Author Archives: News

Perth Mint gold and silver bullion sales surge in September

CoinNews.net/Staff

Repost from 10-18-2021

photo of gold Australian Kangaroo“Demand for Australian bullion products surged in September, figures from The Perth Mint show, with sales of gold coins and bars the highest in five months and sales of silver coins and bars the best in three months. The Mint’s minted bullion sales not only surpassed those from the prior month but those of a year ago.”

USAGOLD note: The Perth Mint is seeing much better results than the U.S. Mint thus far in 2021 in terms of percentage growth. We need to keep in mind though that the U.S. Mint was down for a few months due to a changeover in coin design to the new American Eagle. Gold bullion coin sales for October for the gold American Eagles have been very strong – 121,500 troy ounces and already 6% over September sales.

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Inconceivable? Yields are defying all expectations

Bloomberg/John Authers/10-14-2021

“In the case of 10-year TIPS yields for the U.S., they have managed to fall once again below the once-inconceivable minus-1% level. Yields like that are not supposed to happen, and certainly not when the economy is growing and people are worried about inflation.”

USAGOLD note: Authers ties together presidential politics, bond yields, and inflation. He concludes with a question: “Can I summarize this neatly?” And answers: “No not really.” But between thesis and final conclusion, he offers much to consider including a return to a theme he first advanced months ago: How do we go about dealing with the consequences of a paradigm change from low inflation and interest rates to the polar opposite? There are a couple of time-tested options we might suggest along those lines and both now seem to be priced favorably.

 

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Central bankers are spooked by signs that inflation is lingering for longer

Bloomberg/Shelly Hagan

Repost from 10-13-2021

Artist rendering of two doves, Asian motif“But the forecasts — displayed as anonymous dots on a chart — can be affected by shifts in personnel. In addition to Powell’s chairmanship, President Joe Biden has the chance to pick three other governors on the seven-seat Board in Washington. A decision on the chair is expected this fall.”

USAGOLD note: This article is of value to gold investors on several different levels having to do with the politics of central banking. Some might quarrel with our use of the word “politics” with reference to central banking, but it has become apparent that it now plays a direct role in monetary policy. The Biden administration has some major decisions ahead of it in that regard – decisions that could radically alter the already dovish course of the Federal Reserve with an even more dovish tilt. (In addition to appointments listed above, it will also be choosing replacements for Robert Kaplan and Eric Rosengren, “two of the most hawkish” regional Fed presidents.)

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Fed staff says Wall Street is getting inflation all wrong

Bloomberg/Steve Matthews/10-18-2021

photograph of Federal Reserve monetary report booklets“The Federal Reserve’s army of more than 400 Ph.D. economists has a message on inflation for policy makers and the American public: Chill out.”

USAGOLD note: Presented as a public service announcement …… Out of the army of economists at the Fed, how many predicted a year ago that the inflation rate would go from 0.5% to over 4.25%? Not many, we would venture. So why should we believe Fed economists when they tell us inflation will be under 2% in 2022?

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Chinese developer Sinic defaults as Evergrande deadline looms

Financial Times/Staff/10-19-2021

photograph of China Evergrande sign with Chinese characters

“Sinic Holdings has added to a growing list of defaults across China’s contracting real estate sector as markets are braced for a deadline this weekend for developer Evergrande to settle interest payments on its offshore bonds.”

USAGOLD note: Far from tansitory, far from contained …… China appears willing to bail out bond investors within its borders, but the jury is still out on foreign holders. If Evergrande defaults “offshore” this weekend, we will know soon enough whether or not we move to the early stages of a global contagion. You will find details at the link worth considering. Sinic’s default and the prospect of still more was probably a major impetus for gold’s strong move to the upside in overnight markets.

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World Bank economist rules out risk of hyperinflation in Argentina

Buenos Aires Times/Staff

Repost from 10-15-2021

“I don’t see that risk. Inflation is around 50 percent but the government still has some tools to prevent the crisis from deepening. In addition, reaching an agreement with the IMF will anchor expectations, further reducing risk.” – William Maloney, World Bank chief economist for Latin America, when asked about the risk of hyperinflation in Argentina

USAGOLD note: Argentina, we are confident, feels reassured by these words. Calm, no doubt, has returned to financial markets. With thanks to Rogue Economics‘ Bill Bonner, who included this anecdote in a recent report. As shown in the chart below, it took 10 Argentina pesos to buy a dollar in 2016. It now takes almost 100.

US Dollar/Argentina Peso
line chart showing depreciation in the Argentina peso against the U.S. dollar 2012-2021
Chart courtesy of TradingEconomics.com

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White House decisions on Fed leadership complicated by trading furor

FoxBusiness-Wall Street Journal/10-15-2021

photo showing Jerome Powell and Lael Brainard during Fed Board of Governors meeting“Mr. Powell, a Republican, has been the front-runner to keep the job when his term expires early next year. But questionable trading activities by two Fed bank presidents, first reported last month by The Wall Street Journal, cast a cloud over his prospects by giving a vocal minority of Democrats who already opposed his nomination new grounds to call for his replacement.”

