Author Archives: News
Short and Sweet
Gold, vanadium, europium reveal the existence of a mysterious particle
“To observe the Majorana fermions, the team of physicists from the Massachusetts Institute of Technology, the Institute of Technology at Delhi, the University of California at Riverside, and the Hong Kong University of Science and Technology, designed and built a material system that consists of nanowires of gold grown atop a superconducting material, vanadium, and dotted with small, ferromagnetic ‘islands’ of europium sulfide, which is a ferromagnetic material that is able to provide the needed internal magnetic fields to create the Majorana fermions.” – Valentina Ruiz Leotaud, Mining.com/
USAGOLD note: This must have been what Ben Bernanke was talking about years ago when he said he didn’t understand gold. [Smile] Gold’s allure, to be sure, is a mystery to some, but for those who understand the ever-present dangers imposed by the money printing press, the only mystery is why so few own it.
“And as it was found near an Anglo-Saxon cemetery, it may have been buried in a barrow (burial) and scattered by centuries of ploughing.” – Dr. Adrian Marsden, numismatist, Norfold Historic Environment Service
USAGOLD note: The coins, according to this report, were minted in the Byzantine Empire and the Merovingian kingdom (modern dary France). Britain did not mint their own coins at the time – about 610 AD.
“Unprecedented trade surpluses and record inflows into its bond market are giving China a stockpile of dollars unseen since the days when the ‘Asian savings glut’ was blamed for keeping U.S. interest rates excessively low and fueling the sub-prime mortgage crisis.”
USAGOLD note: It used to be that the lion’s share of these surplus dollars was rerouted to the U.S. Treasuries market, but that is no longer the case. So, where is it going? This article attempts to answer that question but, as the headline suggests, necessarily comes up short. For years, gold market analysts have believed that a portion is going surreptitiously to gold reserves.
China foreign exchange reserves
Chart courtesy of TradingEconomics.com
“Federal Reserve Chair Jerome Powell and Governor Lael Brainard were spotted at the White House on Thursday as President Joe Biden mulls a decision on appointments at the central bank, according to a person close to the process.”
USAGOLD note: Powell, a Republican, remains the favorite especially since he has proven himself particularly in tune with the Biden agenda. Lael Brainard, however, lurks in the background as a very dovish alternative. InTouch Capital Markets rates her the second most dovish member of the FOMC behind Neel Kashkari. Powell, though rated a dove, is more toward the middle of the pack. We should learn soon if the Biden administration is willing to pass on the opportunity to appoint a lifelong Democrat who leans in the direction of the progressives or stick with the more centrist Mr. Powell.
“President Joe Biden acknowledged that Americans are feeling the pressures of inflation and goods shortages, promising that his soon-to-be-signed infrastructure legislation is part of his plan to overcome the extended effects of the coronavirus pandemic.”
USAGOLD note: Normally, we stay away from the political humdrum in Washington, but this statement from Biden is too egregious to leave alone. The president, it would seem, has a curious view of cause and effect. If the prevailing view in the White House is that massive spending is the cure for inflation, then nothing – save possibly the Fed – stands in the way of runaway inflation. Removing Powell from the chairmanship in favor of Lael Brainard, under such circumstances, seems the most logical next checkoff on the Biden agenda. Nothing, then, would stand in the way of wanton money printing. If the comments featured above are not a strong endorsement of Modern Monetary Theory (and by proxy gold ownership), we do not know what is.
“The survey showed 1 in 4 consumers reducing their living standards due to price increases, while half of all families anticipated reduced real income in the year ahead when adjusted for inflation.”
Consumer Sentiment Index
(University of Michigan, 2012-2021)
Chart courtesy of TradingEconomics.com
USAGOLD note: Not a very comforting scenario …… This article emphasizes inflation as the reason for plunging consumer confidence, but we see it as a warning shot across the Fed’s bow on anything resembling tighter monetary policy.
“Investors drawn to cryptocurrencies can be forgiven for having an expectation of high returns, especially lately. After all, even as the S&P 500 Index more than doubled in the past five years, Bitcoin rocketed more than 80-fold — albeit with much of the rally occurring in the past year. ‘Memecoins’ such as Dogecoin and Shiba Inu have also surged, often for no particular reason.”
USAGOLD note: These are the sorts of things that happen historically at the end of super mania financed by funny money ……This now worthless token sold for $2681.80 last week at the top. On Monday, it was trading at one-half cent.
“‘A worrying sign is the passthrough of inflation from input prices to output prices. The input price inflation has been high for many months by now, driven by the rising commodity prices,’ Zhang Zhiwei, chief economist at Pinpoint Asset Management wrote.”
USAGOLD note: A butterfly in China flaps its wings ……
“Annual inflation rate in the US surged to 6.2% in October of 2021, the highest since November of 1990 and above forecasts of 5.8%. Upward price pressure was broad based, with energy costs recording the biggest increase (30% vs 24.8% in September), namely gasoline (49.6%). Inflation also increased for shelter (3.5% vs 3.2%); food (5.3% vs 4.6%, the highest since January of 2009), namely food at home (5.4% vs 4.5%); new vehicles (9.8% vs 8.7%); used cars and trucks (26.4% percent vs 24.4%); transportation services (4.5% vs 4.4%); apparel (4.3% vs 3.4%); and medical care services (1.7% vs 0.9%). The monthly rate increased to 0.9% from 0.4% in September, also higher than forecasts of 0.6%, mainly due to rises in cost for energy, shelter, food, used cars and trucks, and new vehicles.”
US Consumer Inflation Rate
(% annualized, 2016 to October 2021)
Chart courtesy of TradingEconomics.com
USAGOLD note: Gold jumped $18 on the news, breaking through the $1833-35 resistance level mentioned in this morning’s DMR (below) – at one point trading over the $1850 mark.
