Author Archives: Opinion

The repo markets mystery reminds us that we are flying blind

Financial Times/Gillian Tett/9-20-2019

“But here is the bad news: the fact that a ‘temporary’ cash squeeze created so much drama shows that neither the Fed nor investors completely understand how the cogs of the modern financial machine mesh.”

USAGOLD note:  Tett dives into the Fed’s cash dilemma and warns of a monetary system facing problems it has not encountered before.

Posted in Today's top gold news and opinion |

The future is Asian

Reuters/Jeffrey Goldfarb/9-16-2019

“A splintering West and increasingly interconnected East is creating a newly powerful mega-region, according to Parag Khanna, author of ‘The Future is Asian.’ He swung by the Breakingviews office in Hong Kong to break down the economic and geopolitical rationales behind his idea.”

USAGOLD note:  Deep background and insights for those who seek it. . . . . . Keep in mind, as you listen to this interview, Asia’s ancient attachment to precious metals. “The world is very multi-polar,” says Khanna. “Asia is just taking its rightful place alongside the others.”

Posted in Today's top gold news and opinion |

Here is how the yield curve inversions boost the gold price

Wall Street Window/Mike Swanson

“The indicator on the bottom of this chart is the gap between the 3-month and 10-year US Treasury bond. As you can see it is now below zero, which means that the interest rate on the 3-month bond is higher than that of the 10-year. This is the very definition of an inverted yield curve and forecasts a future slowdown in the economy and future interest rate cuts from the Federal Reserve. Now as you can see this has happened twice in the past twenty years and both times it did gold soon broke out of a long-term resistance level to launch big massive gold bull runs that lasted for years.”

USAGOLD note:  The reasons for those previous massive bull runs are twofold.  The first has to do with economics. The Fed immediately talked up and inaugurated stimulus programs to keep the economy from rolling over to a deflationary depression and financial panic.  The second has to do with market psychology. The possibility of a systemic breakdown ran at fever pitch causing a worldwide influx of capital into the gold market.  The two together amount to the disinflationary argument for gold ownership and one we have made for a long time here at USAGOLD.  The best strategy is to understand what’s at work in this economic milieu and make your purchases ahead of the clamor when it becomes evident to the masses.

Image courtesy of the World Gold Council

Repost from 6-11-2019

Posted in Today's top gold news and opinion |

Citigroup says gold may top record

Bloomberg/Ranjeetha/Pakiam/9-10-2019

“‘We expect spot gold prices to trade stronger for longer, possibly breaching $2,000 an ounce and posting new cyclical highs at some point in the next year or two,’ analysts including Aakash Doshi said in a note received Sept. 10. That would exceed the record of $1,921.17 set in 2011.”

USAGOLD note:  Bloomberg reposted this article on its front page yesterday.  We included Citigroup’s forecast in last Wednesday’s DMR.  Here is a link to the complete article. . . . .


Repost from 9-17-2019

Posted in Gold and Silver Price Predictions from Prominent Players, Today's top gold news and opinion |

I wouldn’t be surprised to see $3,000 gold: David Rosenberg

YouTube/Financial Post/Video Interview of David Rosenberg

“What is amazing about this run-up in gold that we have seen is that it has taken place with the U.S. dollar actually quite firm.”

USAGOLD note:  David Rosenberg is chief economist at Gluskin Sheff and Associates and a highly-respected Wall Street analyst.  We were a bit surprised at his $3000 forecast for gold. He explains how it is possible to a skeptical host.


Repost from 9-16-2019

Posted in Gold and Silver Price Predictions from Prominent Players, Today's top gold news and opinion |

‘Gold will be explosive’ – Frank Giustra

KitcoNews/Daniela Cambone/Video interview of Frank Giustra

“‘I think we’re in the third and final phase of the gold market that’s started in 2001, and this will be the most explosive phase for gold,’ Giustra told Kitco News.”

USAGOLD note: This is one of the better interviews we have seen in awhile on the long-term merits of gold ownership. Giustra explains how he has structured his own gold portfolio.


