Monthly Archives: November 2022

Not just another recession

Foreign Affairs/Mohamed A. El-Erian/11-22-2022

graphic representation of bulletin board note hope for the best prepare for the worst“Three new trends in particular hint at such a transformation and are likely to play an important role in shaping economic outcomes over the next few years: the shift from insufficient demand to insufficient supply as a major multi-year drag on growth, the end of boundless liquidity from central banks, and the increasing fragility of financial markets.”

USAGOLD note: Out with old, in with the new…… El Erian explains why the global economy may never be the same. “…Resilience, optionality, and agility are all vital,” he says.

Posted in Today's top gold news and opinion |

China thought to be stockpiling gold to cut greenback dependence

Nikkei Asia/Munemasa Horio/11-22-2022

Ed Stein Cartoon of dragon atop gold hoard captioned Dragon's Hoard“Central banks are snapping up gold this year, but it is uncertain which ones are behind most of that shopping spree, fueling speculation that China is a big player. Seeing how Russia has been hit by monetary sanctions by the West, China and some other countries must be hurrying to reduce dependence on the dollar, analysts reckon.”

USAGOLD note: Since the World Gold Council reported recently that it could not identify the source for 300 tonnes in official sector gold demand, speculation has been rife as to who the whale might be. Opinion is now beginning to coalesce around China as the buyer in question and Russia as the seller, according to this Nikkei Asia report. The newspaper points out that China sold U.S. Treasuries to the tune of $121.2 billion so far this year – “the equivalent of roughly 2,200 tonnes of gold.”

Posted in Today's top gold news and opinion |

Stephen Diehl: Crypto is the ‘commoditisation of populist anger, gambling and crime’

Financial Times/Henry Mance/11-20-2022

cover 'Popping the Crypto Bubble'“After 14 years, [crypto] is still a solution in search of a problem. It’s not building a new financial system. It’s not building a new internet. It’s not an asset uncorrelated with the market. It’s not a hedge against inflation. It is a vehicle for pure, naked speculation detached from anything in the economy. It’s a casino that’s wrapped in all of these lies. When you tear back those lies, what’s left looks like a net negative for the world.” – Phillip Diehl, author, Popping the Crypto Bubble

USAGOLD note: Diehl says the chase for crypto profits “reveals a lot of our dark tendencies” and that young people already throttled by the financial crisis and the pandemic are its most consequential victims. His observations follow along the lines of Niall Ferguson’s posted here earlier today. Before you buy the dip, you might want to read this interview.

Posted in Today's top gold news and opinion |

FTX kept your crypto in a crypt not a vault

Bloomberg/Niall Ferguson/11-20-2022

ramirez cartoon on the FTX scandal meltdownCartoon courtesy of

“In truth, however, these modern analogies fail to do justice to Bankman-Fried’s rise and fall. To understand what just happened, you really need to go back a century and a half, to Anthony Trollope’s coruscating The Way We Live Now (1875). Inspired partly by the 1866 collapse of Overend, Gurney and Co., the novel describes the ascent and descent of Auguste Melmotte, whom Victorian society hails as a financial genius not because he is one, but because he offers the elite the prospect of easy money.”

The anatomy of a scam and how it fits into the long history of such misadventures……Ferguson does not have nice things to say about Bankman-Fried, but what happened with FTX is nothing new in financial markets. “Time and again,” he writes, “share prices have soared to unsustainable heights only to crash downwards again. Time and again, this process has been accompanied by skullduggery, as unscrupulous insiders have sought to profit at the expense of naive neophytes.” And crypto, let us not forget, was promoted with great fervor (and disdain for those who questioned it) as a New Age alternative to gold.


Posted in Today's top gold news and opinion |

Gold continues advance begun yesterday ahead of options expiry, Powell speech
The yellow metal is up 7.1% in November, and silver an eye-catching 12.3%

(USAGOLD – 11/30/2022) – Gold continued the advance begun yesterday, ignoring today’s Comex options expiration and reflecting expectations of a more moderate approach from Fed Chairman Powell in his address to the Brookings Institution later today. It is up $12 at $1764. Silver is up 33¢ at $21.67. Quietly, while attention stayed riveted on Fed policy, the precious metals had a good month. Gold is up 7.1% in November while silver posted an eye-catching 12.3% gain. Maverick Investor’s Paul Franke, a nationally ranked stock picker for 30 years, sees gold as grossly undervalued at current prices.