“Gold demand (excluding OTC) fell 7% y-o-y to 831t in Q3. This drop was almost exclusively driven by ETFs – which swung from very large inflows in Q3 2020 to modest outflows this year – overshadowing strength in other sectors of demand during the quarter. Jewellery, technology and bar and coin were significantly higher than in 2020. Modest central bank purchases were a solid improvement on the small net sale from Q3’20. Supply was down 3% y-o-y due to a significant drop in recycling.”
USAGOLD note: A generally favorable report on gold demand for the third quarter with the expectation that the positive trends are likely to continue. One surprise was record year-to-date growth for coin and bullion demand in the United States. We referenced this report in Friday’s DMR and repost it here for those who may have missed it.
United States Producer Price Index
Chart courtesy of TradingEconomics.com
“Wholesale prices in the U.S. surged again in October and offered little sign that the biggest increase in inflation in decades is going to peter out soon. The producer price index rose 0.6% last month, the government said Wednesday.”
USAGOLD note: Gold bumped higher after the report’s release. Year-on-year the producer price index posted an 8.6% gain – nearing double digits.
“The cost of food commodities that make up a typical breakfast has soared to its highest point in a decade under the strain of bad weather and supply-chain crunches, providing another in a long list of upward pressures on global inflation.”
USAGOLD note: This is the first we’ve heard of it, but Financial Times has what they call the “breakfast indicator,’ and it is up 63% (!) since 2019 … and the big food companies say prices will worsen before they get better.
“We’re going to end up with a real shortage of energy. And when you have a shortage, it’s going to cost more. And it’s probably going to cost a lot more.” – Steve Schwarman, Blackstone CEO
USAGOLD note: Schwarzman says banks are not making loans to drill for oil and that is going to create problems in the supply. Prices will rise globally and social unrest will follow. If you are old enough to remember the 1970s, rising oil prices and accompanying shortages are going to have the ring of familiarity.
“Outstanding U.S. public debt increased $1.4 trillion over the past year. Who were the buyers? The Federal Reserve’s Quantitative Easing (QE) policy gobbled up a net $1 trillion of Treasuries, while foreign buyers snapped up nearly $500 billion.”
USAGOLD note: For those of us who have been involved in the gold space for any length of time, the question posed in the headline will provoke a knowing smile or two. The purchase of government debt used to be called monetization, the very definition of which is printing money and, therefore …… inflationary. The value of this article lies in its presentation of relevant statistical facts, i.e., the Fed’s purchasing 70% of the federal debt issued last year.
USAGOLD note: An incredible tale of a fabulous treasure trove retrieved over the past five years from Sumatra’s Musi River. near Palembang. This article includes many photographs one of which shows part of a life-sized 8th century Buddha “studded with gems, and worth millions. ……”
“[W]ith available copper inventories at LME warehouses falling below 20,000 tons — less than China’s factories consume in one day — traders are grappling with the possibility that there simply won’t be metal available to deliver.”
USAGOLD note: Obviously, if there’s an availability problem with metals like copper there can just as easily be the same with gold or silver – a prospect we should not take lightly.
“The Federal Reserve is expected to take its first major step away from the easy policy it put in place to fight the pandemic, a milestone on the road back toward normal.”
USAGOLD note: Unless you’ve been living in a cave, the Fed announcing a taper will not come as a surprise. Nevertheless, even though there has been some consequent reshuffling of the deck on Wall Street, it is our distinct impression that we have yet to see the full reaction. We will know more of the Fed’s plans by late Wednesday.
Hedge funds seen facing heavy losses amid wrong-way Treasury bets ahead of Fed tapering, traders say
“Some hedge funds are likely to be facing substantial losses as the result of a steady narrowing in the differential between yields for long-dated U.S. government debt and shorter-dated ones, traders said on Friday.”
USAGOLD note: The problem is excessive leverage. Either way the rabbit (the Fed) jumps tomorrow (or even if it doesn’t jump at all), there is trouble building in the system and it is difficult to know the extent of the consequences. Who would have guessed two weeks ago that we would be back to worrying about the narrowing yield curve? MarketWatch describes that narrowing as “a harbinger of potential economic trouble.”
“[N]ow a crisis in China’s property sector, as manifest in the financial problems of developers Evergrande and Fantasia, has many worried that China’s near-insatiable demand for raw materials, which long proved a potent engine of growth for emerging economies, has run out of steam.”
USAGOLD note: We have raised the prospect of a slowdown impairing commodity demand in China – a situation that might also cause some to think gold demand might be hampered as well. There is another aspect to China’s property bust though that is likely to encourage gold demand – the global systemic risks and the potential for a contagion. As such, it is not just Chinese investors likely to seek refuge in the yellow metal.
“Schlick started minting coins with his newly mined silver, similar in size and weight to the Guldengroschen (shortened to Guldener), which were just gaining popularity at the time – each 1⁄8th of a Cologne Mark of silver. Schlick called his coins, which weighed roughly an ounce and were an inch and a half (4cm) across ‘Joachimsthalers’. German speakers to the north and west shortened this to ‘thaler’, while Czech and Slavic speakers to the south and east called them ‘tolars.'”
USAGOLD note: Now you know how the dollar got its name – historically associated with an ounce of silver. Nineteenth and Twentieth century American silver dollars contain .77345 ounces of pure silver.
Attribution: Classical Numismatic Group, Inc. http://www.cngcoins.com, CC BY-SA 3.0 <http://creativecommons.org/licenses/by-sa/3.0/>, via Wikimedia Commons