Gold tracks lower, takes breather as silver rises

(USAGOLD – 7/15/2019) – Gold is tracking lower in early U.S. trading as speculators look favorably upon precious metals with an industrial component in their pricing – silver, platinum and palladium.  Silver is up 11¢ on the day at $15.32. (Please see today’s Chart of the Day.)  Platinum and palladium are up 1.54% and 1.25% respectively in the early going.  Gold meanwhile is taking a breather after last week’s see-saw proceedings – down $3 at $1412.  Though the safe-haven trade appears to be sidelined this morning, it may not be for long with central banks around the world signaling underlying economic weakness and the need for aggressive stimulus.

“Gold is more than just a commodity,” says long-time technical analysts John Murphy at StockCharts. “Gold is sometimes also viewed as an alternate currency. When global traders lose confidence in their currency, they often turn to gold as an alternative store of value. . .Gold recently rose to a six-year high on falling U.S. interest rates which have weakened the dollar (aided by a more dovish Fed). So gold is rising in dollar terms. The true hallmark of a bull market in gold, however, is its ability to rise relative to other major currencies. And it’s doing just that.”

Quote of the Day
[OPINION] – “In their conspiracy theories, frustrated silver bulls were missing the one obvious conclusion confirmed by the Blythe Masters interview, that JPMorgan was, and probably still is, working for the Chinese central bank as their client. China is the whale in the market, which explains why we see the lack of correlation between the largest four traders and the second four going back over a decade. Bear in mind also that the commitment of trader’s reports covering Comex are not the whole story. Forward trades in London on the LBMA are a significantly larger market and JPMorgan operates its own vaults in London as well.” – Alasdair Macleod, GoldMoney

Chart of the Day

Chart note:  As you can see in this chart, silver has not kept pace with gold’s rally since the end of May.  It has gone up, but with not nearly at the same velocity as gold. So much so that the gold-silver ratio now stands at nearly 93 to one, its highest level since 1991.  The most plausible theory for silver’s lag is that it relies on industrial applications for demand and that a recession would undermine that demand.  Some see opportunity in this chart, others cause for concern.  We will point out for the record though that silver lagged gold’s run early in the years of the credit crisis. It played catch-up, however, as the rally in precious metals prices unfolded over the next three years.  In November 2008, the gold ratio was 80 to 1.  By April 2011, it was 30 to 1.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold up modestly in early trading – holding above the $1400 level

(USAGOLD – 7/12/2019) –  Gold is up modestly in early trading following yesterday’s steep sell-off on a worse-than-expected inflation report. Only in this upside-down, Alice-in-Wonderland investment climate can an item generally viewed as an inflation hedge decline on news of a possible return of inflation. But decline it did. This morning the yellow metal is making an attempt at recovery trading tentatively at $1406 – up $2 on the day.  Silver is down 1¢ at $15.10. TIAA Bank’s Chris Gaffney remained optimistic after what he described as gold’s “knee jerk reaction” to the inflation report. Yesterday’s move, he told Reuters, was “just an adjustment of the fact that maybe it had gone up a little fast [on Wednesday], but is still holding nicely above $1,400, and it looks like we are going to continue holding above $1,400.” The overriding issue remains monetary policy and perhaps before too long the Fed chairman’s clearly-stated dovish stance will regain the upper hand in gold’s pricing.

Quote of the Day
“An ounce of gold cost $271 in 2001. Ten years later it reached $1,896—an increase of almost 700 percent. On the way, it passed through some of the stormiest periods of recent history, when banks collapsed and currencies shivered. The gold price fed on these calamities. In a way, it came to stand for them: it was the re-discovered idol at a time when other gods were falling in a heap of subprime mortgages and credit default swaps and derivative products too complicated to even understand. Against these, gold shone with the placid certainty of received tradition. Honored through the ages, the standard of wealth, the original money, the safe haven. The value of gold was axiomatic. This view depends on a concept of gold as unchanging and unchanged—nature’s hard asset.” – Matthew Hart, Vanity Fair

