Monthly Archives: June 2019
Gold broke abruptly to the upside in the wake of the Fed meeting then leveled before surging again in late afternoon trading. It is now up almost $11.50 on the day at $1357. Silver is up 14¢ at $15.16. Gold’s behavior suggests both a resumption of its uptrend before the meeting and new impetus from the strong undercurrent at the FOMC toward a more accommodative rate policy. Though the actual vote was 9-1 to keep rates where they are, the Fed’s dot plot shows a divided committee on rates with eight of 17 members forecasting rate reductions by the end of 2019. The strongest reactions thus far have been in the safe-haven category – gold and U.S. Treasuries. The 10-year Treasury yield dropped from 2.09% to 2.03%. The stock market was clearly disappointed moving higher by only 40 points in the meeting’s aftermath.
“Gold prices could outperform a lot of assets in the coming months. In fact, don’t rule out gold going for even $2,000 per ounce.The case for owning gold keeps getting stronger. You really potentially be making a big mistake if you ignore the yellow precious metal. Why be so bullish on gold? Well, there are a few factors that could raise the price of gold, including uncertainty, volatility, low interest rates, and money devaluation. And right now, a lot of these factors are coming into play, which could lead to gold prices skyrocketing.”
USAGOLD note: The influential Lombardi Letter weighs in on gold. The downside, it says, could be “very small” and the upside “immense.”
“Within China’s financial markets, the insurance industry now manages US$2 trillion of assets, following a decade of rapid growth. The Insurance Asset Management Association of China explains why this fast-growing sector might benefit from investing some of its US$2tn assets in gold.”
USAGOLD note: In a subsequent article, the IAMAC’s Deyun Cao says that China’s insurance industry is looking to gold “as a highly liquid asset, constitutes an effective tool for diversifying investment portfolios. It has a strong and consistent track record and is not susceptible to default risk. . .Our study is ongoing but we are confident that gold could be an effective asset for China’s fast-growing insurance industry.” A ringing endorsement for gold signaling interest from a sector within China that has significant purchasing power.
Repost from 10-18-2019 (and reminder of a long-forgotten potential source of demand)
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“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. . . . . .
Repost from 6-13-2019
Copernicus on the debasement of money
“Although there are countless scourges which in general debilitate kingdoms, principalities, and republics, the four most important (in my judgment) are dissension, [abnormal] mortality, barren soil, and debasement of the currency. The first three are so obvious that nobody is unaware of their existence. But the fourth, which concerns money, is taken into account by few persons and only the most perspicacious. For it undermines states, not by a single attack all at once, but gradually and in a certain covert manner.” – Copernicus, Essay on the Coinage of Money (1526)
Few know that Copernicus applied his genius to the insidious effects of currency debasement. The ground-breaking essay linked above probably influenced both John Maynard Keynes (See below) and Thomas Gresham of “bad money drives out good” fame. Supply Side Blog’s Ralph Benko says Copernicus’ essay “has been translated into English several times yet those translations remained difficult to obtain for students of the monetary arts and sciences. It has remained mostly the property of elite historians.” Above we link Edward Rousen’s translation that you might keep company with the knowledgeable elite.
It cost 8¢ to mail a one-ounce letter in 1973 as indicated by the commemorative Copernicus stamp shown above. It costs 55¢ today – an illustration of his assertion that currency debasement “undermines states, not by a single attack all at once, but gradually and in a certain covert manner.” The post office increased the cost of mailing a letter by 5¢ – to 55¢ – beginning in 2019.
“By a continuing process of inflation governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.” – John Maynard Keynes, The Economic Consequences of Peace (1919)
“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
Repost from 6-13-2019
“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.
Repost from 6-13-2019
(USAGOLD – 6/19/2019) – Gold drifted in a narrow range overnight and into the open of U.S. trading as financial markets await the outcome of the FOMC meeting due later this afternoon. Gold is priced at $1344 – down $2 on the day. Silver is trading at $15 – down 2¢ on the day. Yesterday, gold seesawed on trade and forex developments, but encouragingly managed to end the day on an up note. The general trend has favored the upside of late, but the results of the Fed meeting are likely to either boost or undermine that bias. We will cut today’s report short this morning, but invite you to return to our live daily newsletter page later in the day for an update if anything of interest comes of the Fed meeting.
