“To be sure, the 1% are not alone in extrapolating the recent past into the future, a cognitive error known as recency bias. It’s human nature to turn bearish after the stock market has performed terribly. By the same token, it’s entirely normal for us to turn bullish after the market has performed spectacularly.”
USAGOLD note: The global elite must hedge their own worst instincts just like the rest of us . . . and many have –
“Well, I worked on Wall Street and in the hedge fund industry for decades. I also lived among the players in New York and Greenwich, Connecticut, at the same time. I’ve met the top hedge fund gurus in private settings. And here’s the thing: I’ve never met one of them who does not have a large hoard of physical gold stored safely in a nonbank vault. Not one.” – James Ricards, Here’s where gold will be in 2026
Repost from 1-12-2020
“What is amazing about this run-up in gold that we have seen is that it has taken place with the U.S. dollar actually quite firm.”
USAGOLD note: David Rosenberg is chief economist at Gluskin Sheff and Associates and a highly-respected Wall Street analyst. We were a bit surprised at his $3000 forecast for gold. He explains how it is possible to a skeptical host.
Repost from 9-16-2019
“The politically attractive, if not the only possible, solution to the debt problem will be to inflate the real debt obligations away, making them easier to pay off in a depreciated currency – but if the governments choose this path, we would see high inflation, which would make gold to shine.”
USAGOLD note: Mr. Powell, would you reach over and flip the switch on that printing press over there?
Repost from 10-26-2020
Why the U.S. needs to encourage Americans to hold gold
We have always believed that citizen ownership of physical gold is in the national best interest, not just the best interest of its accumulators. In the event of a worldwide economic breakdown or a realignment of the global monetary system, it would be good for the country to have a storehouse of gold held by the populace. China encourages citizen gold ownership for precisely that reason.
“With a growing number of countries encouraging their central banks and citizens to acquire gold,” writes The Federalist‘s Sean Fieler, “it is increasingly reasonable to assume that gold will be part of the world’s monetary future, not just its past. The U.S. Treasury should embrace policies that will attract more of the world’s gold to America and better position our citizens and our nation for whatever the monetary future may hold.”
“A volatile week ended in favor of gold investors, with geopolitical tensions reigniting haven demand for the metal.”
USAGOLD note: This Bloomberg piece reinforces the point made in the USAGOLD note to the post immediately below. It is not really a matter of ‘sticking to one’s guns’ as it is a deeper understanding of the ever-present need to hedge uncertainties of which geopolitical tensions are just one.
Repost from 1-12-2020
“Jia Qingguo of Peking University told a forum in Singapore that bilateral ties are in ‘bad shape’ as the US seeks to contain China.”
USAGOLD note: We continue to get conflicting accounts on the trade negotiations between the US and China with the American press passing along happy tidbits and the Asian press casting doubt on the proceedings. Hard to know which is the accurate representation of reality. . . . . .
Repost from 1-9-2020
(USAGOLD – 1/16/2020) – Gold gave back a portion of its gains posted late yesterday in the wake of the US-China trade agreement signing at the White House. It is down $2 at $1554. Silver is level at $18. Gold Newsletter’s Brien Lundin had an interesting take on yesterday’s post-agreement upside. “. . . [F]or the vast majority of the time that the markets have been laboring under the uncertainty of the China trade tensions,” he wrote, “any good news was considered bearish for the monetary metals and bullish for the dollar. Instead, gold and silver are rising nicely on the closing of this first phase of the deal, and the dollar is lower. A 180-degree shift in sentiment like this is very telling to me. Over my decades in the markets, I’ve learned that a true bull market is one that interprets seemingly bearish news as bullish. That’s what’s happening right now.”
Chart of the Day
Chart note: This overlay chart shows gold and oil pretty much rising in tandem over the past year with gold playing catch-up in the second half of the year.
“Greg Jensen, co-chief investment officer of Bridgewater Associates, the world’s biggest hedge fund, says gold could surge to a record high above $2,000 an ounce as central banks embrace higher inflation and political uncertainties increase.”
USAGOLD note: As most of you already know, Bridgewater Associates is headed up by Ray Dalio whose attachment to gold is well known. This is the first time, though, that the fund has gone public with a number. Jensen advises that investors make gold “a cornerstone” of their portfolios.
“Indeed, the enthusiasm of the systematic strategies exceeds that of the humans to a greater extent than at any point in the last decade. As the importance of systematic investing has only risen throughout this period, that suggests that we should take the current overweighting seriously.”
USAGOLD note: We are in uncharted waters when it comes to the overall influence of machine trading on stock market values . . . and by extension the human counterparts who own the same stocks as the machines. Can we rely on silicon-based buyers materializing to counter the silicon-based sellers?
“The battle continued in 2019, and rarely has the disparity been this sharp. And what do we mean? Well, on one hand, you have real physical gold. This is gold that you store yourself or at a trusted vaulting company. This is gold that you can actually hold in your hands. This is the gold that is demanded at record levels by central banks around the globe. On the other hand, we have pretend gold. This is the domain of the bullion banks. They offer futures contracts, unallocated accounts, and ETFs…all as an alternative to the real thing and as a way of increasing the total supply of ‘gold’ in what amounts to a modern day alchemy.”
USAGOLD note: For real physical gold, check out our Safe Storage Program or simply take delivery like the majority of our clients. Hemke goes on to detail the differences between real and virtual gold at the link.
