Author Archives: News
More grim job losses as U.S. hits record high on new COVID cases
Reuters/Lisa Shumaker/7-9-2020
“As the number of new coronavirus cases in the United States rose to a single-day record, fresh government data on Thursday showed another 1.3 million Americans filed for jobless benefits, highlighting the pandemic’s devastating impact on the economy.”
USAGOLD note: Some signs of moderation in the overall numbers but a cloud of uncertainty still hangs over the employment picture.
Sources: U.S. Bureau of Labor Statistics, St. Louis Federal Reserve [FRED]
Gold ETFs close H1 with record US$40bn of net inflows
World Gold Council/GoldHub/7-7-2020
“Gold-backed ETFs (gold ETFs) recorded their seventh consecutive month of positive flows, adding 104 tonnes (t) in June – equivalent to US$5.6bn or 2.7% of assets under management (AUM). This brings H1 global net inflows to 734t (US$39.5bn), significantly above the highest level of annual inflows, both in tonnage terms (646t in 2009) and US-dollar value (US$23bn in 2016). To put this strength of demand into context, H1 inflows are also significantly higher than the multi-decade record level of central bank net purchases seen in 2018 and 2019, and could absorb a comparable amount of about 45% of global gold production in H1 2020.”
Chart courtesy of GoldChartsRUs.com
USAGOLD note: That last statistic WGC quotes – 45% of global gold production being absorbed by ETFs – is probably the most salient. It is also interesting to note the current level of holdings greatly exceeds stockpiles in the period after the 2008 financial crisis when gold plied all-time highs.
India gold prices hit all-time high as virus spike lifts safe-haven demand
INDIA WATCH
“Gold prices in India hit an all-time high on Wednesday, tracking a global rally, as surging coronavirus cases in many countries raised the metal’s safe-haven appeal. Local gold futures hit an all-time high of 48,871 rupees ($646.66) per 10 grams in early trade, taking their gains to 25% in 2020 so far. The contract had gained nearly 25% in 2019.”
USAGOLD note: We can remember when the prevailing mainstream media opinion in India was that the population’s zest for gold would be dampened by weak economic conditions and its price would go into decline. We argued (for the benefit of our many site visitors from India) that if the currency continued to decline gold might continue to rise, as the Indian people would move to protect their wealth. Here we are at all-time highs in rupee terms.
Chart courtesy of TradingView.com
Repost from 7-3-2020
Spread blowout that jolted gold ripples across more metals
BNN Bloomberg/Justina Vasquez/7-2-2020
“The chaos that engulfed the gold market in March as the global pandemic choked off physical trading routes is rippling through other precious metals, resulting in price dislocations and a surge in exchange inventories for silver and platinum.”
USAGOLD note: From what we can gather, this report indicates that another delivery squeeze might be developing on the commodities exchange – this time involving silver and platinum. The reference to a surge in inventories needs to be put into context. The build-up, if March is the template, has more to do with preparing for heavy delivery demand than it does a sudden surge of metal hitting the market – the opposite of what the explanation above infers. The accompanying chart at the link above, in our view, is far more telling than the text underneath it.
Global hedge fund liquidations surge as coronavirus hurts returns
“More hedge funds went out of business during the first three months of 2020 than at any other time since 2015 as the coronavirus led to heavy losses and investors pulled out billions in assets.”
USAGOLD note: Huh? Didn’t the stock market just wind up the best quarter in years? Looks like some folks didn’t get the memo.
Repost from 7-2-2020
US companies file for bankruptcy at fastest pace since 2013
Financial Times/Joe Rennison and James Fontanella-Khan
“‘This is not like any other situation that the economy has experienced, certainly in my lifetime,’ said Larry Young, a Houston-based managing director at consultant AlixPartners, which specializes in corporate turnarounds.”
USAGOLD note: Is this the end of the beginning or the beginning of the end?
Repost from 7-1-2020
The Fed is buying some of the biggest companies’ bonds, raising questions over why
“As the Federal Reserve moves deeper into its purchases of corporate debt, it faces more questions about the consequences of its unprecedented market interventions. Disclosures filed this week surrounding its credit facilities show the Fed is not only buying the bonds of struggling companies hit hard by the coronavirus pandemic but also some of the stalwarts of American industry …”
USAGOLD note: Good question …… Creative destruction is banished from markets. Moral hazard is running at all-time highs. Financial wizardry rules the day.
