“Without confidence in the dollar, the world has no valid reserve currency. Gold is an alternative to the dollar. As for the pandemic, gold is a perfect hedge. It is risky either way. If the virus persists or the inevitable ‘deadly second wave’ occurs, gold will rise on the effects. If a vaccine is found, gold will rise on the hangover of the cure.”
USAGOLD note: We’ve had the “new normal,” the “new-new normal” and the “new abnormal” (in recent weeks). Now John Ing warns of a debt-ridden future that is “never normal.”
Repost from 5-18-2020
Gold in six easy lessons
1. Don’t buy it because you need to make money; buy it to protect the money you already have.
2. Don’t look at price as a barrier; look at it as an incentive.
3. Don’t buy the paper pretenders; buy the real thing in the form of coins and bullion.
4. Don’t fall prey to glitzy TV ads; do your due diligence instead.
5. Don’t allow naysayers to divert your interest; allow yourself the right to protect your interests as you see fit.
6. Don’t forget the golden rule: Those who own the gold make the rules!
“Rogers said he owns both gold and silver, but would like to add more gold when the time comes. Silver, he says, still is down 50 percent from its all-time high and, thus, looks a better bet. Nonetheless, Rogers sees both the bullion counters ‘ going up a lot over the next few years, as ‘never ever in history has the world seen such a staggering debt burden that lies ahead in 2021, 2022 and the years ahead,’ he said.”
USAGOLD note: Some strategic advice from the widely respected hedge fund maestro ……
Repost from 8-16-2020
“’The monetary theory of inflation has been replaced by labor and product market micro theories, and market pricing of inflation risk is low,’ the economists led by Catherine Mann said. ‘So Gold is not presaging inflation.’ The gold rally was also not an indicator that the dollar would lose its crown as the ‘premier international reserve asset.’”
USAGOLD note: Echoes of Goldman Sach’s recent analysis and an application of Gresham’s Law: Bad money drives out good.
Repost from 8-9-2020
This year, speakers at the annual Denver Gold Forum are making their presentations electronically. We will post a number of those presentations as DGF makes them available.
USAGOLD note: Atlantic House’s Charlie Morris sees gold going to $7,345. per ounce by 2030 on a confluence of factors with real rates on dollar-based yield instruments and rising inflation the most important. He says the rest of the decade will be more like the inflationary 1970s than the disinflationary early 2000s.
Repost from 4-22-2020
“Describing the yellow metal as a hedge in times of uncertainty, Pamela Aden recapped the market volatility of the last five months, saying it’s time for people to protect their savings and investments. ‘A perfect storm is taking place … during an election year that’s crazed with a health pandemic, economic collapse, racial conflict, millions unemployed, anger, protests all linked together,’ she said.”
USAGOLD note: The Aden Sisters’ straight-shooting, cut-to-the-chase candor is always appreciated.
Repost from 6-21-2020
“It’s a bit like what happened to big tech. People like it because it’s defensive. People like it because it’s a reflation trade. People like it because it’s inflation protection. What we are starting to see with the narrative about gold is starting to be like the narrative about big tech. It gives you everything.”
USAGOLD note: The highly-respected Mohammed El-Erian addresses a subject we have broached many times on this page – gold’s widening Renaissance as a financial asset.
Repost from 8-16-2020
“In a bull market those who look for bullish sentiment to get excessive too early, they’re wasting their time. Contrary opinion is an unreliable indicator. Sometimes near a major top the contrary opinion guys will be right. But quite often in the middle of a trend they will find too many bulls and yet the price will still drive north (head higher). … So I think people who use the traditional methods of analysis like looking at short-term charts or contrary opinion, they’re wasting their time. This is a fresh new bull market, it is a crisis situation, and gold is part of a much bigger picture that’s going on here…”
USAGOLD note: Nothing in the investment game is foolproof including contrary opinion. Oliver has been making the right calls for quite some time now. This is a crisis, he says, and “it is not going to be incremental anymore.” He touts gold and silver saying the yellow metal is headed for the high $2000s. Oliver is a man of conviction as you will find in the interview at the link above. He also carries some credentials having worked directly with COMEX chairman and EF Hutton commodities division head, David Johnston, during the 1970s.
