“It’s one thing to read words like ‘crisis’ and ‘instability.’ But it’s vastly more affecting to see a man with a million-dollar account be denied entry to his failed bank and realize that in the blink of an eye he’s poor. And then to see him juggling five gig economy jobs and still having to move his family into his mother’s house.
This is validation for stackers: If that guy had minimized his exposure to the banking system and turned his cash into gold and silver coins, he and his family would still be living in their posh London flat. And his marriage would have survived. And his son would have been able to avoid a harrowing and life-threatening trip through refugee hell to rescue his boyfriend.”
USAGOLD note: An economic breakdown, as Rubino suggests above, is not the only of life’s calamities against gold acts as a hedge. The full piece linked above is a captivating, quick read.
Image: Albrecht Durer’s Four Horsemen of the Apocalypse (1498)
Repost from 11-6-2019
“This MMT sounds like a recipe for immense inflation, even hyperinflation. You are spending all this money directly into the economy. It will drive consumer prices through the attic roof, you say. This is crackpot. A witch’s sabbath of inflation would surely result. Yes, but here the MMT crowd meets you head on… They agree with you. They agree MMT could cause a general inflation, possibly even a hyperinflation.”
USAGOLD note: Modern Monetary Theory (MMT) is neither modern nor a theory. John Law, the Scottish financier, tried a version of it exactly 300 years ago (1717-18) in France.* He did so with the blessing of the French monarchy and with a rationale very similar to MMT’s proponents today. In the end, Law’s theories (to his surprise if we are to believe the historical account) bankrupted the French people and the government, reduced the economy to ashes, and created such a distaste for paper scrip among the citizenry that it took 80 years for France to reintroduce paper money as a circulating medium.
“The shrewder speculators* became alarmed. They began to sell their shares of stock, and hoard in gold the enormous wealth they had acquired. This resulted in a demand on the government for metal in exchange for its paper, and soon the government had no metal to give. Then the crash came. Those who had the government paper could buy nothing with it. Those who held the Mississippi stock could scarce give it away. It was worthless. The government itself refused to accept its own paper for taxes. A few lucky speculators had made vast fortunes; but thousands of families, especially among the wealthier classes, were ruined.” – Edward S. Ellis and Charles F. Home, The Story of the Greatest Nations (1900)
* Please see this link for a summary of Law’s Mississippi Company land scheme.
Image by Internet Archive Book Images [No restrictions], via Wikimedia Commons/The Mississippi Bubble, Street of Speculators/The Story of the Greatest Nations/Edward S. Ellis and Charles F. Home (1900)
Repost from 2-4-2019
“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.
“[L]arge government deficits exist and will almost certainly increase substantially, which will require huge amounts of more debt to be sold by governments—amounts that cannot naturally be absorbed without driving up interest rates at a time when an interest rate rise would be devastating for markets and economies because the world is so leveraged long. Where will the money come from to buy these bonds and fund these deficits? It will almost certainly come from central banks, which will buy the debt that is produced with freshly printed money.”
USAGOLD note: There is not a great deal we can or should add to what Dalio has to say at the link above except to mention again that the head of the world’s largest hedge fund advises gold ownership.
Repost from 11-5-2019
(USAGOLD – 11-12-2019) – After another attempt at a rally overnight ran out of gas, gold dropped again on the COMEX open. It is down $5 on the day at $1450.50. Silver is down 9¢ at $16.75. As reported yesterday, JP Morgan and Citibank led this bout of selling with their liquidation of gold futures’ positions late last week. Since then, BNN Bloomberg reports that an additional roughly 33,000 contracts, or 3.3 million ounces, were dumped in a 30 minute period yesterday morning. Those sales drove the price down another $10 and below the $1450 mark. The selling seems to have carried over to this morning’s open. With the rapid drop in the price – almost $65 over the past week and $100 from its highs in early September – longer-term investors in the physical metal who like to buy the dips might be encouraged to test the waters at these levels.
