Monthly Archives: September 2019
“A splintering West and increasingly interconnected East is creating a newly powerful mega-region, according to Parag Khanna, author of ‘The Future is Asian.’ He swung by the Breakingviews office in Hong Kong to break down the economic and geopolitical rationales behind his idea.”
USAGOLD note: Deep background and insights for those who seek it. . . . . . Keep in mind, as you listen to this interview, Asia’s ancient attachment to precious metals. “The world is very multi-polar,” says Khanna. “Asia is just taking its rightful place alongside the others.”
Repost from 9-19-2019
“But it’s on the financial side where consequences and repercussions have been fatefully neglected. It’s in the financial world where a decade of QE, zero rates and central bank market backstops imparted momentous structural change: the colossal ETF complex, the passive ‘investing’ craze, quantitative strategies, algorithmic and high-frequency trading, a proliferation of derivative trading, leveraging and trend-following speculation on a global basis – to list only the most obvious. Along the way, aggressive monetary stimulus had much greater inflationary effects on risk markets than upon real economies. This ensured a continuation of aggressive stimulus – and only deeper market Bubble maladjustment.”
USAGOLD note: I keep coming back to Keynes’ observation: “For it is, so to speak, a game of Snap, of Old Maid, of Musical Chairs — a pastime in which he is victor who says Snap neither too soon nor too late, who passed the Old Maid to his neighbour before the game is over, who secures a chair for himself when the music stops. These games can be played with zest and enjoyment, though all the players know that it is the Old Maid which is circulating, or that when the music stops some of the players will find themselves unseated.” – John Maynard Keynes
Repost from 2-10-2019
“I’ve been saying for years that central banks can never step away from this. They can threaten to. And they can bluff, and they can do some probing bets like they did last year, and the market may fall for that, or call that bluff in the short term. But yes I think we’re in a position now where central banks can never back away, which sort of begs the question how can this ever end. Can asset markets get inflated forever?”
USAGOLD note: The day of reckoning can be postponed, but, for the prudent investor, it cannot be taken out of the investment equation. That is why so many professional investors are hedging their bets.
Image courtesy of Visual Capitalist
Repost from 9-22-2019
“‘I think the economic data has gotten a little bit better, yet I still think, when we put it all together … it seems that there is an increasing probability of a recession before the 2020 election,’ Gundlach said in an interview with CNBC’s Scott Wapner.”
USAGOLD note: Professional investors, including Gundlach, often cite recession concerns as one of the prime motivations for gold ownership – the ultimate asset of last resort.
Repost from 9-18-2019
“Gold stock investors who are nervous about a liquidity event like 2008 should buy put options and buy them now. For everyone else, the ongoing theme is sharp but minor reactions that are excellent buying opportunities. My recommended plan of action: Lighten up on the stock market. Be bold and increase holdings of gold!”
USAGOLD note: The latest gold market opinion from Stewart Thompson. . . . .
Economic insecurity is becoming
the new hallmark of old age
“In the United States,” writes Katherine S. Newman and Rebecca Hayes Jacobs for The Nation, “economic security in old age was seen, for a long time, as both a social issue and a national obligation. From the birth of Social Security to the end of the 20th century, the common assumption has been that we have a shared responsibility to secure a decent retirement for our citizens. Yet that notion is weakening rapidly. Instead, we have started to hear echoes of the mantra of self-reliance that characterized welfare ‘reform’ in the 1990s: You alone are in charge of your retirement; if you wind up in poverty in your old age, you have only your own inability to plan, save, and invest to blame.”
Some compare today’s stock market psychology to the period just before 2008. Others compare it to the 1920s when everything was hunky-dory until suddenly it wasn’t – perhaps a more apt comparison. Too many are “all-in” with respect to stocks in their Individual Retirement Accounts hoping to accumulate as much capital as possible without regard to the potential downside. The stock market did not recover from the losses accumulated between 1929 and 1933 until the mid-1950s, almost 25-years later – a fragment of stock market history lost to time.