Repost from 9-16-2019

Posted in Gold and Silver Price Predictions from Prominent Players, Today's top gold news and opinion |

Leon Cooperman says the Fed made a mistake cutting rates: ‘You’re screwing the savers’

CNBC/Thomas Franck/9-19-2019

“‘Just think about it this way: You have a 35-40% marginal tax rate, you’re getting 2% on your cash if you’re lucky,’ he continued. ‘You keep 60% of the 2%, that’s 1.2%. The inflation rate is running 2%: You have a negative on savings.'”

USAGOLD note:  And, we are led to believe, rates are likely to go still lower. In this increasingly upside-down, mad-hatter financial environment, one Danish bank is offering to pay borrowers .5% a year to take out a mortgage. Jyske Bank, the Danish lender offering the loan, automatically reduces the size of your mortgage each month.

Posted in Today's top gold news and opinion |

Silver: Is it time to buy?

ETF Daily News/Taylor Dart/9-17-2019

“Silver has pulled back 11% from its highs at $19.70/oz. Despite this pullback, bullish sentiment has not budged much, and is currently sitting at 61% bulls based on DSI data. While an oversold bounce is possible, I believe we will likely see a slightly lower low in silver below $17.50/oz, before this correction is completely over.”

USAGOLD note:  Current pricing ($17.87 as this is posted) is not too distant from this analyst’s target. For the longer-term investor, it might make sense to start now rather than waiting for some ultimate target that may or may not be achieved. We offer an affordable storage plan for those who do not take delivery – a good option for the buyer thinking about making a significant purchase.  Too, you can take delivery on some or all of your holdings if so desired down the road. We do quite a bit of business in silver Eagles and Maple Leafs within IRAs. Please give us a call if you would like to learn more. We can walk you through the options. 

Posted in Today's top gold news and opinion |

Why Russian and Chinese central banks will keep buying gold

MarketWatch/Myra Saefong

“Emerging markets have beefed up gold holdings, undeterred by prices near their highest levels in more than six years, as countries such as Russia and China diversify their foreign-exchange reserves—a trend that is likely to continue.”

USAGOLD note:  In Friday’s DMR we mention funds, institutions and central banks as three players largely absent in previous bull market rallies going all the way back to the early 1970s. That circumstance introduces a new and important dynamic to present-day gold market analysis. This article will bring you to speed on the central bank component of that trinity.


Repost from 9-14-2019

Posted in Today's top gold news and opinion |

Drop in gold prices raises hopes of demand revival

INDIA UPDATE

ETMarkets/Sutanuka Ghosal/9-19-2019

“TS Kalyanaraman, chairman and managing director, Kalyan Jewellers said that rise in gold prices has had an impact the consumer sentiments and gold buying trends. ‘But we believe that these sentiments are short-term and we are expecting the demand to pick up soon,’ he added.”

USAGOLD note:  Year to date, gold is up 19.65% in rupee terms. Simultaneously, the rupee is down about 4% against the dollar.  If investors believe that the rupee is headed still lower, it stands to reason that gold demand might remain steady through the festive season even if prices are rising.

Posted in Today's top gold news and opinion |

‘Bond King’ Gundlach says there is an increasing chance of a recession before 2020 election

CNBC/Thomas Franck/9-18-2019

“‘I think the economic data has gotten a little bit better, yet I still think, when we put it all together … it seems that there is an increasing probability of a recession before the 2020 election,’ Gundlach said in an interview with CNBC’s Scott Wapner.”

USAGOLD note:  Professional investors, including Gundlach, often cite recession concerns as one of the prime motivations for gold ownership – the ultimate asset of last resort.

Posted in Today's top gold news and opinion |

Negative interest rates are the price we pay for de-civilization

MisesWire/Jeff Deist/9-18-2019

“Bloomberg terminals, the financial software system used by countless analysts and traders around the world, has a problem: its system cannot price callable bonds using negative interest rates. Programmers never considered such a scenario, and thus failed to code the system accordingly. So users get an error message when they attempt to force negative bond yields into their machines.”

USAGOLD note:  A fascinating look at the real meaning of and wider implications for negative interest rates.  “Under what scenario,” Deist asks, “would anyone lend $1,000 to receive $900 in return at some point in the future?”  His answer is an eye-opener.

Posted in Today's top gold news and opinion |

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.


QUESTIONS?
ORDER DESK: 1-800-869-5115 x100/orderdesk@usagold.com

ORDER GOLD & SILVER ONLINE 24-7

 

Posted in ClientInsights, Today's top gold news and opinion | Tagged |

Is the dollar’s ‘exorbitant privilege’ coming to an end?

