Private: Jeffrey Gundlach says the stock market was and still is in a bear market
“’The stock market was and still is in a bear market,’ the founder and chief executive officer of Doubleline Capital said in an investor webcast on Tuesday. He also said stocks could go negative again in 2019.”
USAGOLD note: CNBC gave Gundlach’s prediction headline coverage yesterday. He says stocks could go negative again in 2019.
Private: Afternoon Update
(USAGOLD – March 12, 2019) – Gold pushed back over the $1300 mark today with an $8.50 gain to stand at $1301 in late afternoon trading. Silver is up 14¢ at $15.44. Gold gained early in the day on the weaker inflation data from the Labor Department. It got another push later in the day on the news that UK’s parliament rejected the Brexit arrangement the May government negotiated with Brussels. Gold’s current assault on the $1300 level began last Friday on expectations that the major central banks were going dovish to varying degrees on monetary policy to counter a softening global economy. That sentiment underpins all else in the gold market at the moment.
Private: Support for the gold price could soon change to a rush for gold
Lombardi Letter/Alessandro Bruno
“But there’s fashion and there’s style; they’re not the same thing. Fashion is temporary and changes. Style is permanent and adapts. Investing in stocks, outside of a clear strategy based on a buy-and-hold approach, is often a fashion. Gold may be traditional now, but it’s never out of style. And it may soon become fashionable again. Indeed, the change, or the shift, has already begun.”
USAGOLD note: The allusion to fashion reminds us of the old maxim that an ounce of gold from time immemorial would always buy a quality man’s suit. “The price of a fine suit of men’s clothes,” wrote the U.S. Geological Survey last year, “can be used to show anyone who is not familiar with the price history of gold just how very cheap gold is today. With an ounce of gold, a man could buy a fine suit of clothes in the time of Shakespeare, in that of Beethoven and Jefferson, and in the depression of the 1930s.” At present, a quality men’s off-the-rack suit at Brooks Brothers without the shoes and tie ranges in price from $1700 to $2500.
Repost from 11/5/2019
Private: No DMR today. . .
. . . but please check back. We may post an update later.
Private: China will not devalue renminbi to spur exports: central bank chief
“China has gone to great lengths to support its currency and would not devalue the renminbi to spur exports or combat trade frictions, the governor of the central bank said Sunday.”
USAGOLD note: The chart shows mixed success if the PBoC’s policy has been to support the yuan against the dollar. Since 2008 the yuan is up about 14.5%. From the late 2013 high point, it is down 10%. Over the past twelve months of the trade war (second chart), it is down almost 6.5%. The PBoC, though, might be swimming against the current these days with speculators apparently betting on the dollar in the on-going trade war.
Private: Fed’s Powell: Trumps attacks played no role in the rate pause
NewsMaxFinance/3-11-2019
“Federal Reserve Chairman Jerome Powell says political attacks by President Donald Trump played no role in the Fed’s decision in January to signal that it planned to take a pause in hiking interest rates. He also said in an interview broadcast Sunday that he can’t be fired by the president and that he intends to serve out his full four-year term.”
USAGOLD note: Nothing to see here. Just a coincidence. . . . . And then the Fed chairman went on to confirm for 60-Minutes a very dovish stance outlined in bits and pieces over the past few months.
Private: Bond investors are daring to whisper about a return to Fed QE
Bloomberg/Vivien Lou Chen/3-8-2019
“Bond-fund managers are starting to whisper about the prospect of more Federal Reserve quantitative easing to fight the next U.S. downturn, underscoring just how acute concerns over flagging global growth have become less than three months after the central bank last raised interest rates.”
USAGOLD note: The ECB quickly announced a new version of QE. PBoC is adding stimulus far and wide. BoJ never hung up it sword. BoE is on-board. The Fed, according to analysts quoted in this Bloomberg piece, is not far behind. . . . . .
