“Gold will outperform the S&P 500 Index in 2020. That’s one of several projections made by CLSA in its just-released ‘Global Surprises 2020’ report. The Hong Kong investment firm has an impressive track record when it comes to making market predictions—last year it had a 70 percent hit rate—so it may be prudent to take this one seriously.”
USAGOLD note: We referenced this report in yesterday’s DMR and post the link here for those who might have missed it.
“‘Each one will interact,’ he said. ‘What concerns me most if you did have a downturn — we are now 11 years in expansion — whether that’s one, two, three years forward, with the larger polarity that exists, the wealth gap and the political gap. I would be more concerned about that.’”
USAGOLD note: Some interesting perspective from the head of the world’s largest hedge fund and an advocate of gold ownership.
“With developed market government bond yields at already very low levels, gold provides safe haven characteristics as an alternative. Indeed, with stabilization of recent global data points, the market may soon start to worry about inflation where gold would act as a hedge whereas government bond prices would decline.”
USAGOLD note: More and more professional investors, like Bank of New York Mellon’s Suzanne Huchins, have begun to factor inflation into their investment scenarios. Inflation concerns have been absent from the mix for a very long time and whether or not they are justified now remains to be seen. Wherever and whenever inflation enters the discussion, though, there you will find gold.
Repost from 2-7-2020
“Negative interest rates that have spread through Europe and Japan are coming soon to the U.S., according to a Societe Generale strategist.”
USAGOLD note: That strategist, Albert Edwards, is predicting a deflationary meltdown. Others say a surprise inflation is in the cards. Another group thinks things will stay the same – continuing disinflation. The one thing these maladies all have in common is that gold serves effectively as a portfolio remedy – one-stop hedging for the undecided investor.
Repost from 2-7-2020
“No one dares to look at the facts—or if they do, they dismiss them. Denial is a powerful force. The fact is that monetary policy is running on empty, at least in the Eurozone, and governments can provide only limited fiscal stimulus. We’ve reached the end. There’s nothing left to do than prepare for the crisis and wait. And, to be very afraid.”
USAGOLD note: A simultaneously dire and persuasive forecast from economist Tuomas Malinen, chief economist at GnS Economics and Adjunct Professor of Economics at the University of Helsinki.
Repost from 10-26-2019
Top ten producers, in metric tonnes
2004 – 2019
Source: U.S. Geological Survey
“The University of Chicago economist was not alone. Up to the eve of the worst crash in 80 years, America’s economic luminaries, including Alan Greenspan, former chairman of the Federal Reserve, and his successor Ben Bernanke insisted there was no cause for alarm. Having failed to foresee the crisis, many badly misread its aftermath.”
USAGOLD note: It is because the experts, including Fed chairmen, get it so wrong so much of the time that prudent investors own gold and silver as hedges and stores of value. Alan Greenspan, for one, recommends gold ownership to protect against oversights and wayward policy measures.
Repost from 10-11-2019
USAGOLD note: Many will agree with FT’s selection of the verb “hooked” in describing the financial market’s relationship to the central bank’s monetary policy. While the markets are “hooked,” the Fed, as TD Securities’ Priya Misra points in this article, is “a little trapped.” That begs the question: Where do we go from here?
Repost from 1-30-2020
“If the choice is between gold or a bond that yields 5%, that’s one thing but the balance changes when it’s gold versus something that yields nothing. Add on the chance of more QE, a currency war or a real war and gold looks better and better. It’s not going to be a straight line but we’re back in an easing cycle. The last easing cycle ended with gold at $1900. If central bank easing unfolds as expected, we will get back there. If there’s a recession or war, it will go even higher.”
USAGOLD note: We alluded to this odd but beneficial set-up for gold in yesterday’s DMR – a hedge against negative yield (especially when including inflation!) and upside potential. In many countries gold is the better safe-haven alternative.
