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(USAGOLD – 6/12/2019) – Gold rallied higher overnight and in early U.S. trading – up $6 at $1334. Silver is up 3¢ at $14.80. Earlier in the week Counting Pips’ Zac Storella, an expert on CFTC Commitment of Traders data, said that gold is “now at the most bullish level in over a year – showing that sentiment for gold is coming back into favor.” Today’s return to the upside after two days tracking lower buttresses that perception. Underlying the changing sentiment is concern about the possibility of a global recession and continued deepening of the U.S.-China trade war – two factors, in turn, adding to the prospect of cross-border central bank stimulus.
“It is fair to say that the global slowdown is a very real threat to the entire economy across all borders,” writes CME Group’s Scott Bauer. “China trend growth is declining as it moves into being an economy more like the United States and the Eurozone than an emerging market. The lack of European and U.S. economic momentum and policy paralysis invites comparison to Japan. This comparison will persist and reduce the attractiveness of growth-sensitive assets like equities and increases the allure of gold as a store of value.” We should not overlook the fact that recent rallies in the gold price have begun during Asian trading hours – an unusual turn of events that illustrates Bauer’s point.
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: We faithfully reproduced this chart developed by UK’s Colin Seymour in 2001. Posted originally at the USAGOLD website, Seymour’s chart on the 1929 stock market crash and the annotations that went with it caused quite a stir on the internet at the turn of the century and the early stages of gold’s secular bull market. It is still widely referenced and linked on the world wide web. We recently re-reposted the study as part of a site-wide upgrade to current internet presentation standards. It is as relevant to investors today as it was in 2001. Here is the link to the original article titled Pompous Prognosticators.
“The indicator on the bottom of this chart is the gap between the 3-month and 10-year US Treasury bond. As you can see it is now below zero, which means that the interest rate on the 3-month bond is higher than that of the 10-year. This is the very definition of an inverted yield curve and forecasts a future slowdown in the economy and future interest rate cuts from the Federal Reserve. Now as you can see this has happened twice in the past twenty years and both times it did gold soon broke out of a long-term resistance level to launch big massive gold bull runs that lasted for years.”
USAGOLD note: The reasons for those previous massive bull runs are twofold. The first has to do with economics. The Fed immediately talked up and inaugurated stimulus programs to keep the economy from rolling over to a deflationary depression and financial panic. The second has to do with market psychology. The possibility of a systemic breakdown ran at fever pitch causing a worldwide influx of capital into the gold market. The two together amount to the disinflationary argument for gold ownership and one we have made for a long time here at USAGOLD. The best strategy is to understand what’s at work in this economic milieu and make your purchases ahead of the clamor when it becomes evident to the masses.
“The dollar fell slightly against the euro following Trump’s tweets. Trump has repeatedly gone after the Fed for what he considers tight monetary policy. The Fed hiked rates four times in 2018.”
USAGOLD note: Sooner or later, one would think, all of this hectoring of the Fed will have an effect on the markets, including the dollar and consequently gold. . . . .The Fed has already provided plenty by way of indications that it agrees with Trump on the need for more stimulus, but it has not acted as yet.
“Yesterday, I suggested that the cancellation of tariffs on Mexico was akin to the famous tabloid headline ‘World War Two Bomber Found on Moon Mysteriously Disappears’. There hadn’t been a bomber on the moon in the first place, so this wasn’t really news – and in the same way, I argued, the cancellation of the Mexican tariffs shouldn’t be taken as a big deal as they were never a credible threat in the first place.”
USAGOLD note: Gold seems to have gained on the Mexico kicker, given up those gains on the lull announcement, and is now regaining its stature as the markets return to worrying about the real problems – the U.S.-China trade war, the possibility of a recession and Fed policies in the face of those two challenges.
“He brought the audience to attention by proposing an Asian currency linked to gold. Dr. Mahathir argued that such a currency would promote regional stability, while avoiding the so-called ‘dollar trap’ (read: dollar dependency). This time around, the 93-year-old Dr Mahathir is onto something — something that would deliver its advertised benefits. Dr. Mahathir’s comments on currencies are, of course, legendary. Remember the Asian Financial Crisis of 1997-1998?”
