Notable Quotable
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“There is nothing we can take for granted in this inflationary crazy economic environment, no rules of thumb that can really guide us. My father was a thrifty man, a truly great man, but also a believer in long-term value and truth. Yes, he loved gold and silver coins too, and very much so. He accumulated them throughout his life. As I look at that today, it is extremely obvious that this was one of his best financial decisions. He was never a day trader or a rah-rah techno champion. He clung to that which he could really trust, really own, really control. That seems like a good way to think even now.” – Jeffrey Tucker, Daily Reckoning
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Fitch’s US debt-rating downgrade is bad news for stocks.
MarketsInsider/George Glover/8-2-2023
“August is usually the quietest month of the year for the stock market. But Fitch shattered any sense of summer calm last night when it slashed the US government’s credit score, in what could end up being a massive blow to President Joe Biden’s economic track record.”
USAGOLD note: Biden’s track record wasn’t exactly glowing before the Fitch announcement. A good many analysts have warned of late that the government’s fiscal stance – and that includes both the Biden administration and Congress – has become a danger to the economy and financial markets. The yield on the 10-year Treasury jumped from 4.01% to 4.105% after the Fitch announcement.
One hell of a head fake on gold
MishTalk/Mish Shedlock/7-31-2023
“Gold has big daily drop following Fed and ECB announcements. The pullback lasted 2 days before a big blast higher. In the wake of fluff announcements by the Fed and ECB in which no reporters asked any difficult questions, gold took a mini-dump then surged twice as much two days later.”
USAGOLD note: Mish posts a thumbnail analysis of the current gold market and concludes: “If you have faith in central banks, sell your gold. Otherwise, I suggest hanging onto it.” Worth a visit……
How to choose a gold firm
It may be the most important choice you make as a gold owner
It is surprising how many prospective investors simply dive into gold and silver investing without much in the way of a consumer inquiry. That lack of simple due diligence has ended up costing a good many investors thousands of dollars, and sometimes even hundreds of thousands before the damage is detected.
Here you will find some brief but useful guidelines
to help you choose the right gold and silver company.
To end right, start right.
DISCOVER THE USAGOLD DIFFERENCE
Reliably serving physical gold and silver investors since 1973
Monetary vs fiscal dissonance and the return of QE
Zero Hedge/Crescat Capital/7-23-2023
“Following the COVID era, we have entered a period of fiscal dominance among major developed economies. Hence, the escalating debt burden is already near historical levels and compounding at an alarming pace. To sustain the current government spending deluge, we believe it is inevitable that the Fed and other monetary authorities reassume their fundamental role as the primary financiers of government debt.”
USAGOLD note: Crescat predicts “capital will divert away from US Treasuries and flow into gold.”
Chart courtesy of VisualCapitalist.com
The US reserve currency and commodities
Goehring & Rozencwajg/7-24-2023
“Incredibly, by 2016 commodity prices had sold off to such an extent that they were the most radically undervalued in 120 years. The only times that came close were in 1929, 1969, and 1999. Following every prior period of radical undervaluation, commodity and natural-resource related investments dramatically outperformed, both in absolute and relative terms.”
USAGOLD note: In this in-depth study, Goehring & Rozencwajg say the coming rally and eventual overvaluation in commodities will likely be led by gold.
Short and Sweet
Two legendary central bankers embrace gold
In The End of Alchemy (2017), Mervyn King, the former governor of the Bank of England, writes of central banks’ frustration in dealing with the persistently stagnant global economy. “Central banks,” he says, “have thrown everything at their economies, and yet the results have been disappointing, Whatever can be said about the world recovery since the crisis, it has been neither strong, nor sustainable, nor balanced. . . [W]ithout reform of the financial system, another crisis is certain – sooner rather than later.”
“Our problem,” Alan Greenspan once said, “is not recession which is a short-term economic problem. I think you have a very profound long-term problem of economic growth at the time when the Western world, there is a very large migration from being a worker into being a recipient of social benefits as it is called. And this is legally mandated in all of our countries.” The western world, he concludes, is headed to “a state of disaster.”
It is interesting to note that both Greenspan and King, two of the most respected central bankers in modern times, have embraced gold since leaving their respective posts. The former Fed chairman has consistently suggested that gold is “a good place to put money these days given the policies of governments.”
The former governor of the Bank of England says that he is “very struck by the fact that over many, many years, central banks, governments and individuals have always, despite the protestations of economists, held some gold in their portfolio…[W]hen unexpected things happen, particularly when governments rise and fall, then gold is a means of payment that everyone is always prepared to accept. And I think that’s why even central banks have always had a role in their portfolios for gold.”
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Are you ready to embrace gold?
DISCOVER THE USAGOLD DIFFERENCE
Reliably serving physical gold and silver investors since 1973
A long-time market bear who called the 2000 and 2008 crashes warns the S&P 500 could plummet 64%, bursting a historic bubble
MarketsInsider/Zahra Tayeb/7-25-2023
“John Hussman is doubling down on his dire outlook for US stocks, even after the market defied recession predictions to notch some impressive gains this year.”
USAGOLD note: Hussman is not impressed by the stock market rally thus far this year. “Yes, this is a bubble in my view,” he says. “Yes, I believe it will end in tears.”
Young, rich Americans don’t trust the stock market, so they’re turning to alternative assets
Yahoo! Finance/Jeannine Mancini/7-31-2023
“Based on a survey conducted by Lansons, it was found that less than 10% of the entire American population has invested in alternative assets. However, among the younger generations, there is a more significant interest in alternative investments, with 30% of Gen Z and 25% of millennials either investing in such assets or possessing knowledge of platforms that facilitate these investments.”