Repost from 8-3-2020
“We want you on board the gold train as it pulls out of the station. It’s also important to understand why you’re on board. Gold is — and always has been — the world’s favorite safe haven. That is, during times of uncertainty, insecurity, economic or political upset, war, devaluations and more, gold has always come out as #1. And this impressive track record goes back more than 5,000 years.”
USAGOLD note: This overview from the Aden Sisters – the widely followed chart analysts – is an excellent primer for those new to the gold market, i.e., why it has always made portfolio sense and why it makes sense now and for the future – “the best investment in the world today.”
Repost from 8-16-2020
“I think that the downside in gold is limited. The upside on gold at this point is unlimited. It’s going to be far, far higher than people imagine.”
USAGOLD note: In the past, Lassonde has said that gold will go “over $10,000” in a “tidal wave of buying.” In this interview, he says we are “about halfway through this [gold] bull market and there is a lot more to come” over the next two to five years. Much more to digest at the link above ……
Repost from 7-26-2020
Rainy day investment
“In an economy buffeted by the ups and downs of farming and fishing, the people [of India] are used to buying gold after bumper harvests or fishing seasons and selling it after lean ones.” –– Vivek Kaul, Live Mint
Dr. MoneyWise says: “It’s all very simple. Own gold for a rainy day. Use it if and when that day arrives.”
Graphic image courtesy of Visual Capitalist • • • Click to enlarge
USAGOLD note: Stunning visualization of gold’s secular bull markets. Worth a visit.
Repost from 6-10-2020
“Anyone armed with this knowledge would not have been surprised that the collapse in economic confidence and the surge in deflation fear that occurred during February-March of this year was accompanied by a veritable moon-shot in the gold/silver ratio*. Nor would they have been surprised that the subsequent rebounds in economic confidence and inflation expectations have been accompanied by strength in silver relative to gold, leading to a pullback in the gold/silver ratio.”
USAGOLD note: Once again, nothing new to people who frequent this page, but if you are new to gold and silver and interested to know the circumstances under which the gold-silver ratio moves in one direction or the other, this short article offers some solid background.
Repost from 7-20-2020
“Global silver investment jumped 12 percent to 186.1 million ounces (Moz), making it the largest annual growth since 2015. Notable gains in Europe (+25 percent), the US (+9 percent) and India (+5 percent) led to the increase. Institutional investment fared even better than retail demand. Last year, exchange-traded product (ETP) holdings stood at 728.9 Moz at year-end, up by 13%, achieving the largest annual rise since 2010.”
USAGOLD note: Is silver angling for a major turnaround? The Silver Institute offers some hopeful signs as indicated in the snippet above. The link above takes you to the full 86-page report.
Repost from 4-22-2020
“The optimal portfolio, since 1929, included risk weighted combinations of Domestic Equity (24%), Fixed Income (18%), Active Long Volatility (21%), Trend Following Commodities (18%), and Physical Gold (19%). This allocation is highly unorthodox compared to a Traditional Pension Portfolio dominated by equity Linked Assets (73%) and Fixed Income (21%).”
USAGOLD note: “On a long enough timeline every strategy sucks,” quips RCM Alternatives on Artemis’ approach to the 100-year portfolio. That explains the 19% portfolio commitment to physical gold, the portfolio inclusion for all seasons.
Repost from 2-24-2020
“‘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
“‘I’m not surprised to see gold drop $100-plus [Tuesday]. I think yields have started to drift higher at the long end. I’m not interested in long-term treasury bonds at all. I’m not interested in short-term treasury bonds really at all, either.’ Gundlach added.”
USAGOLD note: Sounds like Gundlach is keeping some powder dry …… Hoping for a near-term buying opportunity. He has been a steadfast gold bull for a number of years.
Repost from 8-12-2020
“People who buy shares for capital growth, and bonds for diversification are ‘investors’, on this view. And remain ‘investors’ even if said assets have negative cash flows. But those buying gold for these reasons are ‘gold bugs’, not pure investors. Or so the thinking goes. In my view, it is time to accept that gold buyers are investors – and often very good ones at that. As in many respects, gold is one of the best investments there is.”
