“While some analysts are getting a bit negative in their outlook for gold, the physical market is getting stronger and that’s very good news for investors. . . There’s a beautiful double bottom pattern in play on this short-term gold chart.”
USAGOLD note: The latest gold market opinion from Stewart Thomson: “Good times are here. Great times are near.” A good, quick read at the link.
Repost from 12-5-2019
“We reproduce here the speech which Rachel delivered on 12 September, 2019 at the reception to commemorate the centenary of the London gold price. Fittingly it was held at the fourth New Court, the offices of Rothschild & Co in the heart of the city, built on the site of the second New Court where the gold auction took place for much of the last 100 years.”
USAGOLD note: An interesting history of the London gold market’s centerpiece – the AM and PM fixes now celebrating their 100th anniversary.
Repost from 12-3-2019
(USAGOLD – 12/9/2019) – Gold is attempting to gain some traction in this morning’s trading after Friday’s drop to just below the $1460 level. It is up $5 on the day at $1465. Silver is up 9¢ at $16.64. Gold has been stuck in a range between $1455 and $1475 since early November with the four primary factors that drove it higher in the past now seemingly in abeyance – the US-China trade war, the threat of recession, plummeting yields, and stock market instability. All of that could change in a heartbeat, but for now those threats have gone to the back burner and gold has gone on hold.
Analyst Clif Droke, though, brings an old market nemesis forward as the year comes to a close – and one that he thinks could propel gold in 2020. In a Seeking Alpha article, he says “Safe-haven demand will also likely serve to bolster gold’s long-term bull market going forward, but the primary catalyst for gold demand will likely revolve factors other than just global trade. A weakening dollar will only serve to increase the demand for gold as an inflation hedge, which is what typically drives the metal’s strongest rallies. Therefore, investors should expect that as the U.S. currency is pushed downward through policy intervention in 2020, gold’s bullish prospects will increase.”
The coming week could be an important one for markets with the Fed and ECB both holding meetings, the British election on Thursday and the all-important decision on more stringent tariffs due on Sunday. Sandwiched in between are a number of government reports including consumer prices, producer prices and jobless claims. Any one of these is capable of delivering a surprise with the tariff issue, needless to say, the most tenuous at the moment.
Chart of the Day
Chart courtesy of the World Gold Council
Chart note: Central bank gold purchases are running at the highest level since 1971, the year the United States suspended dollar convertibility into gold at fixed rates. Up until 2011, central banks were net sellers from their reserves. Since then, they have become net buyers as shown in the chart with 2019 the strongest year for net purchases on record.
“Today, over 95% of New York Stock Exchange trades are generated by robots using algorithms to decide when to buy and sell. These are not matching systems (which have been around since the 1990s). These are trading robots that decide what to do without human intervention.”
USAGOLD note: Ricards says the time has come to move out of stocks and reallocate in bonds, cash and gold, but the memorable takeaway in this article is his view on what he calls ‘trading robots’ that ‘buy or sell based on headlines and keywords.” We highly recommend Ricard’s latest at the link. . . . . . .
“What’s happened is that the Federal government has borrowed money and ultimately that loan is held by the central bank which increases the central bank’s balance sheet size and thereby in there for the monetary base. So it’s the equivalent of debt monetization. When you question whether it’s quantitative easing, whether the current Fed chairman says it’s something different from that, whether it’s money printing, it’s really all the same things because all it is, it’s the Fed increasing the size of its balance sheet by buying Treasuries in one form or another.”
USAGOLD note: David Einhorn, who heads up Greenlight Capital, is one of the many hedge fund proprietors who advocates gold ownership. Einhorn learned about gold from his grandfather – lessons he has never forgotten.
Here is the link to the original Anchor interview (audio). ZeroHedge posts a transcript at the link above.
“Lending would get expensive. Food, energy, and even medical services could all shoot up in price. Not good if you’re Chairman Powell and want to give the impression that the Fed has control of U.S. monetary policy. But the most alarming part of this is ‘real’ inflation may already be over 5%.
“Inflows into gold ETFs have moderated — a positive signal . . . “
USAGOLD note: This article explores the thinking on gold from Jeff DeGraaf (Renaissance Macro Research) – one of Wall Street’s ‘most widely followed chart watchers’ and a contrarian.
Courtesy of TradingEconomics.com
Related: Bloomberg/Emily Barrett/Traders already bracing for wild week ahead/12-7-2019
“‘We still see upside in gold as late cycle concerns and heightened political uncertainty will likely support investment demand’ for bullion as a defensive asset.”
USAGOLD note: Gold demand has been down on a global basis this past quarter, but at the first sign of trouble in the global economy we expect that demand to ramp up quickly – as Goldman says for ‘defensive’ purposes.
Image courtesy of Bullion Star
“The idea that in such circumstances there is a case for making a countercyclical ‘helicopter money’ drop – in which a central bank pumps cash into the economy — is one area in which so-called modern monetary theory is correct: when there is no doubt, shovel it out.”
