Author Archives: News

Axios/Mike Allen

“America’s economy is operating under the influence of performance-enhancing steroids thanks to unprecedented monetary intervention.”

USAGOLD note:  Round and round we go, where it ends nobody knows …… This is a good synopsis of where we are at this point in time.

Repost from 1-18-2021

CNBC/Jeff Cox/1-20-2021

“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.

Bloomberg/Liz McCormick and Craig Torres/1-21-2021

“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.

Reuters/Howard Schneider/1-21-2021

“Forget about the amount being borrowed, Yellen, a former Federal Reserve chair, told members of the Senate Finance Committee. Focus instead on the interest rate being paid and the returns it will generate, an approach that argues the country’s future economic potential can support more borrowing today and makes the roughly $26.9 trillion in U.S. IOUs seem less formidable.”

USAGOLD note:  Famous last words …… It would be regrettable for investors to forget that the debt – however large – will need to be repaid (with interest), inflated away, or repudiated. One of those options is unlikely. The other two suggest a practical need for portfolio diversification.

Additions to the U.S. National Debt
(Quarterly through Q3-2020, in millions of dollars)

Sources:  St. Louis Federal Reserve, U.S. Department of Treasury, Fiscal Service

Visual Capitalist/Niccolo Conte/1-1-2021

CNBC/Jeff Cox

“The damage from COVID-19 is concentrated among already challenged groups. The K-shaped recovery remains highly uneven, with certain sectors and groups experiencing substantial hardship.”

USAGOLD note:  The timebomb ticking underneath the U.S. economy ……  Brainard, like the rest of the Fed, is looking to the federal government to keep a lid on the problem.

Repost from 1-16-2021

The Daily Mirror/James Andrews/1-19-2021

“Over Christmas sales of gold bars surged as Brits fed up with terrible savings rates opted to put their money into something shiny instead ……”

USAGOLD note:  Whodathunk?……

CNBC/Noah Higgins-Dunn

“More than 2,600 people died from Covid on Friday after more than 2,800 fatalities were reported on Thursday, a single-day record of the pandemic. More than 2,000 people have died everyday from the virus since the month began.”

USAGOLD note:  The Ramirez cartoon gives the grim statistics perspective ……

Cartoon courtesy of MichaelPRamirez.com

Repost from 12/7/2020

CNBC/Eric Rosenbaum/1-17-2021

“A majority of investors with $1 million or more in a brokerage account believe the stock market is in a bubble or close to being in one, according to an E-Trade Financial survey.”

USAGOLD note: As we have said repeatedly through this latest expansion in the stock market bubble, “play it but make sure you also hedge it.” We see this latest correction in the gold price as convenient for the many judicious investors looking to accomplish that goal.

Reuters/David Lawler and Andrea Shalal/1-19-2021

“In more than three hours of confirmation hearing testimony, the former Federal Reserve chair laid out a vision of a more muscular Treasury that would act aggressively to reduce economic inequality, fight climate change and counter China’s unfair trade and subsidy practices.”

USAGOLD note:  As we have said since the government’s coronavirus response began, few will quarrel with the steps that have been taken and many investors will prepare for its consequences.

Bloomberg/Swansy Afonso, Haslinda Amin and Rishaad Salamat/1-15-2021

“Some of the weddings and festive buying that had been postponed because of the pandemic will come back in 2021, and this pent-up demand will boost sales, P.R. Somasundaram, managing director for India at the London-based [World Gold] Council, said in an interview to Bloomberg TV.”

USAGOLD note:  We have contemplated what the effect might be once Indian and Chinese physical demand came back online. Looks like we are going to soon find out. On top of the very strong investment demand in the West, things could very interesting on the physical supply front.

Financial Times/Jim Brunsden, Sam Fleming and Phillip Stanford/1-16-2021

Graphic illustration courtesy of HowMuch.net • • • Click to Enlarge

“In particular, the paper highlights the EU’s difficulties in asserting its independence in the face of sanctions against Iran imposed by Mr Trump, citing them as proof of the need to ‘shield’ the bloc from ‘the effects of unlawful extraterritorial application’ of such measures.”

USAGOLD note:  The obvious question is what will the European Union rely upon instead? One would think that such concerns would enliven the gold repatriation movement, even prompt nation-states within the EU and perhaps the EU itself to boost their gold reserves. The pie chart above shows the breakdown for currency holdings within national reserves – as it stands now.

Bloomberg/Yueqi Yang/1-17-2021

“Janet Yellen is expected to affirm the U.S.’s commitment to market-determined dollar value and give assurances that the U.S. won’t seek a weaker dollar for competitive trade advantage, the Wall Street Journal reported, citing Biden transition officials familiar with her preparation for her confirmation hearing.”

USAGOLD note:  A watered-down version of Rubin’s strong dollar policy that suits the times and perhaps the reality in which we find ourselves ……That said, the strong dollar policy was never much of a policy but more an attempt to jawbone the market from selling off the greenback. Since Rubin, uttered that famous refrain in 1995, the dollar has declined in purchasing power 41% and the price of gold has gone from $375 to $1840 and a recent visit over the $2000 mark.