Chart note:  We ask the indulgence of our regular readers who have seen this chart before. We have had quite a few new visitors over the past few weeks looking into gold for the first time, and this chart more than any other, we feel, is central to understanding why gold continues to make sense as a long-term portfolio holding. When the United States abandoned the gold standard in 1971 and freed currencies to float against one another, the fiat money era began. We are still in that era today. This chart shows the performance of gold from the early 1900s to 1971 when gold backed the dollar, and the era from 1971 to present when it did not. Gold has had its ups and downs since 1971, but clearly, over the long run, in the absence of an official gold standard, individual investors have been well-served by putting themselves on a private gold standard.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold retreats on modest profit taking; James Dines proclaims ‘This is it’

(USAGOLD – 7/11/2019) – Gold retreated this morning in what appears to be modest profit-taking after yesterday’s solid $23 run-up. It is down $6 on the day at $1416.  Silver is down 9¢ at $15.21. Gold pushed higher yesterday when it became clear from chairman Powell’s opening statement that the Federal Reserve was moving toward closer alignment with the White House on interest rates and dollar policy. In a note reported by Bloomberg last night, Vanguard Markets’ Stephen Innes summed up what that public crystallization of the Fed’s position might mean for gold:

“Although there will be a few bumps on the way given the level of skepticism in the first gold rally cycle, we think there will be an even greater rush for gold in the coming weeks and months. So gold prices could stay on an upward path as central banks pivot to an easing stance, the U.S. dollar turns gradually weaker with a more dovish Fed and the burden of harmful yielding debt rises.”

For some of you the name James Dines might ring a bell.  Touted as the “original gold bug” for his recommendation to buy gold in the late 1960s, he told Outsider Club‘s Nick Hodge that that big money is rotating out of FAANG technology stocks and into safe havens including gold. Hodge says he has never heard the veteran market analyst more decisive about a gold bull market. “This is it,” says Dines.

Quote of the Day
“Rather than let the market adjust itself, government typically starts the process all over again with a new and larger ‘stimulus package.’ The more often this happens, the more ingrained become the distortions in the way people consume and invest, and the nastier the eventual depression. This is why I predict the Greater Depression will be … well … greater. This is going to be one for the record books. Much different, much longer lasting, and much worse than the unpleasantness of 1929-1946.” – Doug Casey, International Man

Chart of the Day

Chart note: This chart compares price appreciation for gold and the dollar index. Gold has consistently outperformed the dollar in twelve of the last eighteen years – a formidable record. Even if one were to add in average yields on dollar-based investments, gold still comes out the clear winner in those twelve years. Gold had an off-year in 2018 – down 1% while the dollar was up almost 7%. So far in 2019, though, gold has returned to form with an 11.1% thus far this year (through July 10, 2019).

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold bolts higher on Fed chair testimony – up $16 on strong COMEX volumes

(USAGOLD – 7/10/2019) – Gold bolted higher this morning on a clear, unambiguous statement from Fed chairman Powell that investment and the economy were slowing and that the central bank would act accordingly. The metal is up $16 at $1411.50.  Silver is up 19¢ at $15.31. “Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened,” said Powell. “Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”  Morgan Stanley, in addition, forecasted that the FOMC would cut interest rates by 0.5% at its July meeting – a prediction that will take many by surprise following last week’s healthy jobs report. Volume shot notably higher on the COMEX August gold contract as result with the price advancing quickly once again over the $1400 mark.

Quote of the Day
“If we don’t quite know what the future holds, there is little point in getting carried away by very fancy mathematical calculations of optimal portfolios. Don’t rely on past data to be a good guide. Try to think through what mix of assets gives you the best chance of surviving some big event. That must mean including assets that are negatively correlated or uncorrelated in your portfolio. And 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. And I think that’s why even central banks have always had a role in their portfolios for gold.” – Mervyn King, former Governor, the Bank of England