Private: Atlanta Fed slashes GDP growth prediction to near zero
“The U.S. economy will barely grow in the first quarter, based on data on domestic construction spending in December released on Monday, the Atlanta Federal Reserve’s GDPNow forecast model showed. The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2019 is 0.2 percent on March 11, down from 0.5 percent on March 8.”
USAGOLD note: What is troubling about the numbers that are now coming out is how quickly things have eroded. . . .from good to great to good to plain awful.
Private: Former Fed Chair Yellen says excessive corporate debt could prolong a downturn
“’I think a lot of the underwriting of that debt is weak. I think investors hold it in packages like the subprime packages … the same thing has happened. It’s called CLOs, or collateralized loan obligations,’ she added.”
USAGOLD note: Sounds ominous. . . . .Former Fed chair Yellen warns the situation could lead to “lots of bankruptcies in the non-financial corporate sector.” Few outside Wall Street ever even heard of CLOs. Now CNBC says the CLO problem could “spook” investors who recall the origins of the last crisis. With these revelations from Janet Yellen, the quiet problem of corporate debt will move to center stage.
Repost from 12-11-2018
Private: The danger lurking in the Fed’s monetary policy
MarketWatch-Barron’s/James Grant
“Clarida acknowledged no doubts. He said that radical monetary policy has worked, that it will continue to work, and that it may well become more radical.”
USAGOLD note: Grant mentions a suggestion made by Clarida that the Fed could set a “temporary ceiling for Treasury yields at longer maturities by standing ready to purchase them at a preannounced floor price.” We will let that one sink in without comment, though Grant has some choice thoughts on the matter at the link offered above. These ideas and more will be discussed in an upcoming conference at the Federal Reserve Bank of Chicago in June.
Image: Fed chairman Jerome Powell swears in vice chairman Richard H. Clarida
Repost from 3-3-2019
Private: Gold off to quiet start for the week
No DMR today 3-12-2019. Please check back though. We may post an update later.
(USAGOLD – March 11, 2019) – Gold gave back a small portion of Friday’s gains this morning as the week got off to a quiet start – moving off the $1300 mark to trade down $1.50 at $1297.50. Silver is level on the day at $15.30. The slowdown in global growth continues to be the headline story for markets today. For the most part, though, there is not much in the way of news of interest to the gold market at the New York open. We will post later in the day if things change.
Quote of the Day
“Nobody knows what would happen if Britain’s LCH or Germany’s Eurex Clearing came under stress. They have thin layers of capital compared to banks. Before the 2008 crisis most derivatives were cleared by trading parties in direct dealings. The G20 shift has lifted the share of CCPs [central counterparties] for interest rate derivatives from 20 to 60 percent. The effect is to concentrate risk. The BIS warns that the system may encourage a rush for the exit in events of extreme stress. The International Monetary Fund has also flagged the dangers. It warned this year that CCPs ‘increase the risk of a failure of the infrastructure itself’ and could lead to a ‘catastrophe’ if the all layers of defense were overrun by a big default. It would be like the failure of the Maginot Line.” – Ambrose Evans-Pritchard, BIS warns of seizure at heart of financial clearing system
Chart of the Day
Chart note: The chart on gold and silver since September of last year is an impressive one even with the recent correction factored into the equation. Gold is up 8.5% and silver is up 9% as of last Friday’s close.
Private: China adds 10 tonnes to gold reserves, but is that all?
SharpsPixley/Lawrie Williams/3-9-2019
“If we add the latest 9.95 tonne figure to its previously reported gold reserve this now stands at some 1,862 tonnes, the world’s sixth largest holding, but only equivalent in value to around 2.4% of the country’s total forex holding value. By contrast, all of the top four nations, and also the Netherlands at No.9 hold more than 60% of their forex holdings in gold. However the Chinese central bank is not thought to be the only official government entity which holds gold on its behalf. These probably include the State Agency for Foreign Exchange, China Investment Corporation (the nation’s sovereign wealth fund) and the military, and we can probably add the commercial banks to this list as they are all state-owned.”
USAGOLD note: We agree with Lawrie Williams that China’s true gold holdings are probably substantially larger than what is being reported.
