Monthly Archives: September 2019

Afternoon Update

MarketWatch/Mark DeCambre and Myra P. Saefong/9-30-2019/2:39pm ET

Gold drops below the key $1,500 mark to post lowest finish in 2 months

image of gold weathervane“Yellow metal loses 3.7% for the month, pares quarterly gain to 3.4% . . .’Naturally, a strong U.S. dollar is a headwind for gold priced in U.S. dollars,’ said Michael Armbruster, managing partner at Altavest. ‘However, technical considerations may be more influential on today’s action in the gold market,’ he said.”

USAGOLD note:  This MarketWatch report echoes this morning’s DMR. The downside was more significant than most anticipated. We should keep in mind, though, the strong long position amassed at COMEX and the related overall gold market volatility (as chronicled here last week).

Posted in Today's top gold news and opinion |

Precious metals net second biggest weekly inflows on record: BAML

Reuters/9-27-2019

“Precious metals enjoyed their second biggest inflows ever in the week to Wednesday, Bank of America Merrill Lynch said on Friday, as festering trade tensions and global growth woes triggered a rush for safe haven assets.”

USAGOLD note:  A short, two-paragraph report that says a great deal about current institutional money manager thinking. . . . . . .Follow the money! (Chart below shows repository, mutual funds and ETF stockpiles for gold, silver, platinum and palladium.)

Chart of ETF holdings of all precious metals

Chart courtesy of GoldChartsRUs/Nick Laird

Posted in Today's top gold news and opinion |

Sam Zell says gold ‘is a good hedge’

Bloomberg/Daybreak-video interview

“Sam Zell, the founder of Equity Group Investments, says he bought gold for the first time in his life because ‘it’s a good hedge.'”

USAGOLD note:  Billionaire Sam Zell is not the first property mogul to become a gold owner, nor will he be the last.  He adds his name to a long list of renowned money men who have made their interest in gold public over the past several months.

Ed Stein cartoon Washington with economy in tow, engine blows up


Repost from 1-19-2019

Posted in Today's top gold news and opinion |

Four collision courses for the global economy

ProjectSyndicate/Noriel Roubini

photo of Noriel Roubini, economist“There are now several geo-economic games of chicken playing out. In each case, failure to compromise would lead to a collision, most likely followed by a global recession and financial crisis.”

USAGOLD note:  Roubini has never been an advocate of gold ownership.  At the same time, the scenarios he outlines cry out for it.


Repost from 9-25-2019

Posted in Today's top gold news and opinion |

Draghi says ECB should examine new ideas like MMT

Bloomberg/Fergal O’Brien/9-24-2019

Cartoon bomb with fuse labeled MMT - Modern Monetary Theory“European Central Bank President Mario Draghi said the Governing Council should be open to ideas such as Modern Monetary Theory, while noting they’re closer to fiscal policy and should be directed by governments.”

USAGOLD note:  A wake-up call for the more than 500 million citizens of the European Union who save, invest and conduct commerce in the euro.


Repost from 9-25-2019

Posted in Today's top gold news and opinion |

Why the repo market is such a big deal – and why its $400 billion bailout is so unnerving

Fortune/Alexander Seaedy

Graphic of 'QE4?' in red“Put otherwise, the Fed is back where it was roughly a decade ago, effectively buying U.S. Treasuries from banks on an indefinite basis. But the difference this time? There’s no financial crisis in sight, just the uncomfortable fact that private capital markets once again need public support.”

USAGOLD note:  This Fortune article concludes that the Fed has already launched the “equivalent” of a new round of quantitative easing.


Repost from 9-25-2019

Posted in Today's top gold news and opinion |

Technical selling, profit-taking push gold below the $1500 mark

(USAGOLD – 9/30/2019) – Traders pushed gold well below the psychologically important $1500 mark overnight – weakness that carried over to the COMEX open. The reversal is a continuation of the trend that began at the $1530 level early last week. The metal is now trading at $1483 – down $14 on the day.  Silver is down 32¢ at $17.21.  At this juncture, we are content to blame the downside more on profit-taking and a technical correction than any deep-seated change in the geopolitical and economic concerns hanging over financial markets these days. Quite a few technical analysts have predicted support coming into the market at the $1484-1485 level.  We will soon see if that support is going to materialize.

