Yahoo/Theron Mohamed/6-22-2022

“Seth Klarman trumpeted gold as a haven asset, dismissed cryptocurrencies as dangerous and pointless, and predicted the Federal Reserve would back down from its inflation fight.…  The billionaire investor and Baupost Group chief — widely seen as Warren Buffett’s spiritual successor — also championed the US dollar, and warned rising interest rates could spell trouble for funds that have taken too many risks in recent years.”

USAGOLD note: We posted a link to Klarman’s Harvard Business School comments earlier in the week, but this one offers more in the way of direct quotes, including some interesting comments on gold ownership.

Bloomberg/John Authers/6-22-2022

“In place of gold, currency’s anchor is the trust in the central banks that issue them. Now credibility appears to be at an end. With central banks desperately ripping up their playbooks to try to rein in inflation that’s veered far beyond target, they’re admitting they’ve been wrong, and giving up on trying to steer the markets on their plans for the future. That’s alarming, because the precedent of the 1970s is not encouraging.”

USAGOLD note: Articles, like fiat currencies, come and go. Once in a while though, one sticks like a gold coin in the palm of the hand. This article stands a good chance of becoming one of the latter. Authers sees the recent central banks’ inflation blunder as more than just a gaffe. It signals the beginning of the end to the age of central bank credibility. “The word of Powell or Lagarde,” he says, “is no longer as good as Volcker’s, and it’s certainly not as good as gold.”

Invezz/Shivam Kaushik/6-16-2022

“Thus, the supply and demand fundamentals of the physical substance do not determine the price of paper gold. The paper market follows its own heavily-financialized logic and is divorced from physical fundamentals. Instead, the paper price acts as a beacon, on which all physical prices are locally determined.”

USAGOLD note: At any given point in time, physical investors must make a determination if the paper price is trading at a discount, premium, or at par with the current market reality. To do so a number of factors must be taken into account, but there is one that takes precedence. Does the current paper price reflect the amount of danger lurking in financial markets and in the general economy? Of course, that call is subjective, but, as a prospective buyer, it helps enormously to view the price of gold within the context of the times. That is how we get to a place where the demand for gold can be off the charts even as the price languishes. This article offers solid insights into the nature of the gold investment, especially for first-timers.

CNBC/Mike Winters/6-15-2022

“‘I believe in gold,’ Cramer tells CNBC Make It. He argues that it is one of three things that ‘holds its value in a recession.’ The other two: masterwork paintings and incredible mansions.”

USAGOLD note: Cramer also sees gold as offering relief from rising inflation. He mentions physical gold as one of three options but says, “it not like you can sell a gold coin easily through a brokerage account.” We beg to differ. For those who think they might like to trade gold and silver, we offer a storage account by which you can buy and sell with a quick phone call – any amount. Some of our clients, particularly those with substantial holdings, have taken advantage of this service. If you have an interest, give us a call. We will lay out the options for you. (1-800-869-5115, Ext#100).

Bloomberg/Ranjeetha Pakiam/6-14-2022

“Gold has been hit by a large ‘wealth shock’ on the back of a weaker yuan following the economic impact of the lockdowns in China, the world’s largest consumer, according to Goldman Sachs Group Inc., which revised its price targets. Still, the worst may be over, it added.”

USAGOLD note: Goldman offers its take on what’s holding gold down adding that the “negative wealth effect” has led to liquidation in the gold futures and ETF markets. “We view current gold weakness,” it concludes, “as a good entry point.”

Money Wek/John Stepek/6-13-2022

“What’s interesting is that investors still feel that it should be possible to make money. There’s some other asset out there which can protect and earn money during inflation, just as surely as an S&P tracker fund has made you money during the last decade.  I don’t think this mindset is very helpful.”

USAGOLD note: Stepek sees us in a new reality where not losing money in real terms will be seen as a victory. Adjust your thinking, he advises, from the return on you your capital to the return of your capital. He recommends gold along with a few other options.

MarketsInsider/Zahra Tayeb/6-6-2022

“Spectrum said its European Retail Investor Index (SERIX)hit a high of 116 in the past month, indicating the optimism among investors towards bullion, which can serve as a store of value in times of market turmoil or rising inflation. This was the highest such reading since the data series began, Spectrum said.”