Some will rely on the fact that stocks recovered nicely once the Fed launched the 2009 bailout. We should keep in mind though that many prominent Wall Street analysts have warned that the Fed no longer has the firepower it did then. The financial markets and economy are much more vulnerable as a result – all of which brings us back to the notions of self-reliance and taking personal responsibility for our retirement plans. If you find yourself among the group that thinks hedging a stock market downturn to be in your best interest, we can help you effectively structure a gold and silver diversification as part of your retirement plan to hedge that possibility.
Important! – Gold’s Century: While stocks dominated headlines, gold quietly performed
$20 St. Gaudens
Uncirculated – .9675 oz.
A dynamic 10 coin date variety grouping, including some substantially rarer dates like a 1909/8 overdate, a 1910-S, a 1910-D, a 1909-S, a 1908 w/Motto, a 1913-D, and a 1916-S. (Also includes a 1908 no motto, a 1922 & 1924). Offered as a set at $1710 per coin, which is a roughly $12 per coin discount to standard pricing.
Only one set available.
Offered by phone only to the first taker.
USAGOLD note: Bart Chilton comes out in favor of investors buying gold. That should resonate in certain circles given his intimate knowledge of the gold futures markets.
Repost from 1-2-2019 [Mr. Chilton passed away less than five months after this interview.]
“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.”
USAGOLD note: A fascinating look at the real meaning of and wider implications for negative interest rates. “Under what scenario,” Deist asks, “would anyone lend $1,000 to receive $900 in return at some point in the future?” His answer is an eye-opener.
Repost from 9-18-2019
“‘While these issues are important for market functioning and market participants, they have no implications for the economy or the stance of monetary policy,’ Powell said Wednesday in prepared remarks at a press conference in Washington, after the Fed cut interest rates for a second straight meeting.”
USAGOLD note: Move along. Nothing to see here. . . . .
Repost from 9-18-2019
“The new capital raising is further indication that Mr Singer is anticipating a market meltdown. The billionaire investor, who has been vocal about complacency in global financial markets, recently predicted that the economy was headed for a significant downturn with risk at an all-time high.”
USAGOLD note: Singer’s ‘dry powder’ strategy is meant to capitalize on the meltdown he anticipates.
“President Donald Trump’s Twitter attacks on the Federal Reserve are prompting investors to bet the central bank will bow to political pressure and lower interest rates, according to a new study.”
USAGOLD note: Perhaps those presidential tweets are having more of an effect on markets than many think – particularly in an election year.
Related: Threats to central bank independence – high-frequency identification with Twitter / Francesco Bianchi, Howard Kung and Thilo Kind / National Bureau of Economic Research
“The split in the FOMC between hawks and doves is no doubt driven by many factors, but one of the main underlying differences concerns the amount of inflation risk that participants are willing to take in the late stage of the economic cycle.”
USAGOLD note: Inflation, says Davies, is still on the radar screen and should not be casually dismissed. He also makes mention of the Fed chairman as being “an obvious dove by nature.” One wonders if Mr. Powell will appreciate being pigeonholed as such. The current occupant of the White House, for one, would certainly disagree with that characterization.
“TS Kalyanaraman, chairman and managing director, Kalyan Jewellers said that rise in gold prices has had an impact the consumer sentiments and gold buying trends. ‘But we believe that these sentiments are short-term and we are expecting the demand to pick up soon,’ he added.”
USAGOLD note: Year to date, gold is up 19.65% in rupee terms. Simultaneously, the rupee is down about 4% against the dollar. If investors believe that the rupee is headed still lower, it stands to reason that gold demand might remain steady through the festive season even if prices are rising.
Repost from 9-20-2019
“’We need more pipeline, especially in gold production,’ Jerry Xie, executive vice president, said in an interview on the sidelines of the Denver Gold Forum on Monday. ‘We’re currently looking for acquisition opportunities quite aggressively. We’re doing this on behalf of our parent company, not just for ourselves.’”
USAGOLD note: Should they find it, is there any doubt where it will end up? Not, we venture a guess, to satisfy global demand outside of China.
Repost from 9-18-2019
“Bullion deliveries to London held at a seven-year high last month driven by a surge in investors seeking haven assets.”
USAGOLD note: Given the destination of Swiss bullion – exchange traded furds, according to this Bloomberg report – British funds and institutions appear to be stocking up on gold in advance of Brexit. “The City” is hedging its bets. Year to date, gold is up 20.6% in British pounds.
