Monthly Archives: January 2021

The Great 2021 Squeeze Mania

Credit Bubble Bulletin/Doug Noland/1-29-2021

cartoon of a hedge fund manager on the phone telling a client to buy gold

“Hopefully I’m wrong on this, but most will be losers. Before this is all over, many will blow up their trading accounts and exit the casino in dismay – or worse. Short squeezes always have a pyramid scheme component. It’s musical chairs, and the velocity with which squeeze stocks eventually collapse will be a shock to many. There was outrage Thursday after Robinhood and other online brokers restricted trading in a limited number of stocks. But just wait until this Bubble implodes, and there’s blood in the (Main and Wall) Streets. Trading systems were stressed this week by millions of buy orders. How will the system function under the stress of tens of millions of panicked sell orders? I’ll presume worse than March.”

USAGOLD note 1: Some words of wisdom and highly recommended reading from an old pro in the financial business. Those hoping for a short squeeze in the silver market might be careful what they wish for. It could unleash market forces against which there is little or no defense as Doug Noland outlines above and on which he elaborates in detail at the link.

USAGOLD note 2: Here at USAGOLD, we recommend gold and silver for long-term asset preservation purposes – not speculation. As such, we see physical coins and bullion as the safest and most productive option for the average investor. It is a simple, straightforward philosophy and strategy that has served us well over the years.

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Is silver the next target for the GameStop traders?

Friday’s silver ETF stockpile gains are an attention grabber.

TheStreet/David Dierking/1-29-2021

“It’s still early message board chatter and there hasn’t been a commitment from the Reddit crowd yet, but silver prices are rising, volumes are increasing and there’s a strong macro argument to be made. Don’t be surprised if this group experiences a wild ride next week.”

USAGOLD note: This positive assessment was published before Friday’s numbers came out on ETF stockpile additions. GoldChartsRUs reports strong buying from silver ETFs to close out the week including a 34.4 million troy ounce stockpile gain for the IShares ETF (SLV) – the group’s most prominent member. As you can see in the chart below (which includes all repositories, mutual funds, and ETFs, including SLV), Friday’s addition is the largest by far over the past year for a single day (and by the way the largest since 2013). We’ve included a table from GCRU that shows a concentration of Friday’s volume in the IShares ETF (SLV). Above and beyond the intentions of the Reddit crowd, Dierking makes the point that silver could be headed for a big year anyway based on the fundamentals. That said, Friday’s stockpile growth is an attention grabber.

chart showing overall ETF silver stockpiles over past 12 months with Friday's large gains

Table showing ETF/Funds daily volumes and totals for silver

Chart and table courtesy of GoldChartsRUs • • • Click to enlarge

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Posted in Today's top gold news and opinion |

Silver Series – part three

 

infographic on silver from Visual Capitalist pt 3

 Infographic courtesy of Visual Capitalist/Nicholas LePan • • • Click to enlarge
Visit link for complete infographic

USAGOLD note:  This series offers the reader a solid overview of silver’s fundamentals in a digestible, quick-read format.

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Gold is entering a new era and a new bull market

King World News/Matthew Piepenburg

graphic image of a gold bull against blue background with arrows pointing higher“Although it’s normal to expect a correction phase within a larger bull market for both silver and gold, the price retracements of late signal a buy opportunity for precious metal investors, not grounds for a bearish panic—unless you’re a gold trader blind to technical buy/sell signals.”

USAGOLD note:  We referenced Piepenburg’s comments in Friday’s DMR and repost them here for those who may have missed it.


Repost from 1-26-2021

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Why the US dollar’s mini-revival won’t take the wind out of the yuan rally

South China Morning Post/Neal Kimberley

photograph of 100 yuan and $100 bills“Yuan bulls should remain calm. A sinking US dollar might have gained some relief last week on the back of an uptick in yields on the benchmark 10-year US Treasury note, but that respite is likely to prove short-lived. The greenback’s mini-revival rests on weak foundations, and economic circumstances still favour the renminbi.”

USAGOLD note:  Many FOREX analysts see the yuan as lead dog in the currency race …… Neal Kimberley is an experienced market analyst having worked for many years as a trader at major banks in London.  He is now a market analyst at Thomson Reuters.