Private: Belgium tells companies to halt exports to UK after March 29
Independent/Jon Stone/3-9-2019
“Belgium’s customs authority is advising companies that export to the UK to halt shipments after Brexit day to avoid customs chaos in the event of a no-deal scenario. Kristian Vanderwaeren, chief executive of Belgian customs, called for a ‘Brexitpauze’ after 29 March and said firms should do as much of their exporting as they can before new controls have to come in.”
USAGOLD note: One of the first tangible signs we have seen of Brexit reality. . . . . .
Image by Furfur [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)]
Private: Central banks shift stance in face of ‘pervasive uncertainty’
Financial Times/Delphine Strauss/3-8-2019
“The world’s leading central banks were heading for the exit from crisis-era stimulus policies as recently as December. But in just a few weeks, global monetary policy has gone into reverse, with the Federal Reserve putting rate rises on hold and peers — from the Bank of England to the Reserve Bank of Australia — following its dovish lead.”
USAGOLD note: The sudden shift among central banks in less than a couple of months time is still being digested by the financial markets. The events at the end of last week, though, seemed to incite a call to action among investors that included a move to precious metals. Gold and silver responded with strong advances to the upside.
Private: Gold speculators pulled back sharply on their bullish bets this week
Through Tuesday, March 5, 2018
Charts and commentary courtesy of CountingPips.com
Tables courtesy of GoldSeek
Note: Commitment of Traders reports are published Friday with data from the previous Tuesday.
Gold speculators pulled back sharply on their bullish bets this week
Gold Non-Commercial Speculator Positions:
Large precious metals speculators reduced their bullish net positions in the Gold futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday. The latest COT data is now up to date after delays in previous weeks due to the government shutdown.
The non-commercial futures contracts of Gold futures, traded by large speculators and hedge funds, totaled a net position of 88,018 contracts in the data reported through Tuesday March 5th. This was a weekly fall of -47,678 net contracts from the previous week which had a total of 135,696 net contracts.
The week’s net position was the result of the gross bullish position (longs) declining by -34,207 contracts to a weekly total of 202,628 contracts combined with the gross bearish position (shorts) which saw a gain by 13,471 contracts for the week to a total of 114,610 contracts.
The net speculative position has now fallen for two straight weeks and for three out of the past four weeks. The current standing has now decreased under the +100,000 contract level for the first time in the past five weeks.
Gold speculator sentiment has been on a strong bullish run since late in November with contracts turning bullish and running to their highest levels since April of 2018 before cooling off these past two weeks.
Gold Commercial Positions:
The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -113,997 contracts on the week. This was a weekly advance of 45,848 contracts from the total net of -159,845 contracts reported the previous week.
Gold Futures:
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Gold Futures (Front Month) closed at approximately $1284.70 which was a decline of $-43.80 from the previous close of $1328.50, according to unofficial market data.
Silver speculators sharply liquidated their bullish bets this week
Silver Non-Commercial Speculator Positions:
Large precious metals speculators sharply cut back on their bullish net positions in the Silver futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday. The data is now up to date after delays in previous weeks due to the government shutdown.
The non-commercial futures contracts of Silver futures, traded by large speculators and hedge funds, totaled a net position of 32,521 contracts in the data reported through Tuesday March 5th. This was a weekly lowering of -25,792 net contracts from the previous week which had a total of 58,313 net contracts.
The week’s net position was the result of the gross bullish position (longs) lowering by -14,017 contracts to a weekly total of 76,954 contracts combined with the gross bearish position (shorts) which saw an advance by 11,775 contracts for the week to a total of 44,433 contracts.
The net speculative position dropped this week by the most in over a year and has now seen declining speculator bets in three out of the past four weeks. The overall standing remains in bullish territory at +32,521 contracts this week but below the +40,000 net contract level for the first time in ten weeks.
Silver Commercial Positions:
The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -52,241 contracts on the week. This was a weekly gain of 25,928 contracts from the total net of -78,169 contracts reported the previous week.