Repost from 6-30-2020
UK court rejects Maduro’s claim on $1bn of Venezuelan gold held by Bank of England
Financial Times/Michael Stott/7-2-2020
“A British court has dealt a blow to attempts by Nicolás Maduro’s regime to access $1bn of Venezuelan gold held at the Bank of England by ruling that opposition leader Juan Guaidó had been ‘unequivocally’ recognised as Venezuela’s president by the UK. Mr Justice Teare said on Thursday that it was the British government’s prerogative to decide who was the legitimate head of state.”
USAGOLD note: $1 billion in gold is the equivalent of about a half day’s trading in the $40 billion per month London gold market.
Short and Sweet
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Gold, vanadium, europium reveal the existence of a mysterious particle
“To observe the Majorana fermions, the team of physicists from the Massachusetts Institute of Technology, the Institute of Technology at Delhi, the University of California at Riverside, and the Hong Kong University of Science and Technology, designed and built a material system that consists of nanowires of gold grown atop a superconducting material, vanadium, and dotted with small, ferromagnetic ‘islands’ of europium sulfide, which is a ferromagnetic material that is able to provide the needed internal magnetic fields to create the Majorana fermions.” – Valentina Ruiz Leotaud, Mining.com/
USAGOLD note: This must have been what Ben Bernanke was talking about years ago when he said he didn’t understand gold. [Smile] Gold’s allure, to be sure, is a mystery to some, but for those who understand the ever-present dangers imposed by the money printing press, the only mystery is why so few own it.
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Gold posts biggest quarterly gain since 2016 on virus woes
Bloomberg/Ranjeetha Pakiam/6-30-2020
“Bullion has been rising due to a resurgence in virus infections, with new hot spots emerging and the World Health Organization warning that the worst of the pandemic is still to come because of a lack of global solidarity. More U.S. areas took steps to scale back reopenings, while Australia’s Victoria is imposing a four-week lockdown in some parts of the metropolis of Melbourne in an attempt to contain a spike in cases.”
USAGOLD note: At just over 30%, the 2020 second quarter’s gain from the same quarter one year ago is actually the best since 2011, according to data generated at the St. Louis Federal Reserve’s web site.
Gold Annual Returns
(Change from one year ago same quarter)
Sources: ICE Benchmark Administration, St. Louis Federal Reserve [FRED]
The European Union finalized its ban on American travelers as the coronavirus pandemic continues to rage
BusinessInsider/David Slotnick/6-30-2020
“European Union officials on Tuesday finalized and published a list of 15 countries whose residents will be allowed to visit when it reopens its borders on Wednesday. The United States is not included, effectively barring Americans from visiting much of Europe for the foreseeable future.”
USAGOLD note: Can’t really blame Europe for taking this position under the circumstances, but it serves as an unpleasant reminder of the difficult situation in which we find ourselves and how difficult it is going to be to get back to normal.
Cartoon courtesy of MichaelPRamirez.com
Charting the world’s annual gold consumption
- Gold prices posted their biggest weekly gain since 2008 amid the coronavirus market crash.
- Bitcoin, believed by some to be a substitute for gold, has not risen in price among the market panic.
- Supply chain disruptions have led to unprecedented disruptions in the gold market.
- Industry experts believe that gold reserves are now being mined faster than they are replaced.
The Largest Sources of Annual Global Gold Demand
1. Jewelry: 2,107t (48.37% of demand)
2. Investment (total bar & coin): 870.6t (19.99% of demand)
3. Central banks & other institutions: 650.3t (14.93% of demand)
4. Investment (ETFs & similar): 401.1t (9.21% of demand)
5. Technology: 326.6t (7.5% of demand)
Visualization courtesy of HowMuch.net
Repost from 4-17-2020
Main Street investors bank profits on rally that Wall Street doubted
Reuters/Tom Westbrook and Cyntia Kim/6-18-2020
“Main Street investors who have reaped windfall gains from the steepest stock market rebound on record now seem to be making for safety, brokers say, just as Wall Street experts are advising clients to dip their toes into riskier assets again.”