Quote of the Day
“Bloomberg terminals, the financial software system used by countless analysts and traders around the world, has a problem: its system cannot price callable bonds using negative interest rates. Programmers never considered such a scenario, and thus failed to code the system accordingly. So users get an error message when they attempt to force negative bond yields into their machines. . .“Under what scenario would anyone lend $1,000 to receive $900 in return at some point in the future?” ” – Jeff Diest, Mises Institute (Negative Interest Rates are the Price We Pay for De-Civilization)

Chart of the Day

Chart showing 25% of bonds worldwide trading at negative rates

Chart courtesy of Visual Capitalist

Chart note:  “Historically,” says CNBC’s Maggie Fitzgerald in a recent article, “people give the government their money, instead of spending it, with the promise of being paid back over time, with interest. Now, governments are essentially getting paid to borrow money, as people become increasingly desperate for a safe haven for their wealth.”  About 25%, or $15 trillion, of the global debt draws a negative rate of interest.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Add repo market instability to the tumult

Credit Bubble Bulletin/Doug Noland

Image of artist depiction of black hole“To this point, it’s been the Teflon President affixed to Teflon markets. But between ‘repo’ market instability, Washington chaos, the risk of serious trade war escalation – in a world of heightened financial, economic and geopolitically instability – there is a scenario where the unraveling begins. Markets have to this point demonstrated astounding faith that the President will ultimately act in their best interest. As always, markets are a contest of greed and fear. One of the bad scenarios would be the markets fearing an administration resorting to a ‘scorched earth’ gambit.”

USAGOLD note:  Noland offers his take on the repo market meltdown – a walk through the numbers that leaves one with thoughts about a blackhole of financial debt from which there is no escape.


Repost from 9-29-2019

Posted in Today's top gold news and opinion |

China’s August net gold imports bounce from 8-year low

Reuters/Sumitra Layek and Harshith Aranya/9-26-2019

Photo of China Panda gold coin, one ounce, mother and cub“China’s net monthly gold imports via Hong Kong in August surged nearly 61%, after falling to their lowest in more than eight years in July, the Hong Kong Census and Statistics Department data showed on Thursday.”

USAGOLD note:  From West to East the yellow metal flows. . . .The uptick, according to Reuters, follows a loosening of import restrictions launched that “stopped an estimated 300-500 tonnes” from crossing China’s borders since May.

Posted in Today's top gold news and opinion |

Trump administration considers ban on Chinese listings in US

Financial Times/James Politi, Peter Wells and Colby Smith/9-27-2019

Graphic TW1 -  trade war between U.S. and China“The White House is weighing a plan to stop Chinese companies listing on US exchanges in a move that would take its trade war with China to Wall Street.

USAGOLD note:   Surprising this escalation would be announced two weeks before talks are scheduled to resume.  Seems the administration is split on this one. . . .See link below.


UPDATE:  US Treasury says no plans to block Chinese listings ‘at this time’/Bloomberg/9-28-2019
Posted in Today's top gold news and opinion |

Gold specs raise bullish bets to over 3-year high

Through Tuesday, September 24, 2019
Charts and commentary courtesy of CountingPips.com
Tables courtesy of GoldSeek

Note: Commitment of Traders reports are published Friday with data from the previous Tuesday.

Table showing Gold COT report September 24, 2019

Gold Non-Commercial Speculator Positions:

Large precious metals speculators lifted their bullish net positions in the Gold futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Gold futures, traded by large speculators and hedge funds, totaled a net position of 312,444 contracts in the data reported through Tuesday September 24th. This was a weekly advance of 29,845 net contracts from the previous week which had a total of 282,599 net contracts.

The week’s net position was the result of the gross bullish position (longs) rising by 28,882 contracts (to a weekly total of 370,393 contracts) while the gross bearish position (shorts) fell by -963 contracts for the week (to a total of 57,949 contracts).

Gold speculators sharply raised their bets this week for a 2nd straight week and by the most in the past seven weeks. The boost in bullish bets brings the current standing to the highest level since July 5th of 2016, a span of one hundred and sixty-eight weeks.

The gain in speculative bullish bets this week has now pushed positions higher for sixteen out of the past twenty-two weeks.

Gold Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -345,145 contracts on the week. This was a weekly decline of -26,746 contracts from the total net of -318,399 contracts reported the previous week.

Gold Futures

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Gold Futures (Front Month) closed at approximately $1540.20 which was an uptick of $26.80 from the previous close of $1513.40, according to unofficial market data.


Silver speculators lowered their bullish bets for 3rd straight week

Table showing Silver COT report September 24, 2019

Silver Non-Commercial Speculator Positions:

Large precious metals speculators decreased their bullish net positions in the Silver futures markets again this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Silver futures, traded by large speculators and hedge funds, totaled a net position of 50,729 contracts in the data reported through Tuesday September 24th. This was a weekly fall of -5,249 net contracts from the previous week which had a total of 55,978 net contracts.

The week’s net position was the result of the gross bullish position (longs) decreasing by -623 contracts (to a weekly total of 94,002 contracts) while the gross bearish position (shorts) rose by 4,626 contracts for the week (to a total of 43,273 contracts).

