“Even so, the president thought one thing was needed to make things better: tariffs on America’s trade partners. Many economists and lawmakers argued against this, saying it would hurt trade, kill jobs and slow, if not contract, the economy. The president dismissed their reasoning, and into place the tariffs went. As economic uncertainty mounted, many investors moved into gold, which was perceived as a safe haven (so much so that the Treasury feared it might run out of bullion).
USAGOLD note: That move to gold in the early 1930s had to do with the metal’s safe haven attributes and the growing threat of systemic risks.
Repost from 8-25-2019
“A comparison between iShares 20+ Year Treasury Bond ETF and State Street’s SPDR Gold Trust shows that, on a percentage return basis, gold and bonds have tracked each other quite well.”
USAGOLD note: So what is it that bonds and gold have in common? We would reduce it to both being a destination for safe-haven capital. The difference between the two? Gold is a safe-haven asset that is not simultaneously someone else’s liability. Bonds, on the other hand, by definition are assets that rely completely on the performance of someone else (and the value of the currency in which they are denominated).
Repost from 11-12-2019
Money Morning/John Krauth/11-14-2019
“As always, gold investors should remain data-driven. Look closely at federal and global activity influencing the price of gold over the medium or long term. After all, the big picture hasn’t changed. All major central banks are in easy-money mode. And there is deeper data suggesting the gold sector is actually holding up well.”
USAGOLD note: Money Morning’s John Krauth tells why he thinks “gold prices could start rising again soon. . . .” At the link.
Image courtesy of Visual Capitalist
“More than a third of the generation had crossed over Fidelity’s recommended allocation to stocks, which is 70% for those 10 years from retirement. Almost one-tenth of boomers were entirely in equities during the quarter, running the risk of serious losses in a market meltdown.”
USAGOLD note: Nothing here that a proper diversification wouldn’t cure. I am reminded of a John Kenneth Galbraith quote from his book, A Short History of Financial Euphoria:
“There are those who are persuaded that some new price-enhancing circumstance is in control, and they expect the market to stay up and go up, perhaps indefinitely. Then there are those, superficially more astute and generally fewer in number, who perceive or believe themselves to perceive the speculative mood of the moment. They are in to ride the upward wave; their particular genius, they are convinced, will allow them to get out before the speculation runs its course. They will get the maximum reward from the increase as it continues; they will be out before the eventual fall. For built into this situation is the eventual and inevitable fall. Built in also is the circumstance that it cannot come gently or gradually. When it comes, it bears the grim face of disaster. That is because both of the groups of participants in the speculative situation are programmed for sudden efforts at escape.”
Something to think about. . . . . . . .
“‘If you look at today’s economy, there’s nothing that’s really booming now that would want to bust,’ Powell said in testimony before the House Budget Committee. ‘In other words, it’s a pretty sustainable picture.’”
USAGOLD note: A candid assessment of the future or famous last words? We report. You decide.
“If and when the popularity of gold ETFs indeed increases among retail and institutional investors, it might well result in a more volatile gold price going forward. ETFs allow a large number of investors to build up and reduce significant exposure to the gold market quickly, which, in turn, could cause substantial fluctuations in demand for physical gold and thus ultimately the US dollar price of gold.”:
USAGOLD note 1: An article that does a good job reviewing physical gold demand globally. It ends, as highlighted in the quote above, with an important observation: The sizable ETF stockpiles are likely to an ever-present source of increased volatility on both the upsides and downsides – an assessment with which we agree. The detailed report, including tables and charts, is worth the time spent (linked above).
USAGOLD note 2: It is interesting to note that ETFs – the preferred repository among funds and institutions who trade large volumes – purchased 258.2 tonnes of gold in Q3-19. Private investors, who prefer to hold gold in personal storage, at the same time quietly took delivery of 150.3 tonnes of the metal in the form of coins and bars.
Should I buy a gold ETF?
Are you looking for a price bet or the real thing?
