Mental Floss/Elizabeth Miller
“Gold’s symbol on the periodic table, Au, comes from its Latin name aurum, which means ‘glowing dawn.’ This metal’s tantalizing yellow color and shining exterior has made gold a prized element in jewelry and treasured objects for thousands of years—but, amazingly, all of the gold that has ever been refined could melt down into a single cube measuring 70 feet per side. Read on for more opulent facts.”
USAGOLD note: A refresher course on humanity’s long-term attachment to the yellow metal dating back to the Thracian civilization 4000 years ago. We take special note of fact #10. On a sunny autumn day, the golden Colorado capitol dome does truly shine lustrously against the bluest sky you will ever see . . . . . .
Image by Billmcmillan [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], from Wikimedia Commons [Edited]
Repost from 9-27-2019
“Federal Reserve officials are considering a new program that would allow banks to exchange Treasurys for reserves, a move aimed at ensuring liquidity during difficult times that also would help the central bank decrease the size of its nearly $4 trillion balance sheet. . . . In some quarters, the idea is viewed as a natural extension of current Fed policy. Others, though, think it in essence could be a repackaged form of quantitative easing and thus yet another iteration of the Fed’s decade-long tinkering in financial markets.”
USAGOLD note: Here we go again. . . . Another new and sure-to-please form of financial engineering designed specifically to pump money into the economy.
Repost from 4-29-2019
“‘I think that we’re going into a recession. Look, I’m not going to sit here and pinpoint the day, the week or the month it’s going to happen, but it’s out there,’ said David Rosenberg, chief economist at Gluskin Sheff. ‘I think people tend to forget that the cause of the recession are the lags between the monetary policy tightening cycle and the eventual hit on GDP growth.'”
USAGOLD note: We should take into account not just trade war fears but the poor demand at yesterday’s auction of 10-year notes (covered below). The stock market is down on the trade war but we also believe that the inverted yield curve, as reported at the link above, is also a big factor. Above we repost an important Short and Sweet on the inverted yield curve as it relates to the gold market.
World Gold Council/Demand Trends/5-2-2019
Map courtesy of the World Gold Council
“Central banks bought 145.5t of gold, the largest Q1 increase in global reserves since 2013. Diversification and a desire for safe, liquid assets were the main drivers of buying here. On a rolling four-quarter basis, gold buying reached a record high for our data series of 715.7t. Q1 jewellery demand up 1%, boosted by India. A lower rupee gold price in late February/early March coincided with the traditional gold-buying wedding season, lifting jewellery demand in India to 125.4t (+5% y-o-y) – the highest Q1 since 2015. ETFs and similar products added 40.3t in Q1. Funds listed in the US and Europe benefitted from inflows, although the former were relatively erratic, while the latter were underpinned by continued geopolitical instability. Bar and coin investment softened a touch – 1% down to 257.8t. China and Japan were the main contributors to the decline. Japan saw net disinvestment, driven by profit-taking as the local price surged in February.”
USAGOLD note: The World Gold Council reports U.S. bar and coin demand rose 38% over the past year (through the first quarter). Global central banks and financial institutions drove physical gold demand the past 12 months raising once again the question if professional investors know something that retail investors do not. As the chart above illustrates, the United States ranked at the top globally for growth in gold coin and bullion demand over the past year, while Asian demand fell back.
Repost from 5-3-2019
Reuters/David Lawder, Jeff Mason and Michael Martina/5-8-2019
“The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world’s two largest economies, according to three U.S. government sources and three private sector sources briefed on the talks.”
USAGOLD note: This report from the Reuters news agency is unlikely to be well-received in financial circles. It will be seen as China forcing the White House’s hand, a justification for the president’s tariff stance, and an indicator that the split is far-deeper than most thought prior to its publication.
“The central bank’s shift follows an increase in recent weeks in the effective fed funds rate within that band. The benchmark has been above IOER for more than a month and this week crept up to 2.45 percent, fueled in part by rates squeezing higher in other short-term funding markets.”
USAGOLD note: If the Fed is lowering the rate paid on excess reserves, then it is making an attempt to keep the Fed funds rate from rising – a dovish policy stance. The market, it would seem, is inclined to push rates higher. It did not lower rates per se, but it acted to keep them from rising – an interesting distinction.