Quote of the Day
“Reality is far more vicious than Russian roulette. First, it delivers the fatal bullet rather infrequently, like a revolver that would have hundreds, even thousands of chambers instead of six. After a few dozen tries, one forgets about the existence of a bullet, under a numbing false sense of security. Second, unlike a well-defined precise game like Russian roulette, where the risks are visible to anyone capable of multiplying and dividing by six, one does not observe the barrel of reality. One is capable of unwittingly playing Russian roulette – and calling it by some alternative ‘low risk’ game.” ― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
Chart of the Day
Chart note: Since the turn of the new century, gold consistently provided a real rate of return on investment when measured against inflation. In fact, it provided a real rate of return in twelve of the nineteen years represented on the chart. The period was one of subdued inflation. Gold’s performance, as a result, took many analysts and professional money managers by surprise and altered the perception among money managers that the precious metal is solely an inflation hedge.
“The trouble is that overall market levels generally do not reflect the current fortunes of the economy,” [says Scottish Trust’s Alasdair McKinnon], “Market levels, in fact, better reflect the degree of confidence in the aforementioned ‘disruption’ bubble. As we expect this bubble to deflate, we think it is highly likely that President Trump’s vociferous campaign for the US Federal Reserve to cut interest rates and print more money will ultimately prove successful.”
USAGOLD note: Gold, McKinnon suggests, should do well under such circumstances.
“Speaking at the European Central Bank Forum in Sintra, Portugal, [Stanley] Fischer said the U.S. economy ‘is doing reasonably well, but you wouldn’t know that if you listen to the president of the United States.’ He said lower borrowing costs would boost employment — in an already strong labor market — but at the cost of a mortal blow to the U.S. central bank.”
USAGOLD note: At first blush, Fischer’s reaction seems a bit extreme. In speaking to the same issue, Alan Greenspan has said that presidential pressure on the central bank is nothing new. “The best thing that you can do if you’re in the Fed is put earmuffs on and just don’t listen,” Greenspan said in a CNBC interview last October. “I was at the Fed for 18½ years. I got innumerable notes, pledges, requests, et cetera to lower rates. I do not recall a single instance where somebody in the political realm said we need to raise rates, they’re too low.”
“The Federal Reserve will not be goaded into cutting interest rates on Wednesday in the wake of European Central Bank President Mario Draghi’s signal of potential easing as early as next month, economists said. While the Fed will likely take Draghi’s comments into account, ‘the fact that other central banks are eyeing the easing trigger is not, I would say, in the top three reasons for the Fed to cut rates,’ said Sal Guatieri, senior economist at BMO Capital Markets, in an interview.”
USAGOLD note: In response to the president’s tweet yesterday singling out the ECB president for pushing policies to depreciate the euro, Draghi said that Europe’s central bank does not target exchange rates. Right. And it don’t rain in Indianapolis in the summertime.
“That’s according to a Bank of America Merrill Lynch survey of money managers with $528 billion between them. Equity allocations saw the second-biggest drop on record, while cash holdings jumped by the most since the 2011 debt-ceiling crisis, the June poll showed. Concerns about the trade war, a recession and ‘monetary policy impotence’ all contributed to the bearish sentiment, Bank of America said.”
USAGOLD note: We made reference to this article and survey in yesterday’s DMR. Decided to repost it for those who did not see yesterday’s report.
“As we mentioned last week, gold should at minimum be on everyone’s radar if not in everyone portfolio. After the break of the psychological $1350, Gold is reclaiming its rightful status as a must-have asset in everyone’s investment portfolio. Indeed, what a difference a fortnight makes. From a vocal chorus of indifference and reliant on central bank demand to Friday’s fear of missing out momentum which propelled prices to a new 2019 high.”
USAGOLD note: If gold’s on your radar, we can help as we have with thousands of gold investors over our 46 years in the business. . . . . . .
