Author Archives: News

The biggest investors in SLV (silver ETF)

GoldReporter/2-23-2021

“The SLV silver ETF made headlines in recent weeks. Many young U.S. investors put money in silver through this fund. Here are the biggest institutional investors.”

USAGOLD note: Precious metals’ ETFs are the favored vehicle among big financial institutions looking for a place to store and trade large volumes of metal. As reported at the link above, the top five shareholders in SLV are Morgan Stanley, Bank of America Corp, Jane Street Group, Wells Fargo and UBS Group.

overlay chart showing silver ETF stockpiles over the last five years with the price of silver

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

 

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Strategists pick commodities as a favorite way to play reflation

Bloomberg/Joanna Ossinger/2-22-2021

“As the reflation theme dominates markets, investment strategists are picking commodities as some of their favorite trades.”

USAGOLD note:  And commodity prices are ratcheting higher as shown in the S&P GSCI chart immediately below……This is one of the developing big stories in financial media. Silver could be a major beneficiary given the Biden green energy program.

Line chart showing upward progression of commodity pricesSPGSCI Index one year

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

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Interactive Brokers chair says financial system came ‘dangerously close’ to failure during GameStop mania

CNBC/Kevin Stankiewicz

Repost from 2-18-2021

graphic image of moral hazard spelled out in scrabble letters“[T]he brokers default on the clearinghouses, so you end up with a complete mess that is practically impossible to sort out, so that’s what almost happened.” – Thomas Peterffy, Interactive Brokers

USAGOLD note: I guess they didn’t see it coming. Why is it that these near brushes with disaster become a major source of worry and debate after the fact? Where are the regulators who are supposed to keep a lid on this sort of thing? These kinds of problems are the children of excess liquidity and rampant moral hazard. By now, we should be getting used to it, and more aware than ever, that systemic risk needs to be hedged.

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Powell signals Fed to keep buying bonds even as outlook improves

Bloomberg/Rich Miller/2-23-2021

“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved,” [Fed chairman Powell] told the Senate Banking Committee Tuesday.

USAGOLD note: Judiciously, Powell left the Fed’s options open and did not light a fuse on bond buying. To taper, or even hint at it, is to send interest rates on a tear and stock market investors heading for the exits. Meanwhile, the bond portfolio continues to pile up at the Fed and we haven’t even gotten around to the $1.9 trillion stimulus package. That legislation, by the way, this morning went out of Committee and is expected to be voted on and passed by the House later this week, according to press reports. Here is what the Fed’s swelling balance sheet looks like on a chart – heading towards $8 trillion.

Federal Reserve Bank Balance Sheet
(2011-present)

bar chart showing growth of the Fed's balance sheet over the past ten years

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

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A $13 trillion debt bill comes due for big economies

Bloomberg/Anchalee Worrachate

Repost from 1-6-2021

graphic illustration of a money printing machine“The Federal Reserve is on pace to buy nearly half the $2 trillion of net supply TD Securities expects the U.S. government debt to issue this year.”

USAGOLD note: Some call it quantitative easing. Others call it printing money. This article delves into the ramifications of the sovereign debt problem in the general and the U.S. national debt problem in particular – at the link.

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Euro tops dollar as payment currency for first time since 2013

Bloomberg/Alexandre Tanzi

Repost from 11-23-2020

photo image of various currencies rolled and rubberbanded
“Trade upheaval, a pandemic-induced recession and political disharmony renewed pressure to reduce the share of international payments in dollars. The U.S. currency has weakened more than 11% from its March peak, based on a Bloomberg index that measures it against a basket of major peers, and many observers are predicting its valuation to drop further.”

USAGOLD note:  One month does not a trend make and we would have to see a trend develop before we would think that something of real importance was actually occurring. Nevertheless, we thought the “event” worth noting and filing for future reference.

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Are economic numbers displaying inflation?

NASDAQ/Mark Vicker

Repost from 2-17-2021

graphic image red sticker with the word "inflation"“Yesterday afternoon in this space, we brought up a recent jump in bond yields: the 10-year had come in at 1.3%. Historically this is still quite low — and still below the Fed’s 2% target rate — but it did draw attention to something we’d seemingly long forgotten about: inflation. Well, pre-market trading activity has sunk into the red upon two new monthly economic reads: Retail Sales and Producer Price Index, both for the month of January.”

USAGOLD note:  Zack’s Mark Vickery raises a question that may have crossed your mind after the government released yesterday’s run of reports.

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After golden year for precious metals, silver set to shine in 2021

Reuters/Peter Hobson

Repost from 1-2-2020

graphic image brush painting of a bull“After a spectacular year, precious metals are set for further gains in 2021, with silver tipped to outperform, but analysts are growing more cautious about the prospects for gold as the global economy recovers from the impact of the coronavirus.”