Chart of the Day

Chart note: Whether or not China will begin unloading its very large hoard of U.S. debt is a subject of much concern, but its intentions are one part of the much larger global de-dollarization puzzle. This chart shows the change in U.S. debt held by foreigners and international investors in billions of dollars from 1970 to present.  The level of ownership grew proportionately over time in concert with the overall issuance of U.S. debt until 2015, when it began to fall off.  The problem is not just that foreign investment in U.S. Treasuries is on the wane.  It is that the retreat has come at a time when U.S. borrowing needs are expected to consistently exceed $1 trillion per year. The question becomes, “How is the U.S. federal debt going to get financed?”  (For more detail, please see The $12 trillion federal debt bombshell –  A NEWS & VIEWS SPECIAL REPORT)

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold tracks sideways ahead of Powell Congressional testimony

(USAGOLD – 7/9/2019) – Gold tracked sideways this morning after a quiet night overseas.  It is down $1 at $1394. Silver is down 6¢ at $15.09.  Generally speaking, the markets are on hold awaiting the testimony of Fed chairman Powell starting tomorrow before the House. With an FOMC meeting looming at the end of the month, expectations are that Mr. Powell will tread lightly though there is always the chance something might be said to touch off either the White House or Wall Street.

The World Gold Council is out with a report this morning showing a strong 5% gain in gold stockpiled by ETFs and a 15% gain in net dollar value, more than half of which was the result of price appreciation. North American investors led with a 5% gain in tonnes stockpiled.  Europe was second at 4.7%. Asia lagged at a 3.3% gain.

“Earlier this year,” says the Council, “we noted that rates related to monetary policy would drive gold prices in the short-run, and that the US dollar would play a less significant role, and this has been the outcome so far. With rates falling, global negative-yielding debt is at all-time highs – above $13 trillion – and the price of gold has moved in tandem with those amounts over the past few years. These are all drivers that could continue to support gold prices in the second half of the year.”

Quote of the Day
“Sir Isaac Newton was asked by the British Treasury officials and financiers of his day why the monetary pound had to be a fixed quantity of precious metal. Why, indeed, must it consist of precious metal, or have any objective reality? Since paper currency was already accepted, why could not notes be issued without ever being redeemed? The reason they put the question supplies the answer; the government was heavily in debt, and they hoped to find a safe way of being dishonest. But Newton was asked as a mathematician, not a moralist. He replied: ‘Gentlemen, in applied mathematics, you must describe your unit.’ Paper currency cannot be described mathematically as money.” – The God of the Machine, Isabel Paterson (1943)

Chart of the Day

Chart note:  Gold is up about 12.5% from July 2018 from $1255 to $1414 (7-4-2019).

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold finds support once again just below $1400, gains momentum in overseas trading

(USAGOLD – 7/8/2019) – Gold found support once again late Friday at just under $1390 level returning to $1400 by the end of the day.  It then gained momenturm in Asia and Europe overnight and is trading now at $1403 – up $3 over Friday’s close. Silver is up 10¢ on the day at $15.09.Though recession worries and the potential for lower U.S. interest rates still head a longer list of concerns, the problems at Deutsche Bank have also begun to weigh on financial markets.

As posted at our live daily newsletter page this morning, gold ownership among Germany’s citizenry already rivals that of Japan and China – nearly 9000 tonnes in private hands. That figure is likely to grow in the wake of the now-exposed depth of the problem at Germany’s largest bank and the associated risk it imposes on the rest of Europe’s financial system. To many, the problems at the bank, including the massive layoffs beginning this week, are reminiscent of the problems at Lehman Brothers in 2008 just before it collapsed.

In an interview at CNBC on Friday, Standard Chartered Bank’s Suki Cooper weighed in on gold’s future prospects following last week’s correction from the $1435 level. “There are a number of macro factors that have turned very positive for gold, and even though we’ve seen a little bit of a pullback, we think this is actually a healthy correction. Those key drivers of a weaker dollar, falling yields and the continued uncertainty and potential risk that we might see a widespread recession are spurring investors to turn to gold once again as a safe haven asset.” She added that the nomination of Christine Lagarde to head up the European Central Bank “created an even more bullish environment for gold.” [Emphasis added]