Repost from 1-26-2021

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Gold, silver turn to the upside; bullion coin premiums once again on the rise as supply tightens

(USAGOLD – 1/29/2021) – Gold looked to be tracking toward breaking even on the month in early trading. It is up $25 at $1870. Silver is up a robust 90¢ at $27.48 – a level that if sustained would put it up around 4.5% for January. Though gold has struggled to regain the momentum in terms of pricing in international markets to start the year, demand for physical metal at retail dealers is firmly on the rise. On the other hand, silver has posted a strong January both in terms of physical demand and pricing in international markets.

“The lesson here,” writes Brien Lundin in this month’s Gold Newsletter, “is that we’ll see times when gold is buffeted by rogue waves in the flow of economic data. And when those days come, we need to remember that the tide is actually flowing powerfully in gold’s favor. In truth, it’s the interplay between the bond market’s reaction to potential inflation and the actual inflation data that will create the wiggles in gold’s uptrend. Rather than get shaken out by these market fluctuations, we need to hold steady…or even look at these as buying opportunities. Because if anything, the fundamentals for gold have only turned more positive in recent days.”

Important client note: Gold and silver bullion coin premiums are once again on the rise. Increased demand throughout January is being exacerbated by tightening supplies and delayed releases of new coinage from sovereign mints. The Royal Canadian Mint is still reporting a several week delay on shipping any of its 2021 product – with no concrete availability date yet announced – and the U.S. Mint has returned to allocation, reducing and limiting the number of coins being released to the dealer network on a weekly basis. The imbalance between supply and demand has already pushed wholesale premiums roughly .75% higher on gold bullion coins and approximately +2.5% on silver bullion coins since the start of the year. At this juncture, the consensus in the industry is if gold prices remain at the lower end of their range against a backdrop of continued fiscal and monetary support from both the government and Federal Reserve, demand is likely to continue at high levels, and premium pressure unlikely to abate anytime soon.

Chart of the Day

Euro Area Central Bank Balance Sheetbar chart showing the euro areas central bank balance sheet

Japan Central Bank Balance Sheetbar chart showing Japan's central bank balance sheet growth 2000-2020

United States Central Bank Balance Sheetbar chart showing growth in the United States central bank balance sheet 2000 to 2020

China Central Bank Balance Sheetbar chart showing growth in China's central bank balance sheet 2000 to 2020

Source: tradingeconomics.com

Chart note:  For the record, the charts on quantitative easing in various economies from 2000 to 2020. The most notable feature for Europe, Japan, and the United States is the pandemic-related surge in 2020. China is lagging on a relative basis, which might be one reason why the Chinese yuan has been in an upswing over the past several months.

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

Silver Series – part two

screnshot of silver infographic from Visual Capitalist

 Infographic courtesy of Visual Capitalist/Nicholas LePan • • • Click to enlarge
Visit link for complete infographic

USAGOLD note:  This series offers the reader a solid overview of silver’s fundamentals in a digestible, quick-read format.

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Posted in Today's top gold news and opinion |

US carrier group enters South China Sea amid Taiwan tensions

Reuters/Staff

“A U.S. aircraft carrier group led by the USS Theodore Roosevelt has entered the South China Sea to promote ‘freedom of the seas’, the U.S. military said on Sunday, at a time when tensions between China and Taiwan have raised concern in Washington.”

USAGOLD note:  With everything else going on, most have forgotten that we still live in a world rife with geopolitical tensions including those involving the United States, China, and Taiwan. The presence of the USS Theodore Roosevelt in the South China Sea sends a message and elevates tensions.


Image source: https://upload.wikimedia.org/wikipedia/commons/d/de/South_China_Sea_claims_map.jpg


Repost from 1-25-2021

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Deficit spending is expected to skyrocket in 2021

Rogue Economics/Bill Bonner


“And it’s still too early to know if the downward trend in yields has come to an end.But just to be clear about it, rising yields in an economy with $80 trillion of debt is a sign of impending doom. It becomes ever more expensive to finance and refinance the debt… requiring more and more infusions of fake money. The locomotive goes faster and faster… until it flies off the tracks.”

USAGOLD note:  Bill Bonner reminds us of some down-to-earth realities about to impose themselves on the American economy ……


Repost from 1-25-2021

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Posted in Today's top gold news and opinion |

Outrageous predictions: The future is now

Saxo Bank/Steen Jacobsen

artist rendering of a man chasing a shooting star“While these predictions do not constitute Saxo’s official market forecasts for 2021, they represent a warning against the potential misallocation of risk among investors who might typically assign just a one percent chance of these events materializing.  It’s an exercise in considering the full extent of what is possible, even if not necessarily probable, and particularly relevant in the context of this year’s unexpected Covid-19 crisis. Inevitably the outcomes that prove the most disruptive (and therefore outrageous) are those that are a surprise to consensus.”

