Monthly Archives: August 2019
“The first upside target [for silver] is the 23.6% retracement level at $22.15.”
USAGOLD note: Some interesting technical analysis on silver centered around the Gold to Silver ratio.
Chart courtesy of TradingView.com
“UBS Wealth Management, which oversees $2.5tn for rich clients, has trimmed its core equity recommendation to an ‘underweight’ position for the first time since the height of the eurozone crisis in 2012, on worries that the ongoing trade war and slowing global growth increase the risk of owning stocks.”
USAGOLD note: Over the weekend, we had central bank leadership telling the world that there was not much it could do to counter the ill effects of the trade war. We even had one prominent central banker – Mark Carney, the head of the Bank of England – surprise the financial world by suggesting that perhaps it was time to look for alternatives to the dollar as the world’s reserve currency. UBS’ sell recommendation looks to be a reaction to the negative sentiment global leaders projected at the Jackson Hole and Biarritz meetings this past weekend.
Repost from 8-27-2019
The road to confetti is long and winding
“Does the deployment of helicopter money not entail some meaningful risk of the loss of confidence in a currency that is, after all, undefined, uncollateralized and infinitely replicable at exactly zero cost? Might trust be shattered by the visible act of infusing the government with invisible monetary pixels and by the subsequent exchange of those images for real goods and services? . . . To us, it is the great question. Pondering it, as we say, we are bearish on the money of overextended governments. We are bullish on the alternatives enumerated in the Periodic table. It would be nice to know when the rest of the world will come around to the gold-friendly view that central bankers have lost their marbles. We have no such timetable. The road to confetti is long and winding.” – James Grant, Grant’s Interest Rate Observer
Dr. MoneyWise says. . . .Some think it takes an advanced degree in economics to understand the merits of a diversification in gold and silver when all it takes is a little common sense. Common sense ownership of physical metal saved the skeptical saver in the time of the French assignat inflation in 1789, the nightmare German inflation in 1923, the global bank collapses in 1932, the American stagflationary breakdown in the 1974 and Venezuela’s inflation in 2019 – even though those episodes span almost 250 years. As old Ben Franklin once said: “A change of fortune hurts a wise Man no more than a change of the Moon.”
“Investors holding ‘poor man’s gold’ are suddenly a lot richer, and silver’s rally may still have room to run.”
USAGOLD note: We spend much time on gold and precious little on silver. That is because of the dearth of news and opinion on the sometimes forgotten member of our dynamic duo. This article fills the void – at least for today . . .
“’One of the things that 2019 will be known for is the end of the eight-year bear market in gold and the beginning of a new bull market,’ Maley said Tuesday on CNBC’s Trading Nation.“
USAGOLD note: This article appeared at the CNBC website before yesterday’s sell-off so, we thought we would post it for your consideration. It stresses any pullback as one within an overall bull market. It also cites the longer-term attributes of gold ownership in the current market environment.
“‘The disaster scenario is if yields fall dramatically from here,’ said one strategist. ‘Hypothetically, if the trade situation intensifies, if maybe Hong Kong goes badly and Brexit seems like it results in a hard exit … then what you probably get is a massive rally again in Treasurys.’”
USAGOLD note: As yields are driven ever closer to and possibly through zero, no one is sure of the ramifications to the rest of the financial markets. “Been there, done that” does not apply as the United States has never been there, never done that. Vulnerabilities abound.
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“Gold’s spectacular rally is just getting started if hedge funds have their way. Prices are already at the highest in more than six years, and Goldman Sachs Group Inc. and Citigroup Inc. predict bullion could climb about 6% to $1,600 an ounce in as little as six months. Money managers are going all in, raising their wagers on a rally to the highest since 2016.”
USAGOLD note: We have reported consistently on institutional accumulation of gold over the past several months. This report provides an update of the trend. It is alive and well on Wall Street and tells why some of the larger institutions are predicting even better days ahead.
Bloomberg/Michael McKee, Rich Miller and Matthew Boesler
“‘We are experiencing a period of major political shocks,’ Lowe said, citing developments in the U.S., Brexit, Hong Kong, Italy and elsewhere. ‘Political shocks are turning into economic shocks.'”