Repost from 5-1-2019
“Ultra-high net worth individuals (UHNWIs) in India are looking at gold as a viable investment option in 2019, reports suggest. According to a survey conducted by independent global consultancy company Knight Frank, 14 percent Indian UHNWIs are likely to hike their investment in the gold asset class, which is three percent higher than it was in 2018.”
USAGOLD note: The article goes on to note that 20% of the wealthy worldwide intend to increase their gold holdings in 2019.
South China Morning Post/Teddy Ng and Lee Jeong-ho/4-26-2019
“Xi said China would keep the Chinese currency stable within a reasonable range, but would not engage in any ‘beggar-thy-neighbour’ currency devaluation, one of the criticisms of the US towards China. . .Amid concerns that China had failed to live up to its reform pledges, Xi said, ‘China treasures its promises and commitments with a thousand taels of gold.'”
USAGOLD note: That cryptic reference might have been directed to China’s partners along the New Silk Road, i.e., that China has significant gold on hand to back its promises of aid. Such a commitment will play well in Asia where gold remains a highly-valued measure and symbol of real wealth.
Repost from 5-1-2019
Bloomberg/Vildana Hajric and Sarah Ponczek/5-5-2019
“Not that the candidates are shedding any tears. A campaign aide for Senator Bernie Sanders — who is running for the Democratic nomination — touted the concerns among investors as a victory that signals growing support for his ideas like Medicare for All. The aide said it shows that investors who didn’t consider Sanders a real threat before now believe he can win.”
USAGOLD note: It is of more than passing interest that the markets are beginning to react to the possibility of a Democratic win in 2020 sooner rather than later. . .The concern is not misplaced. An assortment of polls now show Trump trailing both Biden and Sanders in the upcoming election and by uncomfortable margins.
“The U.S. government will have to stop borrowing money between July and December if Washington doesn’t agree to raise a legal restriction on public debt, the Treasury Department said on Wednesday.”
USAGOLD note: Here we go again. . . . . .And with the level of partisan rancor on the loose in Washington at the present, who knows where we end up this time.
Financial Times/Sam Fleming and Robin Wigglesworth/5-3-2019
“Having lamented low inflation as one of the great challenges facing central bankers today in March, Jay Powell on Wednesday wrongfooted many investors with comments that seemed to play down the gravity of the problem.”
USAGOLD note: It seems that the complaint from “investors” (as this article refers to the aggrieved parties) was that Powell did not unequivocally verify their market bias – or more accurately provide impetus for profit on their positions. “Powell blindsided us on Wednesday — he upset the entire market view on inflation,” said Tim Duy, at economist at the University of Oregon in the Financial Times article linked above. “[Inflation] outcomes are too low relative to the target, but suddenly they don’t seem to be worried about it. There is something very weird going on.”
“Companies seem to be talking a little bit more about how price increases are helping profits, an early sign that more inflation could be seeping into the economy. ‘It’s not bad. [Prices] are sticking a little bit. Anecdotal evidence is what it is. I think the breadth of it is interesting. The idea that it’s not disastrous for companies is okay. It might even be good,’ said Don Rismiller, Strategas Research’s chief economist.”
USAGOLD note: There have been a number of instances in recent months wherein strategically positioned suppliers have provided anecdotal evidence of consumer price inflation. Somehow though that anecdotal evidence has not translated as yet to the Consumer Price Index published monthly by the U.S. Department of Labor.
Repost from 4-26-2019
Fox News interview with Maria Bartiromo/NewsMax
“We are moving toward stagflation,” Greenspan, who served as chairman from 1987 through 2006, told Fox Business’ Maria Bartiromo on ‘Mornings with Maria.’ “In the process of moving in that direction, it feels good, but it’s a false dawn.”
Repost from 5-3-2019
“Federal Reserve Chairman Jerome Powell faces a tough task on Wednesday, trying to steer clear of word choices that might kickoff a market overreaction, economists said. Making his life tougher is the fact that Wall Street is already unhappy with some of Powell’s recent communications efforts.”
USAGOLD note: Life under the microscope. . . . . Just about anything he says is likely to be seen by someone, or a group of someones, as a gaffe. And then there is always the presence of the President looking over his shoulder – not to speak of the entire international financial community. In an age where the economy seemingly hangs by a thread held tenuously by the central banks, and on every word the Fed chairman utters, the possibility of unintended consequences looms large – not just today but for as long as the central bank plays an overly influential role in the economy and financial markets.
“Oil prices fell 3% on Friday after U.S. President Donald Trump again pressured the Organization of the Petroleum Exporting Countries to raise crude production to ease gasoline prices.”