Silver Futures:
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Silver Futures (Front Month) closed at approximately $1510.50 which was a decline of $-72.70 from the previous close of $1583.20, according to unofficial market data.
Speculators rebooted US Dollar Index bullish bets.
US Dollar Index Speculator Positions
Large currency speculators boosted their bullish net positions in the US Dollar Index futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday. The latest COT data is now up to date after delays in previous weeks due to the government shutdown.
The non-commercial futures contracts of US Dollar Index futures, traded by large speculators and hedge funds, totaled a net position of 33,714 contracts in the data reported through Tuesday March 5th. This was a weekly gain of 1,801 contracts from the previous week which had a total of 31,913 net contracts.
This week’s net position was the result of the gross bullish position tumbling by -6,925 contracts to a weekly total of 41,672 contracts compared to the gross bearish position total of 7,958 contracts which saw a lowering by -8,726 contracts for the week.
The net speculative position had fallen in five out of the previous six weeks before this weeks rebound. The overall standing is back to the highest level in seven weeks and has remained above the +30,000 net contract level for thirty-one consecutive weeks.
Private: AFTERNOON UPDATE–Gold approaches $1300 on Chinese market fears, weak U.S. jobs data
MarketWatch/Myra Saefong and Rachel Koning Baels/3-8-2019
“Gold was ‘clearly reacting to the jobs numbers, but this is too obvious,’ said Jeff Wright, executive vice president of GoldMining Inc. ‘In my opinion, gold is responding to the weekly downtrend in the U.S. equity markets along with U.S. dollar weakness [Friday] across the major currencies.’”
USAGOLD note: To that, we will add concerns about the general global trend toward economic weakness as pointed out in this morning’s DMR. It will be interesting to see how Asia opens late Sunday.
Private: Democrats eye universal basic income for US
FoxBusinessNews/Diane Kaye/3-6-2019
“And yet, socialist Democrats like New York Rep. Alexandria Ocasio-Cortez Opens a New Window. and California Sen. Kamala Harris continue to push for universal basic income in the United States. A prospect which legendary economist Thomas Sowell Opens believes could lead to the economic downfall of the country.”
USAGOLD note: I fear that we are not too far away from universal basic income becoming a reality despite the degree to which it goes against core American values.
Private: President says dollar too strong, swipes at Fed for rate hikes
Bloomberg/Alyza Sebenius/3-2-2019
“‘I want a strong dollar but I want a dollar that does great for our country, not a dollar that’s so strong that it makes it prohibitive for us to do business with other nations and take their business,’ Trump said. He didn’t mention Powell by name, but referenced ‘a gentleman that likes raising interest rates in the Fed, we have a gentleman that loves quantitative tightening in the Fed, we have a gentlemen that likes a very strong dollar in the Fed.'”
USAGOLD note: Just when you get around to thinking that the Fed is doing the President’s bidding, the president says it’s not so – not by a long shot.
Repost from 3-2-2019
Private: Special Report
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The National Debt and Gold
Here’s why the two have risen together since the 1970s
and why the correlation is likely to continue
[LINK]
“It is a fact that when your national debt gets to the level ours is, that it constitutes an economic threat to the society, and that kind of threat ultimately has a national security consequence for it.” – John Bolton, U.S. National Security Adviser to President Trump
“Last month, as the US midterm elections approached, Deutsche Bank analysts released a calculation that should have made American voters wince. It shows that the US government currently pays $1.43bn each day (yes, day) to service its public debt — 10 times more than any other G7 country (Italy is a distant second in this grim league).” – Gillian Tett, Financial Times
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Private: U.S. payrolls shock suggests dawn of a long-forecast slowdown
Bloomberg/Katia Dmitrieva and Carlyann Edwards/3-8-3019
“The U.S. labor market may not be as weak as February’s payrolls number suggested, but the report provides a reality check that a long-forecast slowdown is arriving.”
USAGOLD note: Echoes of this morning’s DMR. . . . . . . . .