Monthly Archives: November 2023

A Century of Shifting Fortunes
The S&P 500 and Gold in Historical Perspective

(USAGOLD – 11/14/2023) Gold is spiking as US inflation broadly slowed in October, which markets cheered as a strong indication that the Federal Reserve is done hiking interest rates. Gold is trading at $1958.56, up $11.64. Silver is trading at $22.75, up 42 cents. CMEGroup reports that since 1928, U.S. equities and gold have shown notable average annual returns of 5.9% and 4.9%, respectively. Analyzing equities in terms of gold, by dividing the S&P 500 index by gold’s dollar price, reveals significant fluctuations in their relative values over the past century. Key periods include a substantial decline in stock values relative to gold from 1929 to 1942, a sharp rise from 1942 to 1967, a dramatic fall from 1967 to 1980, a significant surge between 1980 and 2000, and a notable decline from 2000 to 2011. More recently, the S&P 500 gained significantly against gold from 2011 to 2021, but it has since experienced a decline of around 15%. Gold’s tendency to outperform stocks during times of fiscal and monetary expansion, price instability, and geopolitical uncertainty leads to speculation about its potential dominance over equities in the 2020s.

Moody’s Downgrades U.S. Credit Outlook to Negative
Fiscal Deficits and Debt Challenges Ahead

(USAGOLD – 11/13/2023) Gold remains under pressure as investors react to Moody’s negative outlook on U.S. debt. Gold is trading at $1936.10 this morning, down $4.10. Silver is trading at $21.98, down 29 cents. Moody’s on Friday downgraded the outlook on the U.S. credit rating from “stable” to “negative,” citing concerns about large fiscal deficits and declining debt affordability. This change follows a similar downgrade by Fitch earlier in the year, related to political tensions around the U.S. debt ceiling. Investors are increasingly worried about federal spending and political polarization, which have contributed to a significant drop in U.S. government bond prices. Despite this outlook change, Moody’s affirmed its top ‘Aaa’ long-term issuer and senior unsecured ratings for the U.S., acknowledging the nation’s credit and economic strengths. However, the agency noted that political polarization in Congress increases the risk of lawmakers failing to agree on a fiscal plan to improve debt affordability, with significant policy responses unlikely before 2025 due to the political calendar​.

USAGOLD Comment: A downgrade in a country’s credit rating can indicate increased sovereign risk. Gold is considered a non-sovereign asset, meaning it is not directly impacted by the financial health of any single country.

In Loving Memory of Michael J. Kosares
A 50-Year Legacy of Gold Advocacy

(USAGOLD – 11/10/2023) Gold remains under strain following the reiteration of a hawkish U.S. monetary policy stance by Federal Reserve Chairman Jerome Powell on Thursday afternoon.. Gold is trading at $1944.72 this morning, down $13.83. Silver is trading at $22.42, down 22 cents.

As we celebrate the life of Michael J. Kosares today, this is a quote he lived by:

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

-Theodore Roosevelt Jr.

From Bad Trucking Loans to Basel III Rules
Understanding Gold’s Value in a Risky Banking Landscape

(USAGOLD – 11/9/2023) Gold remains under pressure, trying to hold critical support around $1,950. Gold is trading at $1949.07 this morning, down $1.13. Silver is trading at $22.65, up 9 cents. The 4th US bank failure in 2023 occurred last week. Yahoo Finance reports, the collapse of Citizens Bank in Sac City, Iowa, was heavily impacted by its exposure to bad loans within the struggling trucking industry.  Although this was a smaller regional bank, with losses estimated at $14.8 million, this highlights the risks associated with sector-specific loan portfolios, especially in industries experiencing financial distress.

U.S. Debt Interest Payments Surge Past $1 Trillion
Gold’s Role in Preserving Wealth

(USAGOLD – 11/8/2023) Gold is down this morning amid a lack of major, markets-moving news. Gold is trading at $1964.23 this morning, down $5.22. Silver is trading at $22.73, up 9 cents. The annualized interest payments have surpassed $1 trillion, a figure that has doubled in just 19 months Bloomberg reports. This estimate is based on the U.S. Treasury data, which includes the government’s monthly outstanding debt balances and the average interest rate paid. This situation has sparked discussions about the sustainability of the U.S. fiscal path, especially in light of heavy borrowing and the potential return of “bond vigilantes” — market actors who sell bonds in response to policies they consider irresponsible. The implications of this include a downgrade of U.S. government debt by Fitch Ratings in August.