Quote of the Day
“For we have reached a critical point. In a sense, it is true that the mists are lifting. We can, at least, see clearly the gulf to which our present path is leading. Few of us doubt that we must, without much more delay, find an effective means to raise world prices; or we must expect the progressive breakdown of the existing structure of contract and instruments of indebtedness, accompanied by the utter discredit of orthodox leadership in finance and government, with what outcome we cannot predict.” – John Maynard Keynes, The Means to Prosperity (1933)

Chart of the Day

Chart note:  This chart shows the gains or losses in gold from the same month a year earlier. From 2002 through 2011 those gains were consistent. After a down period beginning in 2012, and running through 2015, gold’s performance became less consistent.  It then swung back to a more positive trend beginning from early 2016 to present. In June 2019, gold posted one of its strongest returns by this measure in some time – 12.67%. Throughout the period, the gold price was reacting to disinflationary circumstances when its value as a safe-haven store of value captured investors’ attention.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold drops $30 on jobs report, still up $102 since late May turnaround

(USAGOLD – 7/5/2019) – Gold dropped $30 this morning upon release of the Labor Department’s payroll report showing a larger than expected gain in employment in June.  The TradingView chart (shown below as our Chart of the Day) records massive paper sales of the metal over a less than two-hour period that dropped the price from $1420 to $1390.  Silver is down 32¢ at $15.02. To end what has been a volatile week for gold, we revisit a couple of quotes from a Financial Times article that serve as a reminder why many investors own gold in the first place. On a day like today, it helps to keep one’s perspective.

“You’d be surprised,” says Laurie Kamhi, managing director of a fund that serves entrepreneurs and executives, “at how many of them invest in bars as a way to store money.”  Brent Armstrong, a partner at Weatherly Asset Management which caters to clients $2 million to $25 million in assets, says gold is a unique commodity. “We can look at its use in jewelry and electronic products,” he says, “but it’s also been a human emotional store of value for thousands of years.”

Money managers, by and large, tend to focus on the bottom line, i.e., the tangible return on investment. With gold, though, there is also an intangible reward – peace of mind. In the end, there is much to be said for that quality of the precious metals which addresses the basic need for a reliable store of wealth in financially challenging and uncertain times – even on days less rewarding than others. Even with today’s downside factored into the equation, gold is still up $102, or 8%, since the late May turnaround at $1288 per ounce.

Quote of the Day
“The moral of the story is that nobody should be complacent in these times when recession risk is so high, especially because the coming recession is likely to set off a global cluster bomb of dangerous bubbles and debt. The current probability of a recession is the same as it was during the Big Short heyday of 2007 when subprime was blowing up – just let that sink in for a minute. Do you think ‘this time will be different’? How can it be different when we didn’t learn from our mistakes and have continued binging on debt and inflating new bubbles?! Anyone who believes that ‘this time will be different’ is seriously delusional and will be taught a very tough lesson in the not-too-distant future.” – Jesse Colombo, Real Investment Advice

Chart of the Day

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Early Fourth of July fireworks yesterday give way to downside today

(USAGOLD – 7/3/2019) – Fourth of July fireworks came early to the gold market yesterday with a nearly $45 price eruption and a quick return to last week’s highs of over $1435 per ounce. This morning, however, it is a different story with gold giving up a portion of those gains. It is down $11 in today’s early going at $1420.  Silver is down 13¢ at $15.25. “Gold resumed its rally above $1,400 an ounce on a cocktail of positive drivers,” writes Bloomberg’s Ranjeetha Pakiam this morning, “with weak data feeding expectations for fresh easing from central banks, Treasury yields hitting a two-year low, and the U.S. president seeking to reshape the Federal Reserve board with two picks seen as doves.” To that “cocktail of positive drivers” we would add one more – White House trade advisor Peter Navarro’s announcement yesterday that the United States and China were “still a long way off” on a trade deal. Since the late May turnaround at $1277, gold is up $143 or 11.2%.