“You heard me right,” he writes in an analysis posted at Seeking Alpha on Monday. “Gold buried in your back yard has risen in price at essentially the same rate as U.S. equity market total returns over the last two decades! Believe it or not, measured from June 2002, the two asset classes are effectively TIED for total return performance. Warren Buffett, CNBC, and the WSJ do not and will not advertise this fact. If equities are only keeping up with general monetary inflation, what’s the point pushing stock investments? … If gold is the base currency our fractional reserve banking system is built upon, it should retain value vs. such over many years. My research suggests gold’s real-world valuation in U.S. dollars should be above $2800 an ounce today. I am using a math technique of annual median averages since 1969 to reach this conclusion, where half of the time gold should trade higher than $2800 and the other half under this price point.”

Gold and the Dow Jones Industrial Average
(%, 1971 to present)
overlay chart showing gold and stocks performance 1971 to present
Chart courtesy of • • • Click to enlarge


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

Notable Quotable


“Tail wagging dog? Perhaps. But while solving the mystery of gold pricing may continue to defy a quick sound bite analysis, and while the size of investment plus speculative flows doesn’t show any kind of consistent relationship to the size of price swings, it’s plain that the behaviour of gold ETF investors and Comex speculators, although marginal to physical demand across longer time frames, tends to map if not drive the market’s direction.” –  Adrian Ash, The Alchemist


Posted in Notable Quotable, Today's top gold news and opinion |

History says inflation could persist for a decade

MarketWatch/Brett Arends/11-19-2022

graphic showing exit for THERE being a great distance down road through desert“The likelier scenario is that even if it starts to come back down, inflation may persist higher for longer than the markets, money managers, or the Federal Reserve thinks. That’s because, in effect, inflation has reached the kind of critical mass or momentum this year that makes it much harder to control.”

USAGOLD note: Based on the analysis of “legendary financial guru,” Rob Arnott, Arends warns the right approach to inflation might be to buckle our seat belts for a long, rough ride ……

Posted in Today's top gold news and opinion |

Did Bullard undershoot? Stifel economists say fed funds rate may need to go to 8% or even 9%.

MarketWatch/Vivien Lou Chen/11-18-2022

stein cartoon of a couple headed down a steep 401k roller coaster track

“Stifel, Nicolaus & Co. economists Lindsey Piegza and Lauren Henderson said they think that even a 7% federal funds rate may be ‘understating’ how high the Fed’s benchmark interest rate likely needs to go. Calculations show that there’s a possible need ‘for a federal funds rate potentially 100-200bps higher than [Bullard’s] suggested upper bound,’ they wrote in a note. In other words, a federal funds rate that gets to between 8% and 9%, versus its current range of between 3.75% and 4%.”

USAGOLD note: It does not take an advanced degree in economics to predict how an 8% or 9% lending rate would be received in the stock and bond markets. It is interesting to note in this context that the average 401K is down 20% thus far this year, according to Fidelity Investments. Where would its value be if rates were at 8%-9%? By the way, Bullard, not Powell, in our view, is the true Volckerian in the current mix of Fed officials.

Posted in Today's top gold news and opinion |

Foreign demand for U.S. Treasurys, other debt plunges to $80 billion in September

Morningstar-MarketWatch/Joy Wiltermuth/11-17-2022

image of Uncle Sam saying I need vast sums of money“Demand from foreign investors for Treasurys and other long-term U.S. bonds dropped by more than half to $80 billion in September from a month before, according to a Barclays tally of Treasury Department data. While foreign investors bought nearly $190 billion in longer U.S. fixed-income securities in August, they scaled back dramatically a month later, according to Treasury Department data.”