For safe-haven, asset-preservation purposes, the best alternative is not futures, options, mining stocks or even ETFs, but delivery of the metal itself in the form of gold coins or bullion. Some think that owning an ETF is akin to owning real gold, but it is not. It is essentially a price bet simply because only owners of 10,000 ounces or more (with most trusts) can take delivery of the metal represented by the shares. Then there is the problem of counterparty risk. “Unlike physical gold bullion – which is a tangible asset,” says Mauldin Economics’ Olivier Garret, “ETFs are a financial product that have counterparty risk. Counterparty risk is present when there’s a possibility the other party in an agreement will default or fail to live up to their obligations. . .[O]ne of gold’s primary benefits is being the only financial asset that is not simultaneously somebody else’s liability. Therefore, these ETFs are a poor substitute.” In short, by owning an ETF instead of the real thing, investors expose themselves to one of the primary risks they hope to avoid through gold ownership.
The USAGOLD storage option – strong competition for the ETF
One of the advantages of a gold or silver ETF is that the trustee stores the metal for you and makes it easy to buy and sell. We can open a fully-allocated storage account for you that offers the same advantages. In fact, the annual cost of storage and insurance is actually lower than most ETF fees. You can buy and sell with a phone call. Most importantly, because specific coins and/or bullion are stored in your account, you can still take delivery in part or full whenever you so wish – something, as mentioned above, that the ETFs offer only to their largest institutional clients.
ORDER DESK: 1-800-869-5115 email@example.com
ORDER GOLD & SILVER ONLINE 24-7
Investment Research Dynamics
“The rapid increase in Fed money printing in just five weeks reflects serious problems developing in the global financial system. Actually, the problem is easy to identify: At every level – government, corporate and household – the level of debt has become unsustainable, with not insignificant portions of that debt in non-performing status (seriously delinquent or in default).”
USAGOLD note: The headline references a quote from former Bank of England governor, Mervyn King, who once said: “I am very struck by the fact that over many many years, central banks, governments and individuals have always, despite the protestations of economists, held some gold in their portfolio. Obviously, there is no high running return, but when unexpected things happen, particularly when governments rise and fall, then gold is a means of payment that everyone is always prepared to accept.” King made the ‘sleepwalking toward a crisis’ comment in a speech at a recent International Monetary Fund conference.
Repost from 11-5-2019
“The thing is, despite the recent surge in markets, it appears that plenty of investors are afraid. Rather than going all-in on stocks for fear of missing out, investors are showing almost unprecedented restraint. Money continues to pour into money-market funds, with assets standing at $3.51 trillion as of last Wednesday, up from $3.05 trillion at the start of the year, according to the Investment Company Institute.”
USAGOLD note: Some say that the growth in money-market funds is fuel for further increases. Others, like Burgess, say its a sign that investors are backing off. The chart below illustrates a point we have made on several occasions here in the recent past: The Dow Jones did not revisit the highs of 1929 until 1955, 26-years later.
Repost from 11-11-2019
“Ah, excuse me. Oh, will ya excuse me. I’m just trying to find the recession. Has anybody seen the recession?”
USAGOLD note: Good question. Nary a sign in the numbers over the past few weeks.
Repost from 11-11-2019
Precious Metals Summit Conference/Video/Grant Williams/11-12-2019
“Trust me when I tell you that none of this is going to make gold less attractive in the coming years.” – Grant Williams
USAGOLD note: “None of this” refers to a series of charts and commentary Grant Williams delivered at the recent Precious Metals Summit Conference in Zurich. Williams makes a thorough and captivating presentation on the merits of gold ownership and some “tailwinds blowing up a storm.”
Image courtesy of Visual Capitalist
“And then, with the new year upon us and deteriorating economic conditions bringing even lower interest rates, both COMEX metals will rally in 2020Q1. At this time, I expect COMEX gold to reach toward $1650 and COMEX silver to trade above $20 sometime before Saint Patrick’s Day.”
USAGOLD note: Hemke offers some interesting analysis to back up his forecast at the link above.
“Stocks may be at record highs as the year winds down, but Wall Street has already started issuing warnings about a host of threats to the markets in 2020. Deutsche Bank’s chief economist, Torsten Slok, sent out a list to clients on Friday of 20 risks to the economy and markets next year. CNBC was granted permission to publish the full list.”