USAGOLD note: Interesting that Johns-Hopkins’ Steven H. Hanke who has acted as an advisor to a number of emerging countries on their currency problems would endorse Mahathir’s proposal on a gold-back East Asian currency. He says the ringgit “would literally be as good as gold” and predicts that others might follow Malaysia’s lead. An article worth reading and filing for future reference. . . . . . .
“Trump told reporters at the White House on Monday that he could impose tariffs of 25%, or ‘much higher than 25%’ on $300 billion in Chinese goods. ‘We’ve never gotten 10 cents from China and now we’re getting a lot of money from China,’ the president said. Trump was asked in an interview with CNBC earlier in the day whether the additional tariffs would be enacted immediately if there’s no meeting at the summit later this month.”
USAGOLD note: I’m no expert on the art of the deal, but doesn’t this kind of rhetoric make it difficult for Xi to comply? Why would he want to look like he’s doing the president’s bidding? Particularly on the domestic front in China where Xi is not going to want to look subservient . . . .
Related: China vows to ‘fight to the end’ in trade war if US escalates tensions/FoxNews/Katherine Lam/10-11-2019
“Remember Blain’s Market Mantra No 1: ‘The Market has but one objective: to inflict the maximum amount of pain on the maximum amount of participants.’ To achieve its foul ends, the market sucks us in… and when so much money is sloshing around, just desperate to find something to do… then it gets so much easier. . .”
USAGOLD note: We admit to being one of Morning Porridge’s regular readers . . . Today he brings into the mix an ill-fated investment by his wife.
“The gold trade is shining bright. Investors rushed into the commodity on Thursday, pushing it to a four-month high. Gold is now just 1% away from its 52-week intraday high of $1,349.80 from February, and TradingAnalysis.com’s Todd Gordon believes it may soon surpass that level. After examining the charts, he says bullion could climb as high as $1,500.”
USAGOLD note: A very optimistic viewpoint as we move into what could be another eventful weekend. . . . . . .
Repost from 6-7-2019
“New York Federal Reserve President John Williams called on Thursday for central banks to change their strategy to combat low inflation, which he labeled ‘a symptom of deeper problems affecting advanced economies. In the pre-2008 era, inflation was a major concern for the public and central banks alike,’ the leader of the Fed’s key district said in prepared remarks for a speech at the Council on Foreign Relations in New York. ‘And, while I will always be vigilant about inflation that’s too high, inflation that’s too low is now a more pressing problem.'”
USAGOLD note: Now on the easy money bandwagon, Williams joins Clarida, Bullard, Brainard and others. As head of the New York Fed, his voice is an influential one.
Repost from 6-6-2019
For gold . . .
It is not a question of if, but when
The lesson is one as old as the gold market itself: The best time to buy is when the market is quiet – a strategy that requires both discipline and conviction. As an old friend and client used to say (he passed away years ago): “It is not a question of if, but when.” He accumulated a large hoard of the metal in the 1990s and early 2000s between $300 and $600 per ounce and lived to see his prediction come true. His estate though was the ultimate beneficiary of his wisdom. He was not one to sell gold once he had acquired it. We chatted regularly on the phone back then and I told him that I had used the story just told in one of my newsletters. He was in his late 80s at the time. “Tell them,” he said resolutely, “that I bought my first ounce of gold at $35.”
“The possession of gold has ruined fewer men than the lack of it.”
– Thomas Bailey Aldrich –
“An epic gold bull market is on the menu for 2019. I’m not talking about a garden-variety cyclical gold bull market, but rather one of the biggest gold manias in history. This gold mania will be riding the wave of an incredibly powerful trend… the re-monetization of gold. The last time the international monetary system experienced a paradigm shift of this magnitude was in 1971.”
USAGOLD note: With that Giambruno launches into a list of four catalysts that starts with Basel III, moves through central bank gold buying, China’s oil for gold gambit and ends with he calls the Fed’s dramatic capitulation. A wide ranging recapituation of the reasons to own gold. . . .
Repost from 6-6-2019
“There is a sizable contingent of investors, and advisors, today who have never been through a real bear market. After a decade long bull-market cycle, which only seems to go up, you can certainly understand why mainstream analysis continues to believe the markets can only go higher. What is concerning is the rather cavalier attitude the mainstream media takes about bear markets. ‘Sure, a correction will eventually come, but that is just part of the deal.’ What gets lost during these bullish cycles, and is found in the most brutal of fashions, is the devastation caused to financial wealth during the inevitable decline.”