USAGOLD note: Economic surrealism for the new year as seen through the eyes of analysts at the Netherland’s Saxo Bank …… an entertaining read. Many of you will find the forecast for silver particularly agreeable – a sizzling, jolt turbocharges the price higher.


Repost from 12-9-2020

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Posted in Gold and Silver Price Predictions from Prominent Players, Today's top gold news and opinion |

Billionaire investor: Enjoy the bull market while it lasts

MarketWatch/Shawn Langlois

graphic image showing a stack of gold coins on printout of charts

“Whenever you bought into the market when it was selling at the present multiple of, say, 22 times or higher, you’ve never really made any serious money one year, three years, five years out. I think that’s what we’re looking at.” – Leon Cooperman

USAGOLD note:  As the late, great Richard Russell (Dow Theory Letter) used to say: “Trees don’t grow to the sky, and liquidity doesn’t expand forever.” Here’s another bit of wisdom from Russell: “[i]f all goes wrong, gold is real, time-tested wealth. Gold stands alone as money outside the central bank system. If the Federal Reserve was abolished tomorrow and the U.S. was to renege on all its debt — gold would still be money.”  (Kitco,3/10/2006) That was roughly 18 months before the first signs of the oncoming credit breakdown emerged. The gold price was $540 per ounce.


Repost from 1-22-2021

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No Daily Gold Market Report today.
We may post an update later if anything of interest develops.


 

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Biden’s Fed – New mandates, a close White House tie and big challenges ahead

CNBC/Jeff Cox

graphic image of the White House with piles of dollars “But that doesn’t mean the U.S. central bank won’t face pressure as it looks to navigate its way through a new administration. Challenges ahead include the coronavirus pandemic, as well as demands for a more inclusive economy and a stronger approach toward social issues, such as racial equality and climate change.”

USAGOLD note: Not to mention keeping the printing press running at full tilt to cover the costs of all that……Some interesting new dynamics come into play as Biden moves into the White House, Powell remains at the Fed and former Fed chair Yellen moves to Treasury. The upshot, though, is that the new act taking the stage has a far more ‘progressive’ agenda than the one that has just exited. And the one that just departed was not exactly conservative in its approach to economics.


Repost from 1-22-2021

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Inflation rippling through markets is just what the Fed wants to see

Bloomberg/Liz McCormick and Craig Torres

graphic image of inflation genie out of the bottle“Heading into what looks like a monetary-policy gap year, with neither bond purchases nor benchmark interest rates expected to change in 2021, the Fed is far more worried about the risk of long-term scars — which could develop from a slow recovery — than about the risk of overheating the economy.”

USAGOLD note: History shows that once the inflation genie is out of the bottle, it is very difficult to get it back in.


Repost from 1-22-2021

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The boy who cried wolf. Is an inflationary decade ahead?

Incrementum/Ronald Stoferle and Mark J. Valek

image of a lone wolf against a snowy backdropSimilarly, the global paradigm of recent decades with its repeated warnings of inflation has consistently reinforced disinflation. Now, as trust in public institutions continues to erode, populist policies could serve as the bedrock of a new inflationary paradigm. We suspect the monetary developments of 2020, coupled with the recent paradigm shift, could push inflation rates significantly higher. Policymakers and investors at large are reluctant to acknowledge this possibility. Decades of the deflationary paradigm have rendered them wholly skeptical of a potential wolf attack: spiking inflation.”

USAGOLD note:  So what happens if you buy gold and the forecast inflation never arrives? Not a lot. Gold protects against disinflation (as it did in the 2000s), and stagflation (as it did in the 1970s), hyperinflation (as it is in Venezuela now), and deflation (as it did in the 1930s). It is the investment for all seasons, all the bear market scenarios. Inflation is a lone wolf.  There are others in the pack.


Repost from 12-4-2020

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Golden advice: Bet against the ‘experts’

Gold Switzerland/Matthew Pieipenburg

photo of stacks of bullion gold coins
“Successful investing, from Baron Rothschild to Benjamin Graham, inevitably overlaps with contrarian investing. In short: Cooler minds avoid the madness of crowds. … As of today, precious metals make up only 0.5 % of total financial assets. By simply owning precious metals, one is already among a minority. But is this a wise minority?”