USAGOLD note: Buiter argues in this opinion piece that the Fed is restricted in what it can do to aid the economy because it will not violate zero percent interest rates – a ‘binding constraint’ that if violated would create ‘upheaval’ among money market funds. That leaves quantitative easing as the logical course of action for the Fed. Not only does Buiter see QE as on the horizon, he also sees MMT, helicopter money and large doses of fiscal stimulus as options should the U.S. enter a recession.
“The unprecedented buildup of speculative leverage throughout the twenties boom played an instrumental role in systemic liquidity abundance that fueled both financial distortions and economic maladjustment. Confidence in the Federal Reserve’s capacity to sustain marketplace liquidity was instrumental in bolstering a progressively speculative market environment that culminated in the 1927 to 1929 speculative blow-off.”
USAGOLD note: It is difficult to read that paragraph without thinking about the present relationship between the Fed and financial markets. . . . “.As the late Dr. Kurt Richebacher would often repeat,” writes Noland ‘the only cure for a Bubble is to not let it inflate.’” Noland’s latest another good read – at the link.
Image courtesy of HowMuch.net
USAGOLD note: Stoferle, along with Mark J. Valek, publish the widely circulated and referenced In Gold We Trust annual report. In this interview, Stoferle says “It is crystal clear. We are in a gold bull market again.” The most important opinion expressed is that the start of something different, perhaps very special, occurred in the gold market over the past 30-days or so. Stoferle and his hosts at MacroVoices delve into just what that “something” might be. If you are looking for fundamental insights on gold’s price potential, this interview will get you where you want to be.
Re-post from 8-11-2019
“Gold broke down from a bull market in 2012/2013 – nearly 7 years ago. Now, Gold has broken resistance near $1375 and is technically in a full-fledged Bull Market. The importance of this is the 7-year cycle and how the rotation in Gold, between the high near $1923 and the low near $1045 represent an $878 price range. The upside (expansion) rally in Gold may very well move in expanding Fibonacci price structures – just like it did in 2005 through 2012. If this is the case, then we may expect to see an ultimate peak price in Gold well above $3500.”
USAGOLD note: Super-bull Chris Vermuelen dives deep to tell why he thinks gold is about to lift off the launch pad. . . . .
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!
“The failure of Abenomics has been phenomenal. The balance sheet of the central bank of Japan has ballooned to more than 100% of the country’s GDP, the central bank owns almost 70% of the country’s ETFs and is one of the top 10 shareholders in the majority of the largest companies of the Nikkei index. Government debt to GDP has swelled to 236%, and despite the record-low cost of debt, the government spends almost 22% of the budget on interest expenses. All of this to achieve what?”
USAGOLD note: There is a certain inevitability in the path Japan has taken economically and there is a growing contingent of economists who believe that the rest of the industrialized world is fated to follow it as a matter or course.
Repost from 11-3-2019
“China’s state-backed Zijin Mining Group has agreed to buy Continental Gold for $1bn, as the industry’s consolidation accelerates.”
USAGOLD note: The article points out that China’s mining companies are likely to make more acquisitions “given the metal’s strategic importance to Beijing.” Ziijn MIning Group is state-owned.
Repost from 12-3-2019
“Of course, the name is something of an oxymoron; there is really nothing modern about this monetary theory. Confusing money-creation with wealth creation was at the core of the debate between John Law and Richard Cantillon 300 years ago. For Law (a Scot who fled British justice, took refuge in France, and within a few years managed to drive what was then the leading economic power of the day into near bankruptcy), increases in the supply of money would lead to the employment of unused land and labor, which in turn would lead to higher productivity. Meanwhile, Cantillon explained in his Essay On Commerce that mistaking money for wealth always leads to disaster.”
USAGOLD note: At the risk of sounding cynical, it would not be difficult to imagine the Federal Reserve – make that the world central banks – proceeding with some version of MMT even while railing against it and saying they would never engage in such a thing. How far from MMT was quantitative easing? Not far, we would venture.
Repost from 3-17-2019
“A decade of easy money has left the world with a record $250 trillion of government, corporate and household debt. That’s almost three times global economic output and equates to about $32,500 for every man, woman and child on earth.”
USAGOLD note: Nobody knows where this all ends, but there is plenty of opinion floating around out there. History tells us that there always comes a breaking point and when it comes, it pays to have taken precautions against it.
Repost from 12-2-2019
Gold coins, hoofs found in 2,000 year old Chinese tomb
“Chinese archaeologists. . . discovered 75 gold coins and hoof-shaped ingots in an aristocrat’s tomb that dates back to the Western Han Dynasty (206 BC – 24 AD). The gold objects — 25 gold hoofs and 50 very large gold coins — are the largest single batch of gold items ever found in a Han Dynasty tomb. They were unearthed from the tomb of the first ‘Haihunhou’ (Marquis of Haihun) in east China’s Jiangxi Province. The coins weigh about 250 grams each, while the hoofs’ weights vary from 40 to 250 grams, said Yang Jun, who leads the excavation team.” – Xinhuanet/11-17-2015
USAGOLD note: These gold artifacts were found along with a portrait of Confucius, perhaps the oldest known. Wisdom and gold make easy company. Confucius once said something that has current applicability: “In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of.” Or at the very least, well-hedged . . . . . . . .