Gold’s Remarkable October
Japan’s Unprecedented Turn to Gold

(USAGOLD – 11/7/2023) Gold is down this morning influenced by disappointing economic figures from China, which have affected the broader raw commodities market. Gold is trading at $1966.78 this morning, down $11.36. Silver is trading at $22.61, down 22 cents. U.S. Global Investors reports that gold prices experienced their strongest October increase in nearly 50 years, with a 7.3% surge to close at $1,983 an ounce. This rally is notable as it occurred despite a backdrop of rising Treasury yields and a robust U.S. dollar, conditions that typically hinder the performance of gold, a non-interest-bearing asset. The article attributes this exceptional performance to a range of economic and geopolitical concerns, including record-high national debt, increasing credit card delinquencies, persistent fears of a recession, and the impact of two ongoing wars​.

Central Banks’ Gold Acquisitions Defy Expectations
China at the Forefront

(USAGOLD – 11/6/2023) Gold is down this morning and is seeing some pressure as trader and investor risk appetite has up-ticked recently. Gold is trading at $1987.70 this morning, down $4.95. Silver is trading at $23.19, down 2 cents. Central banks globally have significantly increased their gold purchases in the first nine months of the year, with a 14% year-on-year rise, reaching 800 tonnes, according to a report by the World Gold Council. This surge, driven by concerns over inflation and a move away from the U.S. dollar, saw China leading with the People’s Bank of China buying 181 tonnes. The consistent rate of gold acquisition surprised market analysts, especially against last year’s peak. The World Gold Council highlighted discrepancies between official reports and actual purchases, especially from China and Russia. Domestic economic challenges in China further fueled its citizens’ gold investments. John Reade, chief market strategist at the World Gold Council, said that it expected the annual total of official purchases of gold to “get close to or exceed” last year’s 1,081 tonnes, FT reports.

Silver’s Catch-Up
The Underlying Factors Behind its Lagging Performance

(USAGOLD – 11/3/2023) Gold is surging on Friday due to a lackluster jobs report, diminishing the likelihood of a Fed rate increase in December. Gold is trading at $2,000.55, up $14.77, and Silver is trading at $23.17, up 41 cents. The gold/silver ratio is at its highest peak since March 2023 (when it reached 91:1), indicating that gold’s performance has significantly surpassed that of silver. While gold has seen an 9% increase year-to-date, silver has declined by 5.4%. Nevertheless, silver has shown signs of recovery, with an approximate 7% rise in the past month.

Blockchain Meets Bullion
HSBC’s New Platform for Tokenized Gold Ownership

(USAGOLD – 11/2/2023) Gold is trading slightly higher on Thursday after the the Federal Reserve kept interest rates unchanged yesterday. Gold is trading at $1,990.02, up $7.49, and Silver is trading at $23.03, up 9 cents. HSBC, a leading bullion bank, has launched a groundbreaking initiative to modernize the London gold market by utilizing blockchain technology, Bloomberg reports. One token on HSBC’s new system is equivalent to 0.001 troy ounce, compared with 400 troy ounces for a London gold bar, the bank said in a statement. Given HSBC’s significant standing in the global bullion market, this venture into blockchain-based gold trading is anticipated to be influential.

Gold’s Resilient Q3 2023
High Mine Production Meets Varied Investment Trends

(USAGOLD – 11/1/2023) Gold has cooled off some as we wait for the Fed’s interest rate decision today. Gold is trading at $1986.96 this morning, up $3.08. Silver is trading at $22.73, down 11 cents. The World Gold Council reports in Q3 2023, gold demand surpassed its long-term average, with central banks continuing significant buying, though not reaching Q3 2022’s record. Despite high gold prices causing a slight dip in jewelry consumption, total gold demand, including OTC, grew by 6% year-over-year to 1,267t. Investment demand was mixed: it increased 56% year-over-year but fell short of its five-year average, and gold ETFs saw reduced outflows. While gold use in technology decreased, mine production reached an all-time high of 971t, and recycling surged 8% year-over-year​​.