USAGOLD note: Many of the items on the list have a political component in a year in which politics is likely to have great effect on market psychology.
Repost from 11-11-2019
HussmanFunds/John P. Hussman/October 2019
“Finally, my impression is that many investors are vastly overestimating their tolerance for risk. The argument that ‘well, the stock market might go down, but it always comes back’ seems to be an increasingly popular way of dismissing risk entirely. Unfortunately, that argument only works on the way up to hypervaluation. It does not work on the way down.”
USAGOLD note: In a scholarly way, Hussman gets down to the nitty-gritty in his latest newsletter. We keep coming back to a footnote to modern economic history: Following the crash of 1929, it took 26 years for the stock market to return to the high registered just before the crash.
Repost from 11-7-2019
“The question of whether precious metals have a place in one’s portfolio is a never-ending debate, but an equally important yet often overlooked question is ‘how much’? Ned Naylor-Leyland of Merian Global Investors discusses the role that gold and silver can play, and the important differences between sizing bullion versus sizing mining stocks.”
USAGOLD note: Naylor-Leyland has been an articulate advocate of gold and silver ownership for a good many years. In this interesting seminar, he covers the basics offering in the process a good starting point for new investors and a solid refresher for those who already own the metals and are looking to perhaps add more at this point in time. “Gold is money, ” he says, “and everything else is credit.”
Repost from 10-14-2019
“Rapidly rising competition is one problem. The number of hedge funds has exploded from 530 in 1990 to 8,200 today, with their aggregate assets under management (AUM) skyrocketing from $39 billion to $3.2 trillion.”
USAGOLD note: Trouble in Hedgefundville. . . .Kolakowski’s article linked above provides a robust overview of the primary causes.
Repost from 11-6-2019
“‘I am bullish on gold. I am not saying that gold is not going to go down because it is going to fluctuate, but people should have at least 10 percent of their portfolio in physical gold,’ he said.”
USAGOLD note: Mobius sticks with his 10% recommendation and his bullish call on the yellow metal.
“It is true you can’t ‘time the market,’ but you can manage risk by adjusting market exposure at times when risk outweighs the potential for further reward. What’s important to avoid is the ‘time loss’ required to ‘get back to even.’ In the long run, the mitigation of risk should allow the portfolio to reach your investment goals.”
USAGOLD note: Lance Roberts once again offers some solid common sense advice for the ordinary citizen/investor. One of the three broad hedging strategies he lists is “holding a negatively correlated asset” – as in something negatively correlated to the stock market. One of the best known and widely used options in this grouping is gold coins and bullion, followed by silver.
Repost from 11-6-2019
New York Sun/Seth Lipsky
“Forgive us, but whom would you trust to issue a currency — the Congress that regulates our dollar or the youthful tycoon who made $100 billion tapping on his laptop? The securities of Mr. Zuckerberg’s company have soared to one of the greatest fortunes in history. The value of notes issued by Congress have collapsed by as much as 98% or more — just in the century since the creation of our central bank.”
USAGOLD note: A brilliant, cleverly written editorial by Mr. Lipsky. . . . . . .
Repost from 10-27-2019
“It’s one thing to read words like ‘crisis’ and ‘instability.’ But it’s vastly more affecting to see a man with a million-dollar account be denied entry to his failed bank and realize that in the blink of an eye he’s poor. And then to see him juggling five gig economy jobs and still having to move his family into his mother’s house.
This is validation for stackers: If that guy had minimized his exposure to the banking system and turned his cash into gold and silver coins, he and his family would still be living in their posh London flat. And his marriage would have survived. And his son would have been able to avoid a harrowing and life-threatening trip through refugee hell to rescue his boyfriend.”
USAGOLD note: An economic breakdown, as Rubino suggests above, is not the only of life’s calamities against gold acts as a hedge. The full piece linked above is a captivating, quick read.
Image: Albrecht Durer’s Four Horsemen of the Apocalypse (1498)
Repost from 11-6-2019