Quote of the Day
“But there is a real underlying risk that by deploying and using its economic weaponry so frequently the U.S. will, in the long run, drive others, friend and foe alike, away from its economic orbit. ‘These are not zero-cost options,’ says Robert Hormats, former under secretary of state for economic affairs and an adviser on international economics for presidents going back to Richard Nixon. Imposing tariffs on China and other nations trying to send their goods to the U.S. not only raises the prices of those products for Americans, it also gives targeted nations an incentive to develop markets, and long-term trade ties, in other countries.” – Gerald F. Seib, Wall Street Journal

Chart of the Day

Chart note: J.P. Morgan Asset Management released a report recently ranking investments over the past twenty years. It shows gold as the second best performer over the period at a 7.7% average gain annually. REITs were number one at a 9.9% gain. Stocks ranked fourth at 5.6%.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold regains some lost ground – ‘expect markets to keep singing gold’s praises’

(USAGOLD – 7/2/2019) – Gold regained some of yesterday’s lost ground in early U.S. trading today.  It is now up $7 on the day at $1393 as the after-effects of the Trump-Xi agreement to restart talks begin to fade. Silver is level at $15.16. In a client note distributed yesterday and included in  Reuters’ afternoon gold market report, Commerzbank summed up what many were thinking. “We do not expect gold to fall significantly further,” it said. “In our view, it is above all the upcoming European Central Bank and Fed rate cuts, and the political risks, that argue against any pronounced and lasting price slide.”

Continuing with that theme, Financial Times‘ Lex columnist offers this strongly-worded take on current gold market dynamics: “These days it is not dollars that emerging countries feel they have to hold. They want gold, and plenty of it. Since the first quarter of 2015, central banks in China, Russia, India and Turkey have boosted their gold holdings by two-thirds to 4,960 tonnes. Diplomatic and trade rows with the US explain some of this buying. There is a move to avoid buying dollars for their foreign exchange reserves. . . US interest rates are probably headed down. That move should depress the dollar against other currencies. Expect markets to keep singing gold’s praises.” [Emphasis added]

Quote of the Day
“Well, my recommendation is, since we came off the gold standard in ’71, put yourself on the gold standard. So, I’m a very simple man. I save gold and silver coins. I have no ETFs. I don’t have savings. I keep my money out of the banking system. So, I’m on the gold standard. I operate outside the banking system. And I’m accountable. I am responsible for my own life. Trump’s my friend. I don’t expect him to take care of me, my God. All these people, Social Security we know is going bust. It’s got no money. I think 78 cents of every dollar collected in taxes now goes to entitlement programs or the debt. We can’t keep functioning like this.” – Robert Kiyosaki, Rich Dad Poor Dad

Chart of the Day

The biggest foreign holders of U.S. debt

Click to enlarge. Chart courtesy of HowMuch.net

Chart note: “The total amount of treasury securities issued to foreign countries is $6.433 trillion,” says HowMuch.net. “China currently holds the most U.S. debt due to a variety of factors, including China’s desire to keep the yuan weak compared to the dollar. Most of the treasury securities held by other countries are in the form of treasury notes and bonds, rather than treasury bills. The top five countries in the visualization (China, Japan, Brazil, United Kingdom, and Ireland) account for almost half of the treasury securities held by foreign countries.”

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold down in mixed reaction to Trump-Xi agreement

(USAGOLD – 7/1/2019) – Gold is down $15 at $1394 in early U.S. trading after being down more than $25 in Asia overnight as financial markets attempt to sort out the implications of the Trump-Xi agreement to re-open trade talks. Silver is down 11¢ at $15.21. “The setback [for gold] might be temporary,” reports Bloomberg this morning, “as investors now train their focus on U.S. jobs data due Friday for clues on the Federal Reserve’s next move on policy.” Sharps-Pixley’s Ross Norman, also quoted in that Bloomberg article, was philosophical about the sell-off:  “Gold was well overdue a period of consolidation and gold bulls should welcome it. This provides a welcome entry point.” Adding some credence to the notion that the downside might be short-lived, other items in the commodity complex – oil, palladium and platinum – bolted higher even as gold and silver prices declined. The dollar, at the same time, is up but not convincingly. In short, this morning’s markets are a mixed bag sending mixed signals.