Quote of the Day
“[L]arge government deficits exist and will almost certainly increase substantially, which will require huge amounts of more debt to be sold by governments—amounts that cannot naturally be absorbed without driving up interest rates at a time when an interest rate rise would be devastating for markets and economies because the world is so leveraged long. Where will the money come from to buy these bonds and fund these deficits? It will almost certainly come from central banks, which will buy the debt that is produced with freshly printed money.” – Ray Dalio, Bridgewater Associates, Linked-In article
Chart of the Day
Map courtesy of Visual Capitalist
Chart note: This map shows the difference between Mercator’s representation of country sizes and reality. “Mercator’s map,” says Visual Capitalist, “inadvertently also pumps up the sizes of Europe and North America. Visually speaking, Canada and Russia appear to take up approximately 25% of the Earth’s surface, when in reality they occupy a mere 5%.
“Speculationville is where the confident and suave television and news commentators, politicians, and the experts that speak with false authority live, I include the pundits and so-called specialists. Whenever I find myself drawn down the path that leads towards Speculationville I try to stop and ask if the journey ahead has any real merit or payoff. Often the subject we speculate over is a big factor into just how frivolous the effort is. This means I find very annoying the efforts of media, news programs, and talk shows to drag us into huge areas of speculation instead of focusing on facts and important issues.”
USAGOLD note: An interesting article from Bruce Wilds’ Advancing Time blog. Wilds is a building contractor and manager of commercial and residential properties in the Midwest – an occupation he says anchors his view of “rapidly changing lifestyles” sustained by ‘his hands-on business style, extensive travels, and studies of history, politics, and economics.” What emerges is some basic, down to earth observations and advice. . . . . . .
“Central Banks only hold gold because of tradition (if you believe their nonsense), so it probably comes as some surprise to many that, between them, they have bought more of this ‘traditional’ asset in the first half of 2019 than they have done in any other 1H on record. It’s enough to make the skeptics of the world think they might be concerned about something but… well that would be directly opposed to their assurances that everything is under control so… it’s probably nothing. Just tradition…” – Grant Williams, Things that make you go hmm
USAGOLD note: With tongue firmly in cheek. . .Williams (Lawrie) elaborates on that point made by another Williams (Grant).
“China’s foreign exchange reserves rose more than expected in October, as the yuan rebounded on growing hopes that Chinese and U.S. negotiators are making headway in their efforts to strike an interim trade agreement.”
USAGOLD note: Some have tried to read more into the fact that China’s gold reserves stayed steady in October (also reported in this article). We will stick with our long-standing opinion that the additions have been on-going and probably much larger than the aggregate gold stockpile reported. Further, we will stick with our view that the reports simply reflect the level the Chinese central bank is willing to announce at this point in time.
“President Donald Trump is due to deliver remarks at the New York Economic Club on Tuesday. Analysts will listen closely for comments on trade talks with China.”
USAGOLD note: And whatever else the president might have to say about the economy and financial markets. . . . .
“This is when prices begin to decline, or plunge, and these dropping prices pull more people out of their hallucinations with a sort of rude awakening, and they sell in order to hang on to what they still have left, and this pushes prices down further and yanks more people out of their consensual hallucinations. It works wonderfully on the way up, and it can last a lot longer and be a lot more powerful than folks who haven’t smoked the same stuff think possible. But at some point, it turns into a treacherous and gut-wrenching mass-awakening.”
USAGOLD note: Wolf Richter does a wonderful job in this editorial explaining what he calls ‘consensual hallucination’ or what others have called ‘the madness of crowds.’ In the aftermath of the 2008 meltdown, money men around the world offered some version of the excuse they ‘did not see it coming’ to explain why no public warnings came from money managers who might have known better. This time around major players all around are warning that the consensual hallucination will someday end. In fact, many – including billionaires Ray Dalio, Paul Tudor Jones, Thomas Kaplan, and Stanley Druckenmiller among others – have advised people that gold is a sound choice under the present circumstances of stock market over-valuation.