USAGOLD note: The problem of funding Uncle Sam’s borrowing needs is something that does not get a lot of attention outside the Treasury Department and certain quarters of the financial business. At the same time, amidst a sea of challenges facing the federal government, this might very well be its greatest. Failure to sell Treasuries through traditional means ominously raises the prospect of resorting to the printing press.

Posted in Today's top gold news and opinion |

FTX and the age of fiat money

The New York Sun/Staff/11-17-2022

photo of U.S. one dollar bills rolling off the printing press“The best story so far on the collapse of FTX, at least in our view, is A.R. Hoffman’s dispatch in the Sun that marks the drama as a feature of our national experiment in fiat money. After all, if America had a sound currency, one anchored in the classical monetary specie of gold or silver, we wouldn’t have so many young geniuses out there hawking crypto coins and tokens as units of account and mediums of exchange.”

USAGOLD note: Thought-provoking editorial connecting printing press money to the crypto fiasco……… Also interesting to know that former Speaker of the House, Paul Ryan is pushing a “new plan to avoid a debt and currency crisis” – not the sort of concern addressed by the typical Washington politician.

Posted in Today's top gold news and opinion |

Gold regains lion’s share of yesterday’s losses
How gold stands up at a time when performance relativity has become an issue

(USAGOLD – 11/29/2022) – Gold regained the lion’s share of yesterday’s losses in overnight trading as the commodities complex took a turn to the upside, the dollar weakened, and markets entertained the notion of China reducing covid restrictions. It is up $13 at $1756. Silver is up 35¢ at $21.36. Precious metals traders in the United States are likely to remain cautious early in the week, with options expiration on the December Comex gold and silver contracts looming on Wednesday. As markets have progressed to the downside in concert over the past year, performance relativity has become something of an issue for portfolio managers and private investors alike. Long-time gold market analyst Adrian Ash recently dug into the yellow metal’s long-term prospects in that regard and came away with some comforting conclusions.

 “…[R]ather than backing off in 2022 as gold bullion steadied around the highest prices in history,” he writes in an essay posted at the Bullion Vault website, “that demand has stabilized after rebounding from the Covid Crisis shutdowns… and it has stabilized even as the No.1 consumer, China, has continued to lockdown families, social events and retail outlets in the name of still trying to secure ‘zero covid’ infections. Nothing is guaranteed of course, and a steep drop in the global gold price could perhaps meet a drop in Asian and global jewellery demand in 2023. But historic patterns and trends suggest that this simply isn’t how things work. So any investor or fund manager looking for some downside protection in their portfolio might want to consider how gold bullion – a strong and repeated diversifier for wider investment holdings – looks most likely to enjoy downside protection of its very own right now.”

Gold average annual prices
bar chart showing the average annual price of gold 1971 to November 2022
Chart by USAGOLD [All  rights reserved] • • • Data Source:

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

Central banks load up on gold again: Gold prices could skyrocket

Lombardi Letter/Moe Zulfiqar/11-14-2022

Photo of pallettes of gold bars purchased by Hungary's central bank“It’s unlikely you’ll hear about central banks buying gold in your evening news or throughout the day in the mainstream financial press. It’s not the hot thing to talk about. Here’s the reality, though: central banks have been net buyers of the yellow precious metal since 2010. They don’t care about where gold prices stand; they buy the metal regardless.”

USAGOLD note: Zulfiqar believes that central bank demand “could be a big catalyst that sends gold prices toward $3,000 per ounce much sooner than previously expected.” Through the third quarter, central banks have already purchased more gold than in any full year since 1967, according to the World Gold Council.

Posted in Today's top gold news and opinion |

Dalio warns of consequences of ‘more intense’ China-US friction


“’The possibility of war is leading Chinese leadership to prioritize self-sufficiency over cost-efficiency, which is also happening in the United States, which is not good for real growth,’ the founder of Bridgewater Associates wrote in an article published on LinkedIn Wednesday, citing the two countries are already at ‘war’ on trade, technology, geopolitical influence and the economy.”

USAGOLD note: One would think that the US inflation rate will be directly affected if the situation develops as Dalio warns. For decades, cheap goods from China have kept the inflation rate down.