USAGOLD note: Posted and linked without comment ……
Repost from 8-11-2020
“It surprises many professional investors that gold has been the leading major asset class in the 21st century. It has beaten the US treasuries, US equities, developed market equities and emerging markets, even after accounting for dividends. $100 invested at the turn of the century has turned into $591.”
USAGOLD note: Charlie Morris makes a case similar to the one we made several months ago under the banner Gold’s Century – While stocks dominated headlines gold quietly performed. Morris concentrates on addressing the question “Why” and offers an appealing forecast while the USAGOLD report told “How” and concentrated on gold’s performance since the turn of the new century featuring the chart posted below.
“For twelve consecutive years, gold was up every single year whether there were inflation fears, deflation fears; strong dollar, weak dollar; political stability, political instability. It didn’t matter – strong oil, weak oil. . . Gold went up for twelve years. . . When gold embarks upon its next move, I believe that you will see that long wave take gold relatively quickly, but it will be measured in years, up to a $3000 to $5000 target that I believe is fundamentally justified based on the facts we have today.” –– Thomas Kaplan, Electrum Group (Bloomberg’s Peer to Peer Conversations with David Rubinstein)
Repost from 6-1-2020
“Over 40 years the authors have watched the bright optimism of a new, rigorous approach to economics — which they shared — dissolve into the failures of prediction, [former Bank of England governor Mervyn King and former Financial Times columnist John Kay] write, arguing that the modern community of economists and policymakers needs to accept radical uncertainty and rethink its models.”
USAGOLD note: And radical uncertainty ought to be a psychological underpinning for any rational, modern day investment portfolio. As Nicholas Taleb of black swan fame once said: It is just as important to prepare for what we cannot foresee as for what we can. One short cut to achieving that goal, in our view, is to own gold – and enough of it to make a difference.
“Having been mugged too often by reality, forecasters now express less confidence about our abilities to look beyond the immediate horizon. We will forever need to reach beyond our equations to apply economic judgment. Forecasters may never approach the fantasy success of the Oracle of Delphi or Nostradamus, but we can surely improve on the discouraging performance of the past. – Alan Greenspan, The Map and the Territory, 2013
Repost from 3-24-2020
The stock market is poised for a 40% drop, warns economist who says the current climate feels a lot like 1929
“I think we’ve got a second leg down and that’s very much reminiscent of what happened in the 1930s where people appreciate the depth of this recession and the disruption and how long it’s going to take to recover. … Stocks are [behaving] very much like that rebound in 1929 where there is absolute conviction that the virus will be under control and that massive monetary and fiscal stimuli will reinvigorate the economy.” – A. Gary Schilling, economist – A. Gary Shilling & Co
USAGOLD note: Schilling joins a group of prominent economists and market analysts who see similarities between the 1930s and the present. Schillings warning about a 40% drop prompts a quick review of the market action following the 1929 crash. The top (380) to bottom (43) decline occurred over a three year period from late1929 through most of 1932 and amounted to a more than 85% loss of index value. The Dow Jones Industrial Average did not return to its 1929 peak until late 1954 – 25 years after the Great Crash.
Chart courtesy of MacroTrends.net
Repost from 7-7-2020
“Gold’s value rests in the eye of the beholder … The fact that we will never scientifically arrive at a ‘correct’ price need not stop us from trying, however. And after going through the various valuation exercises, the rally looks rational. While the current price looks expensive, it could easily rise further.”
USAGOLD note: As we are fond of saying, “gold’s value is relative.” It doesn’t really matter how many digits it takes to express the price. Its true value rests in its comparison to the purchasing power of the currencies in which it is being priced and the anticipated value of those currencies in the future. Authers, one of our favorite financial writers, has it right when he asks “Is it overpriced?” then answers: “The question is impossible to answer.” (Please see this morning’s Chart of the Day below, i.e., gold expressed in various major currencies over the past 12 months.)
Repost from 8-8-2020
“Gold and U.S. stocks could part ways during a fresh round of market turbulence, ending a three-month period in which their returns were almost yoked. Renewed deterioration of the global economy and more lockdowns to prevent Covid-19 from spreading should hit equities but leave gold standing, according to Societe Generale.”