USAGOLD note: This was the big economic news Friday afternoon. . . . Those with an eye on oil might also want to take a look at the Evans-Pritchard article further down the page.
“On Wednesday the Federal Reserve will make its third monetary policy decision of 2019. With a new GDP print showing another low reading on inflation, the Fed is expected to keep the benchmark interest rate steady at the current target range of 2.25% to 2.50%. In March, the data-dependent Fed signaled no more rate hikes for the year amid tightening financial conditions and geopolitical concerns abroad.
USAGOLD note: Though no suprises are expected, there is always the chance the market for better or worse will read something into the post meeting statement and press conference. More often than not, gold finds Fed Week a challenge. However, with policy for the time being pretty much baked into the cake, the Tuesday/Wednesday conclave could be a non-factor this time around.
The Sydney Morning Herald/Ambrose Evans-Pritchard/4-26-2019
“Donald Trump’s double strangulation of Iran and Venezuela is reducing spare capacity in the global oil markets to wafer-thin levels very fast. If anything goes wrong in the geopolitical cauldron of world energy over the next six months, we will discover whether Saudi Arabia really is capable of cranking up an extra 2 million barrels a day of crude.”
USAGOLD note: Ambrose Evans-Pritchard applies his typically thorough and insightful gift for analysis to the current oil market. . . a must read that includes some surprising speculation on Saudi Arabia’s ability to fill the production gap that would materialize if Venezuela and Iran were indeed out of the picture.
Image: Aramco’s first commercial oil well in Saudi Arabia March 3, 1938.
Financial Times/Colby Smith, Joe Rennison and Mamta Badkar/4-25-2019
“Argentine financial assets tumbled for a second day, amid mounting political worries about the future of President Mauricio Macri’s government as it struggles to grapple with record-high inflation, slowing growth and a weakening currency.”
USAGOLD note: Argentina has been on and off the watch list for a good many years now. Lately, it is back “on” with repercussions in the banking business beyond its borders. The government’s struggle with inflation, a weak economy and a currency that few would consider a savings instrument is the citizen’s struggle. In that respect, there is little doubt that the demand for gold is strong among the citizenry at this point in time. On the other hand, Argentina, the country, is a gold seller having recently reduced its holdings by seven tonnes.
Chart courtesy of TradingEconomics.com
“This increased Russia’s total gold reserves to 69,700,000 ounces or 2,167.9 tonnes, the central bank stated. Gold represents around 18% of the central bank’s total reserves. During the first quarter of 2019, Russia acquired 56 tonnes of the precious metal, buying 37.3 tonnes of that in January and February.”
USAGOLD note: It is unclear at this juncture if all of the additions to Russia’s reserves are coming from its gold mining sector. There has been speculation among some analysts that in addition Russia has been purchasing gold on the open market.
Financial Advisor/Tracey Longo
“In fact, year after year, the firm has found that investors are often their own worst enemy, failing to exercise the necessary discipline to capture the benefits markets can provide over longer time horizons, while succumbing to short-term strategies such as market timing or performance chasing as they did in 2018, Dalbar has found.”
USAGOLD note: A powerful argument for a strong diversification in gold and silver – both of which have a low correlation to stocks and bonds. JP Morgan’s finding that gold ranks second among investments over the past twenty years speaks volumes. (Please scroll below.)
Repost from 4-19-2019
Financial Times/Philip Georgiadis and Siddarth Shrikanth/4-23-2019
“Crude prices rose to a five-month high on Tuesday, as Washington’s decision to end sanctions waivers on Iranian oil imports buoyed markets for a second day and sent shares in some of the world’s biggest energy companies higher.”
USAGOLD note: One would think that at some point gold would play catch-up with oil but the correlation between the two is not always reliable in the short term. It does tend to play out though over the longer run.
“About an hour and a half’s drive north from New York City lies a treasure — the gold kind. But it’s not one that you can go and find. In fact, you can’t get anywhere near it. Because this treasure belongs to the United States Treasury. Nearly a quarter of the U.S. government’s gold sits beneath a windowless building on the campus at West Point.”
USAGOLD note: You will enjoy this! Each bar is worth $500,000. . . . The Mint strikes the American Buffalo (pictured) and Eagle gold coins at the West Point facility.