USAGOLD note:  Reuters weighs in on the precious metals for 2021 with a mostly bullish appraisal of the future.  2020, as Hobson points out, was a very good year ……

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Global bonds suffer worst start since 2013

Bloomberg/Paul Dobson and Stephen Spratt

Repost from 2-16-2021

“Former New York Fed President William Dudley last week outlined reasons why the U.S. central bank might have to pull back on stimulus sooner and with greater force than anticipated to keep inflation in check, potentially triggering a new wave of volatility akin to the taper tantrum.”

USAGOLD note:  It certainly looks a lot like another taper tantrum. Bond yields are up almost 20% over the past two weeks (from 1.07% to 1.28% as of this afternoon) as investors bail. If bonds are no longer a safe haven, there are alternatives. The problem, Bloomberg points out, is global with bond markets everywhere save China in retreat.

 

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Gold goes from star commodity to laggard in shocking reversal

Bloomberg/Yvonne Yue Li, Josehph Richter and Eddie Spence/2-17-2021

“Spot prices touched a seven-month low on Friday, deepening a slump and breaching through a support level that analysts say could portend further losses. Bullion pared some of Friday’s losses as the dollar moved lower, though is already down more than 6% this year.”

USAGOLD note:  Shocking reversal? Does a 6% drop thus far this year qualify as “shocking”? Market leaders – like gold with respect to the commodities complex – often correct while the rest of the field plays catch-up.  Nothing new about that. The one thing I’ve learned about gold over my many years in the business is that just when you think you’ve got it pegged, it turns around and does precisely the opposite. It has a mind of its own on the upside……and on the downside, by the way. While the media continues to bash gold at every opportunity, it is still up almost 11% over the past 12 months, while the DJIA, the financial media’s darling, is up 8%.

Gold and Dow Jones Industrial Average
(Percent gain through 2/19/2021)

Line chart showing gold and the dow jones industrial average through 2-19-2021

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

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Breaking down America’s imports and exports by product – HowMuch

graphic illustration of total imports breakdown how much 2020

graphic illustration of exports breakdown how much 2020

Courtesy of HowMuch.net • • • Click to enlarge

“In 2020, the United States imported $11.1 trillion worth of goods and services while exporting $8.5 trillion,” says HowMuch.net. “Breaking this down into the various product types draws a picture of the American economy. Looking at the value of the different categories, we get a sense of what products the U.S. relies heavily on other countries for, and which they produce in excess.

      • America exports $2.84 trillion in services, nearly twice the $1.85 trillion it imports.
      • Imports of goods stood at $9.23 trillion in 2020, nearly twice the $5.67 trillion it exports.
      • The difference between imports and exports of consumer goods, except food and automotive is $1.85 trillion, the largest imbalance favoring imports.
      • On the flip side, the gap between imports and exports in the other business services category came in at $570 billion favoring exports.
      • Total exports dropped by $1.55 trillion and imports by $1.41 trillion in 2020 compared to 2019.”
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The absurd electric bills slamming Texans

YahooNews/Pilar Menendez, William Bredderman and Steven Monacelli/2-17-2021

“The nightmare only got worse on Monday, when she realized her bill had increased by another $2,500. In comparison, Scott-Amos paid $33.93 last year for the entire month of February. ‘I don’t have that type of money,’ she said. ‘I now owe Griddy $2,869.11. This is going to put me in debt, this is going to mess up my credit. Are they going to cut me off? In the middle of this ongoing crisis?’”

USAGOLD note:  Not a joke by any stretch, but the Ramirez cartoon reflects what a good many trapped in this polar vortex “disruption” are thinking ……

Ramirez cartoon showing longhors wishing for some global warmingCartoon courtesy of MichaelPRamirez.com

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US trade deficit rises to 12-year high of $679 billion

NewsMaxFinance–AP

“The U.S. trade deficit rose 17.7% last year to $679 billion, highest since 2008, as the coronavirus disrupted global commerce and hampered President Donald Trump’s attempts to rebalance America’s trade with the rest of the world.”

USAGOLD note:  An unexpected set-back that could in time find its way to the gold and dollar markets ……It happened, we should remember, at a time when oil (a major influence on the imbalance in the past) was trading at low prices.

bar chart showing the trade imbalance - biggest deficit since 2008

 

Sources:  St. Louis Federal Reserve, U.S. Census Bureau, U.S. Bureau of Economic Analysis
Click to enlarge


Repost from 2-8-2021

 

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China-EU trade deal strengthens Beijing’s hand in power game with US

South China Morning Post/Wang Xiangwei

photograph of 100 yuan and $100 bills“The fact that Beijing was able to make enough concessions and wrap up the talks in a mere 10 months, after years of procrastination, says a lot about China’s reimagined diplomatic priorities for a post-Covid-19 world.”