USAGOLD note: This article is built around Richard Wyckoff’s market cycle – accumulation, mark-up, distribution and decline. Roberts believes we most probably have come to the “decline” phase of the cycle and reminds us of stock market guru Benjamin Grahm’s advice from back in 1959 that ” a big bull market is inevitably followed by a big bear market.” His article linked above is well worth a visit for some important details.
Repost from 1-16-2019
“In our business there is no place for certainty. With that in mind, I like to quote Henry Kaufman, who was the chief economist at Salomon Brothers. He said that two kinds of people lose a lot of money: ‘Those who know nothing and those who know everything.’ So, at best, the future is merely a probability distribution of future events. All you can do is get the odds on your side.”
USAGOLD note: For those who make no claim to either, i.e. ‘knowing nothing’ or ‘knowing everything’, there is the old expedient of simply diversifying with precious metals and let others spend endless time discussing where the various markets might be headed.
Repost from 4-26-2019
“Thank you! It has been a pleasure doing business with your Company! You’ve treated the small investor (me) just like you would a millionaire. Best wishes, and I hope I can make some purchases in the future.” – L.W., Savannah, Georgia
We also treat millionaires . . . well. . . like millionaires – whether they admit to being millionaires or not [smile].
We receive unsolicited testimonials like L.W.’s routinely. Please see our Client Testimonials page for more feedback, and be sure to visit the Better Business Bureau for even more in the way of FIVE-STAR reviews. Don’t do business with any gold company until you have checked it out.
(USAGOLD – 6/9/2019) – Gold is off another $5.50 today at $1324 and down $18 from the high-water mark posted on Friday. Silver is level on the day at $14.73. Gold reached the $1320 level in overnight trading but seems to be regaining its footing in early New York trading. Some analysts see the downside of the past two days as a natural and healthy response to the eight straight days of upside that preceded it (and tacked $70 – or nearly 5.5% – onto the price). Others see it as the beginning of a major correction. The next few days should tell us who has it right. “We remain cautiously constructive on gold despite Monday’s decline as we have to suspect that the trend of a lower dollar and depressed global interest rates will continue to stay in place for some time, providing gold prices with some ballast,” INTL FCStone analyst Edward Meir told Reuters in a note.
Quote of the Day
“Gold and silver, like other commodities, have an intrinsic value, which is not arbitrary, but is dependent on their scarcity, the quantity of labour bestowed in procuring them, and the value of the capital employed in the mines which produce them.” — David Ricardo, British political economist (1772-1823)
Chart note: This long-term chart on the annual average price of gold since 1970 dispels the notion that gold is somehow volatile or unpredictable and as a result unreliable as a long-term portfolio safe haven. To the contrary, it shows gold living up to its reputation as a portfolio safe haven during times of rapidly changing economic circumstances.
“President Donald Trump on Monday criticized Federal Reserve policies as ‘destructive’ for not lowering interest rates. Trump, who has accused the U.S. central bank of undercutting his efforts to boost economic growth, has repeatedly said on Twitter the Fed should cut its key overnight lending rate by a full percentage point and renew the quantitative easing program that saw it pump trillions of dollars into the economy in response to the 2007-2009 financial crisis and recession.”
USAGOLD note: The verbal war between the Fed and White House continues. . . . .
“China’s foreign exchange reserves unexpectedly rose US$6.1 billion in May to US$3.101 trillion, reversing the previous month’s decline. The rise also came as China increased its gold reserves by 1.88 per cent to US$79.8 billion last month, according to central bank data released on Monday.”
USAGOLD note: The addition for May is roughly 16 tonnes and in line with previous announcements. The PBoC has added almost 60 tonnes thus far this year. Bloomberg calls China’s gold acquisitions a “determined diversification away from the dollar.” We would call it acknowledgement of a diversification that occurred long ago.
“‘There’s an expression, the more authoritative a level is, the more authoritative the resolution,” said [Cornerstone Macro’s Carter] Worth, ‘meaning, this $1,350 level has been in play, now, for half a decade. All the while, gold’s pullbacks have been increasingly shallow during the period of time over which $1,350 has been an authoritative top, suggesting that it’s finally ready to spring off the top and into a major breakout.'”