Repost from 6-21-2019
(Chart added 1-31-2020 – Gold’s performance in various currencies full year 2019)
(USAGOLD – 2/12/2020) – Gold continued its aimless drift this morning in advance of Fed Chairman Powell’s second and final day of Congressional testimony. The only statement from the chairman of enduring interest thus far was the one about the need for fiscal help from Congress in the event of a future recession. Knowing that Washington gridlock is a fact of life, such statements should be enough to send investors running into gold’s open, safe-haven arms. Thus far, though, the metal has barely registered a pulse. As we open the day in New York, it is down $2 at $1566. Silver is down 8¢ at $17.57.
We have made the point often that while stocks command mainstream attention, gold continues to perform quietly in the background.* Along these lines, U.S. Global Investors’ Frank Holmes makes the following observation in an article at the Forbes website: “I can’t say whether gold will beat the S&P this year or next, but what I do know is that the yellow metal has been a wise long-term investment. For the 20-year period through the end of 2019, gold crushed the market two-to-one, returning 451.8 percent compared to the S&P’s 223.6 percent. That comes out to a compound annual growth rate (CAGR) of 8.78 percent for gold, 4.03 percent for the S&P.”
Chart of the Day
Chart note: Both the strength and velocity in the Fed’s balance sheet growth since September 2020 is notable.
USAGOLD note: Audio interview of the World Gold Council’s Director for Central Banks of Public Policy, Shaokai Fan.
Graphic courtesy of the World Gold Council
“Could anything stop the slow death of paper currencies? It’s too late for a gold standard; the amount of paper printed has grown way too large. So a correction of paper money is coming, and usually a flight out of paper goes to gold — that’s a real reason gold has been up.”
USAGOLD note: Dines says that those who do not prepare for the coming currency crisis “risk losing their wealth.”
“The silver market today is obviously quite different from the one in 2011 that saw silver jump to an all-time high of $49 an ounce. Could it run that far again? We believe so. Consider: industrial demand for silver, particularly photovoltaics, is heading up, and should get another lift if and when the trade war with China is put to rest. Investment demand for silver also looks solid, with no end in sight to the low-interest-rate policy direction of central banks. Add higher demand to shrinking supply, lower grades, and less silver by-product credits from falling lead and zinc mine production, we see a floor forming under silver prices.”
“The11% decrease in domestic mine production in 2019 was attributed to decreases in production from the Bald Mountain, Carlin, and Cortez Mines in Nevada and the Fort Knox and Pogo Mines in Alaska. In 2019, worldwide gold mine production was estimated to be unchanged from that in 2018. Increased mine production in Australia, China, and Indonesia offset decreased gold mine production in Peru, South Africa, the United States, and Zimbabwe.”
USAGOLD note: Gold mining statistics for 2019 from the United States Geological Survey at the link above. . . . .
“Wall Street bull Edward Yardeni isn’t sure how much longer investors will shrug off coronavirus fears. He sees the outbreak as the most critical risk to the record stock market rally.”
USAGOLD note: As goes China, so goes the rest of the world? As the net economic effects begin to sink in, the case in the affirmative grows stronger.
“Why is it so safe? In part, the ongoing risks created by the virus outbreak bind the hands of any central bank that might have been tempted to try tightening financial conditions. Secondly, the Fed has boxed itself in. It is now making clear that its 2% inflation target is ‘symmetrical’, and not a tight upper limit, making it all the harder to justify raising rates.”
USAGOLD note: The Fed is printing. The markets are dancing. Warnings of impending doom and a possible fall from grace are ignored. Meanwhile, physical gold is stockpiled by those who simply don’t trust, in our opinion, what appears to be an ill-conceived euphoria.
Repost from 2-7-2020
“Klarman noted that about 31% of the fund’s portfolio was in cash to end 2019.”
USAGOLD note: Klarman is the widely followed analyst who plies his trade at Blaupost Group in Boston. He warns now of a “liquidity trap” undermining economic growth. We missed this report in late January but thought it still worth passing along now.
Repost from 2-7-2020