JPMorganChase/Craig Cohen

“There is nothing to suggest that the dollar dominance should remain in perpetuity. In fact, the dominant international currency has changed many times throughout history going back thousands of years as the world’s economic center has shifted. After the end of World War II, the U.S. accounted for biggest share of world GDP at more than 25%. This number is brought to more than 40% when we include Western European powers. Since then, the main driver of economic growth has shifted eastwards towards Asia at the expense of the U.S. and the West.”

USAGOLD note:  We made reference to this JP Morgan analysis on the US dollar in yesterday’s DMR. JPM suggests that its clients diversify dollar exposure by shifting to other developed market currencies and precious metals. It says that aforementioned shift away from the dollar is already under way.


Repost from 7-25-2019

Posted in Today's top gold news and opinion |

Prospective Fed nominee Shelton says global economy in ‘very dangerous situation’ like 1930s

CNBC/Jeff Cox

“Monetary policy nowadays is ‘not causing any growth to be stimulated but it is having an effect in currency markets, and we’re in a very dangerous situation,’ Shelton told CNBC’s Rick Santelli during a ‘Squawk on the Street’ interview. ‘It’s not unlike the 1930s when you had beggar-thy-neighbor competitive depreciations.'”

USAGOLD note:  The risks are not just to currencies but to financial markets and institutions as well. Shelton goes to say that “it would be nice to be virtuous in a vacuum, but I don’t think we have that luxury.”  In other words, the United States, in her view, should act at this juncture to depreciate the dollar – something that must be done through the concerted action of both the Treasury Department and the Federal Reserve.


Repost from 8-2-2019

Posted in Today's top gold news and opinion |

BlackRock has bias toward precious metals, particularly gold

BoombergUK/Interview of Evy Hambro

Evy Hambro, global head of thematic investing at BlackRock, discusses the outlook for gold and precious metals on “Bloomberg Surveillance.”

USAGOLD note:  BlackRock takes a seat on the gold bandwagon: “. . . an opportunity carry, that is a very positive environent.”


Repost from 9-6-2019

Posted in Today's top gold news and opinion |

Goethe’s excursion into economics – Faust

Acton Institute/Samuel Gregg

“Accompanied by Mephistopheles, Faust attends the court of a ruler whose empire is facing financial ruin because of profligate government spending. Rather than urging the emperor to be more fiscally responsible, Mephistopheles — disguised, revealingly, as a court jester — suggests a different approach, one with disturbing parallels to our own age.”

USAGOLD note:  Dr. Jens Weidmann, President of Germany’s Bundesbank, made reference to Goethe’s treatment of money printing as a Faustian bargain in a speech delivered in 2012 (See below). For a scholarly approach to that section of Goethe’s famous play, Faust, we post the link to Samuel Gregg’s short essay above. All posted on a Friday for those looking for something to delve into over the weekend. We thought it a fitting addition to the board after Mario Draghi’s announcement yesterday that the ECB would launch a new round of quantitative easing for the European Union.


Money creation and responsibility/Jens Weidmann/Bank-Historical Research conference/9-18-2012

“Let me remind you briefly of the ‘money creation’ scene in Act One of the Second Part of Faust. Mephistopheles, disguised as a fool, talks to the Emperor, who is in severe financial distress, and says

“In this world, what isn’t lacking, somewhere, though? Sometimes it’s this, or that: here’s what’s missing’s gold.”

The Emperor finally responds to Mephistopheles’ subtle attempt to persuade him,

“I’m tired of the eternal ‘if and when’:  We’re short of gold, well fine, so fetch some then.”

To which Mephistopheles replies

“I’ll fetch what you wish, and I’ll fetch more.”

–– from Jens Weidmann’s speech


Repost from 9-12-2013

Posted in Today's top gold news and opinion |

Denmark offers to buy U.S.

The New Yorker/Andy Borowitz

“‘Denmark would be interested in purchasing the United States in its entirety, with the exception of its government,’ the spokesperson added.”

USAGOLD note:  A little humor to launch the weekend. . . .


Repost from 9-12-2013

Posted in Today's top gold news and opinion |

The Federal Reserve cut interest rates. It didn’t loosen monetary policy.