USAGOLD note: As noted in the past on this page, while prices have been trapped in a narrow zone, physical investors have been adding to their coin and bullion holdings at a record pace largely for safe-haven purposes. In the chart below, the World Gold Council shows US Mint bullion gold coin sales on a pace for their best year since 1999. “Considering the macroeconomic backdrop,” says Spectrum’s Michael Hall, “it’s no surprise to see investors looking to take advantage of a dip in the gold price to make safe haven allocations.”

Chart courtesy of the World Gold Council • • • Click to enlarge

Chart note: The green bars in the chart represent actual sales. The grey extension represents projected sales annualized for 2022.

Daily Reckoning/James Rickards/6-6-2022

“When this panic hits and the dollar is deemed no longer reliable, the world will turn to gold. Frustration with the sideways movement of gold prices is understandable. But behind the curtain, a new liquidity crisis is brewing. Investors should consider today’s prices a gift and perhaps a last chance to acquire gold at these prices before the real safe haven race begins. Gold is so cheap right now, it’s practically a steal.”

USAGOLD note: The stronger dollar is translating to a buying opportunity for Americans on a whole host of consumer items – gold being just one of them. But, as has happened in the past (sometimes formally, sometimes informally), the dollar will need to go lower against its rivals at some point in order to balance the international monetary equation. Precisely for that reason, gold and silver’s price histories have been given to long periods of sideways action followed by sudden price spikes. When the wheel turned, it turned decisively.

USNews/CarolinaMandl-Reuters/6-9-2022

“The question is whether there’s enough gold to back the currency reserves. The answer is for the price of gold to go higher, perhaps much higher.… Just wait until they’re forced to loosen into an inflationary spike to support the Treasury. At that point, it’s best to have some gold. That’s what grandpa Ben taught me.” – David Einhorn, Greenlight Capital, speaking at the Sohn Investment Conference

USAGOLD note: Einhorn, whose hedge fund is having a banner year, believes that the Fed is bluffing about its ability to contain inflation with quantitative tightening and that it will be forced to “capitulate” sometime next year. He likened the Fed’s current balance sheet reduction effort to “clearing off your snowed-in driveway with an ice cream scooper.” Einhorn’s grandfather taught him at an early age about the baseline value of gold ownership – lessons that have stuck with him throughout his Wall Street career.

MarketsInsider/Theron Mohamed/6-5-2022

“Just bought 2,500 US Silver Eagles in 5 Green Boxes. Why silver? Gold already moved up. Bitcoin still too high. Silver 50% below all time high. Silver an industrial metal as well as money. I buy silver because it is liquid & can be spent without government tracking.” – Robert Kiyosaki (Tweet, 3/7/2022)

USAGOLD note: Kiyosaki warns that “a massive market crash, hyperinflation and depression may lie ahead.” In monitoring why USAGOLD’s clientele has taken such a strong interest in silver, its low price relative to other assets comes up frequently as a key motivation.

King World News/4-04-2022

“I’ve been involved in markets since I got with E.F. Hutton in 1975. So, you know, a long time. I’ve never seen such a confluence of events of upside and downside potentials that are so strong that will impact each other like icebergs crashing into one another. Fiat currencies, we think, are at the doorstep of collapse. We will now see events unfold in a chaotic manner. It’s not going to take five years for this to happen. It’s going to happen in the next year or so. ……”

USAGOLD note: “Collapse” covers a lot of territory. In this interview linked above, Michael Oliver describes his version of it and offers opinions how to defend your assets against it.

Lombardi Letter/Moe Zulfiqar/5/27/2022

“[W]hat central banks are doing these days when it comes to purchasing gold is grossly underreported in the mainstream media. It doesn’t get reported much because the gold market is considered boring, not like hot technology stocks or cryptocurrencies. Central banks need gold as the world becomes more polarized and currencies get questioned. The yellow precious metal has a history of preserving wealth in times of currency devaluation and crisis. Central banks know this well. They hold a lot of currency in their reserves and will need a lot of gold to hedge against volatility. This will help gold prices get to $3,000 per ounce. Given what central banks did in the first quarter of 2022, my stance on gold is as bullish as ever.”