Quote of the Day
“[Y]ou should have it [gold] because you never know what our political leaders are going to do. . . Gold keeps its intrinsic value better than anything else. When you see the nominal price change, that’s not the value of gold changing, that’s the value of the dollar or whatever currency you’re talking about, changing in value. Gold is the constant, like the North Star. Yes, you should have it, a piece of it, just for peace of mind.”Steve Forbes, Forbes magazine

Chart[s]of the Day
At mid-year, we thought it appropriate to post a quick run-down on gold’s performance in a select group of currencies over the past twelve months as of Friday’s closing prices.

European euro + 15.7%
Chinese yuan + 17.1% Japanese yen + 10.2%Indian rupee + 13.6%British pound + 16.3% United States dollar + 12.8%

Charts courtesy of BullionStar.com

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold finds support, treks higher, paces sidelines awaiting Trump-Xi outcome

(USAGOLD – 6/28/2019) – Gold continued to pace the sidelines this morning awaiting the outcome of the Trump-Xi meeting in Japan on Saturday.  The good news, though, comes from a technical perspective. For a second time this week, the yellow metal found support just above the $1400 mark then trekked higher regaining almost $10 in the price to finish at $1411. In today’s early going, it is up another $3 at $1414.  Silver is level on the day at $15.28.

Whether or not gold has drawn a line in the sand at $1400 remains to be seen, but traders and speculators are likely to take note of those reversals as a good sign. As of this morning’s pricing, gold is up $15 for the week (1%) and up $108 in the month of June (8.25%).  Silver is level on the week, but up 69¢ for the month (4.75%).

A Financial Times article on gold published this morning highlights a couple of eye-catching quotes from money managers whose clients invest in gold.  Laurie Kamhi, managing director of a fund that serves entrepreneurs and executives says, “You’d be surprised at how many of them invest in bars as a way to store money.”  Brent Armstrong, a partner at Weatherly Asset Management which caters to clients $2 million to $25 million in assets, says gold is a unique commodity. “We can look at its use in jewelry and electronic products,” he says, “but it’s also been a human emotional store of value for thousands of years.”

Money managers, by and large, focus their attention on the bottom line, i.e., the return on investment.  With gold, though, there is also a psychological reward – peace of mind. In the end, there is much to be said for the non-monetary side of the precious metals, i.e., that quality which addresses the need for a reliable store of wealth in financially challenging and uncertain times.

Quote of the Day
“I remember being told many years ago on a South African game reserve that the buffalo was the most dangerous of the big five game animals. In large part, this is because of the complacency shown towards them relative to the other, more obviously dangerous big five game animals (ie the lion, leopard, rhino and elephant). It’s also a fact that unlike the other big five, the buffalo gives no warning of an imminent charge. It’s complacency that gets you killed, and the same goes for investors with the macro-risks. We all know what the big macro-imbalances are out there, caused by years of loose money, but investors continue to ignore them at their peril.” – Albert Edwards, SocGen

Chart of the Day

Chart note: Up until the “double oughts,” the manual on gold read that it performed well under inflationary and deflationary circumstances, but not much else. However, as the decade of asset bubbles, financial institution failures, and global systemic and sovereign debt risk progressed, gold marched to higher ground one year after another. As events unfolded, it became increasingly clear that the metal was capable of delivering the goods under disinflationary circumstances as well. The fact of the matter is that during the 2000s – even as the inflation rate hovered in the low single digits (green area on chart] – gold managed to rise from under $300 per ounce in the early 2000s to nearly $1900 per ounce by 2011, a gain of roughly 633%.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold falls back to just above the $1400 level, looking for support

(USAGOLD – 6/27/2019) – For the second time in two days, gold has fallen near the $1400 mark. Whether or not support will hold at that level is the question of the day. It is now trading at $1402 – down $9.50 on the day.  Silver is trading at $15.24 – down 7¢ on the day. Financial markets, in general, look restrained this morning pending the outcome of the Trump-Xi meeting on Saturday coupled with the arrival of the annual summer doldrums.