Barron’s/Matthew C. Klein/9-18-2019

“At first blush, this looks like a situation where the Fed has loosened policy. It is not. Instead, it is simply the next step in the ‘midcycle adjustment’ of monetary policy that began at the start of the year, as Fed Chairman Jerome Powell has put it.”

USAGOLD note:  This article lends credence to Trump’s criticism of the Fed.

Posted in Today's top gold news and opinion |

Watch for gold’s currency component to strengthen

Seeking Alpha/Cliff Droke/9-16-2019

“Gold and gold mining stocks suffered a setback in the first half of September, thanks in part to diminishing trade war fears. But while gold’s ‘fear factor’ is on the wane, the yellow metal’s currency component is showing signs of strengthening. In today’s report we’ll examine the increased prospects for gold to continue its rising trend in Q4 due to a combination of a weaker dollar and a stronger demand outlook for commodities in general.”

USAGOLD note:  Counterintuitely, gold and the dollar have been rising together the past few months.  Now, says Droke, they could be headed in opposite directions. Obviously, this article was posted prior to the drone attack on the Saudi Arabian oil facility.  The “fear factor” has now officially returned to the gold market.

 

Posted in Today's top gold news and opinion |

Game theorists will never see Iran’s Godot coming

BloombergOpinion/John Authers/9-16-2019

“Troubled oil meets calming waters.”

USAGOLD note:  Game theory favors no further U.S. military involvement in the Middle East, according to Authers latest.  “The problem:  game theory can be wrong” – the predictability of unpredictability. Very much worth a visit for the rest of the story. . . . . .

Posted in Today's top gold news and opinion |

Trust in gold

Sharps Pixley/Lawrie Williams

“Government by tweet and investing by ETF represent the death of thought, responsibility, and moral action. Investors must resist these falsehoods. Technological demagogues convince people to surrender their freedom, to believe that the world is binary and capable of capture in 140 tweets. Free people must reject these tyrannies. Monetary charlatans tell citizens that it is prudent to print trillions of fiat dollars to bail out governments and businesses from their inability to competently manage their affairs. Citizens must reject these delusions.”

USAGOLD note:  Lawrie Williams builds a solid piece around a long quote from Credit Strategist‘s Michael Hewitt. Williams cites a persistent mantra in Hewitt’s newsletters:  “Buy gold and save yourselves.” This article is worth a visit.  The rest of Hewitt’s observations will strike a chord with many of you.


Repost from 5-29-2019

Posted in Today's top gold news and opinion |

Swiss bank group lambasts negative rates for damaging the economy

Bloomberg/Catherine Bosley

“The Swiss Bankers Association criticized the central bank’s policy of negative rates, saying it was causing ‘massive structural damage’ to the economy.”

USAGOLD note:  This article lends support to the notion (mentioned often here) that as economies trend toward and/or breach 0% to the downside, we sail deeper and deeper into uncharted waters.  Unexpected and unintended consequeces abound. . . .We might add that there is a clearly established direct, positive correlation between the growing inventory of negative yielding debt globally and the price of gold.


Repost from 9-12-2019

Posted in Today's top gold news and opinion |

DoubleLine’s Jeffrey Sherman warns against buying Treasurys, says gold could be smart recession play

CNBC/Thomas Franck

“DoubleLine Capital’s Jeffrey Sherman believes the August rush into Treasurys may have been overdone and said that those worried over a potential economic slowdown in the U.S. may be better served buying gold.”

USAGOLD note:  Sherman puts a degree of separation between financial markets’ two favorite safe havens over the past several months. . . . . .


Image courtesy of Visual Capitalist

Repost from 9-11-2019

Posted in Today's top gold news and opinion |

Buying pullbacks in gold and silver

GoldSeek/Andy Hecht/9-9-2019

“New highs are times to take profits on a scale-up basis, and significant corrections offer the opportunity to step up to the plate and repurchase the precious metals. Unfortunately, the human emotions of fear and greed often drive traders and investors to buy when markets are peaking and sell on days like September 5 and 6. Trailing stops can be useful tools and capital savers during wild bull markets.”

USAGOLD note:  For Investors in the physical metals, i.e., those who have their positions fully paid for and stored safely away, short-term price movements are not usually a matter of concern. For leveraged investors in the futures and options markets, it is a different story.  The short-term is always in such cases a direct and abiding concern. If one fundamentally believes in the metal’s safe haven attributes,  a drop in the price can be seen as an opportunity to acquire portfolio insurance at a more favorable price.