Posted in Today's top gold news and opinion |

Global silver demand reaches new high in 2022, record supply-demand deficit


“Physical investment in 2022 is on track to jump by 18% to 329 million ounces, which would also be a new record. Support has come from investor fears of high inflation, the Russia-Ukraine war, recessionary concerns, mistrust in government, and buying on price dips. The rise was boosted further by a (near-doubling) of Indian demand, a recovery from a slump last year, with investors often taking advantage of lower rupee prices.”

USAGOLD note: TSI also reports a record deficit between supply and demand – 194 million ounces.

Silver surplus or deficit
(Millions of troy ounces)
bar chart showing silver supply-demand surplus or deficit 2012 -2022
Chart by USAGOLD [All rights reserved] • • • Data source: The Silver Institute


Posted in Today's top gold news and opinion |

ECB raises alarm over growing risks to financial system

Financial Times/Martin Arnold/11-16-2022

graphic image of single-file line reaching the edge of the cliff“A toxic combination of recession, soaring inflation, rising funding costs and lower liquidity is threatening to trigger financial market turmoil in the euro area, the European Central Bank has warned.”

USAGOLD note: ECB warns of an impending crisis brought on by high inflation and a “growing likelihood of a recession.” Oddly, it warns itself to “be prudent in starting to shrink its €5 trillion bond stockpile next year.”

Posted in Today's top gold news and opinion |

Gold level to start the week as options expiration looms
Shifting geopolitics could create “powerful tailwinds for gold and silver,” says Saxo Bank

(USAGOLD – 11/28/2022) – Gold is drifting sideways to start the week as investors worried about the open anti-lockdown revolt in China adding to recession and inflation concerns already wreaking havoc in financial markets. It is level at $1757. Silver is down 17¢ at $21.43. Precious metals traders are likely to remain cautious early in the week, with options expiration for the December Comex gold and silver contracts looming on Wednesday.

“Driven by a new geopolitical situation,” says Saxo Bank’s Ole Hansen in a report posted late last week, “where the world is splitting into two parts with everything evolving around deglobalization driven by the need for self-reliance. Together with the energy transition, we are facing a decade that will be commodity and capital intensive, and where scarcity of raw materials and labor will keep inflation elevated for longer and higher than the 2.6% level currently being priced in through the swaps market. Such a scenario combined with the risk of an economic slowdown forcing a rollover in central bank rate hike expectations, sending real yields and the dollar lower, may in our opinion create powerful tailwinds for gold and silver during 2023.” In the context of a rapidly changing geopolitical environment, it is interesting to note that gold is up in all the major currencies in 2022 except the US dollar.

Gold in top currencies
(%, year to date)
–– Japanese yen –– Chinese yuan –– British pound –– Euro –– US dollaroverlay line chart showing gold priced in various currencies
Chart courtesy of

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

Sunday In-Depth

photo of attic clutter

Every once in a while we rummage around USAGOLD’s creaky old attic and dust-off a golden vignette from our storied past. Most first appeared in our monthly client letter, but this one comes from the first chapter of The ABCs of Gold Investing – How To Protect and Build Your Wealth With Gold by USAGOLD’s founder Michael J. Kosares.  First published in 1996, it is a timeless story about gold’s ultimate value ……

Asset Preservation
Why Americans need gold

“The possession of gold has ruined fewer men than the lack of it.”
Thomas Bailey Aldrich

The incident is one of the most memorable of my career. Never before or since has the value of gold in preserving assets been made so abundantly clear to me. It was the mid-1970s. The United States was finally extricating itself from the conflict in South Vietnam. Thousands of South Vietnamese had fled their embattled homeland rather than face the vengeance of the rapidly advancing Communist forces.

A couple from South Vietnam who had been part of that exodus sat across from me in my Denver office. They had come to sell their gold. In broken English, the man told me the story of how he and his wife had escaped the fall of Saigon and certain reprisal by North Vietnamese troops. They got out with nothing more than a few personal belongings and the small cache of gold he now spread before me on my desk. His eyes widened as he explained why they were lucky to have survived those last fearful days of the South Vietnamese Republic. They had scrambled onto a fishing boat and had sailed into the South China Sea, where the U.S. Navy rescued them. These were Vietnamese “boat people,” survivors of the final chapter in the tragedy of Indochina. Now they were about to redeem their life savings in gold so that they could start a new business in the United States.

