Author Archives: News

CoinNews.net/Staff

Repost from 10-18-2021

“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.

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.

Bloomberg/Shelly Hagan

Repost from 10-13-2021

“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.)

Bloomberg/Steve Matthews/10-18-2021

“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?

Financial Times/Staff/10-19-2021

“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.

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

Chart courtesy of TradingEconomics.com

FoxBusiness-Wall Street Journal/10-15-2021

“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.

MarketsInsider/Ethan Wu (Reuters)

Repost from 10-12-2021

“‘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.”

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)

Dollar Collapse/John Rubino

Repost from 8-27-2021

“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.”

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)

Chart courtesy of TradingEconomics.com

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.

Chart courtesy of the World Gold Council • • • Click to enlarge

MarketsInsider/Isabelle Lee

Repost from 10-6-2021

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.

The Economic Times/Staff

Repost from 10-6-2021

“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.

South China Morning Post/Stephen Chen

Repost from 10-6-2021

“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.

Financial Times/Kate Duguid/10-6-2021

“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 …

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.”

Financial Times/Martin Arnold

Repost from 10-5-2021

“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

BusinessInsider/Grace Kay

Repost from 10-5-2021

“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.”