“What’s astonishing,” concludes Richter, “is just how long consensual hallucination lasts, and how shocked and appalled people are when it ends.” The most enduring lesson gained from these often forgotten (or is it ignored?) chapters in financial history is the utter and enduring destruction they leave behind. The Dow Jones top achieved in 1929, for example, was not revisited until 1955. The best course of action is to hedge one’s own animal spirits with some cool, common sense. Such exercises in discipline have done wonders for investors down through the centuries.
The Exter Inverted Pyramid of Global Liquidity
“[Exter’s Inverted] Pyramid stands upon its apex of gold, which has no counter-party risk nor credit risk and is very liquid. As you work higher into the pyramid, the assets get progressively less creditworthy and less liquid. . .[In a financial crisis] this bloated structure pancakes back down upon itself in a flight to safety. The riskier, upper parts of the inverted pyramid become less liquid (harder to sell), and – if they can be sold at all – change hands at markedly lower prices as the once continuous flow of credit that had levitated those prices dries up.” – Lewis Johnson, Capital Wealth Advisor’s Lewis Johnson
In short, what Lewis Johnson outlines is the bottom-line rationale for diversifying one’s portfolio with gold. For a more detailed analysis of Exter’s Inverted Pyramid, we invite you to visit the May edition of News & Views, our monthly newsletter.
Our next edition of News & Views is slated for tomorrow November 12th!
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“[T]he latest figures covering Switzerland’s September gold export figures, those to Asia have diminished hugely in favour of the U.K. being by far the largest recipient. These are not one-off figures. This is the same pattern which has emerged from the preceding several months’ Swiss gold export data and is generally put down to a combination in a fall-off in demand from China and India in particular, coupled with massive inflows into gold ETFs, most of which keep their gold vaulted in London.”
USAGOLD note: These numbers are simultaneous to gold ETFs stockpiling a record 2855 metric tonnes – the equivalent of 35% of the U.S. gold reserve.
Chart courtesy of GoldChartsRUs
Repost from 11-6-2019
“Gold is currently one of the most hated investments by the media and social media influencers. The only herd following gold are thought to be relics of ancient history and doomsday preppers. Maybe, as we saw in the aftermath of the prior valuation peaks, those who were ridiculed for their rigor and discipline will once again come out on top.”
USAGOLD note: This advisory begins with a poll from the CFA noting “herding – being influenced by peers” as the chief behavioral bias affecting investors. The least influential? Loss aversion. “[W]e believe,” say the authors, “a rational investor would put these in reverse order.” After a lengthy treatment of the subject, and a good one, Lebowitz and Scott recommend gold as “ballast to a portfolio during troubled times.”
Repost from 11-4-2019
What you need to know before you buy
your first ounce of gold
Some initial guidelines from one of America’s top gold experts
If you are new to the concept of gold ownership, you might be looking for a little guidance. We, at USAGOLD, have been in the gold business for a good many years and the one thing that stands out to us in working with so many over the years is how often investors, for one reason or another, get off to a bad start.
That is why we developed a question and answer page many years ago that delves into the subject of GETTING OFF TO THE RIGHT START. We update it regularly as things can change rapidly in the gold and silver markets. The page is linked above and we recommend that newcomers spend the few minutes it takes to get through it. . . .
This page receives considerably high-ranking from Google on a number of important searches and we like to think it’s because of the cause it serves – providing some positive direction to investors trying to get off to a solid start in their pursuit of gold ownership.
If you would like to talk with a real, live gold expert about your needs, try this phone number or drop us an e-mail:
“Ludwig von Mises (the Austrian-American economist, 1881–1973) thought this to be unthinkable, because it contradicted all axioms of human behavior. The damage to be expected through negative interest is articulated in connection with the following issues: savings are discouraged, consumption boosted, the future in many ways consumed today; doing business on credit is being fostered, companies beguiled into misguided investments, political reform discouraged; assets are devalued and the pension provisions destroyed.”
USAGOLD note: That about sums up the net effect of negative interest rates in one, neat paragraph.