USAGOLD note: Just in the past week, three central banks have made major announcements on gold acquisitions. The Bank of Ghana said it would begin bulk purchases from local miners instead of exporting the metal. (Ghana is the world’s sixth-largest gold producer.) The Czech National Bank said it intends to “gradually” add 100 tonnes to its reserves. The Reserve Bank of India reported a 65-tonne open market purchase.

Financial Times/Joshua Franklin/6-1-2022

“It’s a hurricane. Right now, it’s kind of sunny, things are doing fine. Everyone thinks the Fed can handle this. That hurricane is right out there down the road coming our way. We just don’t know if it’s a minor one or Superstorm Sandy … and you better brace yourself.” – Jamie Dimon, JP Morgan CEO

USAGOLD note: A very strong warning from someone not given to a lot of bombast .…… He says the war in Ukraine could push oil into the $150/$175 per barrel range. It’s trading at $115 this afternoon.

MarketWatch/Barbara Kollmeyer/5-30-2022

“Some 43% of respondents said property was the top buy-and-hold choice, followed by 33% who opted for developed market equities and 15% for gold. Cryptocurrencies were ‘not on the radar,’ selected by 1% as a top asset, just behind cash at 4%.”

USAGOLD note: Deutsche Bank seemed a bit surprised that stocks placed higher than gold in the survey given its strong performance during the stagflationary 1970s – a period increasingly compared to our own. At the same time, one wonders how many are aware of gold’s performance during that period – or silver’s for that matter. During the 1970s, gold rose 1820%, silver 1699%, and stocks 11.5%. Here’s the chart – for the record:

Gold, silver and stocks performance
(1970-1979, %)

Chart courtesy of TradingView.com • • • Click to enlarge

MarketWatch/Barbara Kollmeyer/5-24-2022

“While history never exactly repeats, Deutsche Bank strategists were aiming to offer a framework to clients on how to think about the next few years if inflation stays high even after a Fed-induced recession.”

USAGOLD note: Deutsche Bank confirms a point we’ve made repeatedly here about gold and silver with respect to stagflation. During the 1970s, it was the best option in terms of convenience and liquidity while offering a direct positive response to market uncertainties in its pricing. The link above will take you to the chart mentioned in the headline.

Sovereign Man/Simon Black/5-23-2022

“We saw this quite recently in the early days of the pandemic: in early March 2020, major gold ETFs actually fell by around 10%. But the price of physical gold bars and coins went through the roof. So, in my opinion, physical is always better than paper.”

USAGOLD note: Simon Black covers considerable territory in this primer on the benefits of physical gold ownership, i.e., coins and bullion, and throws in some interesting Roman history as a backdrop.

World Gold Council/Louise Street/5-25-2022

“Attitudes towards gold among these investors are contrastingly different – they recognise its safe-haven, inflation hedging qualities. One third of investors view their gold investment as either ‘a store of value (to protect my wealth)’, a way to ‘protect against inflation’ or as ‘a safe investment that I don’t have to worry about’. Which may explain why even more investors bought gold than crypto last year. According to the research, 44% invested in gold in the first 10 months of 2021, with bars and coins among the most popular options.”

USAGOLD note: In that same survey, 31%  of respondents invested in cryptocurrencies (compared to 44% in gold), and 32% viewed crypto as “high risk with the potential for high returns or as a purely speculative bet.”

Retail investors recognize the different risk profiles of gold and cryptos
% assigning top ranking to each statement

Chart courtesy of the World Gold Council, Hall & Partners

Forbes/John Tamny/5-20-2022

“It’s safe to say that skepticism about Bitcoin is rising amid a stretch in which the value of the “coin” has fallen. After hitting an all-time high of $68,000 last November, the price has more than halved. As this is being written, one can be purchased for $28,000. To which some will mutter that this wasn’t supposed to be.”

