Gold retreats overseas, regains footing in early U.S. trading
(USAGOLD – 9/6/2019) – Gold retreated another $13 in overseas markets last night but then regained its footing at the COMEX open. It is now priced at $1518 – down just $1 on the day. Silver is up 3¢ at $18.72. This morning’s weaker-than-expected jobs report helped to reverse gold’s overnight downtrend. It looks, at least for the moment, like the trend we have seen in place over the past several weeks of buyers coming into the market on the dips remains intact. Many market analysts see central bank demand as the psychological bulwark underpinning the market. It keeps domestic production at home in the number one and number three producers – China and Russia. It also diverts available physical supply to other, mostly emerging countries making an effort to build their reserves.
Writing for the South China Morning Post, Joshua Rotbart, managing director of Hong Kong’s J. Rotbart & Co. says: “Gold provides stable insurance against a weaponised US dollar. By hedging their portfolios with gold, Russia and China – especially China, given current events – can manoeuvre with wider geopolitical freedom. As the ‘de-dollarisation’ continues, expect more purchases by central banks, especially considering that gold consists of only 2.5 per cent of China’s foreign reserves, but over 75 per cent of US foreign reserves. How the currency war, in conjunction with the trade war, will unfold remains unclear. What is clear is that gold bullion – physical gold – is back in fashion among many central banks as a suitable substitute for fiat currencies that wield too much geopolitical muscle.”
Quote of the Day
“Bear markets are sneaky beasts and they like to do their damage as secretly and as unobtrusively as possible. I hate to say it but somewhere ahead, the bears going to get it all together and the innocent little stream is going to turn into a waterfall. What can you do about it? Stay out of the market? Protect yourself by remaining in pure wealth, gold. For thousands of years, silver and gold have been treated as pure wealth. As the standard measures of wealth (stocks and bonds) have deteriorated, veteran investors have forgone profits and moved their assets into pure wealth.” – Richard Russell, Dow Theory Letters
Chart of the Day
Chart courtesy of HowMuch.net
Chart note: “It’s no secret,” says HowMuch, “that $1 now will get you less than it would 100 years ago, but just how much has the purchasing power of the U.S. Dollar decreased over the years? To illustrate this, we created a visualization that demonstrates the rise and fall of the dollar since 1913. Using this graphic, we can see how inflation and changes in the Consumer Price Index have decreased the dollar’s purchasing power over the last century.
• $100 in 1913 would only be worth about $3.87 today.
• While the purchasing power of the dollar has gone up and down since 1913, it has never surpassed the purchasing power it had in 1913.
• The purchasing power of U.S. citizens has always topped the charts, but that could be changing in the future.
• Inflation impacts nearly all variables of macroeconomics, and many believe that current U.S. inflation levels are too low.”