USAGOLD note: We have featured Carter Worth’s analysis in the past. He is considered one of the top technical analysts in the business.
“Bank of Japan Governor Haruhiko Kuroda said on Sunday the Group of 20 finance leaders reaffirmed their commitment to use all policy tools if risks to their economies materialise.”
USAGOLD note: Kuroda’s reassurance came after a meeting of central bank governors and finance ministers over the weekend in Fukuoka, Japan.
Recent Better Business Bureau Client Review
“When I first became interested in purchasing gold, I merely followed the advertising recommendation of a conservative national personality. This experience was not favorable, as the recommended firm seemed to be just another high pressure marketing boiler room, only interested in making a sale at the highest possible commission. Of course I was disenchanted, and thus lumped (unfairly) all gold brokers into the same category.
A few years later, my interest in purchasing gold overcame my earlier experience and I began seeking a trustworthy firm. As I researched various options, USAGOLD caught my attention. After a few weeks of following their website presence (the Live Daily Newsletter and their weekly video), I began a telephonic dialog with Jonathan Kosares. Recognizing that I was a novice, Jonathan patiently provided general precious metals background and technical information, while also directing me to various educational resources. Since I sought a long term relationship with a stable firm, and because of my earlier experience purchasing gold, my next step was to schedule a personal visit to USAGOLD’s offices in Denver. The meeting at USAGOLD was quite comforting and further instilled a deep sense of trust. . . All that I encountered underscored and reinforced USAGOLD’s unique history and competency with regard to gold and precious metals.
Over the next few months, I engaged in several significant transactions, and all aspects of those transactions could not have been better. I could not have been more pleased with the specific recommendations and pricing, strategies related to IRA/HSA alternatives, balancing exposures to both gold and silver, and the execution of shipping and delivery. I intend to be a lifelong customer, and to this day Jonathan is always available to share his knowledge of precious metals and his perspective on the markets. If you are looking for personal attention from a trustworthy firm that has decades of impeccable history along with a focused depth of expertise, you have found it in USAGOLD.” – R.N., 1/29/2017
38 45 48 49 53 five star reviews. Zero complaints.
A+ rating. Accredited since 1991.
USAGOLD Recommendation: The precious metals industry is unique in the financial industry in that it is not subject to oversight or regulation by third-party government entities like the SEC or CFTC. As such, marketplace forums and feedback sites often serve as a replacement for investors attempting due diligence. While several options can be found, by far the most impartial and least susceptible to vested influence is the Better Business Bureau. When looking at a company’s BBB profile, don’t focus solely on the rating. To be honest, pretty much everybody has an ‘A’ or ‘A+’ rating. What is far more important to assess is the number and nature of complaints, number and caliber of positive and negative reviews, longevity with the BBB, as well as the number of ‘stars’ given a company through the actual customer review system.
“While headlines may be on the Sino-US trade war, China’s gold market continues to fire on all cylinders, with physical gold continuing to flow into, and through, the world’s largest gold hub. Year-to-date, Chinese wholesale gold demand is on a par with recent years, Chinese central bank gold purchases have officially recommenced after a two year halt, and gold import data into China is now more transparent than ever before.”
USAGOLD note: China still leads the world in physical gold demand and it is no small number: Year to date 688 tonnes have moved from the vaults of the Shanghai Gold Exchange into the hands of Chinese investors. At that pace, China will have imported over 2000 tonnes of physical gold for the year, an amount equal to 61% of annual global mine production. “Therefore,” says Manly, “2019 is shaping up to be another very strong year for Chinese gold demand as physical gold continues to move from West to East.”
Repost from 6-5-2019
JP Morgan study ranks gold second best
investment over past twenty years
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 (Real Estate Investment Trusts) were number one at a 9.9% gain. Stocks ranked fourth at 5.6%.
“Almost two-thirds of those surveyed consider precious metals to be a ‘sensible’ form of investing; one-fifth plan on investing in precious metals in the next 12 months . . . wealthier respondents were more likely to own precious metals and were more likely to say they would buy precious metals in the next 12 months; just shy of two-fifths cited ‘security’ as being the reason for investing in precious metals.”
