Author Archives: News

Financial Times/Joe Rennison/9-27-2020

“Commercial properties hit by the economic effects of coronavirus could have lost as much as one-quarter of their value or more, laying bare the scale of the damage being wrought across American malls, hotels and other commercial buildings.”

USAGOLD note: The implosion in commercial real estate values is well-known to those of us who remember the 1980s. What began in the real estate market, though, quickly flowed through to the banks (Wall Street) and ultimately the overall economy (Main Street). It was the 1980s and one could see the destruction first-hand, i.e., in the number of buildings boarded up in downtown America.

Bloomberg Magazine/Craig Torres

“[Federal Reserve  Division of Financial Stability head Andreas] Lehnert’s home bookshelf betrays his professional obsession with ‘what could go wrong.’ He’s read about why planes crash, why nuclear plant accidents run out of control, and why the space shuttle Challenger blew up. There’s Why Buildings Fall Down and Plagues and Peoples, perhaps especially pertinent for 2020. Lying for Money seems another useful read for someone in Lehnert’s line of work.”

USAGOLD note:  An interesting read … Lehnert plays the role of Smoky the Bear at the Fed – sniffing out potential wildfires before they start to burn.

Repost from 9-23-2020

Reuters/Staff

“Less than half the gold processed by major refiners in 2018 came from large industrial mines, the London Bullion Market Association said on Tuesday, publishing data revealing for the first time the origin of bullion moving through its system.”

USAGOLD note:  More than half came from recycled gold – jewelry, bars and coins. Of course, not all the gold changing hands in the marketplace runs through refiners.

Repost from 9-24-2020

Financial Times/Henry Sanderson and Benjamin Parkin/9-29-2020

“Warren Buffett always mocked people who invested in gold, calling it a useless metal that ‘gets dug out of the ground in Africa, or someplace’ and a way of ‘going long on fear’. This year, however, the ‘sage of Omaha’ joined investors including the world’s largest hedge fund Bridgewater Associates in buying into the latest gold rush, which helped push prices to a record high this summer.”

USAGOLD note: Buffett’s interest in gold did not occur in a vacuum, but comes, in our view, from a realization that demand for investment purposes could ramp up considerably in the years to come for reasons covered in detail at the link above – this morning’s featured FT Big Read. We found this quote of particular interest: “Gold ETFs now make up 35% of global demand compared with just 8% just last year …” As we have mentioned previously on this page, one wonders what will happen with the supply-demand equation when India and China come back online in full force.

Reuters/Staff

“U.S. President Donald Trump on Monday said he was rebuffed when he asked officials to adjust the exchange rate of the dollar to counteract what he described as repeated currency manipulation by China of its yuan.”

USAGOLD note:  From the start, there has been no doubt where this president stands on the strong dollar policy.

Repost from 9-22-2020

Small businesses are dying by the thousands and no one is tracking the carnage

Bloomberg/Madeleine Ngo

“Big companies are going bankrupt at a record pace, but that’s only part of the carnage. By some accounts, small businesses are disappearing by the thousands amid the Covid-19 pandemic, and the drag on the economy from these failures could be huge. This wave of silent failures goes uncounted in part because real-time data on small business is notoriously scarce, and because owners of small firms often have no debt, and thus no need for bankruptcy court.”

USAGOLD note:  It will show up ultimately in the unemployment numbers and in the number of shuttered businesses you see driving any of the main business thoroughfares in America’s major cities …… Many of these business folk are among gold’s most loyal adherents.

Repost from 8-12-2020

Reuters/Peter Hobson

“Banks are making huge profits from gold as investors flood into a market fractured by the coronavirus crisis.”

USAGOD note:  The inside story on the gold market raises a number of questions including the “what if the supply of bullion suddenly dries up again?”   As one bank source said:  “There is no free lunch. Somebody has to lose money along the way …”

Repost from 9-21-2020

SilverSeek.com/Steve St. Angelo

The top three official mints sold a great deal of retail silver bullion products in the first half of 2020.  However, the sales figure could have been a great deal higher if the various government mints weren’t forced to shut down production.  The top three official mints in retail silver bullion sales are the U.S. Mint, Royal Canadian Mint, and the Perth Mint.

USAGOLD note:  It’s been a good year for silver sales at USAGOLD – strong and steady.  Below is chart accompanying St. Angelo’s article showing 40.4 million ounces of silver sold compared to 27.3 million ounces in 2019 – a 48% gain.  Note that the reporting period for the U.S. Mint is January through August, January through June for the Canadian Mint and January through July for the Perth Mint.  Two additional factors to keep in mind:  First, there were slowdowns and shutdowns for the major mints in 2020.  Second, these numbers do not include demand satisfied by bullion coins acquired in the secondary/resale market.

Repost from 9-19-2020

Reuters/Peter Hobson

“Swiss exports of gold to the United States all but halted in August while shipments to China and India rose, customs data showed on Thursday, suggesting a big transfer of bullion to New York that followed the coronavirus outbreak has run its course.”

USAGOLD note:   We would have ended that sentence with the words “for now.”  Historically, the West tended to buy gold when it was rising. The East bought when it dropped. Those cultural tendencies, though, are undergoing a change. The record shows that American funds and institutions, as reflected in ETF flows, were big buyers beginning in 2019 when this rally began.