USAGOLD note: One of the alternatives mentioned is gold.
Notable Quotable
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“The first step in theorizing correctly about money is to understand that the value of money, like that of commodities, is never fixed and unchanging. Chinese philosophers who published the earlier Mohist Canons(468 B.C.~376 B.C.) grasped this crucial point. They recognized that metallic money, such as the ‘knife coins’ then in wide circulation, was valued and exchanged by weight and argued that the real value of money, despite its fixed face value, was not stable but fluctuated inversely with the prices of commodities. When commodity prices were high, money was ‘light’ or its purchasing power low; when prices were low, money was ‘heavy’ or its purchasing power high. Thus, if monetary conditions were such that the nominal prices of commodities were abnormally high, the real prices of commodities were not high but rather money was ‘light’ or depreciated.”
Joseph T. Salerno
The Mises Institute
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Air pockets, free falls, and more cowbells
Hussman Funds/John Hussman/July 2023
“There is a particular “setup” that we’ve historically found to be associated with abrupt “air pockets” and ‘free falls’ in the S&P 500. It combines hostile conditions in all three features most central to our investment discipline: rich valuations, unfavorable market internals, and extreme overextension. The last time we observed this combination to a similar degree was in November 2021, shortly before the S&P 500 lost a quarter of its value. The S&P 500 remains lower than it was then. Despite enthusiasm about the market rebound since October, I remain convinced that this initial market loss will prove to be a small opening act in the collapse of the most extreme yield-seeking speculative bubble in U.S. history.”
USAGOLD note: Hussman tells in detail how the stock market is breaking down and why it should be taken seriously.
Market Overview
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It’s all about the lags
LinkedIn/David Rosenberg/7-27-2023
“The fact that Fed-induced curve inversions have presaged recessions 100% of the time in the past is never respected. Always a case of hope triumphing over experience. Thing is — very rarely do recessions occur in the same month as the onset of the inverted yield curve. There are lags, and that typically can be a year or longer. Think back to 2007. But like the story of the boy who cried wolf, the wolf did show up in the end.”
USAGOLD note: A heads up from Rosenberg……
Recessions follow inverted yield curves with a lag
(Grey bars = recessions)
Source. US Federal Reserve [FRED]
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Citi says it’s ‘only a matter of time’ before gold hits a record
Bloomberg/Renjeetha Pakiam/7-20-2023
“The metal is benefiting from loose monetary policy, low real yields, record inflows into exchange-traded funds and increased asset allocation, the bank’s analysts including Aakash Doshi and Ed Morse said in a report. Gold is expected to climb to an all-time high in the next six-to-nine months, and there’s a 30% probability it’ll top $2,000 an ounce in the next three-to-five months.”
USAGOLD note: The report points out that prices for the metal have already posted new highs in every other G-10 and major emerging market currency this year. Silver, it says, will benefit from “demand for a store of wealth.
Our primal instinct for gold
Money Week/Dominic Frisby/7-20-2023
“The experience of beauty, whether derived from nature, art, music or even mathematics, correlates with activity in the emotional brain, the medial orbitofrontal cortex. Beauty has long been associated by philosophers with truth and purity – also qualities commonly associated with gold. Our instinct for gold and the emotions it inspires from beauty to desire are basic.”
USAGOLD note: Frisby examines mankind’s age-old attachment to gold.
Short and Sweet
Only real intrinsic money survives the test of time
Here is a timeless observation from the now-deceased Richard Russell (Dow Theory Letter):
“Paper money is now being created wholesale throughout the world. Stated simply, all paper currency is now valued against each other. But more important, ultimately ALL paper is ultimately valued against the only true, intrinsic money – gold. In world history, no irredeemable paper currency has ever survived. Since all the world’s currency is now irredeemable (in gold), this means that in the end, the only form of money that will survive is real intrinsic money – gold. It’s not a question of whether gold will survive, it’s a question of when the world’s current paper money will deteriorate and finally die. I can tell you that irredeemable paper will not survive – but obviously I can’t tell you when it will die. The timing is the only uncertainty.”
The chart below from the World Gold Council speaks to Russell’s point. It shows the performance of various currencies – past and present – against gold over the long term. When the end comes, as the chart illustrates, it can come abruptly and without warning. For those who stick to the proposition that gold is not really an inflation hedge, or that it is not really a safe-haven against currency debasement, the chart offers instruction. For those who already own gold as a safe-haven, it provides justification. For those who do not own gold, it serves as an incentive. As the old saying goes: All is well until it isn’t.
Chart courtesy of the World Gold Council
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DISCOVER THE USAGOLD DIFFERENCE
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Oil markets will face ‘serious problems’ as demand from China and India ramps up, IEF secretary general says
CNBC/Charmaine Jacob/7-22-2023
“Oil demand bounced back to pre-Covid levels quickly, “but supply is having a tougher time in catching up,” said Joseph McMonigle, secretary general of the International Energy Forum, adding that the only factor moderating prices right now is the fear of a looming recession.”
USAGOLD note: Rising oil prices could have a profound effect on the inflation rate as it settles in, assuming McMonigle is right.
Most of what we’ve heard about the yuan dethroning the dollar is from the West. Here’s what China’s actually said about it.
MarketsInsider/Huileng Tan/7-31-2023
“While China might not be happy with American dominance — in global politics, culture, or the financial system — Beijing is far from openly advocating for the ‘redback,’ another name for the yuan, to immediately replace the greenback.
USAGOLD note: Important insights at the link……