USAGOLD note: He then tells how gold has held its own while bitcoin has tumbled relentlessly. The mystery is why so few understand the real reasons why. “To be clear,” says Tamny, “gold doesn’t rise as a result of inflation; rather gold’s rise is the signal of inflation.” If you look closely at the chart on gold, and with a fresh eye, you will note that gold first rose above the $2000 level in 2020 after it became clear that the Fed was going to print massive amounts of money to waylay the pandemic and a cratering economy. It anticipates, as Tamny suggests, and it does not necessarily need to inflation to catalyze its anticipation. A very well-written, well-conceived (and short) dissertation on why gold should be a part of the thinking man or woman’s portfolio.

Chart courtesy of TradingEconomics.com

TalkMarkets/MN Gordon/5-20-2022

“U.S.-based gold investors may be frustrated by the dollar’s strength. With consumer price inflation raging at a 40-year high, shouldn’t the price of gold be shooting to the moon? Simple logic says yes. Gold is a venerable hedge against inflation. Consumer price inflation is raging out of control. Therefore, gold, as priced in dollars, should be adjusted upward. But that’s not what’s happening. At least not yet. After hitting $2,039 per ounce in early March, the price of gold, in dollar terms, is down 9.7 percent. If you’re sitting on a pile of cash, now’s certainly a good time to trade some of it in for gold bullion coins – and silver too.”

USAGOLD note: By and large, those who are accumulating gold for long-term asset preservation purposes take advantage of corrections and quiet periods such as we are in now in the way Gordon suggests.

Bloomberg/Niall Ferguson/5-19-2022

“In the same way, a belated tightening of monetary policy by the world’s most important central bank, the Federal Reserve, inflicts a sort of regime change not only on US households and businesses, but on the rest of the world, too. All the consequences of these two shocks — one geopolitical, the other economic — are very hard indeed to predict, but I am confident that we have seen only a small proportion of them so far.”

USAGOLD note 1: Ferguson goes on to say that “owning gold has preserved capital, but owning dollars has been a superior strategy.” That logic applies to investors in countries outside the United States but not to Americans who already own dollars by default.

USAGOLD note 2: Gold has held up well in response to the financial shocks of 2022 while other assets covered in the Ferguson analysis – most notably stocks, bonds, and bitcoin – have declined sharply, as shown in the chart below. Historically, Ferguson identifies the 1970s as the closest comparison to the present period but says “the analogy is far from perfect.” Like the 1970s, he says, we should not “expect a rapid return to stability, whether in macroeconomic or geopolitical terms.” The full analysis is highly recommended at the link.

Investment performances 2022
(%, year to date)

(SPGSCI = Standard & Poors Goldman Sachs Commodity Index; TLT = Bond ETF; SPX = S&P 500; BTCUSD = Bitcoin)
Chart courtesy of TradingView.com

Wisdom Tree/April 2022

“For most of the past year, gold has been ignoring the red-hot inflation that we have been living in. Our internal forecasts model indicates that gold, when factoring in a US inflation rate of 7.9% in February 2022, should be trading at closer to US$2150/oz rather than US$1920/ oz where it is currently trading (7 April 2022). It’s as if gold has been living in an alternate universe. However, gold has been picking up recently, catalysed by safe-haven demand driven by the war in Ukraine. We have periodically observed such instances of geopolitical shocks bringing gold back to life. If sustained, gold could be on an upward trajectory, despite bond yields rising and the US Dollar remaining quite firm.”

USAGOLD note: Wisdom Tree’s consensus forecast has gold at $2315 by the first quarter of 2023. Its bullish scenario, based on sticky near double-digit inflation and a sharp correction in the dollar index, puts it at $2680. Its bearish forecast, which would result from the Fed successfully taming inflation, puts it at $1790 by the first quarter of 2023. “We believe that gold has reached a turning point,” concludes the Ireland-based investment firm, “after being relatively subdued in the second half of 2021. The metal has been catalysed by rising geopolitical risks and it will become increasingly difficult for the metal to keep ignoring the elevated inflation environment we live in.” For the full report, please go to the link at the top of this post.

South China Morning Post/Cheryl Heng/5-9-2022

CNBC/Yun Li/5-3-2022

“You can’t think of a worse environment than where we are right now for financial assets. Clearly you don’t want to own bonds and stocks.” – Paul Tudor Jones, Tudor Investment

USAGOLD note: Jones goes on to emphasize capital preservation as the most important goal in the present environment. He is a long-time advocate of gold ownership.