USAGOLD note: A few discouraging words are heard from Jackson Hole, Wyoming. In general, the message has been that the central banks have limited ability to deal with the politically generated economic problems at hand – problems that could get worse before they get better. We invite you to take a closer look at the image above from a 1913 edition of Puck magazine. History rhymes. . . .
Related: Gold rally just got what traders said it needed – a new catalyst/Bloomberg/Justina Vasquez and Yvonne Yue Li/8-23-2019
Repost from 8-26-2019
“The U.S. yield curve inversion deepened on Tuesday to levels not seen since 2007, rekindling fears of a looming recession that spurred a sell-off on Wall Street and stoked even more safe-haven demand for government bonds.”
USAGOLD note: The growing consensus is that the yield inversion are not like to go away anytime soon. . . . .In fact, top bond market analysts are forecasting it could plunge even further below the zero line as safe haven demand for sovereign debt grows.
“‘I am so afraid of a democracy getting the idea that you can just print money to solve all problems. Eventually I know that will fail,’ Warren Buffett’s longtime investing partner told CNBC’s Becky Quick in an interview. ‘You don’t have to raise taxes, you just print.’”
USAGOLD note: The next thing you know Buffett and Munger will be stocking up on gold [smile]. . . . . . .
Repost from 5-6-2019
“Sterling was the worst performer among major currencies while U.K. government bonds rallied as the market reacted to the threat of a no-deal Brexit increasing.”
USAGOLD note: One would think that the plunging pound would serve as further inducement for gold ownership among British investors.
“A major gold-buying spree by central banks is likely to persist in the coming years, according to Australia & New Zealand Banking Group Ltd., which flagged the potential for further purchases by nations including China.”
USAGOLD note: It used to be that central banks were net sellers of gold and that tended to influence prices to the downside. Now central banks have become net buyers as shown in the chart below:
“‘Our priority is Australia,’ Zhao told Reuters in an interview, adding that his firm was setting up an office in Perth. ‘We are looking for M&A opportunities in Australia, as well as in Canada but the problem in Canada is the political tension’ with China, he explained.”
USAGOLD note: One wonders how much of that production will end up on the world market and how much within China’s borders as national reserves.
“Since the end of May, gold prices have risen about 20%. So, investors might be wondering if it’s still a good time to buy gold. Given the market’s uncertainty, trade tensions, lower interest rate expectations, and political uncertainty, gold might still have a lot of upside left.”
USAGOLD note: Question: What do Gundlach, Dalio, Mobius, Druckenmiller, Tudor-Jones, Einhorn, Sawriris, Singer and Kaplan – some of the greatest financial minds of a generation – all have in common? Answer: An attachment to gold and its presence in their personal financial holdings.
“Hedge fund investors don’t buy the idea that the U.S. economy is headed for a recession in the near term, according to data from Goldman Sachs. The bank studied the holdings of 835 hedge funds with $2.1 trillion of gross equity positions at the start of July, and found that overall these funds are overweight cyclical sectors . . .”
USAGOLD note: An interesting take on invesment flows from Goldman Sachs and an indicator contrary to prevailing opinion. . . .Goldman also says hedge funds are underweight “defensive” stocks.
Repost from 8-22-2019
“In their discussion of policy tools, participants noted that the experience acquired by the Committee with the use of forward guidance and asset purchases has led to an improved understanding of how these tools operate; as a result, the Committee could proceed more confidently and preemptively in using these tools in the future if economic circumstances warranted.” (FOMC minutes, July 30-31, 2019)
USAGOLD note: “In other words,” writes Durden, “Trump should keep up his high-pressure campaign on Powell: it appears to be working.”
Repost from 8-21-2019
USAGOLD note: And keep in mind that this number occurs in the absence of a recession. . . . .The national debt remains the elephant in the room.
Repost from 8-22-2019
“Similar to the late 1970s when then Chairman Paul Volcker faced a stagflationary environment which weakened confidence in the Fed’s ability to deal with the growing imbalances in the economy, Mr. Powell, you are now confronted with an equally challenging, deflationary economic environment. The key to breaking out of this deflationary downward spiral of interest rates is to target inflation by expanding the Fed’s balance sheet — in other words, print money.”
USAGOLD note: Ricchiuto is an economist with Mizuho Securities.
Repost from 8-27-2019 (USAGOLD note: Some would say that what Ricchiuto suggested is what the Fed is now doing.