USAGOLD note: Wisdom is one of those things that can be identified only in retrospect – like market bubbles themselves. At the same time, one of history’s greatest lessons is that one should never underestimate mankind’s ability to fall victim to its baser instincts. The opening lines to this piece will get your attention. The rest of it will explain why your decision to own gold under current conditions might have been the right one. Piepenburg passes along a quote from the 17th-century French philosopher La Rochefoucauld: “The highest offices rarely, if ever, contain the highest minds.”


Repost from 12-4-2020

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The great gold and silver bull market is on

Degussa Market Report/Thorsten Polleit

Graphic image of bull, black and whiteIt is against this backdrop that we remain bullish on precious metals. We believe (and of course acknowledge the uncertainty that surrounds such a statement) that the price of gold could reach 2,450 USD/oz towards the end of 2021 (based on current prices, a 32% gain); the silver price could go up to 47 USD/oz (+87%); the price of platinum may increase to 1,280 USD/oz (+17%), and the price of palladium may well hit 2,710 USD/oz (+14%).”

USAGOLD note: That backdrop is radically aggressive monetary policies across the globe to combat the economic ill-effects of the coronavirus. We cited this report in yesterday’s DMR and repost it here for those who may have missed it.


Repost from 1-21-2021

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Posted in Gold and Silver Price Predictions from Prominent Players, Today's top gold news and opinion |

No DMR today (1/28/2021)


Gold pushes lower in advance of today’s Fed meeting

(USAGOLD – 1/27/2021) – Gold pushed lower in advance of today’s Fed meeting wrap-up and press conference. It is down $11 at $1842. Silver is down 32¢ at $26.23. Wall Street generally anticipates the Fed will remain steadfastly dovish. Anything less could easily unleash primal market forces it would rather keep in check. Investors are already on a knife’s edge if physical precious metals demand is an indicator. “Nobody doubts that the gold rush is a side effect of an unprecedented healthcare crisis, forcing governments to throw the financial manual away,” reports Alex Katsomitros in World Finance magazine. “Gold is the world’s oldest safe asset, always thriving in times of uncertainty. Historically, investors have reverted to it as a hedge against political and economic tumult, with its price jumping during wars, contested elections, and economic crises. During the Great Recession, gold’s price trebled from early 2007 to 2011. The same scenario is now repeating itself.”

Chart of the Day

line chart showing two monetary eras 1915-1971 and 1971-2020

Chart note: We have had quite a few new visitors over the past several weeks looking into gold for the first time. This chart, more than any other, we feel, is central to understanding why gold continues to make sense as a long-term portfolio holding. When the United States abandoned the gold standard in 1971 and freed currencies to float against the dollar, the fiat money era began. We are still in that era today. This chart shows gold’s performance from the early 1900s to 1971 when gold backed the dollar and the era from 1971 to present when it did not. Gold has had its ups and downs since 1971, but clearly, over the long run, in the absence of an official gold standard, individual investors have been well-served by putting themselves on a private gold standard.

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Why Grantham says next crash will rival 1929, 2000

Bloomberg/Video interview of Jeremy Grantham/1-22-2021

USAGOLD note:   Bloomberg’s Eric Schatzker interviews Grantham following his recent warnings of an “epic bubble” in stocks. Among a number of topics covered, Grantham offers his views on gold.

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Gold will respond positively in 2021 as concern shifts from ‘herd immunity to herd insolvency’

Linked-in/Ross Norman

photo image of American Eagle gold and silver bullion coins“Specifically we see ongoing US dollar weakness, deeper negative real rates in the treasury markets and a significant rise in unproductive debt as the Democrats open the spigots with fiscal stimulus as supporting factors. With the economy still contracting in Q1, we expect a bounce in H2 as the vaccine frees up the economy. With the recovery comes demand-pull as well as cost-push inflation further fuelled by the higher velocity of money, leading to expectations of much higher inflation, notwithstanding the weak labour markets.”

USAGOLD note:  Ross Norman has finished high or won the annual LBMA price forecasting contest (including last year’s) so often, that one is forced to pay attention. For 2021, he sees $2025 as the average price, $1810 as the low, and $2285 as the high. Norman says physical demand for silver coins and bars will show “impressive gains,” reflecting ‘strong demand for safe havens in these troubled times.” For good measure, he sees $36 as the high for gold’s running partner – silver.


Repost from 1-21-2021

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