Seeking Alpha/Crescat Capital/4-27-2022

“We are currently experiencing profound changes in the global economy that are likely to unleash a plethora of early-stage secular trends in a new inflationary regime. These are long-overdue structural shifts powered by decades of easy money policies and record levels of debt-to-GDP among developed economies.…(1) Governments and central banks to seek high-quality international reserves in attempt to restore the credibility of fiat currencies; gold will play a major role as a monetary asset. (2) Monetary metals and other tangible assets to regain relevance in crowded 60/40 portfolios as inflationary hedges.”

USAGOLD note:  Crescat believes that the developing inflationary environment will radically alter the way investors allocate portfolios in the years to come – moving from “crowded and overvalued assets to unloved and historically cheap alternatives.”

Visual Capitalist/Niccolo Conte/4-27-2022

(Click to enlarge)

“Gold and silver have been precious and monetary metals for millennia, with the gold-to-silver ratio having been measured since the days of Ancient Rome. Historically, the ratio between gold and silver played an important role in ensuring coins had their appropriate value, and it remains an important technical metric for metals investors today. This graphic charts 200 years of the gold-to-silver ratio, plotting the pivotal historical events that have shaped its peaks and valleys.…Recently in 2020, the ratio set new highs of more than 123:1, as pandemic fears saw investors pile into gold as a safe-haven asset. While the gold-to-silver ratio has since fallen to roughly 80:1, runaway inflation and a potential recession has put gold in the spotlight again, likely bringing further volatility to this historic ratio.”

The Silver Institute/April 2022

Twitter/CrescatCapital-Tavi Costa/4-18-2022

GoldSwitzerland/Ronni Stoferle/4-15-2022

“The ‘militarization of currency reserves’ has deprived the world’s reserve currency, the US dollar, of its neutrality, a neutrality that is indispensable for a universal currency. The euro and other Western countries who are potential competitors for the US dollar’s position have taken themselves out of the game immediately. … Therefore, 50 years after the closing of the gold window, the chances are that gold may play a role again in the inevitable reshaping of the world monetary order. Gold is politically neutral, it does not belong to any state, political party or institution. This neutrality could serve as a bridge of trust between the geopolitical power blocs that currently seem to be emerging.”

USAGOLD note: In order for gold to play a meaningful role in the reorganization of the international monetary system, the price will have to be adjusted upwards, according to Stoferle – perhaps radically upward. We recommend the full analysis at the link. It offers considerable food for thought. We will add that gold serves the same purposes in the private investment portfolio that it does in the reserve holdings of nation-states and their central banks.

MaketWatch/Chris Matthews/4-19-2022

“This volatility has not only helped fuel levels of inflation not seen in 40 years —market observers are warning that it could put the stability of the global economy at risk unless regulators and central banks wake up to the threats posed.”

USAGOLD note: There are so many fires lit in the financial markets these days, that it will be difficult for the Fed to determine which one it should put out first. Some are worried about a speculative crisis suddenly enveloping the commodities space. “… [I]nstead of enacting position limits that work, which would bring prices more in line with supply and demand,” warns one analyst, “we have large banks advising clients to shift more of their portfolios into commodities as a so-called inflation hedge.”

GulfNews/Ned Naylor-Leyland/4-18-2022

“People are interested in gold because they are worried about future purchasing power. The market is still considering whether the US Federal Reserve (Fed) will be able to raise interest rates as much as seven times this year and whether or not inflation will materially weaken. In my view, this is why gold hasn’t broken out properly yet — the market is focused on relatively hawkish observations.”

USAGOLD note: Naylor-Leyland lays out why investors and central banks own gold. It is not simply because it shines and is beautiful to look at. We referenced this report in Tuesday’s Daily Market Report and repost it here for those who may have missed it. Many of our readers will be surprised by the graph below. The U.S. dollar has lost 8% of its purchasing power over the past year.