USAGOLD note: Interestingly, a former Fed economist says if Powell is implicated in the trading scandals, it involves Lael Brainard, the oft-mentioned alternative, as well. This is a solid update on the critical changes unfolding at the Fed.

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Markets could drop as much as 20% if risk-taking investors pull back, says Bank of England

MarketsInsider/Ethan Wu (Reuters)

Repost from 10-12-2021

graphic representation of a tsunami

“‘Asset valuations could correct sharply if, for example, market participants re‐evaluate the prospects for growth, inflation or interest rates,’ the Bank of England said in a statement. ‘Any such correction could be amplified by vulnerabilities in market‐based finance that were exposed in March 2020.'”

USAGOLD note:  The trickle of articles on inflation graduating from “transitory” to “persistent” has turned to a river. The tide of opinion has suddenly turned. Though the central banks are sticking to the transitory narrative, the market players are beginning to register their doubts. The vulnerabilities the Bank of England mentions will be exacerbated by the excessive leverage at play and programmed trading. That is why Leon Cooperman recently warned that “when the market goes down, it’ll move so fast your head will spin. It’s all algorithms.”

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Inflation expectations log new record

TradingEconomics/Staff

Repost from 10-12-2021

“Year ahead inflation expectations in the United States rose further to 5.3 percent in September 2021, the eleventh consecutive monthly increase and a new series high since the inception of the survey in 2013. Three-year-ahead inflation expectations also increased, to 4.2 percent from 4.0 percent, the third consecutive monthly increase and also a new record. In contrast, year-ahead home price expectations dropped by 0.4 percentage points to 5.5 percent, the fourth consecutive monthly decrease, driven mostly by respondents from the ‘West’ and ‘Northeast’ Census regions. Also, while expectations about year-ahead price changes decreased for all the commodities, led by a slowdown in the price of gas, college education, and food.”

USAGOLD note: Inflation expectations are an important data set because it, not the CPI inflation rate, is what is formally used to calculate the real rate of return.

Year ahead inflation expectations
(Percent change monthly 2013 to September 2021)

line chart showing New York Fed inflation expectations

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Do empty shelves count as inflation?

Dollar Collapse/John Rubino

Repost from 8-27-2021

graphic image of heads-up sign“As for whether empty shelves equal inflation, that’s complicated. For now let’s just say that 1) shortages are both a cause and an effect of rising inflation, and 2) it’s getting harder to view Third World financial crises as something that can’t happen here.”

USAGOLD note: Inflation can take on many forms as Rubino points out in this article – rising prices, shrinking quantities, and empty grocery shelves. A Costco in Washington state, he says, is currently out of tp – “shades of 2020.”

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Producer inflation sets record for sixth straight month

Producer prices jumped 8.6% annually in September

FoxBusiness/Jonathan Garber/10-14-2021

“Producer prices rose at the fastest annual pace on record for the sixth straight month in September as supply-chain bottlenecks and materials shortages continued to drive costs higher.”

USAGOLD note: We should keep in mind that wholesale price inflation is not just an American problem. China, for example, reported producer prices rising 10.7% year on year this morning. In short, price increases in one country can and will be passed along to other countries eventually showing up in the prices for consumer goods.

US producer prices
(2012-September 2021)

Line chart showing US producer prices as a percent 2012 to present
Chart courtesy of TradingEconomics.com

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Gold ETFs continue to slide in September driving net outflows in Q3

World Gold Council/Gold Hub

Repost from 10-13-2021

“Gold-backed ETFs (gold ETFs) experienced net outflows of 15.2 tonnes (t) (-US$830mn, -0.4% AUM) in September. Outflows in Europe and North America were only partially offset by inflows in Asia. Global gold ETF holdings fell to 3,592t (US$201bn) during the month  – the lowest tonnage level since April – as the gold price fell on the back of rising yields, a stronger dollar, and a reduction in COMEX managed money net long positions.”

USAGOLD note: Analysts point to ETF inventory flows as an indicator of price direction because that is where institutional interest manifests itself. At the moment, institutions are essentially out of the gold market – neither buyers or sellers, as shown in the chart below. Note, too, the close correlation between price advances and declines and ETF inflows and outflows. Behavior among fund and institutions, we will add, is mercurial. The present indifference could turn to strong interest in a heartbeat.

overlay chart showing gold ETF inflows and outflows and the price of gold
Chart courtesy of the World Gold Council • • • Click to enlarge

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Oil could surge above $100 in the event of a cold winter – and spark inflation that drives the next macro crisis, BofA says

MarketsInsider/Isabelle Lee

Repost from 10-6-2021

photograph of oil traders in Houston offices

USAGOLD note: Bank of America’s oil price forecast reads like something out of the 1970s when tight oil supplies pushed the globe into a stagflationary mire. Supply pressures, says the bank, could “lead to a second round of inflationary pressures around the world. Put differently, we may just be one storm away from the next macro hurricane.” Oil Price.com reported recently that some options traders are betting oil could go to $200 per barrel.