Image courtesy of Visual Capitalist
“‘Gold miners always outperform about two to three times whatever the underlying commodity does, and that’s both up and down,’ [Stuart Frankel’s Steve] Grasso said.”
USAGOLD note: The anomaly mentioned in the headline notes has to do with the volatility inherent to buying gold stocks. The fact of the matter is that buying gold stocks – though in and of itself something that can be a profitable undertaking – is not the same as buying coins and bullion for asset preservation purposes. Gold stocks are stocks first and gold second, whereas there is no doubt as to what you are getting when you purchase the physical metal – the time-honored safe haven hedge against economic and financial uncertainties.
“A depressing consensus prevailed among economists at the recent American Economic Association annual meetings: the developed world is stuck with low growth, low inflation and low interest rates for years to come. Even worse, there is no consensus on why.”
USAGOLD note: That depressing consensus – that secular stagnation is here to stay – elevates the possibility of a future stagflationary or even a deflationary event.
Gold as the portfolio choice for all seasons
“Despite a resiliently strong & compressed US$ and a lack of (sustained) US equity volatility, Gold made a statement breakout in summer 2019. It became sensitive to geopolitical and trade risk and the repricing was (smartly) aligned with a shift in Fed policy. There are technical similarities between the repricing higher in 2019 (into a bull market) versus repricing in 2013 (into a bear market), which should be respected.”
USAGOLD note: We made reference to this Scotia Bank report in yesterday’s DMR. We repost it here for those who might have missed it. The very fact that gold has begun to respond so forcefully to periods of market duress is a matter of interest to Scotia Bank, one of the principal traders of the precious metal in international markets.
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“‘The history of past waves of debt accumulation shows that these waves tend to have unhappy endings,’ Ayhan Kose, director of the World Bank’s Prospects Group, said in the report.”
USAGOLD note: These warnings from high places come with such frequency anymore that they have become little more than background noise for the financial markets.
Repost from 1-10-2020
“Billionaire money manager Jeffrey Gundlach said his strongest market conviction is that the still-resilient dollar will weaken.”
USAGOLD note: Back in August of last year after gold had breached the $1400 mark, Gundlach predicted gold would rise to $1600-$1700. It would be interesting to know where he stands on gold now that is breached his low-end target (even thought we have had a pullback from that level).
Repost from 1-8-2020
“Well, I worked on Wall Street and in the hedge fund industry for decades. I also lived among the players in New York and Greenwich, Connecticut, at the same time. I’ve met the top hedge fund gurus in private settings. And here’s the thing: I’ve never met one of them who does not have a large hoard of physical gold stored safely in a nonbank vault. Not one.”
USAGOLD note: That’s quite a statement. . . .At the link, Rickards tells where he thinks gold will be in 2026.
Image courtesy of Visual Capitalist
Repost from 1-10-2020
Only real intrinsic money survives the test of time
Here is a timeless observation from the now-deceased Richard Russell (Dow Theory Letter):
“Paper money is now being created wholesale throughout the world. Stated simply, all paper currency is now valued against each other. But more important, ultimately ALL paper is ultimately valued against the only true, intrinsic money – gold. In world history, no irredeemable paper currency has ever survived. Since all the world’s currency is now irredeemable (in gold), this means that in the end, the only form of money that will survive is real intrinsic money – gold. It’s not a question of whether gold will survive, it’s a question of when the world’s current paper money will deteriorate and finally die. I can tell you that irredeemable paper will not survive – but obviously I can’t tell you when it will die. The timing is the only uncertainty.”
The chart below from the World Gold Council speaks to Russell’s point. It shows the performance of various currencies – past and present – against gold over the long term. When the end comes, as the chart illustrates, it can come abruptly and without warning. For those who stick to the proposition that gold is not really an inflation hedge, or that it is not really a safe-haven against currency debasement, the chart offers instruction. For those who already own gold as a safe-haven, it provides justification. For those who do not own gold, it serves as an incentive. As the old saying goes: All is well until it isn’t.
Chart courtesy of the World Gold Council
“When I began posting the CBB in 1999, I expected ‘Bubble’ to be in the title for no longer than a year or two. It was to be the ‘Credit Bulletin,’ inspired by Benjamin Anderson’s ‘Economic Bulletin’ from the 1920’s. Yet here we are in 2020 with Bubbles everywhere, including in my blog title. In 1999, I would have said that was an impossibility.”
USAGOLD note: “The probability of a global crisis during 2020 is the highest since 2008,” says Noland. In the modern-day financial system, bubbles are a way of life, so to speak, and something that needs to be accounted for and managed in the overall portfolio. That, in our view, is where gold’s safe-haven attributes come into play. If you are among those who believe, like Noland, that the current stock market bubble is destined to burst, you will want to have your hedge in place before it happens. We got a good idea in the early part of January how quickly gold can rise once danger is recognized. And sometimes the gains stick. . . . . . .
Repost from 1-12-2020
“‘When I see this endless buying for gold it makes me think for the first time people are just saying, ‘I’m really fearful,’ said [CNBC’s Jim] Cramer.”
USAGOLD note: He then asks a question that a good many others might be asking: “Why aren’t [stock] futures down more?” It might be that until something more concrete happens in the Mideast the markets are content to let things play out before acting.
Repos from 1-6-2020