Daily gold and silver price history
1968 to present
Our Daily Gold and Silver Price History pages are among the heaviest traffic pages at the USAGOLD website. The archived data is licensed from the ICE Benchmark Administration and the London Bullion Market Association and Netdania Creations and run from 1968 to present. FOREX prices for the day are posted as a live feed and then frozen at the end of each trading day. These pages are frequented by data gatherers of all descriptions from professors and their students to market professionals and investors – all interested in gold’s price performance both over the long run and within specific time constraints for their own research purposes.
Daily Gold and Silver Price History is another of the quiet pages at USAGOLD that garners significant global interest particularly when the market is moving or breaking news warrants more than average interest. We also invite you to return here regularly – to this Live Daily Newsletter page – for up-to-the-minute gold market news, opinion, and analysis as it happens.
We invite your visit. We encourage your bookmark.
Daily gold and silver price history pages
Gold could go to $1800 to $2200 in the long run
A number of technical analysts have reverted to a more bearish forecast over the past few weeks with the $1250 area once again being touted as the downside support area. Many of those same technical analysts, though, have a significantly more positive outlook for the longer term.
Among that group is Gary Wagner of the Wagner Financial Group who sees $1267 or even $1247 as possibilities in the short run, but also forecasts the possibility of $1800 to $2200 in the longer run. “Our research,” he explains in an article published recently at the Singapore Bullion Market Association website, “suggests that gold is in the final phase of a major long-term impulse cycle. This model also provides a look-back at the final major bullish wave could be traced back to end of 2015, following a correction to $1,040. This corrective fourth wave developed from the all-time high at $1,900 in 2011. The model suggests that gold could re-test the record highs that, if taken out, could see an extensive surge to between $1800 and $2200 per troy ounce.”
Caveat: At USAGOLD, it bears repeating, we have always advocated the ownership of both gold and silver coins and bullion for long-term asset preservation purposes rather than speculative gain. Though we pass along various projections, we do so with the caveat that anything can happen. The analyst who forecasts downside today can quickly change his or her outlook to the upside tomorrow – or vice versa. The long term charts for gold and silver, though, reveal a consistent upward trend that has served investors well in the period since 1971 when the global monetary system departed the gold standard and entered the fiat money era.
“Remember Blain’s Market Mantra No 1: ‘The Market has but one objective: to inflict the maximum amount of pain on the maximum amount of participants.’ To achieve its foul ends, the market sucks us in… and when so much money is sloshing around, just desperate to find something to do… then it gets so much easier. . .”
USAGOLD note: We admit to being one of Morning Porridge’s regular readers . . . Today he brings into the mix an ill-fated investment by his wife.
Repost from 6-11-2019
“The ancient Egyptians believed their gods had shimmering skin made from gold. While the Aztec word for gold, teocuitlatl, literally translates as ‘excrement of the gods’. From ancient Rome to the California gold rush, this dense shimmering metal has been immutably connected with divine quality and the sense of opportunity. The reason for this is simple: gold is the most special element of them all.”
USAGOLD note: A cleverly written piece on the origins of gold and how the ancients might have had it right after all. . . . . .
Repost from 6-13-2019
“The fact that the biggest geopolitical conflict of modern times is running off a 35-year-old script This has profound implications for not only how Trump’s own trade war with the world’s second most powerful nation will conclude, but also for the dollar, because it was against the above-described backdrop that authorities signed the historic ‘Plaza Accord’ in 1985, and according to Goldman, a similar outcome may be coming, one which would result in ‘choppy dollar downside in the months ahead.'”
USAGOLD note: The Plaza Accord allowed for an agreed upon devaluation of the U.S. dollar against the Japanese yen. Much of this ZeroHedge post is based on a Goldman Sachs analysis of that agreement in relation to the trade war between the U.S. and China. It is lengthy but worth the read for those trying to assess the potential impact on the dollar, the yuan and, by extension, gold.
“The personal finance market is filled with slick advertisements touting gold bullion coins labeled with a superb grade or in holders with decorative, autographed inserts. These may be fine collectibles for some, but you could pay more than twice the value of the precious metal content of the coin. There certainly are better ways for investors to buy bullion coins much closer to their actual intrinsic value,” stated Barry Stuppler, president of the Professional Numismatists Guild (PNG).”