Chart courtesy of TradingView.com
“Currency devaluation aside, it makes a lot of sense to own assets which hold their value. Physical assets like gold, art and vintage wine all make for excellent hedges against currency devaluation. But it’s tough for major institutions or governments to buy enough art or wine to truly protect themselves. This leaves gold as the number one acquisition. It should come as no surprise that central banks have been very active in buying gold. Especially China’s…”
USAGOLD note: China heads a lengthening list of nation-states that see gold as the most effective diversification under the circumstances.
Note: Commitment of Traders reports are published Friday with data from the previous Tuesday.
Gold Non-Commercial Speculator Positions:
Large precious metals speculators increased 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 282,599 contracts in the data reported through Tuesday September 17th. This was a weekly rise of 12,874 net contracts from the previous week which had a total of 269,725 net contracts.
The week’s net position was the result of the gross bullish position (longs) going up by 7,397 contracts (to a weekly total of 341,511 contracts) while the gross bearish position (shorts) declined by -5,477 contracts for the week (to a total of 58,912 contracts).
Gold speculators boosted their bullish bets this week following a sharp selloff in positions last week (-30,822 contracts). Two weeks ago, bullish bets had risen to over +300,000 net contracts for the first time in approximately three years, dating back to September of 2016. This week’s gain doesn’t quite bring the position back to that level but keeps the net position above the +250,000 net contract threshold for a ninth consecutive week.
Gold Commercial Positions:
The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -318,399 contracts on the week. This was a weekly fall of -12,788 contracts from the total net of -305,611 contracts reported the previous week.
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Gold Futures (Front Month) closed at approximately $1513.40 which was a rise of $14.20 from the previous close of $1499.20, according to unofficial market data.
Silver specs lowered their bullish bets for 2nd week
Silver Non-Commercial Speculator Positions:
Large precious metals speculators trimmed their net positions in the Silver 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 Silver futures, traded by large speculators and hedge funds, totaled a net position of 55,978 contracts in the data reported through Tuesday September 17th. This was a weekly lowering of -4,253 net contracts from the previous week which had a total of 60,231 net contracts.
The week’s net position was the result of the gross bullish position (longs) falling by -5,788 contracts (to a weekly total of 94,625 contracts) while the gross bearish position (shorts) also declined but by a smaller amount of -1,535 contracts for the week (to a total of 38,647 contracts).
Silver speculators slightly reduced their bullish bets for a second week following three straight weeks of increases previously. The current speculator position remains highly bullish and above the +50,000 net contract level for a fourth consecutive week.
Silver Commercial Positions:
The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -77,547 contracts on the week. This was a weekly uptick of 7,221 contracts from the total net of -84,768 contracts reported the previous week.
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Silver Futures (Front Month) closed at approximately $1814.00 which was a decline of $-4.60 from the previous close of $1818.60, according to unofficial market data.
US Dollar Index specs raise bullish bets to highest since April 2017
US Dollar Index Speculator Positions
Large currency speculators sharply increased their net bullish positions in the US Dollar Index futures markets again this week while New Zealand dollar traders pushed bets to a record bearish level, 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 41,774 contracts in the data reported through Tuesday September 17th. This was a weekly gain of 9,742 contracts from the previous week which had a total of 32,032 net contracts.
This week’s net position was the result of the gross bullish position (longs) rising by just 143 contracts (to a weekly total of 49,626 contracts) while the gross bearish position (shorts) dropped sharply by -9,599 contracts on the week (to a total of 7,852 contracts).
The US Dollar Index speculators boosted net positions by the largest one-week amount since June 19th of 2018, which is a span of sixty-five weeks. Dollar bets have now gained for ten out of the past twelve weeks and this week’s jump puts the current dollar standing at the most bullish level since April 25th of 2017.
“But here is the bad news: the fact that a ‘temporary’ cash squeeze created so much drama shows that neither the Fed nor investors completely understand how the cogs of the modern financial machine mesh.”
USAGOLD note: Tett dives into the Fed’s cash dilemma and warns of a monetary system facing problems it has not encountered before.
“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.
Image courtesy of the World Gold Council
Repost from 6-11-2019