 

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India reserve gold acquisitions reduce sovereign credit risk, according to Gold Policy Center study

The Economic Times/Staff

Repost from 10-6-2021

Map of India colored appropriately - gold“RBI’s addition of gold reserves from 2018 will help the sovereign rating of India, a research by Indian Institute of Management-Ahmedabad released on Friday said. The study of 48 countries by the premier institute’s ‘India Gold Policy Centre’ for two decades ending 2020 said high levels of central bank gold reserves have a strong impact in reducing the sovereign credit risk of that country in international markets.”

USAGOLD note: In other words …… Diversification matters.

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China’s population could halve within the next 45 years, new study warns

South China Morning Post/Stephen Chen

Repost from 10-6-2021

photo of statues of many gold soldiers

“The projection was based on the official birth rate of 1.3 children per woman last year – well below the figure of 2 needed to keep the number stable – and forecast a much more dramatic decline than previous estimates.”

USAGOLD note: Logic tells us the reduction will not happen all at once 45 years from now, but gradually between now and then, so we are not talking about a distant concern. Many will remember the era of the “population bomb” and the projected dystopian impact it was going to have on the economy and environment. Now, with this report, we see a big dent put in that scenario. The obvious question beyond the impact on China itself is: What would such a reduction in China’s population, even if occurring gradually, have on the global economy? This development was completely unexpected and many will be surprised by the headline above.

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U.S. government bond market specialists warn of fragility in Fed pullout

Financial Times/Kate Duguid/10-6-2021

photo of Fed Seal on floor of Marriner Eccles Building Washington DC

“US government bond specialists are starting to fret over how the world’s most important market will cope when the Federal Reserve pulls back its pandemic-era support.”

USAGOLD note: If this level of concern is rattling around the bond market, it most certainly is echoing down the corridors of the Marriner Eccles building. It is difficult to believe that it won’t affect decision-making on some level. This article is an important read …

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With prices at their lowest in over a year, silver’s ‘close to being a bargain’

MarketWatch/Myra Saefong/9-30-2021

photo of a stack of silver coins and bars“After silver’s climb earlier this year to the highest prices since 2013, the metal since has significantly underperformed sister metal gold. With silver’s value dropping to its lowest in 14 months, some investors may see an opening to buy.”

USAGOLD note: Saefong does an excellent job of outlining the current mood among silver market analysts which appears to be, at this juncture, as mercurial as the metal itself. We missed this piece when it was first published, but ran into it late last week (If you are wondering about the September date.)

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Trade gap widens to record high in August

Trading Economics/Staff

Repost from 10-5-2021

“The trade deficit in the US widened to a record high of $73.3 billion in August of 2021, higher than market forecasts of $70.5 billion. Exports edged up 0.5% to $213.7 billion, the highest since May of 2019, boosted by sales of nonmonetary gold and natural gas while shipments fell for autos and parts, civilian aircraft, corn and travel. Imports were up 1.4% to a new all-time high of $287 billion, namely pharmaceutical preparations, toys, games, organic chemicals, transport and travel. The deficit with China increased $3.1 billion to $28.1 billion. The deficit with Canada increased $1.4 billion to $5.1 billion while the deficit with Mexico decreased $1.9 billion to $6.6 billion.”

bar chart showing the trade balance record high August 2021

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German inflation hits 29-year high of 4.1%

Financial Times/Martin Arnold

Repost from 10-5-2021

photograph of German notgeld Stammbach 1921

“German inflation hit 4.1 percent in September, its highest level for 29 years, prompting some economists to question whether central bankers are right to assume the surge in prices is only temporary and will disappear next year.”

USAGOLD note: Many might pass over the headline above as typical of the trends at work in economies around the world including the United States. In Germany, however, where inflation has been generally unknown over the past several decades and gold demand is already running at very high levels, the effect will be profound.


Image: Stammbach notgeld, Germany, 1921

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The supply-chain crisis is rattling Americans as shipping delays hit historic highs

BusinessInsider/Grace Kay

Repost from 10-5-2021

graphic image of inflation genie out of the bottle“The survey of over 1,000 US consumers found that 82% of Americans are concerned about how the disruptions in the global supply chain will impact their life plans, including birthdays, holidays, and the ability to purchase necessary supplies.”

USAGOLD note: The supply chain disruptions, of course, are the rationale the Fed uses to justify its position that inflation is transitory. At the same time, over half of Americans, according to this article, believe that “the supply chain crisis will never end.”

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