Silver speculators continued to pare their bullish bets for a third straight week after previously rising for three straight weeks. These recent declines have been modest and follow up a streak of bullish gains in ten out of the previous fourteen weeks. The current standing remains above the +50,000 net contracts level for a fifth consecutive week – the first time that has happened since January-February of 2019.

Silver Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -75,779 contracts on the week. This was a weekly increase of 1,768 contracts from the total net of -77,547 contracts reported the previous week.

Silver Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Silver Futures (Front Month) closed at approximately $1862.80 which was a boost of $48.80 from the previous close of $1814.00, according to unofficial market data.


US Dollar Index speculators raised their bullish bets for 5th week

Table showing US Dollar Index COT report September 24, 2019

US Dollar Index Speculator Positions

Large currency speculators slightly increased their bullish net positions in the US Dollar Index futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of US Dollar Index futures, traded by large speculators and hedge funds, totaled a net position of 41,939 contracts in the data reported through Tuesday September 24th. This was a weekly uptick of 165 contracts from the previous week which had a total of 41,774 net contracts.

This week’s net position was the result of the gross bullish position (longs) gaining by 687 contracts (to a weekly total of 50,313 contracts) which just eclipsed the gross bearish position (shorts) which rose by 522 contracts on the week (to a total of 8,374 contracts).

US Dollar Index speculators advanced their bullish bets for a fifth straight week and for the eleventh time out of the past thirteen weeks. The gain this week brings the current bullish standing to the most bullish level since April 25th of 2017, a span of one hundred and twenty-six weeks.


*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).
––––––––––––––––––––––––––––––––––––––__________–––––_______––
Posted in COT Reports |

New York Fed examines banks’ role in money market turmoil

Financial Times/Joe Rennison and Brendan Greeley

“John Williams, president of the New York Fed, on Friday questioned the hesitance of the banks in an interview with the FT. ‘The thing we need to be focused on today is not so much the level of reserves [held at the Fed],’ he said. ‘It’s how does the market function.'”

USAGOLD note:  We find ourselves in the very odd position of dealing with a repo market that no one completely understands. Williams’ quandary over how the market functions offers some hard evidence of the “uncharted waters” theme we have featured on this page over the past few weeks. That uncertainty, of course, is the result of the low to below-zero interest rate environment. The repo market may not be the only sector of the money markets where danger lurks.

Ed Stein cartoon showing hedge fund operator on phone telling caller to buy gold

Repost from 9-22-2019

Posted in Today's top gold news and opinion |

There are no coincidences

Credit Bubble Bulletin/Doug Noland

Graphic showing hand holding pin pricking balloon“The Fed’s return to system liquidity injections after a decade hiatus received abundant media coverage. For the most part, analysts were pointing to a confluence of unusual factors: $35 billion money market outflows to fund September 15th quarterly corporate tax payments; settlements for outsized Treasury auctions; and the approaching end to the quarter (where money center banks generally reduce balance sheet leverage for financial reporting and regulatory purposes). Missing from the discussion was that this week’s money market tumult followed on the heels of instability in other markets.”

USAGOLD note:  Doug Noland digs into the repo market breakdown last week with his usual attention to detail.  The above should serve as introduction to the thorough discussion at the link above. “Autumn,” he concludes, “is set up for some serious instability.”


Repost from 9-21-2019

Posted in Today's top gold news and opinion |

Former Fed Chairman Paul Volcker thinks ‘we’re in a hell of a mess’

CNBC/Jeff Cox

photo of former Fed chairman Paul Volcker delivering speech“When Volcker looks around now, he sees ‘a hell of a mess in every direction,’ including a lack of basic respect for government institutions, a current Fed that seems to be following a completely arbitrary benchmark and a ‘swamp’ in Washington run by plutocrats.”

USAGOLD note:  Volcker has always been known for speaking his mind plainly and usually with deep insight.  In that single sentence, though, he seems to have outdone himself. . . .and pretty much summed things up.


Image by European People’s Party (EPP Congress Bonn) [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons [Edited]


Repost from 10-24-2018

Posted in Today's top gold news and opinion |

A long-despised and risky economic doctrine is now a hot idea

Bloomberg/Enda Curran and Ben Holland

image of helicopter dropping paper money on city“But right now, deflation is the big threat. An emerging consensus says the next downturn may need to be fought with direct and permanent injections of cash –- often called ‘helicopter money’’-– and that central banks can’t deliver it alone.”

USAGOLD note: The pressure is building from all quarters for the federal government and the central bank to collaborate on a policy of running even larger deficits and printing money to cover them – the only way, as some see it, to keep the economy from falling into the deflationary abyss.


Repost from 9-24-2019

Posted in Today's top gold news and opinion |

Goldman Sachs says the market is about to get wild in October

CNBC/Yun Li

Graphic of row of large and small orange pumpkins“For investors taking a breather from the chaos in August, buckle up as the market is about to go crazy again, Goldman Sachs warned.”