Repost from 9-11-2019

Posted in Gold and Silver Price Predictions from Prominent Players, Today's top gold news and opinion |

The monetary policy endgame

BlackRockBlog/Rick Reider/9-5-2019

“Ironically, the beggar-thy-neighbor implications of competitive devaluations will almost certainly incite a response from countries who may not originally even have needed to resort to currency debasement in the first place, raising the potential for full blown currency war. How should one position for such an endgame?”

USAGOLD note:  Reider, who is BlackRock’s Chief Investment Officer of Global Fixed Income offers a clue to resolving the endgame quandary: “The solution is to hold an asset that maintains its real value – an asset that cannot be printed.” Some solid logic and historical analysis at the link above.  . .


Repost from 9-10-2019

Posted in Today's top gold news and opinion |

How gold could replace bonds as a portfolio diversifier

InvestmentNews/Jeff Benjamin/9-10-2019

“Instead of trying to navigate the freewheeling price of gold over various market cycles, financial advisers might be better served by focusing on the precious metal’s lack of correlation with other investments.”

USAGOLD note:  A new report from GraniteShares Gold Trust focuses on gold’s non-correlation to “all market factors” and how that translates to big positive for the average investment portfolio.


Repost from 9-11-2019

Posted in Today's top gold news and opinion |

Will the printing presses run at ‘such a frenzied pace you will be able to hear them from Mars’?

Zero Hedge/Tyler Durden

“Will equity yields continue to grind lower (PEs higher) in line with US bond yields falling into negative territory, and as the printing presses are started up again and running at such a frenzied pace you will be able to hear them from Mars? Or will, as I suspect, a slide into recession again be accompanied by the bursting of credit and asset bubbles and the ensuing recession be as surprisingly deep as the 2008 GFC?”

USAGOLD note:  The above is a slice of Albert Edwards latest thinking as posted with commentary from Tyler Durden. . . . .Worth the visit.  As Durden reminds us Edwards “called the current move in rates years if not decades ago.”  Of course, one can utilize the opportunity to trade one’s portfolio to the max.  Another option would be to hedge the portfolio, sit back and admire the  monetary helicopters raining money on every city, town and village in the land.


Repost from 9-6-2019

Posted in Today's top gold news and opinion |

De-dollarization: Europe joins the party

Mises Institute/Ronald-Peter Stoferle/9-13-2019

“The answer is de-dollarization. Gold, which many central banks now include in their balance sheets at market value, offers an alternative. It is indeed the only truly neutral asset available to governments and central banks. Around a third of the world’s gold holdings are held in the vaults of central banks. Nobody describes the banks’ rationale better than DNB, the central bank of the Netherlands: ‘Shares, bonds and other securities are not without risk, and prices can go down. But a bar of gold retains its value, even in times of crisis. […] Gold is the perfect piggy bank – it’s the anchor of trust for the financial system. If the system collapses, the gold stock can serve as a basis to build it up again. Gold bolsters confidence in the stability of the central bank’s balance sheet and creates a sense of security.’”

USAGOLD note:  Stoferle goes scholarly at the Mises Institute website . . . He agrees with us that the dollar is not going to be replaced as the world’s reserve currency anytime soon, but sees, like we do, a continuation of the movement among central banks to hedge their reserves with gold.  If a key western European central bank or two (say De Nederlandsche Bank or Bundesbank) were to suddenly join in, it would be a major event in the gold market.

Posted in Today's top gold news and opinion |

Fears impact of attack on Saudi oil industry could be felt for months

“Brent crude prices posted their biggest percentage gain since Saddam Hussein invaded Kuwait as traders fretted that production in the world’s biggest oil exporter would stay below maximum capacity for an extended period.”

USAGOLD note: The immediate question on Saturday when the attack occurred was “How long will the disruption last?”  It looks like it going to be awhile, according to this article.  The bigger issue is the continued vulnerability.  In another FT article, one analyst called Abqaiq ‘the Achilles heel of the world economy.’


Image: Aramco’s first commercial oil well in Saudi Arabia March 3, 1938.

Posted in Today's top gold news and opinion |