USAGOLD note: A solid argument why investors who own stocks might want to unlock some of the purchasing power stored there while the ratio between stocks and gold is still working to their advantage. The number in the chart below indicates how many gold ounces it would take to buy the Dow in any given month. At present, the ratio is 13.38 to one. Its low came at the peak gold price and the DJIA nearing its low point in 1980 – 1.3 ounces.
Dow to gold ratio
1970 to present (Log scale)
Chart courtesy of MacroTrends.net • • • Click to enlarge
Related: CCN/Prepare for a massive stock market meltdown and explosive gold rally/Stepahie Bedard-Chateauneuf/8-3-2020
Repost from 8-6-2020
“ECONOMY dying. FED incompetent. Next BAILOUT trillions in pensions. HOPE fading. Bought more gold silver Bitcoin. GOLD @$1700. Predict $3000 in 1 year. Silver @ $17. Predict $40 in 5 years. Bitcoin @$9800. Predict $75000 in 3 years. PRAY for the BEST-PREPARE for the WORST. …”
“Writer Nassim Taleb describes three people in the world FRAGILE ANTI FRAGILE and ROBUST. Crisis is crushing Fragile people. Robust will not change. ANTI FRAGILE people are like YOU, people who will emerge from this FAKE PANDEMIC stronger smarter & richer.”
USAGOLD note: Kiyosaki is the widely-followed author of Rich Dad Poor Dad. Think he’s out on a limb with Bitcoin … but do NOT see his gold and silver predictions wildly out of line. Kiyosaki is a long-time advocate of gold and silver ownership as an anti-fragile solution to black swan crises.
Repost from 6-4-2020
“The silver price hike has been fueled by its inherent safe-haven status, fears of inflation, remarkably low interest rates and continued liquidity boosts by central banks. The jump in price reflects renewed interest by both retail and institutional investors in silver as an investment vehicle.”
USAGOLD note: A nice, brief summation from the Silver Institute of what has happened in the silver bullion market since the March lows. A good introduction for those new to the silver market and contemplating a purchase. One of the more interesting developments over the past several years has been its evolution from a precious metal principally used in industry to one that combines industrial demand with monetary demand from investors seeking a financial safe haven.
Repost from 8-6-2020
(USAGOLD – 8-11-2020 – LATE PM) – At times like these, it might be helpful to put things into perspective. We would point out first and foremost that gold is still up almost 26% and silver is still up 38% year to date. At some point along the way, when an investment is posting numbers like that, one might expect a correction – even view it as healthy. Let us not forget, too, that the levels of stimulus already injected into the economy have not disappeared and further massive stimulus, we are promised, waits in the wings.
We would also remind our readers that 5% single-day drops in gold are not unheard of. We had one back in March, for example, just before the subsequent rocket launch higher. In fact, gold has a long-standing reputation for taking the stairs up and the elevator down, so long time gold market participants will not be totally surprised by today’s reversal. That is not to say that precious metals will not go lower in the days ahead, possibly even a lot lower, but on the other hand, price corrections often encourage some judicious bottom fishing among those who read opportunity in price drops rather than disaster. With that thought in mind, it will be interesting to see how Asia responds when the market opens there in a few hours.
A couple of quotes from Myra Saefong’s gold column this afternoon at MarketWatch might add some perspective as well:
Edward Moya/Oanda: “Traders who were looking for an excuse to lock-in profits with their bullish gold bets jumped all over the Russia’s vaccine news.”
Brien Lundin/GoldNewsletter: “Gold and silver’s run over the past couple of weeks was dizzying in its trajectory and just about everyone marveling at that rise was expecting, and even hoping for, a correction. Well, it’s here, and the metals are simply releasing a bit of the air that had overinflated the market. There was tremendous anecdotal evidence that a great swath of investors had bought into the long-term story for gold and silver and were simply waiting for a pull-back to get in. I would expect there’s some reality to this view, and that we’ll see a big influx of investment once it appears that gold has bottomed.”
Buttressing Lundin’s observations, we have had a number of calls from long-standing clients this afternoon placing orders, or prepping to place orders, saying that they wanted to take advantage of the pullback.