USAGOLD note:  Historically, October is the month when markets have been known to go bump in the night.


Repost from 9-21-2019

Posted in Today's top gold news and opinion |

Gold Classics Library

Image of row of books at libraryA Gold Classics Library Selection


A Layman’s Guide to Golden Guidelines
for Wise Money Management
Gresham’s Law, Say’s Law, Rule of 72, Marginal Utility, Diminishing Returns, Regression to the Mean, Unintended Consequences, Murphy’s Law, Occam’s Razor, Law of Attraction, Law of Polarity, and more

by R.E. McMaster, former editor of The Reaper newsletter

Ed Stein cartoon graphic of bad money driving good into hiding

There is an old saying that not all that glitters is gold — as in the gold coins many of you have held in your hands. There is another kind of gold that inhabits the practical wisdom of the ages. In today’s “go-get-’em,” “read-it-and-forget-it” world of everyday web browsing, it can be a challenge to separate the run of the mill from the meaningful. It is with that thought in mind we offer this compendium of the rules and laws of finance and investment by long-time market analyst R.E. McMaster. Formerly the writer/editor of the widely-circulated The Reaper newsletter, McMaster is known for his occasional forays into the realm of economic philosophy and history. I think you will agree with me that these skillfully condensed descriptions are indeed meaningful — a wellspring of knowledge worth reading, re-reading and passing along to friends and family, especially the kids and grandkids.

(Illustrations by Ed Stein)

[LINK]

[Gold Classics Library Index]

____________________________________________

Posted in Gold Classics Library, Today's top gold news and opinion | Tagged , |

Trump says Iran wanted sanctions lifted, but he said ‘NO!’

DMR UPDATE

CNBC/Michael Sheetz/9-27-2019

Posted in Today's top gold news and opinion |

Gold down on Iran claim of U.S. offer to drop sanctions

(USAGOLD – 9/27/2019) – Gold dropped through the psychologically important $1500 mark in early European trading after Iran’s President Hassan Rouhani announced that the United States offered to remove “all sanctions on Iran in exchange for negotiations,” according to a CNBC report.  Oil tumbled on the news and gold along with it. Thus far, there has not been verification of Rouhani’s claim from the American side. The yellow metal is down $17 at $1490. Silver is down 52¢ at $17.39. The news from the Middle East overshadowed lingering concern about the Fed’s continuing bail out of the repo market. In a report released yesterday, TD Securities addresses those concerns and how they might impact the gold market.

“This short-term repo market turmoil,” reads the report, “prompted the US central bank to inject just over $140 billion worth of liquidity into the market with a promise of more. The associated volatility before the intervention and the resulting speculation of systemic issues that may make it necessary to permanently expand the Fed’s balance sheet, should also help to keep gold bid. Indeed, The New York Fed announced that they would increase their daily repo transactions from the previously announced $75 billion to $100 billion through October 10th, and also offer two-week repo trades as well, which they increased from $30 billion to $60 billion, which should all help gold move into $1,600/oz territory.”

Quote of the Day
“One of the most important warnings offered by firefighters is simple: get out early. In the face of wildfires, some homeowners get the idea of staying in their homes and riding it out. As one firefighter warned ‘The point is to go.’ But if you don’t, it’s better to stay than to panic and run in the midst of a firestorm of smoke and embers. It’s not the fire that gets you. It’s the heat. Even before the flames reach the house, it can be fatal to stand outside trying to protect what you have (h/t John Galvin). Similarly, our ‘Exit Rule for Bubbles’ is straightforward: You only get out if you panic before everyone else does. You have to decide whether to look like an idiot before the crash, or look like an idiot after it.”John Hussman, Hussman Funds

Chart of the Day

graphic showing up and down cycle of market emotionsClick to enlarge

Chart note:  We will let the chart speak for itself.  Where do you believe we are in the stock market cycle?  And where would you place gold?

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

The Fed will be growing its balance sheet again, but don’t call it ‘QE4’

CNBC/Jeff Cox/9-25-2019

“In the days, weeks, months and probably years ahead, the Federal Reserve will be conducting operations that look and sound a lot like what it did to pull the economy out of the financial crisis. However, the process this time around will be different in the details.”

USAGOLD note:  Printing money by any other name is still printing money. . . . .The chart below of U.S. Treasury securities held by the Federal Reserve shows an abrupt reversal of the quantitative tightening program begun in early 2018.

Chart of U.S. Treasury securities held by the Federal Reserve shows abrupt reversal
Chart courtesy of the St. Louis Federal Reserve [FRED]
Source:  Board of Governors Federal Reserve System [US]

 

Posted in Today's top gold news and opinion |