USAGOLD note: To say that we agree with this Numismatic News piece is an understatement. We have been at the vanguard warning investors about this type of offering for a number of years. We get calls almost weekly from individuals involved in one of these transactions. Unfortunately there is not a great deal we can do to help, although we might be able to help mitigate the losses, i.e. get you to break even sooner if the gold and silver prices rise. The point is to avoid this sort of thing altogether and stick with owning bullion coins as gold items that are priced at minimum premiums over the gold content.
“Those people who know how to listen are also people who learn. The moment you stop learning, you die. Age is not the number of years you have been living. Age is the condition of your soul.” – Armen Sarkissian* (Lunch with Financial Times, 6-15-2019)
“Life is always preparing you for something you just never know what.” – Armen Sarkissian
“If you don’t own gold, you know neither history nor economics.” – Ray Dalio, Bridgewater Associates
“For twelve consecutive years, gold was up every single year whether there were inflation fears, deflation fears; strong dollar, weak dollar; political stability, political instability. It didn’t matter – strong oil, weak oil. . . Gold went up for twelve years. . . When gold embarks upon its next move, I believe that you will see that long wave take gold relatively quickly, but it will be measured in years, up to $3000 to $5000 target that I believe is fundamentally justified based on the facts we have today.” – Thomas Kaplan, Electrum Group (Peer to Peer Conversations with David Rubinstein)
* Armen Sarkissian is the president of Armenia. Prior to his stint in politics, he was a theoretical physicist in the old Soviet Union where he won the prestigious Lenin Prize.
“When overall stock market corrections happen, they don’t leave any stocks behind. Contrary to popular belief, gold stocks are not spared while physical gold has proven to perform well in corrections.”
USAGOLD note: That’s the bottom line. For the full rationale including supporting demand, we recommend a visit to the link. Gold essentially is a solid disinflation hedge particularly if things regress to the point that the recession affects the stability of financial institutions. When it comes to asset preservation over the long run, nothing compares to the physical in form of coins and bullion.
• Taking advantage of the high gold-silver ratio – especially in IRAs
• Buying US $20 gold pieces while premiums are at all-time lows
• Buying hard-to-get pre-1933 European gold coins at bullion-related prices
Here’s a quick snapshot-breakdown on each:
Taking advantage of the high gold-silver ratio – especially in IRAs
We have processed several swaps of gold to silver within IRA’s over the past 30 days. At the moment, the ratio is almost 88 to one. We haven’t seen the ratio that high in twenty years. In fact, the only higher ratio over the past 30 years came in 1990 at 100 to one. The ultimate goal for most investors is to end up with more gold by trading the silver back for gold when the ratio narrows, thus ending up with more ounces of gold. That strategy worked well in both the early 2000s and in 2007-2008 just before the credit bubble implosion. If you have an interest in taking advantage of this market opportunity, give us a call and we will be happy to walk you through the numbers and help you with the transaction.
For those, who own gold but don’t own silver, now would be a good time to add balance to your precious metals portfolio while prices are cyclically low.
Here’s a gold-silver ratio chart for your review –
Buying U.S. $20 gold pieces while premiums are at all-time lows
Gold investors like to buy off the bargain table and the premiums on U.S. $20 gold pieces are now at all-time lows. The volume in this area over the past six months at USAGOLD has been nothing short of remarkable with a large number of six-figure transactions processed. There are a variety of options too numerous to list here. Too, we try to fit the items purchased to the particular objectives the client has in mind. Once again, the best way to go about this is to talk with your broker directly. At times, we pick up special opportunities at good prices and we can pass those savings along.
Buying hard-to-get pre-1933 European gold coins at bullion-related prices
We offered a special last week of Australia minted British sovereign gold coins that sold out in less than three hours – a testament to the strength of this market. It doesn’t hurt that gold itself is bumping along lows, but when you add to thae appeal with difficult-to-obtain items at a low premium, the offer tends to sell out quickly. We now have a number of smaller lots available (including the French 40 franc lot posted below) that we can offer to those with an interest – pre-1933 European and South American gold coins at bullion-related prices. Call for details and to find out what we now have available.
“In bear or bull markets, billionaires are constantly worried about one thing: protecting their wealth. This video shows how some billionaires protect themselves from downturns – including turning to uncorrelated assets such as gold.”