“As long as US treasuries are trading with negative real yields, gold should have a permanent bid under it. This means dips are likely to be bought into aggressively by investors, especially since the Fed’s Chair Jerome Powell has even stated the Fed isn’t even ‘thinking about thinking about raising rates…’ My guess would be that we have a while to go before gold loses its luster. The same goes for silver … which has a long way to go if it is to match the length of previous bull markets.”
USAGOLD note: A very clearly presented argument for gold’s upside based on a long term central bank bias toward negative real rates.
Repost from 8-5-2020
Gold Hedger Positions
Gold = Gold hedger positions (Last: -287292)
Red = Gold hedger net as % of Open Interest (Last: -54)
Tech isn’t the only asset having a good half-year – gold is, too.
Through about the half-way point of 2020, gold has returned more than 16% and is at its highs for the year. Meanwhile, it suffered only a small drawdown from where it closed 2019. Momentum is a powerful thing, and when gold had good years, it tended to keep going. Over the next few months, gold tended to keep rallying, with only 4 out of 18 years showing a substantial decline in the months ahead.
One concern is that ‘smart money’ hedgers are betting against the metal, holding more than 50% of open interest net short, which means that speculators are heavily long. This has been an issue in recent years, but not so much historically.
The fact that gold is still hitting new highs despite signs of high optimism earlier this year is a good sign. If gold can continue to hold ground despite high optimism, then it suggests a long-term positive market environment much like the mid-2000s. There are some minor shorter-term negatives; if those can calm down in the weeks ahead, then it should present a better risk/reward for the metal heading into the late summer.”
USAGOLD note: Always appreciate the deeper analysis Goepfert offers on a range of investments – including gold.
Repost from 7-2-2020 (before gold advanced to record prices)
‘The speed at which gold has broken above $2,000 an ounce has left some in the market fearing a correction, but many analysts predict more gains as the coronavirus crisis spurs investors to buy into bullion’s relative safety.”
USAGOLD note: This article goes on to offer a balance of bullish and bearish opinion on what’s next for the yellow metal. And yes …… I think even gold market veterans are stunned by both the speed and magnitude of the move.
“Investors have focused on a rise in record prices for gold, but silver’s up about 25% in July—the metal’s second-biggest monthly gain on record—and it’s still undervalued compared with the yellow metal. ‘Silver is often called the ‘poor man’s gold’ because some of the same factors that cause gold prices to rise do the same thing to silver prices,’ says Ed Moy, chief market strategist at gold retailer Valaurum.”
USAGOLD note: Many investors see silver as an underpriced store of value. Like gold, it s an asset that is not simultaneously someone else’s liability and does not carry, as a result, any counter-party risk.
Repost from 8-1-2020
“A mix of slow growth, easy money and black swans can propel gold to record highs in the second half of 2020. Lingering fears about lockdowns and scarring to the real economy should keep haven demand strong, but the metal could also rally in a risk-on environment, as the 2008 play book showed. Comfortably the best-performing major asset in the past year, gold soared by a quarter. That put it within levels that Markets Live foresaw at the end of 2019. With a global recession arriving sooner and cutting deeper than expected, $2,000/oz is the next target.”
USAGOLD note: Van der Walt is a macro commentator at Bloomberg and one of a good many Wall Street analysts who see gold at the $2000 mark by the end of the year.
Repost from 7-2-2020
New note 8/4/2020: Gold did not take long to shatter that old record price in the second half of the year. It blew past the old mark on July 27th to finish at $1965 by the time trading closed for the day.
“There is no doubt that the backdrop remains highly constructive, with negative real yields for the foreseeable future. We have subsequently revised up our 6-to-12-month target to $2,300/oz. Even so, we are mindful that if economic sentiment improves in coming quarters, the hurdle for continued growth in investor demand may make the path to this level an arduous one.”
“Gold broke a new high on 28th July, reaching US$1,940.9/oz on the LBMA Gold Price PM and topping US$1,981.3/oz intra-day. This exceeded the previous record of $1,895.0/oz set by the PM Price on 5th September 2011 and the $1,921.2/oz intra-day high the following day during Asian trading hours. On the heels of this milestone, investors are asking two key questions, which we explore in this report: How does this compare to previous highs? Is the price rally sustainable? Gold’s performance so far in 2020 has been remarkable. As of 28th July, it is up by 27%, significantly outpacing all major assets. This move up has been driven by a combination of: 1) high uncertainty, 2) very low interest rates, and 3) positive price momentum – all of which are supportive of investment demand. But there are reasons to believe that we may still be early in the cycle.”