Repost from 9-21-2020

Wof Street/Wolf Richter

“These near-real-time measures don’t track the entire economy, such as manufacturing, oil-and-gas drilling, financial services, insurance, and many other aspects. But the data show that certain physical aspects of the economy – where people are physically going to do business in some manner – are still very far from the ‘old normal.'”

USAGOLD note:   Wolf offers a walk down Main Street America in 2020  – a report card on how we are doing six months into the pandemic with some very down-to-earth, real economy numbers and analysis we found revealing.

Repost from 9-17-2020

BNN Bloomberg/Claire Valentine and Yvonne Yue Li/9-16-2020

“The world’s largest gold exchange-traded fund is seeing withdrawals after a ferocious run.”

USAGOLD note:  After a run to new record highs in a very short period of time, one might expect some profit-taking and caution from buyers.

Repost from 9-16-2020

Bloomberg/Liz McCormick

“The Treasury market has set a high bar for the Federal Reserve to jump in order to recharge inflation expectations and upend a bullish tone that has surfaced since Chair Jerome Powell laid out a new plan to allow consumer prices to run hot.”

USAGOLD note: The markets are suddenly worried about the Fed’s ability to deliver on its new inflation mandate. Treasury Secretary Mnuchin underlined that concern yesterday when he told CNBC that “now is not the time to worry about deficits and the Fed’s balance sheet” – a major message to Congress and to the Fed all in one simple declarative sentence. Spend and print officially is now the order of the day.

Repost from 9-15-2020

Reuters/Alex Lawler

“World oil demand will fall more steeply in 2020 than previously forecast due to the coronavirus and recover more slowly than expected next year, OPEC said on Monday, potentially making it harder for the group and its allies to support the market.”

USAGOLD note:  Static to dropping oil prices will not do much to get the inflation rate to the Fed’s target level.  As you can see from the chart below, oil production in Saudi Arabia, the world’s largest exporter, went off a cliff.  The recovery thus far has been moderate.

Crude Oil Production Saudi Arabia
BBL/d/1K

Chart courtesy of TradingEconomics.com  • • • Click to enlarge

Repost from 9-15-2020

Financial Times/Eva Szalay and Tommy Stubbington

“Investors now face not only the prospect of near-zero or negative returns from the safest debt, but also a collapse in volatility that has frustrated short-term bets.”

USAGOLD note:  One investment strategist quoted in this interesting article said his firm was placing bets on a higher Japanese yen and Swiss franc as an alternative to trading the bond market. Along with gold, those two currencies are generally considered safe-haven plays and for good reasons. This might not be the kind of attention they wish to attract.

Repost from 9-14-2020

Financial Times/Colby Smith/9-17-2020

“The Federal Reserve is the $7tn gorilla in the financial markets, and investors wish it was willing to throw its weight around a bit more.”

USAGOLD note:  It all gets down to the notion of pushing on a string.  You cannot create money and inflation if people and businesses are unwilling to borrow. Fed chair Powell has said repeatedly that the economy needs help on the fiscal side which is another way of saying the federal government has to become the borrower of last resort – and in a big way. In short, the Fed could have a difficult time producing the level of economic miracle the market would like to see.

NewsMaxFinance/Staff

“This is a terrible sign for the condition of the market for anybody who’s experienced a significant number of cycles, which I’ve definitely experienced.” – Jeffrey Gundlach, DoubleLine Capital

USAGOLD note:   Anyone can get a margin call. Even a stay-at-home, stock trading Mom …… In early 2010, investors carried about $260 billion in securities’ margin debt, according to the Wall Street Journal.  As of the end of last week, that figure stood at almost $615 billion.

Repost from 9-14-2020

CNBC/Patti Domm

“Quincy Krosby, chief investment strategist at Prudential Financial, said the stock market could easily be disappointed because the Fed is unlikely to offer more clarity on monetary policy, such as plans for bond buying.”

USAGOLD note:  The markets may be looking for way more than the Fed is capable of delivering …… A market that depends on monetary largesse for upward mobility is one built on a flimsy foundation.  We should keep in mind that, after all is said and done and all the ballyhoo over the stock market’s strength since March, it is still down about 4% year to date – when using the broad DJIA as a measuring stick – and up only 2% over the past twelve months.

Repost from 9-11-2020

CNNTravel/Jack Guy

“The nuggets have been valued at $250,000. The nuggets could fetch up to 30% more than their estimated value by weight if they are sold to a collector, according to the release. “I reckoned we were in for a chance,’ Shannon told Australian breakfast chat show Sunrise. “It was in a bit of virgin ground, which means it’s untouched and hasn’t been mined.’ The pair had been waiting months for a permit that would allow them to start searching for gold in the area, according to the release.”

USAGOLD note:  Nice find …… How do you spend your Saturdays?

Note:  Nugget shown not one of the nuggets found/described in article.

Repost from 8-23-2020

Financial Times/David Sheppard, Laura Pitel and Michael Peel

Click to enlarge

“Competition over gas discoveries in the eastern Mediterranean has combined with bitter regional rivalries to fuel dangerous tensions between Turkey and its neighbours in recent months. Many fear this could lead to direct military confrontation between Turkey and Greece, as the two Nato members and their allies square up over control of the seas.”

USAGOLD note: You probably have at least seen the headlines on trouble brewing between Turkey and Greece in the waters around Cyprus.  Few though know what’s behind the row and what’s at stake. This FT in-depth article will shed considerable light on the subject for those with an interest.

Repost from 9-9-2020