USAGOLD note: The wheel turns. The melodrama continues. For these, my friends, are the days of our lives …… Seek safety while safety can still be had.
Repost from 6-22-2020
How gold quietly shapes our world
“The periodic table of chemical elements turns 150 this year. The anniversary is a chance to shine a light on particular elements – some of which seem ubiquitous but which ordinary people beyond the world of chemistry probably don’t know much about. One of these is gold. In chemistry, gold can be considered a late starter when compared to most other metals. It was always considered to be chemically ‘inert’ – but in recent decades it has flourished and a variety of interesting applications have emerged.
USAGOLD note: Not must a monetary metal. . . . .This article covers gold’s high-tech uses.
Repost from 10-28-2019
The fall of currencies under the spell of stocks worries strategists
“Currency analysts are lamenting an avalanche of cheap money from the US Federal Reserve, which they say has created bizarre conditions in which exchange rates track stocks rather than economic fundamentals.”
USAGOLD note: Currencies rising against the dollar along with stocks – one more odd circumstance to rationalize in this year of the coronavirus …… It’s all about printing money and how and where that is going to play out. “Everyone,” says one analyst, “is confused about the world.” So we are.
Repost from 6-19-2020
The Bank of England’s golden evolution
Alchemist/Ruth Crowell/Q4-2019
“Today (a sunny day in early September 2019), we hold around 400,000 gold bars in our vaults, currently worth approximately £200 billion, making up 15% of official declared gold reserves globally. We are the largest gold custodian in the UK – we hold over 65% of the gold in London.”
USAGOLD note: For those with an interest in the central role the Bank of England plays in the upper stratosphere of the gold market.
Repost from 10-16-2019
A record 78% of investors think the stock market is overvalued, Bank of America says
MarketsInsider/Carmen Reinecke
“A record number of investors think that the stock market is ‘overvalued,’ according to Bank of America’s June Fund Manager survey. Net 78% of investors said that the stock market is too expensive, the most since the fund manager survey began in 1998, Bank of America said Tuesday. The firm surveyed 212 fund managers with $598 billion under management during the week ending June 11.”
USAGOLD note: Wall Street’s pros think the market is on shaky ground. Main Street, if reports are to be believed, is oblivious ……
Repost from 6-18-2020
Global gold mine production growth set to rebound
“A report by Fitch Solutions states that global gold mine production growth is expected to rebound in the coming years underpinned by higher gold prices and mergers between major mining firms. ‘We forecast global gold production to increase from 106moz in 2020 to 133moz by 2029, averaging 2.5% annual growth,’ the document states. ‘This would be an acceleration from the average growth of just 1.2% over 2016-2019.’”
USAGOLD note: Still a weak number, in our view, despite accelerating prices and demand and unlikely to threaten current price trends.
China’s rich seek ways to move cash abroad before yuan weakens
“‘There is no room for negotiation today,’ a black-market currency dealer said when approached on West Nanjing Road, a bustling commercial strip in Shanghai, last week. ‘It’s going to be 7.2 yuan to the dollar.’The official rate was 7.06 that day, but the man, who was a little past his prime, was defiant. At one point late last month, the yuan had sunk to 7.19 in overseas trading. He was confident in the direction of the weakening currency.”
USAGOLD note: Not much capital, according to this article, is escaping China at this time. One would think that gold and silver demand would be on the rise these days. Here is a chart on the price of gold in yuan year to date – up 15.67%.
Repost from 6-17-2020
China scooping up Canadian miners after gold rally heats up mergers and acquisitions
“Chinese miners are buying up small Canadian gold producers as gold prices have rallied about 35 per cent from the start of last year. Zijin Mining Group Co. Ltd. agreed to buy Guyana Goldfields Inc. for cash on Friday, with a deal valuation of about $323 million. This follows the May announcement by Shandong Gold Mining Co. Ltd. to buy TMAC Resources Inc. for cash at an equity value of about US$149 million.”
USAGOLD note: If your goal is to build national gold reserves and there is a dearth of sellers in size to accommodate, the best approach is to buy production at its source – the mines. That has been the stated goal of Chinese gold mining companies for a number of years. These acquisitions of Canadian properties are part of a longer-term strategy to balance its national reserves.
Repost from 6-15-2020
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