USAGOLD note: Thorough, well-grounded rationale on where we might be headed in the gold market. Particularly useful for those looking into gold for the first time ……The inflation-adjusted high for gold, by the way, is in the vicinity of $2800 per ounce.
“Why is this happening? This behavior is coming particularly from the group labeled ‘other reportable’ in commitment of traders disclosures, which includes family offices and high-net-worth individuals. Worried about protecting the value of their fortunes, they are opting for the perceived safety of physical gold. This creates a specific problem for swap dealers, which are run by the bullion banks that make a market in gold.”
USAGOLD note: For as long as we can remember, USAGOLD has taken the position that the Achilles heel of the paper gold market is investors opting to take delivery of the metal – deliveries the short side of the market would find difficult to meet simply because of the dearth of availability against the amount of capital committed in the market. Now, according to Authers, that day may be upon us.
Repost from 7-28-2020
“Mobius says that investors find themselves in a curious spot where buying stocks and gold are both viewed as ways to preserve capital and avoid erosion from inflation. ‘We’re in a very interesting situation where people are looking at stocks to preserve their capital because stocks will adjust to inflation and also gold. Their sort of hedging their bets.’”
USAGOLD note: Mobius has been a vocal advocate of gold on the interview circuit for over a year now. He points out in this article that mine ouput “should be declining” as a result of COVID-19.
Repost from 7-27-2020
“This is just the beginning of what could turn out to be the biggest gold bull market in history. Gold is within a hair of taking out its previous all-time high of around $1,910. Once it does, I expect gold to skyrocket. Gold is the ultimate form of wealth insurance. For thousands of years, it’s preserved wealth through every kind of crisis imaginable. It will preserve wealth during the next crisis, too. Owning some physical gold – and keeping it in your own possession – is step one. It’s something everyone should do.”
USAGOLD note: Giambruno pulls no punches in this advisory.
Repost from 7-23-2020
“The purpose of this update is to celebrate and mark silver’s powerful breakout from a giant base pattern that started to form as far back as 2013 – 2014, a breakout which has only happened during the past 2 days, yesterday and today, with today’s advance finally seeing it break clear above the resistance at the upper limits of the base pattern. While this doesn’t mean it can’t drop back again it makes it less likely, and even if it does it is likely to soon turn up again. Quite clearly, when you are only 2 days into a bullmarket that is starting after the completion of a 6-year long base pattern, the probabilities are very high that it has much further to go, both in respect to time and magnitude of advance.”
Repost from 7-26-2020
“While the Fed, institutional investors, and pension funds own much of the debt that finances our fiscal spending, foreign countries account for nearly 30%. And chief among those foreign countries is China. Given that our relationship with China is quickly deteriorating, it is not clear what appetite it has for funding our economic recovery. So, expect gold prices to break new records until the economy is on a predictable path toward recovery without the fear of inflation, which given the early stages of the economic crisis caused by this pandemic, could be some time.”
USAGOLD note: Moy was Director of the United States Mint during the 2008 financial crisis.
“Gold prices will push towards record highs over the next 18 months as the coronavirus crisis encourages investors to hoard the metal as a hedge against possible turmoil in the wider markets, a Reuters poll showed.”
USAGOLD note: The price predictions are already out of date, but the sentiment registered in this Reuters poll is worth noting. And to be precise it is not simply the pandemic that offers gold sustenance, but the economic policies launched to combat it – some of which were in place long before the pandemic became a problem inspired by other weaknesses in the financial architecture.
“[Blue Line Capital’s Bill] Baruch, says ‘the charts suggest $26 per ounce could be the next hurdle, a level of resistance stretching to 2011 that could now become support. If it moves past that, he says ‘$30 could be in the cards, too.”
USAGOLD note: We have featured the thinking of Bill Baruch previously on this page (mostly with respect to gold) and he has been remarkably accurate in his predictions thus far. USAGOLD clientele tend to stick with the one-ounce silver bullion coins like those pictured above. The American Eagle and Canadian Maple Leaf are the two biggest volume items.