USAGOLD note: Switzerland has always been associated with gold investing not just among it own citizenry, but as a standard recommendation made by Swiss banks to its high-net-worth international clientele.
Chart courtesy of World Gold Council
Repost from 5-30-2019
“In an interview with the Financial Times at the Trump International Hotel in Washington this week, Ms Shelton called on the Fed to ‘think about whether they are doing more harm than good’. If appointed to the board, she would be ‘asking tough questions’ about its most basic mission, she said. ‘How can a dozen, slightly less than a dozen, people meeting eight times a year, decide what the cost of capital should be versus some kind of organically, market supply determined rate? The Fed is not omniscient. They don’t know what the right rate should be. How could anyone?’ Ms Shelton said.”
USAGOLD note: We haven’t had an individual with Judy Shelton’s fundamental sense of free-market monetary dynamics and intellectual cache at the Fed since Alan Greenspan walked the halls of the Marriner Eccles Building. It would be a welcome sight to see her attend her first meeting of the Federal Reserve Board of Governors. She is a friend of gold and has been for a very long time. . . . .
Repost from 5-31-2019
(USAGOLD – 6/10/2019) – Gold corrected overnight on news that Mexico would take steps to stem migrant flow to the United States, thus avoiding the imposition of new tariffs. It is down $11 at $1329. Silver is downm 22¢ at $14.77. The move to the downside comes after a week that saw gold move $65 higher from its $1275 starting point on May 30 to its $1240 close on Friday.
We asked Zac Storella from Counting Pips, a widely-acknowledged expert on the COMEX Commitment of Traders reports, what he saw in last week’s numbers. His response is worth noting:
“This week’s change in speculative positions (Commitment of Traders) for gold jumped by a total of +69,427 net contracts. This is the largest one-week gain on record, according to the CFTC data dating back to 1986. The current net position (long positions minus short positions) is now at the most bullish level in over a year – showing that sentiment for gold is coming back into favor.
Speculator sentiment is and has been an important aspect to a strong gold price. Speculators are generally trend-followers (buying higher prices, selling lower prices) and on a running three-year basis, we have found a strong correlation between speculator net positions and the gold price.
The week’s change did include a healthy amount of speculators covering their short positions as the total number of short positions fell by -23,413 contracts. However, the stronger case for gold is that almost twice as many long contracts positions were initated (+46,014 long contracts) compared to the short covering. With a combination of new long positions and declining short positions, any which way you look at it, this was a strong week for gold and gold bulls.“
Bloomberg reports hedge funds boosting their “long position in bullion by the most in almost 12 years” in a revival of safe-haven demand. It also quotes INTL FC Stone’s Rhona O’Connell, the London-based gold market analyst, as saying that “bullion might reach $1400 this year.” She went on to say that “all the dominant asset classes have a question mark over them at the moment which is generally when gold comes into play.” In short, there is much on financial markets’ table yet to be resolved not the least a push among key G-20 central banks to potentially resurrect quantitative easing and lower interest rates.
Note: We post the Zac Storella’s Commitment of Traders review weekly here at USAGOLD.
Quote of the Day
“The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.” – Rudy Dornbusch, economist
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.”
“Gold, 30-year seasonal chart. Typically lows are established in mid June and early August, but there have been exceptions to this rule. Although gold normally struggles during the summer months, there exist several historical examples of summer rallies as well, which happened in the context of long-term bull markets (particularly vigorous summer rallies were e.g. seen in 1977 and 1978). Lastly, there is obviously strong resistance in the $1,360 to $1,375 region, which gold has been unable to overcome in several attempts since the early 2016 advance. It seems to us that the chance of finally breaking through this resistance level is much better this time than previously.”
USAGOLD note: We appreciate this report because it addresses some of the things we have been thinking about with respect to gold. It all seems for lack of something more descriptive. . . reasonable.
Financial Times/Robin Wigglesworth and Joe Rennison/6-7-2019
“The global bond market has enjoyed its biggest weekly investor inflows in over four years, with investors dumping equity funds in favour of fixed income amid concerns that the international economy is wilting and central banks will have to cut interest rates.”
USAGOLD note: Further validation of the capital flow to safe-havens from Financial Times. . . Wall Street firmly believes rate cuts are around the corner.