USAGOLD note:  One of the consequences of the just-completed China-EU trade and investment accord that is not getting a great deal of attention is the effect it will have on the dollar’s reserve currency status. Europe, as a whole, is likely to build yuan reserves in order to support its purchases from China. The Regional Comprehensive Economic Partnership signed among Asian countries (which excluded the United States) in November will have a similar effect in the Far East. The two together will advance China’s dream of making the redback an international reserve currency. Logically, the redback’s gains will be the greenback’s loss. It is not surprising that the Biden administration has registered its “concern” about the agreement with EU officials.


Repost from 1-4-2020

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Instititional investors turn to gold

TheNorthernMiner/Kelsey Rolfe

photograph of stack of unmarked 100 ounce gold bars“‘As bond yields have come down, the arguments against gold have started to weaken — there’s not much income from bonds either,’ Calum Mackenzie, partner and head of investment for Canada at global consultancy Aon, said in an interview. ‘Investors looking for that downside protection and that portfolio diversifier that bonds used to provide, they’re looking at gold.'”

USAGOLD note: We referenced this Northern Miner article in yesterday’s DMR and report it here for those who may have missed it. The focus is on Canadian funds and institutions’ interest in gold but the rationale is equally at work in other countries including the United States.


Repost from 2-10-2021

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Gold: To invest, or not to invest?

Arab News/Hala Tashkandi

gold coins against background of bar and line charts stacks“Gold can enhance any investment portfolio in four key ways. It generates long-term returns, acts as a diversifier and mitigates losses in times of market stress, provides liquidity with no credit risk and, finally, improves overall portfolio performance.”

USAGOLD note:  This article, written with the first-time investor in mind, lays out the basic rationale for gold ownership in clear-cut terms.


Repost from 12-30-2020

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World’s biggest gold mines

Statista/Niall McCarthy

map showing locations of the world's largest operating gold minesChart courtesy of Statista.com • • • Click to enlarge

“The levels of demand for gold are now prompting questions about whether reserves of the commodity are being exhausted and if humanity has reached “peak gold”. Some experts believe we have indeed reached that point, a view that is supported by annual gold production statistics. Mining has largely leveled off in recent years.”

USAGOLD note:  A little known fact – The highest production globally comes from mines located in Nevada, according to this Statista article.


Repost from 9-30-2020

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Tesla’s interests go beyond just bitcoin, according to BBC News

BBC News

photo portrait of Elon Musk holding spaceship prototype model“In a stock market filing, Tesla said it ‘updated its investment policy’ in January and now wanted to invest in ‘reserve assets’ such as digital currencies, gold bullion or gold exchange-traded funds.”

USAGOLD note:  Tesla’s bitcoin purchase got all the attention in the financial media so it is interesting to learn that it also publicly expressed an interest in owning gold bullion.


Repost from 2-10-2021

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Danger lurks in global markets transfixed by rising bond yields

Bloomberg/Liz McCormick and Anchalee Worrachate

cartoon showing bicycle with silver dollar wheels and no wheels bike at standstill“Treasury yields have jumped to the highest since the early days of the pandemic as the vaccine rollout and potential for another massive U.S. stimulus package revive animal spirits and the prospect of inflation. But years of near-zero rates and a historic debt overhang have left both stocks and bonds uniquely vulnerable to deep losses if yields climb too far on a growth break-out.”

USAGOLD note:  We continue to be befuddled as to why anyone would buy Treasuries at current yields. Does it really matter that the 10-year Treasury paid .9% in November and pays 1.17% now? The bond market, according to this article, is worried about inflation with one analyst saying “If you have a typical portfolio whereby 60% of assets is in equities and 40% in bonds, you will be hit on both legs.” That’s why prudent investors diversify in a true sense – with assets that are not simultaneously someone else’s liability.


Repost from 2-9-2021

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The year the Fed changed forever

Economic Times/Jeanna Smialek-New York Times

photo of Fed chairman Jerome Powell delivering Congressional testimony“‘Fiscal and social policy is the rightful realm of the people who are accountable to the American people, and that’s us — that’s Congress,’ [Pat]Toomey, who could be the next banking committee chair and thus one of Powell’s most important overseers, said last week from the Senate floor.”

USAGOLD note: Toomey’s comment is well-taken but the American people will see the Fed as filling a vacuum left by a Congress unable to act in the midst of one of the most profound crises in modern times. As we have said repeatedly here over the past year, though few would quarrel with the policies the Fed instituted in 2020, many are preparing their portfolios for the potential repercussions.


Repost from 12-28-2020

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