PBB note: Most billionaires do not take delivery of their gold because of the storage problem. That is not the case for the small private investor. A quarter of a million dollars or less in gold coins stores neatly in a modest-sized safe deposit box. Of course, if you would rather store your gold and/or silver at a depository, we can help with the arrangements. Safe storage includes insurance and the costs are not prohibitive. In fact the annual fees on storing are roughly comparable to what most ETFs charge with the added benefit of a delivery option on the coins or bullion stored. To learn more, we invite you to contact our Order Desk directly.
(USAGOLD – 6/18/2019) – Gold pushed higher this morning in a move that began during Asian trading hours and gained impetus at the London morning fix. It is trading at $1353 – up $13 on the day. Silver is up 16¢ on the day at $14.99. The metals surged in advance of what has quickly become a very important FOMC meeting scheduled later in the day. Gold’s push to higher ground is in itself an unusual turn of events. It usually struggles ahead of Fed meetings.
A Bank of America Merrill Lynch study released this morning shows top money managers the most bearish they have been since the 2008 crisis. Interestingly the study mentions “monetary policy impotence” as one of the group’s primary concerns along with the trade war and the possibility of a recession. The survey group has $528 billion under management, according to a Bloomberg article. The report reflects the high degree of pressure Wall Street is putting on the Fed to move on interest rates. A number of top fund managers have publicly advocated gold ownership in recent months.
Wall Street is not alone in pressuring the FOMC. This morning in directing a barb at Mario Draghi and the European Central Bank President Trump also took indirect aim at the U.S. central bank. “Mario Draghi just announced more stimulus could come,” he said, “which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others.” The president’s comments signal that the trade war could become a currency war as well with the Fed caught in the middle of it.
Quote of the Day
“If I had to pick my favorite for the next 12 to 24 months, it would be gold. If it goes to $1400, it goes to $1700 rather quickly. When you break something like that [the 75 year expansion of globalization and trade], a lot of times the consequences won’t be seen at first. It might be seen one year, two years, three years later. . . So that would make one think that it’s possible that we might go into a recession or make one think that it would make rates go back toward the zero bound level and of course in a situation like that gold is going to scream.” – Paul Tudor Jones, Bloomberg interview 6/12/2019
Chart of the Day
Chart note: Gold has been on a solid run since mid-August of last year. It is up nearly 14% over the 10-month period.
Real Investment Advice/Lance Roberts/6-17-2019
“The ‘power of compounding’ ONLY WORKS when you do not lose money. As shown, after three straight years of 10% returns, a drawdown of just 10% cuts the average annual compound growth rate by 50%. Furthermore, it then requires a 30% return to regain the average rate of return required. In reality, chasing returns is much less important to your long-term investment success than most believe.”
USAGOLD note: Some real-world insights on money management from RIA’s Lance Roberts. . . .
“’I genuinely believe the president hopes that his approach of maximum pressure will lead to talks but . . . the policy that he has approved may lead to the war that he doesn’t want,’ said Robert Malley, a Middle East expert who heads the International Crisis Group.”
USAGOLD note: This article has some scary aspects to it but none scarier than a claim by Trita Parsi, author of the book Losing An Enemy that Trump’s “advisers are giving him advice that he believes is an effective way of getting to the [negotiating] table, but they know is an effective way of ensuring it escalates into a military confrontation.” [Emphasis aded]
“Among the key risks, tensions between China and the U.S. deserve special attention, Roubini says, particularly if they result in China retaliating by closing its market to U.S.-based multinationals like Apple. ‘Under such a scenario, the shock to markets around the world would be sufficient to bring on a global crisis, regardless of what the major central banks do,’ Roubini warned. ‘And given the scale of private and public debt, another financial crisis would likely follow from that.'”
USAGOLD note: Roubini sees danger at every turn. . . .The article linked delves into a number of his concerns at a time when central banks are ‘constrained’ to do anything about it.
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 even 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 their respective currencies cheap against the dollar. That is where the upcoming G-20 conference could turn out to very important and for much more than a possible meeting between Xi and Trump – with major implications for the gold market.