With the assortment of issues preying on investor psychology, though, 2019 might be one of those years when we bypass the annual slowdown. “Gold trading usually gives pundits, dealers and investors a break at some point over the summer,” observes Adrian Ash at BullionVault. “But like 2007, 2008, 2009, 2011 and 2016…this year is proving no time to take your eye off the market. And if 2019 is going to see an old skool summer lull in gold trading, it won’t feel much like a discount up at these prices.”

Overall a potential global recession and attendant looser monetary policies might be an even greater and enduring influence at this juncture than seasonal market considerations. The Sino-American trade war figures largely in that discussion. Expectations linger that barring a surprise the two parties will likely agree on little more than to keep talking.  Come Monday, should that assessment become reality, we could be looking at a completely different gold market from the one we see today.

Quote of the Day
“It took the United States 193 years to accumulate its first trillion dollars of federal debt—the gross debt, as it’s called. We will add that much in the current fiscal year alone. All told, the government owes $21.5 trillion, give or take a few careless tens of billions—that works out to $65,885 for each American. It’s the ease of borrowing that drives the growth in federal IOUs. The remote political cause of this predicament is the ideology of statism. In Washington, this takes the form of tax and tax, spend and spend, elect and elect; on Wall Street, it’s found in too-big-to-fail, a virtually socialized mortgage market, and an overreaching, manipulative central bank.” – James Grant, Time To Worry, The Weekly Standard;  (Also see Grant’s Interest Rate Observer)

Chart of the Day

Chart note:  This chart depicts U.S. government receipts and expenditures from 1950 to present.  Note the growing gap between incoming and outgoing – the difference for the most part filled by additions to the national debt.  Given the established trend, that gap in all likelihood would have continued widening without the imposition of the new tax reduction program and simultaneous growth in government spending.  With tax reductions now in place, the distance between the two lines is likely to widen even further.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold trends lower on Fed signals, traders and investors continue to buy the dips

(USAGOLD – 6/26/2019) – Gold continued to trend lower overnight and into the New York open on profit-taking and signals from Fed chairman Powell yesterday that any interest rate cut at its July meeting would be modest. Though some gold traders and investors are taking profits, others continue to buy the dips. As a result, gold is down $7 in today’s early going at $1411 after being down as much as $16 in overnight trading. Silver is level at $15.32. Gold hit six-year highs in yesterday’s overnight trading at $1437 per ounce. Goldman Sachs revamped its forecast for gold yesterday projecting a $1475 average price over the next twelve months.  It says $1600 is possible if slow growth hampers developed market economies.

Quote of the Day
“The ‘threat’ is best seen through the emergence of exchange-traded funds (ETFs), which allow investors to get a proxy physical gold exposure through an investment via their stockbroker. In truth, these products are, in many cases, more expensive than trading and storing physical gold (especially for larger investors with a long-term investment time frame), have less trading flexibility, and are less secure than owning real physical gold.” – Jordan Eliseo, ABC Bullion/Australia

Chart of the Day

Chart note: “Central bank net purchases reached 651.5t in 2018, 74% higher year over year,” says the World Gold Council in its year-end gold demand report. “This is the highest level of annual net purchases since the suspension of dollar convertibility into gold in 1971, and the second highest annual total on record. These institutions now hold nearly 34,000 tonnes of gold. Heightened geopolitical and economic uncertainty throughout the year increasingly drove central banks to diversify their reserves and re-focus their attention on the principal objective of investing in safe and liquid assets.”

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold hits $1439 in overnight markets then takes a breather

(USAGOLD – 6/25/2019) – Gold is taking a breather this morning after a week of lightning-fast price increases that took it from $1339 last Monday to nearly $1439 last night during Asian trading hours – up $100 on the week.  It is now trading at $1429 – up $4 on the day.  Silver is down 6¢ on the day at $15.41. We are beginning to see fairly strong support on price dips – a further indication of the important sentiment change we have mentioned previously in this report.  We should not rule out short-covering as an additional contributing factor to gold’s quick rise.

