero complaints.
A+ rating. Accredited since 1991.
[Link]
USAGOLD Recommendation: The precious metals industry is unique in the financial industry in that it is not subject to oversight or regulation by third-party government entities like the SEC or CFTC. As such, marketplace forums and feedback sites often serve as a replacement for investors attempting due diligence. While several options can be found, by far the most impartial and least susceptible to vested influence is the Better Business Bureau. When looking at a company’s BBB profile, don’t focus solely on the rating. To be honest, pretty much everybody has an ‘A’ or ‘A+’ rating. What is far more important to assess is the number and nature of complaints, number and caliber of positive and negative reviews, longevity with the BBB, as well as the number of ‘stars’ given a company through the actual customer review system.
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The next great monetary experiment
“This MMT sounds like a recipe for immense inflation, even hyperinflation. You are spending all this money directly into the economy. It will drive consumer prices through the attic roof, you say. This is crackpot. A witch’s sabbath of inflation would surely result. Yes, but here the MMT crowd meets you head on… They agree with you. They agree MMT could cause a general inflation, possibly even a hyperinflation.”
USAGOLD note: Modern Monetary Theory (MMT) is neither modern nor a theory. John Law, the Scottish financier, tried a version of it exactly 300 years ago (1717-18) in France.* He did so with the blessing of the French monarchy and with a rationale very similar to MMT’s proponents today. In the end, Law’s theories (to his surprise if we are to believe the historical account) bankrupted the French people and the government, reduced the economy to ashes, and created such a distaste for paper scrip among the citizenry that it took 80 years for France to reintroduce paper money as a circulating medium.
“The shrewder speculators* became alarmed. They began to sell their shares of stock, and hoard in gold the enormous wealth they had acquired. This resulted in a demand on the government for metal in exchange for its paper, and soon the government had no metal to give. Then the crash came. Those who had the government paper could buy nothing with it. Those who held the Mississippi stock could scarce give it away. It was worthless. The government itself refused to accept its own paper for taxes. A few lucky speculators had made vast fortunes; but thousands of families, especially among the wealthier classes, were ruined.” – Edward S. Ellis and Charles F. Home, The Story of the Greatest Nations (1900)
* Please see this link for a summary of Law’s Mississippi Company land scheme.
Image by Internet Archive Book Images [No restrictions], via Wikimedia Commons/The Mississippi Bubble, Street of Speculators/The Story of the Greatest Nations/Edward S. Ellis and Charles F. Home (1900)
Repost from 2-4-2019
Short and Sweet
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Doomsday prep for the super-rich
“Survivalism, the practice of preparing for a crackup of civilization, tends to evoke a certain picture: the woodsman in the tinfoil hat, the hysteric with the hoard of beans, the religious doomsayer. But in recent years survivalism has expanded to more affluent quarters, taking root in Silicon Valley and New York City, among technology executives, hedge-fund managers, and others in their economic cohort.” – Evan Osnos, The New Yorker
Everyday on this page we report on the reasons why gold ownership makes a great deal of sense to ordinary investors. In doing so, we have always taken exception to the mainstream media’s portrayal of the ordinary gold owner as “the woodsman in the tinfoil hat”. . . etc. I would think that many among the media are utterly amazed that people like Steve Huffman (Reddit, CEO), Peter Thiel (PayPal founder) and the long roster of other luminaries mentioned in this New Yorker article are identified as “preppers” in one capacity or another.
They would probably be even more amazed to find that a good many of this same group are likely to be gold and silver owners as well. As such, they take their place alongside a wide range of Americans who own gold – physicians and dentists, nurses and teachers, plumbers, carpenters and building contractors, business owners, attorneys, engineers and university professors (to name a few.) We know because that is the description of our clientele. In other words, gold ownership is pretty much a Main Street endeavor. One Gallup poll a few years back found that 34% of American investors rated gold the best investment “regardless of gender, age, income or party ID. . .” In that survey, investors rated gold higher than stocks, bonds, real estate and bank savings.
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Investors are counting on Jay Powell to save them
“This week, I asked a flock of financiers at a New York conference to predict the direction of American interest rates. The results were clear-cut . . [T]hree-quarters of the group expected two or three rate cuts over the next year. Wall Street, in other words, thinks the interest rate cycle has turned — with a vengeance.”
USAGOLD note: Some direct evidence of Wall Street’s attitude on rates from Gillian Tett. This supplements our post yesterday on rates with reference to the thinking of the New York Fed’s Williams (please scroll). She ends with a few well-chosen words of warning on the ‘Greenspan put’ which has become in today’s parlance the ‘Fed put.’
Repost from 6-6-2019
Fed uses Chicago conference to signal it will use quantitative easing aggressively to fight next recession
“The Federal Reserve’s two-day Chicago strategy conference laid the groundwork for the aggressive use of asset purchases, known as quantitative easing, to counter the next recession, experts who attended the forum said. With short-term interest rates in a range of 2.25%-2.5%, the Fed does not have a lot of ammunition to fight the next downturn. In the past, the Fed was able to slash rates by 5 percentage points to stimulate the economy as needed. So the Fed is going to use ‘pretty aggressive, desperate, measures,’ to stem the next recession, said Adam Posen, president of the Peterson Institute for International Economics.”
USAGOLD note: What is odd about the resurrection of quantitative easing is that few in and around the Fed seem opposed to it. Now, the Fed intends to employ “desperate measures” in an ordinary recession.
Repost from 6-9-2019
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A contemporary web-based client letter with a distinctively FREE SUBSCRIPTION! |
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For those who still like to sit down with a good book as well as for those who still believe it important to buy the book before you buy the investment. This one has helped thousands of investors learn the basics of gold ownership. ORDER HERE The author is the founder of USAGOLD. |