Purchasing power of the U.S. dollar
(Percent change year over year)

Sources: St. Louis Federal Reserve [FRED]. U.S. Bureau of Labor Statistics

Bloomberg/Vildana Hajric and Michael P. Regan/4-16-2021

“Where we are now is a bit different. We’re in a universe of equities and bonds going down together. There’s a lot of instability. That instability is disconcerting. If they’re both going down, I need to find things that don’t behave like bonds and equities, which means commodities.” – Peter van Dooijeweert, Managing Director, Man Group

USAGOLD note: During a time of secular currency debasement, both stocks and bonds lose value simply on a purchasing-power basis if they do not keep up with or better inflation. Bonds, at present, are in particularly dire straits losing both principal and purchasing power at the same time. In a separate study posted last June, Man Group lists gold and silver as two assets to which investors fled during past episodes of inflation and were rewarded with double-digit returns. The firm also suggest acting sooner rather than later. Man Group is the world’s second largest hedge fund behind Bridgewater Associates. Bridgewater also holds a large position in commodities.

OPINION

Rogue Economics/Nomi Prins/4-12-2022

“So Basel III gives gold – especially allocated gold – a much sounder footing in the international monetary system. It aims to keep banks from simply saying they have gold on the balance sheet. And it will avoid them having more than one owner for their gold. This means that it will incentivize banks to buy actual physical bullion.”

USAGOLD note: There has been considerable discussion on the impact of the new Basel III accords on the gold market over the past couple of years. It all takes on renewed importance, though, with inflation now part of the equation. Nomi Prins offers a solid overview of how commercial banks might perceive gold once the accords take effect in January of next year. Worth the review………at the link. She says one of the simplest ways to take advantage of what she sees as a positive outcome for the yellow metal is to own gold bullion coins like the American eagle or Canadian Maple Leaf.

MarketWatch/Steve Goldstein/4-13-2022

“Without price stability, there is no exorbitant privilege or dollar supremacy, says Pozsar.”

USAGOLD note: And the currency markets, we would guess, turn into some version of a monetary wild west where anything goes in the pursuit of commodities. He says to short the dollar, among a handful of trading options. The standard approach for accomplishing that objective is to buy precious metals, as Pozcar himself has indicated from time to time.

Bloomberg/Joe Wiesenthal and Tracy Alloway/4-7-2022

“Out of this, I think this ‘Bretton Woods III’ that I started to kind of develop and run with, is a world where we are, again, going to go back to commodity-backed money — where gold, once again, is going to play a big role. And not just gold, but I think all forms of commodities.” – Zoltan Pozsar, Credit Suisse

USAGOLD note: Briefly, Pozsar sees a new world monetary order evolving on its own out of the war in Ukraine – what he calls Bretton Woods III. He says BlackRock’s Larry Fink is right when he says that globalization is probably over. We highly recommend the link above……

Munknee/Lorimer Wilson/3-30-2022

“Depending on the length of the recession and the factors affecting the gold price, including inflation, currency value, demand and supply, there can be some fluctuations within the recessionary period but, in general, in recent history, the price of gold has maintained its value or outperformed other asset classes during times of economic instability …”

USAGOLD note: We live in a time when even money market accounts can become destabilized as a result of a credit market breakdown. In the early months of a recession investors seek gold as a safe-haven and hedge against systemic risk and financial market weakness. Thereafter, the demand can accelerate, as it did in 2009, if and when the Fed steps in with more quantitative easing (i.e, money printing) to turn the recessionary tide, or better put, to save the financial system.

Financial Times/Martin Wolf/3-29-2022

“Useful monies are those of open economies with liquid financial markets, monetary stability and the rule of law. Yet the weaponisation of those currencies and of the financial systems that handle them undermines those properties for any holder who fears being targeted.”

USAGOLD note: For attuned investors and nation-states alike, “a new world of currency disorder” translates to gold ownership. Under the new rules of the game, those who manage national reserves would be considered imprudent if they neglected the potential for their economy to be so targeted. And, yes, we do think that the demand for physical gold in the official sector will be a likely result. Wolf mentions gold as one of “four replacements to today’s globalized national securities,” the others being private currencies like bitcoin, a global fiat currency, or another national currency, “most obviously China’s.” An important read at the link ……