Repost from 11-4-2019
Denver Gold Group
30th Annual Conference
September 15-18, 2019
Chairman, Franco-Nevada Corporation
“A Thirty Year Walk Through the Gold Market”
“30 years of gold price. 30 years of gold demand. 30 years of gold mining. The next 30 years!”
Precious Metals Analyst, Standard Chartered Bank
“Will Central Banks Remain Reliable Gold Buyers?”
“Global gold official sector reserves are now at their highest since 1996. The official sector has been a consistent buyer since 2010 even amid volatile price action and as prices have hit all-time highs.”
Portfolio Manager, Orion Mine Finance Limited
“A Thirty Year Walk Through Equity Precious Metals”
“A Colorado perspective. 1989– Colorado had 3.3 millionpeople. 600,000 in the Denver metro area. We were hurting for jobs and investment. Desperation leads to Innovation.”
President, Angwin Precious Metal Advisory Services
“Challenges For Precious Metals Refining”
“Available versus not available market. Capacity defies logic. Typical refining rates down 55% in 6 years. Significant changes in regulation. Very little, to no, long-term growth.”
Repost from 9-24-2019
(USAGOLD – 11-11-2019) – Gold gave up marginal gains achieved in the overnight market early in the U.S.-based COMEX session. The highpoint came at $1,466 and it is trading at $1461 now – up about $2 on the day and trying to get some traction. Silver is up 6¢ at $16.84. JP Morgan and Citigroup, according to a Bloomberg report, sold off gold positions last week contributing to the downside, but that selling according to reports was largely based on an improving geopolitical environment (including trade negotiations) – a position some will question. It might be, too, that, despite the lengthy public statements, the two trading desks simply wanted to book some short-term paper profits. Bloomberg quotes Invesco’s chief global market strategist, Kristina Hooper, as saying, “It’s been sentiment around the U.S.-China trade relationship that’s mostly driven the price of gold. That sentiment has improved, so there hasn’t been as much of a need for gold in recent weeks. But as we know that can change on a dime.”
Quote of the Day
“My time horizon is that I usually measure moves like these in terms of decades,” he said at the time (gold was trading just below $1300 per ounce). “So let’s look at it like this: The first move, the first leg, in gold took it from $250 per ounce to $1900. . .We’ve now been in a correction that has taken gold from $1900 back to where we are today. You could easily see gold fall a couple of hundred dollars before you see it go up a couple of thousand dollars, but each move has been a decade or more which means that when gold embarks upon its next move, I believe that you will see that long wave will take gold relatively quickly to the $3000 to $5000 target that I believe is fundamentally justified based on the facts we have today.” – Thomas Kaplan, Electrum Group Bloomberg interview (Late May 2019, just before gold began its climb from the $1280 level)
Chart of the Day
Chart note: For those exploring the virtues of gold ownership, today’s Chart of the Day is illustrative. Gold has provided a positive return in 15 of the last 19 years (since 2000). It is up 14.45% thus far in 2019 (through November 7).
“Wall Street was indeed ‘still dancing’ hard through the end of 2007. The Fed moved to bolster the economy in the face of heightened financial instability. The impact of stimulus measures on the real economy is debatable. My own view is that late-cycle stimulus is problematic, as it tends to stoke already overheated sectors and exacerbate imbalances and maladjustment. The stimulus impact on finance should be indisputable. The upshot of deploying stimulus in a backdrop of market speculation is dangerous speculative Bubbles.”
USAGOLD note: Noland examines growth in the money supply and money market funds in this week’s edition of his newsletter – an area largely overlooked in the financial media at this point in time.
“The global growth slowdown has been forcing central banks to adopt easy money policies, which in turn is propelling stocks higher. . .But that did not dissuade investors from seeking safe products. The fear factor can be felt by the all-time high holdings in gold-backed ETFs.”
USAGOLD note: Fits the reports that a good many professional money managers and investors simply do not trust these stock market levels. . . . .