Gold and the Purchasing Power of the Dollar
(1995 to present)
Sources:  St. Louis Federal Reserve, BLS, ICE Benchmark Administration

Bloomberg/Natasha Doff and Anna Adrianova

“Gold made up 23% of the central bank’s stockpile as of the end of June 2020, the latest date for which data on the breakdown is available, according to a report published late Monday. The share of dollar assets dropped to 22%, down from more than 40% in 2018.”

USAGOLD note:  Though Russia’s de-dollarization is one of Putin’s stated objectives, part of the turnover probably has to do with reduced oil and natural gas exports. As this article points out, the increase in the price of gold was another contributing factor to the bigger number. At the same time, Russia is now the third-largest gold producer after China and Australia – producing roughly 10% of the world’s mined gold annually. Its de-dollarization policy translates to a major positive in the global supply-demand equation. China has a similar policy though many believe it has yet to disclose its true gold reserves.

 Repost from 1-14-2021

Financial Times/Robin Wigglesworth

“China will emerge as a rival to New York and London as the world’s financial centre, according to Bridgewater founder Ray Dalio, who is betting heavily on what would be an epochal shift in the global economy.”

USAGOLD note: And the yuan will present a challenge to the dollar, as we have commented previously, based on new trade agreements China has signed with the European Union and the rest of Asia. China’s maneuverings could eat into the market for the dollar, and, by proxy, bode well for gold over the longer term. The yuan is up sharply since its June lows.

U.S. Dollar / Chinese Yuan
(one year)

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

Repost from 1-12-2021

SentimenTrader/Jason Goepfert

“There is a broad spectrum of investors looking for the dollar to rally, which should help trigger a pullback in stocks, metals, and commodities. The trouble is, many of their arguments were the same ones used in September. On the surface, the arguments have a little bit of support. The buck closed above a widely-watched moving average for the first time in months on Monday. That ended a streak of 2 months below that average, the longest in nearly a decade. This is the kind of streak the dollar consistently underwent during structural bear markets, with only the last one in the sequence (sometimes) ending up leading to sustained gains.

USASGOLD note:  Goepfert ends with a reflection borne of significant experience analyzing financial markets – “This is why we test – markets do a very good job at screwing with people who try to use logic instead of human nature.” He says that there is “no consistent evidence that this is the type of behavior [as shown in the chart below] that leads to short-covering.”

Chart courtesy of SentimenTrader.com

 Repost from 1-13-2021

South China Morning Post/He Huifeng and Guo Rui/11-22- 2020

“The Chinese currency is set to play a bigger role in global trade and investment in the wake of the pandemic, with the dominance of the US dollar in the international monetary system expected to decline, two Chinese central bank officials said on the weekend.“

USAGOLD note:  This prediction sounds very similar to the one Goldman Sachs made a few months back – only in this instance it is coming from the Peoples Bank of China. A bigger role for the yuan and a reduced role for the dollar, if it were to actually materialize, could diminish overall demand for the greenback and accrue as a positive for gold demand globally. The just-concluded Regional Comprehensive Economic Partnership – a trade deal signed by 15 Asian countries including China but excluding the United States – could provide a boost to China’s ambitions as stated in this article. Some might think the Biden administration will move to remedy the U.S. exclusion from that partnership, but we should keep in mind that the anti-China sentiment runs deep in Washington and is not strictly a Republican phenomenon.

Repost from 11-25-2020

Bloomberg/Yuliya Fedorinova

“An audit showed Sukhoi Log has 40 million ounces of proven reserves as measured by international JORC standards, with an average gold content of 2.3 grams per ton, Chief Executive Officer Pavel Grachev said. That means the field — accounting for more than a quarter of Russian gold reserves — is bigger than Seabridge Gold Inc.’s KSM Project in Canada and Donlin Gold in Alaska.”

USAGOLD note:  The deposit is still several years away from being fully exploited. Russia is now the world’s third-largest gold producer with aspirations of becoming the largest. It mined 310 metric tonnes of gold in 2019. China was first at 420 metric tonnes and Australia second at 330 tonnes. The United States, owing mostly to production in Nevada, is fourth at 200 metric tonnes. By this announcement, the total reserves for Russia grew almost 1250 tonnes.

World Gold Production by Country
Source:  U.S. Geological Survey (in metric tonnes)

Repost from 10-24-2020

Graphic illustration courtesy of HowMuch.net • • • Click to enlarge

From HowMuch:

“To say the coronavirus has taken a toll on the U.S. economy would be an understatement. At the end of 2019, the U.S. experienced the lowest unemployment levels in 50 years. But since COVID-19 swept the nation in mid-March, more than 47 million Americans have filed for unemployment and the country has entered a recession. How do today’s numbers compare to other major periods of unemployment? Our visualization illustrates how unemployment rates have changed over time in relation to major events.”

Repost from 1-13-2021

Barron’s-MarketWatch/Leslie P. Horton and Stephen Kleege

“’It’s worse because the revenue shortfall is uncertain and horrific,’ says [Volcker Alliance’s Richard] Ravitch, now a director of the Volcker Alliance, a nonprofit group that advises on effective government. ‘There’s an enormous loss of revenue going on, and we don’t know how long it will last.’ … The question now: How many municipal bond issuers—cities, states, and others—won’t be able to repay investors?”

USAGOLD note:  Another silent crisis brewing at the corner of Wall Street and Main ……

Repost from 8-29-2020