Photo of gold KimThanh from Viet NamTheir gold wrapped in rice paper was a type called Kim Thanh. These are the commonly traded units in Hong Kong and throughout the Far East. Kim Thanh weigh about 1.2 troy ounces, or a tael, as it is called in the Orient. They look like thick gold leaf rectangles 3 to 4 inches long, 11⁄2 to 2 inches wide, and a few millimeters deep. Kim Thanh are embossed with Oriental characters describing weight and purity. As a gesture to the Occident, they are stamped in the center with the words OR PUR, “pure gold.”

It wasn’t much gold—about 30 ounces—but it might as well have been a ton. The couple considered themselves very fortunate to have escaped with this small hoard of gold. They thanked me profusely for buying it. As we talked about Vietnam and their future in the United States, I couldn’t help but become caught up in their enthusiasm for the future. These resilient, hardworking, thrifty people now had a new lease on life. When they left my office that day, there was little doubt in my mind that they would be successful in their new life. It was rewarding to know that gold could do this for them. It was satisfying to know that I had helped them in this small way.

I kept those golden Kim Thanh for many years. They became something of a symbol for me—a reminder of the power and importance of gold. Today, when economic and financial problems have begun to signal deeper, more fundamental concerns for the United States, I still remember that Vietnamese couple and how important gold can be to a family’s future. Had the couple escaped with South Vietnamese paper money instead of gold, I could have done nothing for them. There was no exchange rate for the South Vietnamese currency because there was no longer a South Vietnam! Wisely, they had converted their savings to gold long before the helicopters lifted U.S. diplomats off the roof of the American Embassy in 1975.

Over the years, I have come to understand and appreciate the many important uses of gold—artistic, cultural, economic, and industrial. Gold is unsurpassed for jewelry and as a high-tech conductor of electricity. Gold has medical applications in dentistry and in treating diseases from arthritis to cancer. Gold plating is used in computers and in many other information-age technologies. In nanotechnology, it is used in a variety of cutting-edge medical diagnostic devices. As for its engineering uses, gold can be found in automobile anti-pollution devices, in jet engines, in architectural glass, and in a number of space applications. All of these pale, though, when compared to gold’s ancient function as money, as an asset of last resort and an unequaled store of value.

– Michael J. Kosares
The ABCs of Gold Investing: How to Protect and Build Your Wealth with Gold (1996)
Available at


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Posted in Gold in the Attic, Sunday In-Depth, Today's top gold news and opinion |

Thanksgiving card 2022

Posted in Today's top gold news and opinion |

Defending the gold premium

Atlas Plus Gold Report/Charlie Morris/11-16-2022

photo of gold bar graph against $100 US note

“When you look around the world for a big, liquid, globally accepted safe haven, there is only one, and that is gold, which continues to reassert its status as the asset of last resort. Pre-1970, in the days of the gold standard, gold formally enjoyed this role. Today, after a 50-year break, the free market is putting gold back onto the pedestal where it belongs.”

USAGOLD note: Morris says that gold is now trading at 23% premium to fair market value based on a model he uses to track the metal, but that it is still a solid value simply because there is no real competition in terms of a genuine safe haven.

Posted in Today's top gold news and opinion |

Our currency, the world’s problem

Real Investment Advice/Michael J. Lebowitz/11-16-2022

photograph of $100 bills and an hour glass“While it may appear the post-Bretton Woods covenant is a win-win pact, there is a massive cost accruing to everyone involved. The U.S. has too much debt. As such, it has become increasingly dependent on low-interest rates to spur debt-driven consumption and to pay interest and principal on existing debt.”

USAGOLD note: Liebowitz lays out the dangers to a global economy of a Fed held hostage by the high level of debt – public and private. This analysis offers a good explanation as to how that became the case…… and why time is running out.

Posted in Today's top gold news and opinion |