Repost from 4-18-2019
Financial Times/Andrew Edgecliffe-Johnson
“When Roger Williams got his turn at the microphone earlier this month, his question for the bank CEOs lined up before the House committee on financial services seemed an unusual one to put to seven sharp-suited financiers. ‘Are you a socialist or are you a capitalist?’ the Texas Republican asked each of them, from Citigroup’s Mike Corbat to David Solomon of Goldman Sachs. None struggled to assure him of their free market bona fides, but the fact the question was even asked reflected a remarkable change in the discussion about business in Washington and beyond in recent months.”
USAGOLD note: Whodathunk? Now as younger people of voting age embrace socialism (Gallup puts that number at 51%.) some on Wall Street are beginning to get concerned. Those with a positive view of capitalism amount to just 45% in the 18 to 29 year old grouping. These trends if they gain political momentum, and that is the fear according to this Financial Times article, ultimately will translate to higher taxes, more government spending, and looser Fed policies. In the end, opening the floodgates on socialism equates ultimately to opening the floodgates on money printing and, in that context, the floodgates on gold ownership. For those who like to stay on top the trends, this article is a must read.
Bloomberg/Rich Miller and Craig Torres
“’The Fed is evolving to a ‘whites-of-the-eyes’ approach in terms of inflation’ under which it won’t hike rates until price rises accelerate,’ said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC.”
USAGOLD note: I can remember a time when economists thought that if the Fed waited for inflation to become obvious, it was already too late. . . . . . .
Repost from 4-17-2019
Financial Times/Tobias Buck/4-18-2019
“Savers seeking the financial advice of Mario Münk and his colleagues at the Berliner Volksbank receive a sobering four-digit response: 0.001 per cent. That is the interest rate currently available on a savings account, the investment vehicle of choice for generations of Germans.”
USAGOLD note: In a microcosm what is wrong with today’s financial markets. . . . .And why global stock market values are fundamentally the illusion of prosperity and subject to catastrophic failure.
“The survey generated responses from more than 1,500 chief financial officers, including 469 from North America, and showed that 67% of those surveyed predicted the U.S. economy would be in recession by the third quarter of 2020, and 84% believe a recession will have begun by the first quarter of 2021. Thirty-eight percent of respondents predicted a recession by the first quarter of next year.”
USAGOLD note: Report from the corporate frontline. . . . . .
“When the Fed accumulated bonds to fight the 2008 financial crisis and its aftermath, the hoard proved useful to banks. Financial institutions could include those cash balances in their stable of high-quality liquid assets to satisfy post-crisis regulatory requirements. With the Fed still shrinking its balance sheet, policy makers are now trying to determine the optimal level of reserves. It currently stands at about $1.6 trillion.”
USAGOLD note: Excess reserves are a remnant of the big-bang monetary experiment following the 2007-2008 financial breakdown. Now the Fed is trying to figure out how to manage what it wrought. Interest rates have taken a back seat to expanding and shrinking the central bank’s balance sheet as the primary policy tool. No one, as this short article – and perhaps painfully so – points out, is quite sure how all of this is going to work out. Confusion reigns not only at the Fed but daily within the financial markets. Gold ultimately will be among the beneficiaries if investors come to a scary realization that the new monetary system has flaws programmed into its onboard guidance system.
Repost from 4-11-2019
International Advisor/Kate Lin/10-10-2018
“Conservative high net worth gold investors prefer physical bullion over ETFs, says State Street Global Advisors. Private banks in Asia mainly use ETF vehicles when making active bets on gold based on a short-term outlook, Robin Tsui, gold ETF strategist at SSGA, said during an event in Hong Kong. For strategic allocations or longer-term investing, buying physical bullion and storing it in a safe remains the norm.”
USAGOLD note: The same is true in the United States and Europe. Financial institutions and funds tend to favor the ETFs while private investors tend to prefer coins and bullion stored nearby.
Repost from 10-10-2019
Bloomberg/Lu Wand and Sarah Ponczek
“If there’s one thing the prophets agree on, it’s that the end will come in the bond market. Even for stocks. Prophesies of doom are everywhere. There’s billionaire investor Stan Druckenmiller, who says our ‘massive debt problem’ will ignite a crisis. Oaktree Capital’s Howard Marks warns that public and private debt will be ‘ground zero when things next go wrong.’ And Citadel’s Ken Griffin sees a credit binge ending badly.”
USAGOLD note: A singular theme appears regularly in the media. We are on the edge of something about to end badly. If compiled, the list of doomsayers – many big names in the investment business – would stretch down the page.
Repost from 10-8-2018