The fundamental motivation for gold’s strong showing, most analysts agree, is the stimulus policies announced or signaled by the world’s major central banks including the Federal Reserve. Most expect that motivation to be reinforced at this week’s G-20 meeting in Japan. The wild card, though, is the sideline meeting between China’s premier Xi and the U.S. president on trade issues.  In the absence of any leaks or posturing of significance, we suspect financial markets could go on hold until a clearer picture emerges from those talks toward the end of the week – though gold’s erratic price behavior this morning does not follow along with that logic.

“I believe this breakout is the real deal,” Bill Fleckenstein, the well-known market analyst, tells King World News, “and the resumption of the bull market in gold is finally upon us. I have no idea how high gold can go, but there is no shortage of reasons to cause folks to want to own some, although I’m not going to bore everyone by reciting all the potential catalysts once again. Now that gold is in motion, it will create more buying interest. Even though everyone claims they want to buy assets on the cheap, what they really want to do — now more than ever — is buy something that’s moving.”

Quote of the Day
“Despite a Federal Reserve that doesn’t know what it is doing – raised rates far too fast (very low inflation, other parts of world slowing, lowering & easing) & did large scale tightening, $50 Billion/month, we are on course to have one of the best Months of June in US history……Think of what it could have been if the Fed had gotten it right. Thousands of points higher on the Dow, and GDP in the 4’s or even 5’s. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us. Blew it!” – President Donald J. Trump at the RealDonaldTrump, 6-24-2019

Chart of the Day

Chart note:  Since gold’s turnaround at the end of May, it is up $155 per ounce or 12.3%.  It is up $100 since June 17th (last Monday). Increasingly we are seeing evidence of investors and traders buying on the dips. Investors primarily are buying physical metal for safe-haven, store-of-value purposes. Traders, according to analysts, are buying both to speculate on the long side and to cover shorts.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold pushes tentatively over $1400 mark in early trading – ‘a dramatic change in sentiment’

(USAGOLD – 6/24/2019) – Gold pushed tentatively over the $1400 mark in overnight trading and managed to hold that position in early U.S trading.  It is now priced at $1407 and up $7 on the day – nice, neat symmetry at an important number.  Silver is level on the day at $15.35.  Though gold has led the way since this uptrend began at the end of May with a 10% gain, silver has shown itself to be a reluctant, but reasonably productive participant – up 6.4% over the same period. Now at a near record almost 93 to one ratio to gold, some will see in that number the potential for a technical re-balancing of the price relationship between the two precious metals.

A headline to an article in this morning’s Wall Street Journal signals that an important psychological shift may be gaining a foothold in financial markets – Bond-Yield Fall Signals Unease. “An aging population means lower potential growth. That, in turn, boosts savings and depresses investment. Central banks struggle because they can’t really control these factors, and in a way, they can make it worse,” explains Silvia Dall’Angelo of Hermes Investment Management in that article. Adrian Day, president of Annapolis, Maryland-based Adrian Day Asset Management is more direct and matter of fact in his assessment. “There has been a dramatic change in sentiment,” he told Bloomberg on Friday in an article on gold’s breakout.

Quote of the Day
“Financialization is the smiley-face perversion of Smith’s invisible hand and Schumpeter’s creative destruction. It is a profoundly repressive political equilibrium that masks itself in the common knowledge of ‘yay, capitalism!’. Financialization is a global phenomenon. In China, it’s transmitted through the real estate market. In the US, it’s transmitted through the stock market. Financialization is the zombification of an economy and the oligarchification of a society.” – Ben Hunt, Epsilon Theory

Chart of the Day

Chart note: “The figure,” say the authors of this study published by the St. Louis Federal Reserve, “shows that the uncertainty shocks that hit the economy in the fourth quarter of 2018 and in the first quarter of 2019 (January) have been the largest during our sample period. Based on the framework we use, this finding has potentially ominous implications for the U.S. economy.”  A fitting chart as we weigh the effects of a possible breakdown in trade talks between the United States and China, an imminent recession and a rapidly changing approach to monetary policy at the Federal Reserve.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |