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Monetary Policy, Treasury Highs, and Dollar Index Drove Gold This Week

Gold Market Discussion

Dollar Index Drove Gold This Week While Treasuries Hit 5 Month High

Building on recent strength, the dollar index drove gold down slightly this week. Gold prices hovered in the mid $1270 range all week. Silver started the week just short of $17 and closed lower at about $16.77. Stocks were up at the beginning of the week, but a five month high for treasury yields Wednesday reigned in stocks, giving gold a boost.

Yields were up because of a sell off of treasuries. One of the triggers for this sell off was anticipation that President Trump could be appointing a hawkish Fed chief next year to replace Janet Yellen. Some experts are seeing bond market mayhem ahead on the charts, and anticipating that it’s in for an overdue bear market.

What this means for investors: The signs from the bond market seem to be showing long term bullishness for precious metals. The bond market is flashing warnings right now similar to those before the last financial crisis. Check it out.

Bond market flashing warning sign even as stocks rally to new highs from CNBC.

 

Euro Hammered after ECB Monetary Policy Meeting and Spanish Politics

Euros
Euro banknotes money

News out of Europe was a significant market driver this week as well. Mario Draghi – head of the European Central Bank – announced that its quantitative easing program will be reduced. The euro took a sharp dive following the meeting, and this further bolstered the U.S. dollar index, putting pressure on gold. ECB and Federal Reserve monetary policy appear to be making a divergence, which is unsettling the markets. Draghi came across fairly dovish signalling no interest rate change for the time being while reducing the monthly bond buying program.

Politics were also a mover for the markets this week on the other side of the Atlantic, and will likely continue to be. On Friday gold got a boost on safe haven demand as the Catalonia region declared independence from Spain after the referendum it held a week ago where the people voted in favor of breaking away from Spain. The Spanish government, unsurprisingly, declared the vote illegal. After the independence announcement Friday, the Spanish government moved to disband the Catalan government.

What this means for investors: European politics are becoming increasingly volatile. Populism and anti-establishment sentiment are increasing. The EU is straining from this discontent while also weighed down by a massive debt burden. Right now these things are keeping the euro down, which boosts the dollar. However, in the longer term, these are catalysts for safe haven buying.

Market Sell-Off after Record High

Sell off of marketThere was some market sell-off Wednesday that lifted gold prices. Earlier this week though the Dow Jones hit a new record high, which weighed down precious metals. Reported earnings have been helping the rally recently, but there aren’t a lot of triggers left in this run to keep pushing it further.

What this means for investors: Many investors are still staying in stocks for now, but the buy phase is winding down. It’s now a hold and wait game. The stock market is certainly over valued, and will have to blow its top.

 


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As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Quiet Week and Stock Market Highs Kept Gold Down This Week

Gold Market Discussion

Gold In Holding Pattern During Quiet Week and Stock Market Highs

stocks steady in October 2017Not much to report on precious metals after a quiet week and stock market highs keeping gold from moving up much. Starting the week, gold touched just above the $1,300 mark, but maintained roughly between $1,285 and $1,290 the rest of the week. The Dow Jones Industrial Average hit a historic 23,000 this week, which is keeping many investors still betting on a continuing stock rally. The markets are showing remarkable resiliency for the “Trump trade” rally that kicked into high gear last November. The rally has certainly run longer than many analysts expected, and investors are still complacent about risk.

The dollar index was in flux all week. Treasury yields and the dollar index fell Thursday on poor corporate earnings boosting gold slightly, but was up earlier in the week, which pushed gold down. Tax reform talk this week out of Washington also seemed to be a positive for stocks and weighed on gold.

What this means for investors: Overall, most investors are simply not looking for safe haven assets right now. The trend right now is looking like the markets still have room to run. Some bearish analysts think it is the last call for market bulls, but the correction seems to be further out than expected. However, the bears are seeing correlation between this market and the pre-crash 2007 market as well as the 1987 market before Black Monday (which this week marked the 30 year anniversary of). The VIX was quiet in the lead up then too.

Market Drivers to Watch Going Forward

tax reform under TrumpAlthough right now the markets seem to be chugging along at a steady, quiet pace, there are plenty of events to look at that could rock them out of complacency (or, alternatively, keep them on course for a while).

As mentioned before, President Trump’s tax reform plan is one of the immediate events to watch. Treasury Secretary Steve Mnuchin said that the markets will tumble if the plan doesn’t pass. That remains to be seen, of course, but political deadlock in Washington could shake the markets. Federal Reserve chair Janet Yellen’s term is up next year, so there is already speculation on who the President will choose as her replacement. There is always the possibility as well of geopolitical events rocking the markets and unforeseen black swans that could tank markets.

What this means for investors: Gold thrives in uncertain and volatile climates, and we are in a lull right now. It might not seem like gold is going to make a massive run tomorrow, but it never hurts to start thinking about long term wealth protection. Like any investment, think about getting in when prices are low.

 


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As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Alarm on Stocks

Gold Was Up This Week and Hit $1,300 As Alarm Bells Sound

Gold Market Discussion

Gold Was up This Week and Reached $1,300 Again

After a couple weeks of resistance, gold was up this week and closed Friday just above the important $1,300 mark. Gold climbed steadily from the 4 week low it hit last week despite some slightly more positive global economic growth data. Geopolitics was a drive for gold this week with President Trump threatening to cancel the Iran nuclear deal, more North Korea talk, and difficulties with Brexit negotiations.

The dollar index was down this week after dovish signals from the Federal Reserve. Fed officials seem undecided on whether to raise interest rates in December. There were some misses on U.S. economic growth data Friday that drove gold up as well, although world stocks showed some strength. Inflation targets showing growth were not quite there, which further undermined the dollar.

What this means for investors: Many investors are still seeing long term bullishness for gold. Precious metals have been resilient all year, and have have enormous long term advantage.

Is Silver a Better Buy Right Now than Gold?

silver barsSilver as well as gold was up this week. Silver closed the week just short of $17.50. Its rally was due to many of the same factors as gold.

Silver has outperformed gold so far this month. The gold to silver ratio is sitting at 77, which means it would take 77 ounces of silver to equal one ounce of gold. Some analysts think it could keep outperforming gold for the time being.

What this means for investors: Silver is more volatile than gold, and this volatility is a big attractant for some investors. However it is still a safe haven asset as well, and its cheaper price draws safe haven buyers as well. Diversifying a portfolio with gold and silver can make it more robust, and with silver’s recent strength, it’s a perfect opportunity to begin or increase silver holdings.

Alarm Bell Sounding On Stock Market?

alarm clock on stocksFor the past year, the stock market has been hitting new highs. Many investors have been expecting the correction to come any day now, and finding to their chagrin that this isn’t the case. The market is certainly overextended though. While there still seem to be highs to reach, it would be advantageous to get into precious metals now before this inflated market reaches the tipping point.

What this means for investors: For more on the overextended market, watch the video on this page.

Germans Are Becoming Biggest Gold Investors

Germany buying goldChina is the biggest government buyer of gold, but on an individual level, Germans are the biggest buyers. They quietly took over the lead last year according to the World Gold Council (WGC) as Germans shifted approximately $8 billion into gold coins and bars. Particularly after the 2008 crash, investors around the globe scrambled to safe haven assets. As central bankers dropped interest rates, German bond yields turned negative and gold became the safe haven of choice. The demand doesn’t seem to have stymied much either given the WGC’s report.

What this means for investors: Since the financial crash of 2008, Germans have been increasing their gold holdings partly because of distrust of the banking system. The German Bundesbank has also significantly increased gold holdings after it recently finished repatriating its gold held overseas. Germany is the economic power house of the European Union, and has to a large extent been the dam that held back more dire economic woes that arose from various EU member states’ debt crises and banking crashes. German investors don’t want to be caught unprepared again when there’s another crash and are preparing now with gold.

Senate Seat Contender Kelli Ward to Speak Tuesday Alongside Conservative News Talk Host Laura Ingraham

Kelli Ward is running for Jeff Flake’s U.S. Senate and is holding a speaking engagement Tuesday. Come out and hear her along with former Congressman J.D. Heyworth and Fox News anchor and national radio syndicate Laura Ingraham.

Dr. Kelli Ward

 


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As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

complacent stock market

Complacency in the Markets Affecting Gold

Gold Market Discussion

Complacency in the Markets Affecting Gold Negatively This Week

happy about stock marketThe stock market continues to set new highs this week. As these records rack up, there is right now a great deal of complacency in the markets affecting gold. Gold fell slightly again this week under pressure from new stock market highs and interest rate talk. It closed out the week around $1,275. The VIX is moving lower as equity investors remain bullish for now, but it is important to remain cautious, as this has been known to signal the calm before the storm.

What this means for investors: Demand for gold coins is in a major slump right now, and lower demand means cheaper prices. With such low levels of volatility, it is not surprising investors aren’t buying into the ultimate safe haven in droves. In fact, demand is at the lowest it has been in about a decade according to this graph. What the graph also shows is unsettling – the last time demand was so low was right before the last financial crash in 2008. The markets cannot stay this complacent forever though. If there is still room for the equity markets to maintain these levels in the near term, it is worth considering taking advantage now of the low demand for gold to diversify your portfolio.

Interest Rate Talk and Gold

interest rates and talk of goldLast week, the Federal Reserve and Bank of England started readying the markets for an interest rate hike.  Investors expect a similar policy line from the European Central Bank and Bank of Japan. Gold took a hit from the proposed hike as the dollar strengthened. In the short run, gold will likely continue to come under pressure.

Ultimately though, physical gold and silver stand to gain from this shift in monetary policy. Central banks are behind the curve on raising interest rates, which means the purchasing power of the dollar will fall, and real interest rates will go negative. This was what happened in a similar expansionary phase in the 1970s when inflation nearly spiraled out of control.

What this means for investors: Generally as the dollar strengthens, gold weakens, and as interest rates go up, the dollar should strengthen. This is what we are seeing now, and with prices getting pushed down in the short term, it presents a buying opportunity for when the credit cycle advances and the dollar’s purchasing power declines. It is also interesting to note that gold is still up overall of the year in every major currency.

Central Bank of Russia Doubles Pace of Gold Purchase

Central Bank of Russia
Central Bank of Russia

Russia has more than doubled its rate of gold buying in the past several years. In the second quarter alone, it accounted for almost 40% of all gold purchases by a central bank. These gold reserve holdings are replacing reserves that would otherwise have historically been held in dollars or euros. According to the World Gold Council, Russia is the world’s third biggest producer of gold as well as the largest official buyer.

What this means for investors: Major world powers like Russia and China (the two biggest buyers of gold) are shifting away from the dollar. These global superpowers are looking to establish a more independent geopolitical position from the U.S. and gold is a more stable foundation for wealth than fiat currencies.


Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

China's Golden Week 2017

What Weighed on Gold Prices This Week? And What Is Ahead? Gold Still Looks Bullish

Gold Market Discussion

After an Initial Rally, What Weighed on Gold Prices This Week?

Gold opened the week just over $1,300, but fell mid-week below $1,290. By Friday, gold had made back some of of those gains to close up. More bellicose rhetoric from North Korea sparked the initial flight to safety. So what weighed on gold prices? There were a few different factors, and these were some of the key ones.

Chinese Golden Week Closes Markets All Week

China Golden Week
China is responsible for an enormous share of the global gold market. It is the number one producer and one of the top consumers. This week, however, the Chinese markets were closed for Golden Week, a 7 day long holiday. Global demand was significantly lower with such a key player not trading, so this led to lower gold prices.

Federal Reserve Expectations

Fed Building
Last week the Fed announcement on bond holding reductions weighed on gold. Expectation of an interest rate hike – the probability is estimated to be at about 60% – to come in December are still keeping gold prices low. Although there are price and inflation targets that the economy is missing on that might make that hike less likely to occur, according to some analysts.

Stronger Dollar and Tax Talk

dollars gauging volatility
Gold also came under pressure from President Trump’s proposed plan on tax reform. The dollar index was up, and that caused gold (which is inversely correlated) to go down. By Friday though, gold came off of its six week low as the dollar came off of its six week high.

What this means for investors: Gold is correcting right now, and price dips like this are always an excellent buying opportunity. Corrections are normal and healthy in any market, and a pull back like this is certainly not the end of gold’s run.

Silver also showed some pull back this week along with gold. The pattern was similar, with silver opening at $17.10 and closing just shy of $17.

Gold Price Pull Back Is Following a Bullish Retracement Pattern

The gold bull market that started in December 2015 is certainly not over. Gold has beat the S&P so far this year in overall performance, and it has hit historic highs. At $1,281, gold prices are now sitting on the 50% retracement level. It is a healthy sign in a gold bull market when gold retraces in this pattern.

What this means for investors: Although there are still elements that weighed on gold prices this week, investors continue to see excellent prospects for gold. Listen to this video for more, and why Dennis Gartman sees more room to run in this bull market. Trouble seeing the video? Click here for the direct link.

He called 2017’s gold rally, here’s what Dennis Gartman is forecasting now from CNBC.

 

Bitcoin Trading Crack Down Will be Good for Gold

I’ve written before about the merits of safe haven gold versus cryptocurrencies and bitcoin. This week, the Chinese government further clamped down on bitcoin trading, and South Korea joined in the clamp down on ICOs (initial coin offerings), leading to a steep drop in bitcoin. Governments and central banks have little regulation over it, and its massive upswing is raising a lot of questions about its governance.

What this means for investors: This year, bitcoin passed gold in price for the first time ever. Many are seeing it as an alternative currency in a similar way that gold is. However, the strong opposition it is facing from governments could mean further crack down on trading. This could move investors back into gold, which would boost demand and price.

10 Reasons to Own Gold

We’ve listed the reasons that gold is approaching a break out point, but here are some more specific events to watch for precious metals going forward:

  • Monetary policy and interest rates
  • North Korea missile tests and other geopolitical events
  • Political deadlock in the U.S.
  • Price dips in metals that provide advantageous buying opportunities

For more, download or open our new eBook. You can go and view, print or download the PDF right now:

Read Now 


Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold Rally Met Resistance This Week and Prices Dipped

Gold Market Discussion

Gold Rally Met Resistance This Week and Prices Dipped – Buying Opportunity?

gold and sliver barsA couple weeks ago gold hit a year high, but the gold rally met resistance this week and prices dipped. Gold fell most of the week, but was able to turn positive late Friday to close out the week just under $1,300. Silver met similar resistance and closed just shy of $17. Some of the things dragging on metals prices were a Fed announcement and a stock market rally. President Trump’s strong UN speech on North Korea and the reactions added some market fear, but geopolitical news was otherwise relatively quiet this week.

What this means for investors: Some investors are getting worried that metals are showing too much volatility right now, however it is not an unusual move in the metals market. Furthermore, until this week, gold has outperformed the stock market for 2017 at 14% to 13%. This is a good case for the long-term gold investors moving forward. As we have suggested before, pull backs like the one this week are a strategic time to allocate more metals in your portfolio. Although it is hard to say when exactly, there are certainly chinks in the economic outlook right now that will prompt a correction the markets and dollar index and make gold a top investment. It’s why buying ahead when prices are still low is key. This may be one of the last such pull backs, making it an especially strategic buying opportunity.

Fed Says No More Easy Money

Janet Yellen illustration by DonkeyHotey on FlickrThe Federal Reserve announcement was the biggest event the markets looked to this week for guidance. Janet Yellen’s tone was slightly more hawkish than anticipated. Following on previous announcements, the Fed chair announced that the Fed would reduce bond holdings and leave interest rates unchanged for the time being. She left open the possibility still for a December hike.

What this means for investors: In the past year, gold has had mixed reactions to rate hikes. Generally, since gold is a non-interest bearing asset, higher rates mean lower gold prices. If the economy doesn’t seem it can handle the higher rates though, gold goes up on safe haven demand. This week’s announcement seemed to weigh on gold prices and give the dollar index a boost. Yellen also downplayed Q3 economic weakness that will follow the hurricanes that hit the southern U.S. this season. There are further economic reports to digest too before December, so it is not necessarily a for certain rate hike.

The Stock Market Hits New Records Despite Overvaluation

highs in the stock marketThe stock market is continuing to hit highs. But even optimistic analysts are seeing downturn in the next several months. The markets are overvalued right now (in a strikingly similar fashion to the markets in 1929 before the crash), but investor optimism is propping them up for the time being. Some analysts are seeing gross overvaluation in bonds and equities that could set the more bullish investors up for a nasty shock.

What this means for investors: The correction probably won’t hit tomorrow or in the next few weeks, but the stress signs are certainly there. Market psychology still seems to be seeing upside for now, but corporate stock buy back is playing a significant role in market valuation as well. It is posing a serious and underestimated risk to the equity markets. Additionally, the likelihood for market-impacting geopolitical events is increasing.

Gold is Money, not Bitcoin

Last week we discussed the bitcoin bubble that could send investors back to gold. Top fund managers are continuing to warn of a bitcoin bubble and favoring gold instead. It is certainly true that some bitcoin investors have made massive returns on investors. Many of these investors are attracted to cryptocurrency because of the current lack of central bank control and government regulation over it.

What this means for investors: Gold is real money, and it holds value beyond the spot price. While other investments can likely make higher returns in a short time, gold is the ultimate long-term safeguard for your money. Allocating part of your investment into precious metals can protect against bubbles and corrections in other assets. Gold and silver will always have value.

 

10 Reasons to Own Gold

We’ve listed the reasons that gold is approaching a break out point, but here are some more specific events to watch for precious metals going forward:

  • Monetary policy and interest rates
  • North Korea missile tests and other geopolitical events
  • Political deadlock in the U.S.
  • Price dips in metals that provide advantageous buying opportunities

For more, download or open our new eBook. You can go and view, print or download the PDF right now:

Read Now 


Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

bitcoin code

Gold Looks Poised for a Break Out Despite Pull Back This Week

Gold Market Discussion

Metals Pull Back, but Gold Looks Poised for a Break Out

Gold Coins and Silver Coins in PhoenixAfter reaching $1,350 last week, gold hit some resistance this week, though it maintained its position over $1,350 to close out the week at approximately $1,325. However, gold looks poised for a break out for a few different reasons including an increasingly shaky dollar and stock market.

So why did gold pull back this week? There wasn’t initially a lot of rhetoric or any missile tests out of North Korea driving the safe haven demand as in recent weeks. However late Thursday another missile launch that flew over Japan spurred an upward move in gold again. A stock rally also mid-week kept metals lower.

What this means for investors: There are a number of economic warning signs flashing that indicate a future bullishness from gold. The fiscal year is going to close out next month with a deficit of approximately $750 billion. Retail and restaurant sales are stagnating with bankruptcies on track to exceed 2009 levels. Household savings levels are plunging while credit debt rises. Even the current stock euphoria has a dark side. Corporate stock buybacks and central bank easy money is a significant driving factor here, and those are not long-term sustaining.

Why Some Experts Say Gold Has Already Broken Out

Ray Dalio
Bridgewater Associates Fund Manager Ray Dalio

Some experts are saying gold is already broken out and has a ways to climb before the end of the year. This week fund managers such as Ray Dalio are suggesting increased holdings in gold now in preparation. Jim Rogers stated a few weeks ago that he believes “gold will be explosive.” The U.S. has experienced economic problems ever four to eight years, so an imminent financial crisis it is not entirely unexpected, in his analysis.

Watch the video interview here.

What this means for investors: Because of the historic “boom and bust” economic cycle, gold will always mean long-term security. Metals go through similar cycles inversely to the economy. It looks like we are reaching that point again where gold is breaking out and the economic recovery is faltering. In addition, geopolitical fears are becoming an increasing source of fear pressure on the markets.

 

Bitcoin Plunge This Week and Gold

Bitcoin and cryptocurrency have been skyrocketing lately. There has been a lot of talk about whether bitcoin will continue its run and be a new safe haven for currency (as many of its buyers believe) or whether it is a bubble that is going to burst soon. Chase CEO Jamie Dimon and many other are predicting an imminent bitcoin crash. The comments sparked a huge pull back in cryptocurrencies this week along with Chinese crackdown on them.

What this means for investors: Many of the same geopolitical and volatility factors drive cryptocurrencies and precious metals. Bitcoin may have run its course (at least for now) though. Physical gold and silver is ultimately the surest guarantee of long-term wealth storage rather than electronically traded currency. When the bitcoin bubble does burst, many of those safe haven investors will flee back to gold.

What Events to Look at For Gold Going Forward

We’ve listed the reasons that gold is approaching a break out point, but here are some more specific events to watch for precious metals going forward:

  • Monetary policy and interest rates
  • North Korea missile tests and other geopolitical events
  • Political deadlock in the U.S.
  • Price dips in metals that provide advantageous buying opportunities

For more, download or open our new eBook. You can go and view, print or download the PDF right now:

Read Now 


Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

sinking dollar

A Plunging Dollar Sent Gold Higher This Week As U.S. Debt Limit Increases

Gold Market Discussion

A Plunging Dollar Sent Gold Higher This Week

Dollar Devaluation Ahead

The recent metals rally continued this week as a plunging dollar sent gold higher. Gold opened after the long weekend just over $1,330 and by Friday had hit $1,350. There were many factors impacting the markets this week including the Democrats’ and Trump’s agreement on the debt ceiling, monetary announcements from central banks, continued fear over North Korean missile tests, weaker-than-expected jobs data, and the devastation  wrought by the record breaking hurricanes.

The dollar hit a 20-month low this week as gold hit a one-year high. The fear factor around North Korea is certainly a significant element of the driving force behind gold. However, it is likely not to be the factor that supports gold in the longer term, according to analysts at Goldman Sachs. Events in Washington such as the raising of the debt ceiling limit and future congressional battles over proposed tax reform are supporting gold.

What this means for investors: A falling dollar index usually always pushes gold higher. The dollar strength of the last year may finally be correcting, and if it does, gold will continue to rally.

Silver Rallies With Gold

Silver RallySilver rallied with gold as the weak dollar boosted those prices as well.  It crossed the significant $18 mark this week and reached $18.50 by Friday.

Silver is actually outpacing gold in gains this year. For August, it gained 5% while gold was up 4.3%. The white metal is generally slightly more volatile in movements, and it has been showing a trend in the last year or so of outpacing gold in movement.

What this means for investors: Silver could show some pull back going forward as it finds price stability, but overall it has a bullish outlook. Uncertainty and a weak dollar are going to likely keep spurring buying movement. When diversifying your investment portfolio, leaving some metals allocation for silver could be a lucrative move right now. 


Trump Floats Idea of Eliminating Debt Ceiling

Donald Trumps Says Dollar is WeakDominating the news out of Washington this week was the debt deal that Trump reached with Senate and House Democrats that initially angered Republicans. The national debt was approaching its cap (essentially, the government was out of money), so in order to continue federal spending, the debt ceiling had to be temporarily lifted to avoid government shut down and to pass the emergency Harvey Aid bill for Houston. In three months, however, the issue will have to be revisited.

Rather than continue adding debt ceiling extensions, the President spoke about possibility eliminating the debt ceiling altogether. He has said in the past that he “loves debt” and is “the king of debt”, so it is not surprising that he would float an idea that would allow even more unbridled deficit spending to the nearly $20 trillion federal deficit.

What this means for investors: How long can such a system continue? It will be impossible to ever pay back this amount of debt. The debt ceiling news was the trigger for the dollar’s plunge this week, and also caused a major pull back in stocks. It indicates further dollar devaluation down the road that will have investors moving back into safe haven assets like gold. For more on debt crisis, watch the video on this page.

Caution from Experts over Stock Market Resiliency

The stock market had a tough week overall, and experts are advising caution. Goldman Sachs chair Lloyd Blankfein said this week that, “…things have been going up for too long” and that what he is seeing in the markets is unnerving him. Furthermore, the majority of Americans are not of the same opinion, and seem to think that the markets will not be lower in the next 12 months.

While this optimistic outlook seems positive for the market outlook, bear in mind that the last time there was so much conviction in the stock market’s strength was in 2007 right before the crash and crisis. Check out the charts here.

What this means for investors: In the aftermath of the 2008 crash, gold nearly doubled in price. If we are approaching another painful correction as it appears, now is the time to protect your money.

 Download “10 Reasons You Should Own Gold” eBook: Updated for Mid-2017!


You can go and view, print or download the PDF of the eBook right now by clicking on this link.

 

Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

gold bars for sale in Phoenix

Gold Hits Year to Date High, Continues to Climb Above the Crucial $1,300 Mark

Gold Market Discussion

Gold Continues to Climb above the Crucial $1,300 Mark

Investing in Gold at $1,300Reaching its highest level this year, it was another shining week for metals, as gold continues to climb above the crucial $1,300 mark. It opened the week around the $1,305 mark, and closed just over $1,320 to head into the long weekend. Fed comments, more North Korea missile tests, and a weaker than expected jobs report all contributed to solidifying support at the $1,300 mark. Silver also rallied this week, closing at $17.70.

The jobs report showed fewer jobs added than expected, and the markets interpreted this soft data as likely to make the Fed more reluctant on lifting rates. This is one of a few factors that is helping to drive the dollar index down. Further driving gold this week, North Korea fired a missile that flew over Japan before breaking apart. As tensions and rhetoric escalate on the growing threat, gold will continue to go up.

What this means for investors:Some investors took the rally this week as an opportunity for profit taking, selling off some gold and silver. However for others, seeing stress signs and rising tension, it became a buying opportunity. Prominent hedge fund managers  increased metal  allocations in their portfolios, and recommended others do the same.

 

Driving Gold: Weak Dollar and Yellen Comments

Weak DollarWhen gold rose on Monday, it was responding in part to comments of Fed chair Janet Yellen and ECB chief Mario Draghi. Last week the world’s top central bankers met at Jackson Hole, Wyoming for their annual summit. Draghi’s comments that Europe’s ultra-loose monetary policy was thus far successful. The comments lifted the euro against the dollar, and gold got a boost as well.

What Janet Yellen said – or rather, didn’t say – is more significant though. She didn’t give any allusions to U.S. monetary policy and the possibility of a coming rate hike. Rather, she focused on financial regulations. This has led to analysts’ speculation that interest rates will rise slowly. Both central bank chiefs sent the dollar into retreat with their comments, which helped boost gold prices.

What this means for investors: Gold is sensitive to rate hikes, and often falls with rates go up, since it is a non-interest bearing asset. However, lately it has been rising when the Fed talks about raising rates because of questions over the strength of the economy.


[WATCH]  Market Technician Louise Yamada Talks about a Gold Breakout

Louise Yamada discusses the market technicals in the market that are boosting gold right now, and what could be next.

Louise Yamada: Gold could rally to $1,400 from CNBC.

Trouble watching? Click here

What this means for investors: Yamada sees gold’s possible run to $1,400 as supported by more than just geopolitical uncertainty. She sees historic, technical data that supports the next break out for metals.

 Download “10 Reasons You Should Own Gold” eBook: Updated for Mid-2017!


You can go and view, print or download the PDF of the eBook right now by clicking on this link.

 

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As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

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Gold hovering over $1300

Gold Chases Last Week’s Highs and Germany Repatriates Gold

Gold Market Discussion

Gold Chases Last Week’s Highs of $1,300

Last week gold hit $1,300 for the first time in 2017. Although it eased back slightly this week, still gold chases last week’s highs. Gold opened the week at $1,289 and closed at $1,290. Mid-week it climbed over the $1,290 mark to nearly reach $1,300 again.

Political uncertainty and a weak dollar index drove gold up this week. Janet Yellen and other world central bank leaders held their annual Jackson Hole, Wyoming summit that analysts and investors watched for signs on where monetary policy is heading next. The central bank chiefs were mostly defensive of their regulatory policy. Treasuries rose along with stocks, but gold did not show any significant pull back other than in the lead up to the summit.

What this means for investors: Uncertainty is becoming an even more prominent feature of these markets. There doesn’t seem to be much that could cause a drastic gold pull back now. Although gold is still wavering at solid support at the important $,1300 mark, the bull market appears established. There is uncertainty around tax reform, health care, foreign tension, and conflict that will continue to drive it. Additionally, the long term trends of low rates and stagnant growth are eventually going to catch up.

Silver also has rallied with gold. It has been staying just over the $17 mark this week. It is a great option for diversification as well.

German Central Bank Finishes Gold Repatriation

German Central Bank BundesbankGermany’s central bank has been repatriating its gold from New York, Paris, and London since 2013, and it has retrieved its gold reserves three years ahead of schedule. During the Cold War, West Germany moved its gold reserves out of the country in fear of a possible Soviet take over. It moved well over 300 metric tons of gold to each of the respective cities.

In 2013 Germany began auditing its foreign held gold and the process for repatriating it back to Frankfurt. Germany was one of several countries that were prompted by the financial crisis to shore up security by repatriating physical gold holdings. The EU powerhouse completed its repatriation efforts ahead of schedule, despite some worries that its New York holdings may have been dipped into.

What this means for investors: Germany – and nearly every other central bank and government – clearly consider gold a safeguard for financial security. In fact, there was concern that the U.S. had used some of the reserves in New York when they asked for an extension of the timetable to return it. It seems it was all accounted for though. Germany’s desire to have its physical wealth secured within its borders though speaks to the long-held value that gold has and will always have. Gold hoarding by central banks has been dramatically rising lately.


[WATCH] Ron Paul: “50% Stock Market Plunge Is Conceivable” 

The former presidential candidate thinks it’s conceivable, but not necessarily the fault of President Trump.

Ron Paul predicts stocks will drop by 50% from CNBC.

Trouble watching? Click here

What this means for investors: The former Congressman’s warning is based less on the recent political turmoil and uncertainty around the President and more on dangerous long-term trends and policies. Most investors are agreeing that the S&P is overvalued  , and gold could be on track to outperform the stock market for the first time since 2011. Don’t let gold’s recent climb stop you from buying now. If Paul’s (and other analysts) projections are right, gold will have a long way to run. The amount of volatility and uncertainty right now are prime conditions for gold, and these deeper market trends will catch up.

 Download “10 Reasons You Should Own Gold” eBook: Updated for Mid-2017!


You can go and view, print or download the PDF of the eBook right now by clicking on this link.

 

Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold Breaks $1,300

Gold Breaks Through $1,300

Gold Market Discussion

Gold Breaks Through $1,300 for the First Time in 2017

Gold breaks $1300 for first time in 2017Gold had a volatile trading range of $1,283-$1,301 intraday on Friday, which was the first time this year that gold has broke the psychological resistance of $1,300. There has been some pull back since, as gold is currently sitting at around $1285 as of print. In last week’s Gold Market Discussion, we pointed out that the VIX, which is the CBOE Volatility Index, soared up 44% in a single day. The VIX is at it again, having seen another 30% spike this past Thursday. Tragedy in Spain on Thursday has also added to recent geopolitical uncertainty as ISIS claims responsibility for the Barcelona terrorist attacks.

What this means for investors: Investors should learn from history- when volatility hits the markets, gold is the shelter from the storm. While stocks have performed to historic levels, we need to keep in mind that we are always only one major crisis or event from Wall Street imploding. When that happens, gold will be there in your hands- literally- to hedge and protect your portfolio. Gold has and will always be the ultimate “wealth insurance”.

[WATCH] Why Gold Could Soar Above $1,300

Watch this video from CNBC. Trouble loading the video? Try clicking here.

Why gold could soar above $1,300 from CNBC.

Economic See-SawWhat this means for investors: Buy low, hold high. The lower you purchase your gold, the more you are hedged against falling investments. If you brought gold at $1850 in 2009, you only protected a percentage of what was lost in the 2008 banking crisis and ensuing recession. However, if you purchased at $1,300 on the way up- you would have hedged more while stocks and real estate were crashing. If you look behind the Wall Street facade of 2017, the underlying numbers are outright scary. If you believe that there will be another massive crash in your lifetime, doesn’t it makes sense to buy at $1,300 instead of $1,850? The most stable place to be on a see-saw is right in the fulcrum. Diversifying with precious metals helps keep you there, but it is best to be there and prepared before the momentum shift begins.

Download “10 Reasons You Should Own Gold” eBook: Updated for Mid-2017!


You can go and view, print or download the PDF of the eBook right now by clicking on this link.

 

Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

10 Reasons You Should Own Gold

Market Volatility Around North Korean Tension Spurred Gold Rally This Week

Gold Market Discussion

Volatility Around North Korean Tension Spurred Gold

North Korea ThreatsThis week, volatility around North Korean tension spurred gold into a rally. Gold opened the week at at $1257 and closed $30 higher. On Thursday it hit $1290. Silver also rallied, closing the week at $17.10.

The news came out this week that North Korea has the capability of fitting a scaled nuclear warhead to its missiles. North Korean leader Kim Jong-Un claimed that the DPRK could imminently fire its missiles towards Guam – the U.S. island territory that hosts three military bases. The White House and Pentagon responded with assurance of a response of “fire and fury” and that the U.S. was already locked and loaded should North Korea make good on its threat.

What this means for investors:We have had fiery rhetoric along with ballistic missile tests coming out of North Korea for some time now . However the talk seems to be rapidly intensifying now. Gold is set to test the year’s highs after holding support at the 50 and 100 day moving averages. Silver is likewise poised to test new highs.

The VIX was up 44% Thursday – Highest Level in Nearly a Year

VIX
Volatility on the rise: The VIX chart over the past month

Predictably, the VIX surged this week. It was up 44% and wrought havoc on some investors’ portfolios. In fact, it was at its highest level since the November presidential election. The VIX measures volatility, so it is unsurprising that the geopolitical tensions this week caused it to spike.

What this means for investors: The spike in the VIX had investors rushing for safe haven protection. Gold and silver are already in a bull market, and now there is a renewed demand because of even greater levels of geopolitical uncertainty.

Dennis Gartman on the Market Slump This Week

Of course, with so much uncertainty and volatility skyrocketing, the markets sunk this week. European markets were all plunging Friday and the Dow Jones and S&P fell their lowest weekly percentages in five months.

What this means for investors: Check out what Dennis Gartman had to say about gold’s upside, and why you should probably increase gold holdings now.

I think gold is about to break out to the upside: Dennis Gartman from CNBC.

Download “10 Reasons You Should Own Gold” eBook that has been Just Updated for Mid-2017!


You can go and view, print or download the PDF of the eBook right now by clicking on this link.

 

Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


 Here are some articles from the web discussing the topics in this week’s post:

Volatility Around North Korean Tension Spurred Gold

Read Here

VIX Up 44% – 3 Month High

Read Here

Dennis Gartman on the Gold Bull Market and Market Slump

Watch Here

 

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

gold bars for diversification

7 Week High for Gold This Week after Disappointing U.S. Economic Data

Gold Market Discussion

7 Week High for Gold This Week

Gold on Nugget GrainsWe had a 7 week high for gold this week. Although Friday saw some pull back on profit taking, it was still a good week for gold. Gold finished out the week just short of $1,260, but climbed as high as $1,270 mid-week.

It was not such a good week for U.S. economic data, however. Inflation is lukewarm, consumer spending is down, and there is a question of if and when the Fed will raise interest rates after all. The dollar continued its downward trend and hit a 2 and a half year low against the euro. Political fallout also weighed on the markets and boosted gold.

What this means for investors: The growing uncertainty is pushing investors towards gold. Analysts at MUFG in London noted that for the first time at a monthly close, gold broke above a downward trend that prevailed since the high of 2011. This is a bullish sign for metals. Buy now before prices start moving up. Watch for when prices dip like they did Friday. Regardless though, with trends pointing towards a gold bull run and uncertainty, it’s the right time to think about protecting your portfolio.

Gold Has So Far Outperformed Stock Market This Century

gamble on stock marketGold had its second best month in 2017 so far in July. It finished the month up 2%. The only higher finish was in February where it was up 3.7% for the month. The dollar, on the other hand, his year lows and is down 10%. Overall, gold has significantly beaten the S&P this century, and with weak economic data casting a cloud on the economy going forward, it will likely continue this run.

What this means for investors: With the record highs that the stock markets have been hitting recently, this is not a feat to be underestimated. Furthermore, gold is trading above its 50 and 200 day moving averages right now, which investors typically see as bullish for metals. With warning signs in the stock and bond markets, this is another reason to start hedging with gold and silver.

Alan Greenspan’s Warning on the Bond Market

Check out what former Fed chairman Alan Greenspan had to say about what he says is the real threat is – the bond market.

Alan Greenspan: Interest rates on government bonds have never been lower from CNBC.

What this means for investors: Many analysts have been warning of a stock bubble and moving out, even as the markets continue to hit all time highs. Greenspan’s warning is that there is an even deeper problem that will trigger the stock market crash and incur stagflation not seen since the 1970s. During these kind of market events, gold becomes the safe haven investment of choice.

Venezuelan Currency Less Valuable Than Online Game Currency

World of Warcraft gold
This “gold” from popular online video game “World of Warcraft” is now worth more than “real” money in Venezuela.

Venezuela, despite its ample supply of oil and other natural resources, has one of the most mismanaged economies and corrupt governments. The country has been rife with tension ,violence, and food and medicine scarcity lately as opposition forces clash with the Socialist government of President Maduro. Long-simmering tensions reached a breaking point when the Supreme Court took over powers of the opposition-held National Assembly. Amidst the turmoil, the Venezuelan bolivar is now worth less than a piece of gold in the computer game World of Warcraft.

What this means for investors: According to the IMF, Venezuela will see 720% inflation this year. Venezuela is a perfect – albeit, extreme – example of how fiat currencies can be devastated by corrupt governments. A gold backed currency probably wouldn’t have saved the Venezuelan bolivar in this case, but gold backed currencies offer at least some security that fiat currencies don’t. Venezuelans are now buying their goods on the black market for the most part – the black market where World of Warcraft currency is more valuable than theirs.

 

 

Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


 Here are some articles from the web discussing the topics in this week’s post:

7 Week High for Gold This Week

Read Here

Gold Outperforms Stock Market This Century

Read Here

Alan Greenspan’s Warning on the Bond Market

Watch Here

Venezuelan Currency Less Valuable Than Online Game Currency

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

gold texture text

The Dollar Index Is at Year Low and Gold Rallies This Week

Gold Market Discussion

Shining Week for Gold as Dollar Index Is at Year Low

gold AuThe dollar index is at year low this week. The last time it was this low was June of last year, and it’s currently in a two week losing streak. Gold was up all week, and closed the week just shy of the $1,270 mark. The dollar went on a roaring tear after President Trump’s election due to his promises of infrastructure and defense spending and the job creation it would do for the economy. However, that strength is now retreating. Political deadlock and conflict are making markets wary of whether Trump’s agenda will be realized. Hence, the falling dollar was a big driver behind gold’s upward climb this week.

What this means for investors: Gold could see significant upside if the dollar keeps slipping. It’s one of the top reasons to think about buying gold right now. Monetary policy, as the Fed begins to unwind its balance sheet, are also going to continue to weigh on the markets. Gold has been on a rallying streak for the past couple of weeks now, and those investors who bought during the dip a few weeks ago are glad they did. It could be a continued upward climb for some time now for gold prices.

The VIX Hit a Historic Low this Week, But One Expert Warns Against Trend

Nobel Laureate economist Robert Shiller
Nobel Laureate economist Robert Shiller

Nobel Laureate economist Robert Shiller warned this week that we are in the quiet before the storm. The S&P, Dow Jones, and Nasdaq hit some fresh  highs, while the VIX (volatility index) was at a new low. While this sounds like it should be ideal for equities, more and more strategists are cautioning that the stock market euphoria is about to crash. Shiller – whose market bubble predictions in the past have landed him a Nobel Prize in Economics – thinks current valuations are too high, and we are approaching an impending correction. The price-earnings ratio is  at a level that has only been higher right before the Great Depression and the late 1990s, which Shiller finds worrying.

What this means for investors: If Shiller’s right again, this is the time to protect with gold while prices are still relatively low. Other analysts are also advising that U.S. equities are approaching their peak, and to start moving out. Gold would be a hedge against the correction Shiller is predicting.

Price of Gold Nearly on Par with Production Cost of Gold

gold mining production costAn ounce of gold recently has been selling at nearly the same as production cost. That is, it is costing about the same to mine an ounce of gold out of the ground as to sell it. Of course, this means profits for gold mining companies right now are not particularly spectacular, but it also reflects a disparity in current gold valuation. Not all gold that is used today comes from mines – much is recycled from old jewelry, electronics, etc. However, the finite amount of gold in the ground means that as it becomes more difficult and expensive to mine, the price will go up on the decreasing supply.

What this means for investors: Gold is “on sale” in that the price is likely not reflecting the short-term supply. It’s worth considering your diversification options now for both gold and silver.

What Is Silver Doing Lately?

grow your portfolio with silverThe technical analysis of silver is looking bullish long term. It was up this week too, like gold, but it also jumped around slightly more sporadically, closing  out the week at $16.75. Silver is driven by many of the same factors as gold, but in addition, it has been experiencing heightened demand from the tech sector for its use in technology like touch screens, solar panels, medical devices, and many others.

What this means for investors: For those investors who can’t afford gold right now, silver is always an attractive option. The past couple years, more and more investors have been diversifying with silver as it is, at times, outperforming gold. It probably won’t jump as fast as far as gold (especially in the short term), but it is certainlyl a lucrative long-term hold.

 

 

Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


 Here are some articles from the web discussing the topics in this week’s post:

Shining Week for Gold as Dollar Index Is at Year Low

Read Here

The VIX Hit a Historic Low this Week, But One Expert Warns Against Trend

Read Here

Price of Gold Nearly on Par with Production Cost of Gold

Read Here

What Is Silver Doing Lately?

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

The 10 Reasons too Buy Gold book preview

Gold Added on Last Week’s Gains plus the 10 Reasons You Should Buy Gold Now

Gold Market Discussion

Quiet Mid-Week, But Gold Added on Last Week’s Gains

Gold provides securityWith a rally this week, gold added on last week’s gains. The week opened at $1,234 and closed at $1,253. Silver opened the week at $16.15 and closed at $16.54. Although metals were trading fairly quietly during the middle of the week due to lack of any significant, market moving events, they steadily solidified their upward moving positions. Political turmoil in Washington D.C., a falling dollar index, and a frothy stock market all stoked gold prices this week.

What this means for investors: A couple weeks ago I called the low when gold dipped to $1,210. We are seeing more and more cracks in the system that are going to support gold prices moving higher. Gold demand seems to be trending more towards safe haven demand than over inflation growth, as economic and inflation growth continue to miss targets. Investors are taking this as a sign that they should prepare to hedge against future economic risk.

European Central Bank Announcement Pushes Dollar Lower

European Central Bank in FrankfurtMario Draghi of the ECB came out unexpectedly dovish this week. The markets didn’t seem to buy his message though. The ECB decided to keep rates at 0.00 rather than raising, as recent comments from Draghi had previously indicated. The ECB and markets are afraid of monetary tightening happening too soon, and the dovish rhetoric is trying to prevent that.

The announcement caused the euro to rise against the dollar, and this sent gold up. Gold and the dollar generally move in opposition to one another, so it was to be expected that gold would get a boost.

What this means for investors: The dollar index was at a 10 month low already prior to the ECB announcement. This is prompting investors in increasing numbers towards gold. On the European side, the central banks and analysts are cautious on European economic growth still, indicating there is still overall global sluggishness. Investors are starting to lose faith in the central banks.

10 Reasons Why You Should Buy Gold RIGHT NOW

10 Reasons You Should Buy Gold Right Now

Here is a preview of our forthcoming ebook “10 Reasons You Should Buy Gold Right Now”, which is a mid-2017 update to include everything happening in the financial markets right now. Keep an eye on your inbox for the full version soon!

1. Dollar Index Lows

The dollar index is down 10% this year, and there doesn’t seem like there is much resistance to stop its further weakening.

2. Potential Stock Market Downturn Increasingly Likely

As the stock market is hitting record highs recently, investors are starting to flee stocks. Global fund managers have a 20% underweight in U.S. equity allocation, which is the lowest since the start of the financial crisis.

3. Bond Yield Curve

The bond yield curve is flattening and approaching inversion. Excessive tightening leads to an inverted curve, and historically, this has always led to recession.

4. Monetary Action by the Fed

The tightening policy that the Fed is embarking on could be disastrous for global economic recovery. In such a debt laden economy, many individuals and corporations will not be able to afford higher rates.

5. Uncertainty in Politics

We are in a highly volatile political state right now, and uncertainty around both domestic politics and global conflicts is certainly fueling gold demand.

6. Overseas Demand Hitting Highs

Overseas central banks and governments are shoring up gold reserves. The Russian and Chinese central banks have increased their buying this year, while China and India alone account for 50% of global gold demand. Additionally, Germany is repatriating its gold from the U.S at an increased rate. In addition, the Islamic financial world has finally approved gold as an investment to comply with Shariah law, opening a vast new market.

7. Sovereign Debt around the World

U.S. Federal spending is set to top $4 trillion. The deficit is increasing at a rate of $2 billion more this fiscal year than last. In addition, countries like Greece have a ratio of 179% of debt to GDP and are weighing down the Eurozone. These kinds of debt numbers are not sustainable, and eventually will have to go through a turbulent reset.

8. Demand for Alternative Currencies

Look at the demand for cryptocurrency, and more importantly, the interest in GOLD backed cryptocurrency. It shows a strong interest in independent, government-free currency. Also, with states like Arizona (among others) passing legislation that effectively renders gold and silver legal tender, it is a clear message that people are tired of the inevitable shortcomings of our fiat money system.

9. Chinese Currency Collapse

Speaking of sovereign debt, China is about to break under the weight of its debt. The speed at which it is has acquired it and the amount of money it has pumped into the system is going to cripple the world’s second largest economy, and this will have global ripple effects.

10. Selling Below Production Cost

Gold and silver are both selling below production cost right now. Precious metals are essentially “on sale”, and pared with the many other factors favoring gold right now, this will inevitably lead to a price boost down the road.

 

 

 

Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


 Here are some articles from the web discussing the topics in this week’s post:

Quiet Week, but Gold Added on Last Week’s Gains

Read Here

European Central Bank Announcement Pushes Dollar Lower

Read Here

10 Reasons Why You Should Buy Gold RIGHT NOW

Read Some Here…

…and here…

…and another here.

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Will Bitcoin be backed by gold?

Gold and Cryptocurrency Forming a New Relationship?

Gold Market Discussion

A Cryptocurrency Backed By Gold? Sure Makes Sense, Doesn’t It?

cryptocurrency backed by gold

Cryptocurrencies like bitcoin have experienced massive rallies recently as a possible, alternative safe haven investment.  Are Gold and Cryptocurrency forming a New Relationship? Naturally, a cryptocurrency such as Bitcoin brings inherit fears of instability and raises questions from investors. This being mainly because the “currency” is backed by what? What if it is hacked? What if the “money” disappears like when Mt. Gox was hacked and essentially robbed in 2014? $460 million disappeared- and unlike a FDIC banking institution, Bitcoin investors- not the bank-  were the victim. As digital devices become more and more embedded into our minute-by-minute lives, digital currencies are the natural progression.

What would boost public opinion and trust? Gold. Physical gold. Just like the “good old days” when our nation’s dollar was also secured by the most recognizably traded asset in the world, a couple of cryptocurrency companies are now moving to back up their digital currency with physical gold. Makes sense, right? Well- as digital currencies evolve and become more and more embedded in our lives (the inevitable)- gold might just be the asset that supports the stability of it- just like the good old days. And yet- another reason that every investor needs a portion of it.

Approval of Gold in Major Islamic Institutions could be a Major Contributor to Gold Backed Cryptocurrencies

In December of last year, major Islamic finance institutions approved gold for investment purposes, which previously had been considered illegal under Shariah Law. A quarter of the world’s population is Muslim, so it stands to reason that this would boost global demand. Cryptocurrency trading is still high restrictive though under Islamic financial law. But now a company called OneGram has made it possible to comply cryptocurrency trading with Islamic finance by backing each virtual coin with a gram of gold. This will open new windows for trading both currencies in the Islamic finance sector, which is growing at the significant rate of nearly 20% a year.

What this means for investors: The appeal of cryptocurrency has similarities to that of gold. As a decentralized currency, it is not subject to government manipulation. Additionally, it is an anonymous way of paying for goods and services, making it more like cash than trackable digital credit and debit cards.

With this new market opening up in the Islamic financial world, gold demand could get a significant boost. Backing up cryptocurrency with gold also illustrates just how universally valued gold continues to be. Its value will almost certainly persist for a long time. In the end, gold is the true physical asset that the world recognizes. No matter what the form of currency may be- it sure is interesting how each one of them is ultimately thought that the most secure backing is gold. After all, it just makes sense.

Gold Rallies This Week on Fed Announcement and Weak Data

federal reserve banking noteLast week we called a new low for gold and recommended it as a buying opportunity. This week gold rallied, closing out the week up 1.5% at $1,230. Gold initially jumped in anticipation of Fed chair Janet Yellen’s hearing before a Senate banking committee. Disappointingly low June retail numbers and flat consumer inflation are worrying analysts about the merits of raising interest rates again soon. Gold had rallied when these numbers were initially released, and they have caused concern about the robustness of the economy to handle another interest rate hike.

What this means for investors: The fear over the next monetary policy steps has investors looking at safer, non-interest bearing assets like gold. The Fed has said it will raise rates at least once more this year as well as unwinding its $4.5 trillion balance sheet, which could tighten economic conditions. Additionally, the dollar index was down this week as gold rallied. Gold and silver demand will continue to go up as uncertainty is stoked by the Fed, and with it investors will see prices go up. Silver was up as well on the Fed’s doveish-ness and wavering.

Some Analysts See Frothy Markets and Recession Fears

Peter Boockvar
Peter Boockvar on CNBC

In increasing numbers, analysts are seeing danger ahead for the stock markets. Peter Boockvar warned, following the Janet Yellen hearing. He warned that tightening cycles generally lead to recession, and does not see any reason why this should be different. In his assessment, just because the Fed warned of what they were going to do (reducing balance sheet and raising rates), it won’t be any less disruptive.

Economists at Deutsche Bank gave a similar assessment of what this tightening cycle will do. Stock markets in developed countries are already showing “frothiness”, and tightening from the ECB and Bank of England could drive more.

What this means for investors: Check out why Sprott Inc. CEO is staying bullish on gold going forward under these economic conditions. In addition to its inverse correlation to an equity market that could be in trouble, it is a hedge against downturn.

 

China Introduces Idea of Block Currency

China's new block currency?Further on the topic of cryptocurrency…China is developing its own digital currency. China is trying to move away from cash, and cryptocurrency seems like a desirable option right now. It’s also worth noting that China is the top gold buyer on the global stage right now, and has been shoring up its central bank with physical gold holdings for quite some time. Alternative currencies like gold and cryptocurrency are not as subject to inflation as cash.

What this means for investors: Cryptocurrencies remove exchange rate risk, are universally accepted around the world, and are not susceptible to control by governments and central banks. For individuals, they are an attractive alternative for holding wealth that is independent of  the corrupt and failing financial system. The rise of cryptocurrencies is indicative of a societal rejection of a broken monetary system of fiat money. Ultimately though, gold will always be safer than digital currency because of its tangibility. The elements boosting digital currency are also going to boost precious metals.

 

Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!


 Here are some articles from the web discussing the topics in this week’s post:

Gold and Cryptocurrency and a New Relationship?

Read Here

Gold Rallies This Week on Fed Announcement and Weak Data

Read Here

Some Analysts See Froth Markets and Recession Fears

Read Here

China Introduces Idea of Block Currency

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Buy gold now

Gold Prices Are Down Right Now – It’s a Prime Time to Buy

Gold Market Discussion

Gold Prices Are Down Right Now – It’s a Prime Time to Buy

golden buying opportunity in July 2017When metals are low, it’s a perfect time to buy, and gold prices are down right now. This could be an important, new price bottom before the next rally. If you have been waiting for the right moment to get in, this is it.

These past two weeks it has been a combination of factors weighing on metals. The Fed came out slightly hawkish this past week on interest rates. Initially on Wednesday leading up to the announcement, gold was making gains. However, the Fed’s sentiment was more hawkish than anticipated, and this boosted the dollar, which made gold pull back. Despite the hawkishness from the Fed though, it is worth noting how precarious the balancing game of monetary policy is right now (see Ron Paul video below for more). Last week there was a sharp drop due to a “fat finger” human error that spooked some investors. Gold recovered slightly the same day from the error, but it had already led to some panic selling.

What this means for investors: Gold and silver are both oversold right now, and it’s creating a perfect window for investors to buy more or get started for the first time investing in gold. In fact, options traders are positioning for a gold rebound. There are signs of recession indicators in bond yields, inflation, and retail that have made many investors still wary despite the Fed’s hawkish sentiment this week. If you are worried about the stability of the economic outlook, this week is likely the most ideal time to buy gold with prices bottoming.

U.S. Federal Spending Is Set to Top $4 Trillion

 

Federal spending out of control

It’s imminent. The U.S. federal spending is set to top $4 trillion this year. The Congressional Budget Office released its growth projections and estimated that the deficit will increase by more than $2 billion in the 2017 fiscal year from the year prior.

What this means for investors: How long can this remain sustainable? Despite being so deep in the red on the balance sheet, the federal government continues to increase its rate of borrowing and spending. Moreover, excessive budget deficit spending ultimately leads to inflation, possible debt default, higher taxes, and lack of economic growth.

Ron Paul on the Stock Market

This week Ron Paul cautioned too much optimism in this stock market. Check this recent video from Ron Paul on CNBC…

Trouble playing video? Watch it here at CNBC.com.

What this means for investors: How long can this excessive spending remain sustainable? Despite being so deep in the red on the balance sheet, the federal government continues to increase its rate of borrowing and spending. If Paul’s prediction is correct, this could trigger a significant gold rally.

North Korea Threat Boosts Uncertainty

 

North Korean Army Officer
North Korean Army Officer

Global and political threats have a deep impact on gold prices. When there is fear on these fronts, people flock to gold. This week North Korea allegedly conducted a successful test of an ICBM (intercontinental ballistic missile) that sparked some uncertainty fears in the market, and boosted gold. Secretary of State Rex Tillerson  and President Trump condemned the tests in the sternest tone and warned of retaliation against North Korean aggression. They also called on stronger efforts by the Chinese to contain the North Korean threat.

What this means for investors: Geopolitical uncertainty of conflict is one factor that could boost gold in the future. In further news on the political front, the G20 summit this week in Hamburg, Germany between leaders of the countries with the 20 largest economies prompted investor fear of trade war . This could negatively affect economic global growth as prices and tariffs soar. Gold is historically the safest haven during such trade wars as well.

 

 

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 Here are some articles from the web discussing the topics in this week’s post:

Gold Prices Are Down Right Now – It’s a Prime Time to Buy

Read Here

U.S. Federal Spending Is Set to Top $4 Trillion

Read Here

Ron Paul on the Stock Market

Read Here

North Korea Threat Boosts Uncertainty

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Russian Mig-29 fighter jets

How Are Global Tensions Going to Affect Gold? Oil Outlook Darkens Markets

Gold Market Discussion

How Are Global Tensions Going to Affect Gold?

world tensionsGold had some pull back at the start of the week, but closed out the week making back some gains. However, going forward, there are global tensions going to affect gold, most likely. Although lately gold has at times been fairly quiet on the volatility trade, there are some events to watch for. There were glimmers of fear in the market Tuesday from some of these events that lifted gold.

Brexit negotiations got off to a rough start. Britain, it seems, wants to foremost discuss retaining trade deals with Europe, while EU officials appeared unlikely to indulge this request. On the domestic front, opposition to President Trump’s proposed reforms to taxes, regulation, and health care sent some volatility into the markets, as it seems uncertain as to the likelihood that they will succeed.

Tension and conflict in the Middle East seems to be escalating rather than resolving. The U.S. shot down a Syrian government plane, Iran launched a missile offensive against ISIS in Syria, and Russia warned the U.S. that planes could be potential targets. Qatar has been diplomatically isolated from the rest of the Arab world, and Saudi Arabia chose a new crown prince. With these developments, uncertainty is certainly mounting rather than abating.

What this means for investors: Gold seemed to shrug off its pull back from last week that the Fed’s raising of interest rates prompted. As the gold market indicated at the end of the week, some investors are preparing now with safe haven assets against market downturn that global events could trigger.


Oil Slump Darkens Markets, Boosts Gold

oil slumping again Oil is in a bear market, and its effect is weighing on the stock market. It’s partially the oil slump that shored up gold on Thursday. Oil is down 20% this year now due in part to over production in places like Libya. The slump is making the Fed and investors fearful that inflation targets won’t be met and that economic growth is not going to to be robust. Usually rising inflation is good for gold, but its stifling in this case means slow growth for the economy, which makes investors cautious.

What this means for investors: With the energy sector taking a hit, investors will be rotating out of that sector and into metals. Bond yields are also falling, as we have mentioned before, and this will spur safe haven demand for gold over bonds.

Retail Armageddon Telling Another Story about the Economy?

retail slumpingRetail is taking repeated hits recently, which is rocking the stock market. In May, retail sales had their biggest drop in 16 months. Names like Amazon are doing well, but other major retailers and department stores are seeing massive drop offs in sales.

What this means for investors: The retail slump is worrying because it shows that the economy has a sense of some consumer fear. People are reluctant to spend right now with the outlook fairly uncertain. It also means with less consumption, there will be slower growth and inflation most likely.

Gold to Silver Ratio Still Showing Positives for Silver

watch the gold to silver ratioWe’ve talked before about how the gold to silver ratio is at historic lows. This trend is persisting. During the metals pull back and sell off last week, silver did not dip below $16, which investors are seeing as a positive sign that silver has support and a ways to climb.

What this means for investors: Falling bond yields, oil prices, and stocks will lend support to silver as well as gold. Some investors are more bullish on silver than gold right now. With both metals, buy on dips, sell on highs. Silver pulled back after the Fed  announcement, but made back some gains with gold.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

How Are Global Tensions Going to Affect Gold?

Read Here

Oil Slump Darkens Markets, Boosts Gold

Read Here

Retail Armageddon Telling a Different Story about the Economy?

Read Here

Gold to Silver Ratio Still Showing Positives for Silver

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

interest rates up June 2017

Gold Retreats after Fed Raises Rates, but Gold Still Looks Safe Long Term

Gold Market Discussion

Gold Retreats after Fed Raises Rates a Quarter Point

rising interest rates
This week gold retreated from its rally following the Fed announcement Wednesday that lifted rates a quarter point. Gold still looks safe long term, however, and made back some small gains Friday as the dollar index experienced some weakening. The dollar index strengthened Wednesday following the Fed announcement. The consumer price index and retail were down, which shows some worrying signs. The Bank of England left its rate unchanged Thursday.

What this means for investors: It is usual for gold to go down when rates go up. Lately it has been doing the opposite following the last couple of rate hikes because of uncertainty in the strength of the markets. Some investors took advantage of the dip to buy because of gold’s strong performance overall for the year so far.

Gold Still Looks Safe Long Term – Just Look at the Yield Curve

yield curveWhile short term rates are increasing however, long term rates are decreasing. The yield curve is showing alarming signs of flattening. Since Janet Yellen took over as Fed chair, it has been looking flatter and flatter. The yield curve inverts from excessive tightening by central banks. Generally when this happens, gold experiences as a rally as a safe haven alternate.

What this means for investors: For more on what this flattening yield curve means for recession, check out our blog from a couple weeks ago. Economist David Rosenberg discusses how a few more rate hikes could invert the curve, and how that historically means recession.

What Experts are Seeing Ahead for Gold and the Markets

Bill Gross discusses why the financial markets are at risk, and why quantitative easing is creating an illusion of economic growth in the below videos.



What this means for investors:When the illusion finally breaks, investors are going to want safe haven assets, and those who bought gold ahead will be glad they did so. In case you missed it in last week’s post, listen to the interview with Jim Rogers discussion the crash that quantitative easing could be preceding.

Texas Opens State Administered Gold Depository as Alternative to New York

A couple of weeks ago Arizona passed a bill that essentially renders gold and silver as legal tender. States like Idaho and Ohio are introducing similar legislation. In another example of a bid at state level to exert more control over monetary protection, Texas is opening a state-administered depository (the first in the nation) as an alternative to those located mostly around the New York area.

What this means for investors: This is mostly significant for Texas investors, or anyone wishing to keep their gold in a depository. However, it shows the high value that people are still placing on security of their money that gold provides. Currently most precious metals depositories are around New York, so this provides an attractive alternative to a wider range of people. It is expected to open in January, and will be located in Austin.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Gold Retreats after Fed Raises Rates a Quarter Point

Read Here

Gold Still Looks Safe Long Term – Just Look at the Yield Curve

Read Here

What Experts are Seeing Ahead for Gold and the Markets

Read Here

Texas Opens State Administered Gold Depository as Alternative to New York

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold Eagles- Bullion

Gold Is at 7 Week High on Weak Dollar Index

Gold Market Discussion

Gold Is at 7 Week High on Weak Dollar Index, Nearly Reaches $1300

Gold Bull Market ComingThis week, gold is at 7 week high on weak dollar index (among other driving factors). Gold prices started out the weak with a rally climbing over $1,290, however it pulled back some on Thursday and Friday. The dollar index was up Friday gaining strength against a plunging British pound following U.K. elections that resulted in a hung parliament.

The dollar index weakness appears to be finally establishing. It was at its lowest level since November this week, as were bond yields. The post-election dollar strength was part of the reason that gold prices were depressed kicking off the new year. As discussed last week, the bond yield curve is also something to pay attention to.

What this means for investors: The dollar index generally moves opposite to gold, so it’s no surprise that gold had such a strong week. Silver was up this week as well. Some profit taking in metals due to the rally likely was responsible for some of the pull back at the end of the week. Take a look at the dollar index chart above to see its recent trajectory.

JIM ROGERS: “The worst crash in your life” is coming


Watch this eye-opening interview with Jim Rogers on Business Insider as he predicts the cause of the upcoming “worst crash in your life”.  Click here to watch on Business Insider’s website.

Charts Indicate Gold Could Still Climb

Some analysts’ charts are showing some very bullish signs on gold’s recent move. Check out the discussion of the four charts that are showing gold moving higher.

What this means for investors: Watch for dips to get in before the bullish move. The fundamentals are present to send gold higher.

Uncertainty Factors in the Markets This Week

Mario Draghi, President of the European Central Bank

Beyond charts and data signaling gold’s upward climb, there is an increasing amount of uncertainty in the world. For example, the U.K.’s snap election this week defied most predictions and has left the country with a hung parliament and Brexit negotiations in question. In the Middle East, tensions over the severing of several Arab countries with Qatar also prompted increased fear in the markets. In Europe, policy dovishness from European Central Bank chair Mario Draghi led to some euro weakening. Of course the big story this week was former FBI director James Comey’s hearing. While it was anticipated by uncertainty, the lack of any major bombshells ultimately led the stock market to recover some of its weekly loss.

What this means for investors: If you are worried about the future, gold and silver might be the right buy for you now. Uncertainty always triggers price spikes. Investors are becoming increasingly worried in this climate about black swan events as well, and increasing gold holdings as a precaution.


Jobs, Fed Data and Gold

Two weeks ago the U.S. Labor Department released the May jobs report and the numbers were disappointing. The labor force participation rate was down more than expected, and fewer jobs added than anticipated. Gold got a boost from the data, however. This data will certainly weigh on the Fed’s decision going forward on interest rates, and on Wednesday, they announce their decision on the next rate hike.

What this means for investors: The Fed announcement is one of the major things investors will be looking at next week. Analysts are almost certain in their predictions that there will be a rate hike, though weak economic data could make them more cautions. After previous announcements of rate hikes, gold has gone up.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Gold Is at 7 Week High on Weak Dollar Index, Nearly Reaches $1300

Read Here

Watch Jim Rogers Interview

Watch Here

Charts Indicate Gold Could Still Climb

Read/Watch Here

Uncertainty Factors in the Markets This Week

Read Here

Jobs and Fed Data and Gold

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold legal tender in Arizona

Arizona Authorizes Gold as Legal Tender and Why the Yield Curve Matters Right Now

Gold Market Discussion

Arizona Authorizes Gold as Legal Tender as Alternate to Fiat Currency

Governor Doug Ducey (R-AZ) makes gold legal tender in ArizonaThis fall, Arizona authorizes gold as legal tender with Governor Doug Ducey’s signing of House Bill 2014 this past week. The bill eliminates capital gains tax on gold and silver, which encourages its use as currency. Previous version of the bill passed the state house and senate but resulted in veto from Governors Jan Brewer and Doug Ducey. However, a stronger grassroots movement this time encouraged Ducey’s signing. The legislation defines legal tender as “a medium of exchange, including specie, that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes, and dues.” Specie is defines as coins having precious metals content.

What this means for investors: Don’t expect that gold and silver will suddenly become a common medium of exchange simply because of this vote. However, this vote is significant for other reasons. The grassroots nature of the movement shows that Americans are, in greater numbers, seeking greater monetary security. People are discovering the inherent flaws and dangers of the Federal Reserve banking system. Perhaps a shift back to Article I, Section 10 of the Constitution – “No State shall…make anything but gold and silver coin a tender in debt payment” – is coming. In addition, such legislative efforts are in motion at the state government level in Ohio and Idaho.

The Yield Curve Could Point Towards Recession

Economist David Rosenberg
Economist David Rosenberg

Economist David Rosenberg warned that the Strategic Investment Conference this week of a telling recession sign that we are starting to see. The shape of the yield curve is the thing to watch now, he cautioned. It appears that it is near to inverting. Every time the yield curve has inverted – that is, short term rates go above long term rates – it has preceded recession. The only time three times it has not is when the Fed stopped short of inverting it. However, right now the curve is flat enough that four more rate hikes could invert it, and the Federal Reserve seems on track for another rate hike in June. Rosenberg also pointed out that 23 million Americans between the ages of 23 and 54 are out of the labor work force, and believes current political volatility is noise over the deeper economic currents.

What this means for investors: The yield curve is a reason that gold has been getting a boost every time the Fed talks about raising interest rates. In China, the yield curve is already inverted. It does not bode well for the global economy with the two largest economies flashing this warning sign.

Moreover, it is worth noting that despite Fed expectations for a rate hike next month, the Fed is issuing caution and less optimism in the economy. Gold was trading over $1,250 this week, and as these indicators become stronger, it will likely continue to see demand and prices rise. Silver hit its highest mark since April 28.

Geopolitical Worries Are Still a Key Market Driver

Greece BanksSafe haven buying in Europe helped boost gold prices to nearly $1,270 on Wednesday. The French presidential elections a few weeks ago had been churning uncertainty in the markets, and now other European elections continue to stir the pot. Some of these are elections in Germany and Italy, were populist, right wing, anti-EU parties are gaining traction. Meanwhile, the Eurozone finance ministers failed to reach an agreement with the IMF about Greek debt relief. Geopolitical tensions over trade, Syria, and North Korea continue to drive safe haven demand as well.

What this means for investors: Gold was at a 4-week high, and silver had its longest winning streak since January. As political uncertainty continues to cloud a shaky global economy, precious metals will be the safest wealth preserver. Meanwhile, the dollar’s strength’s days look numbered. Take advantage before prices climb higher.

Silver Is Oversold Right Now

silver bars

I have been writing recently about silver being at the right dip to buy. More analysts are starting to agree with the technical case for silver. Silver is oversold right now, and the oversold case makes this a compelling buying opportunity.

What this means for investors: Silver is the perfect option for investors with a budget. It can be more volatile than gold in movement, but historically, it is a safe haven as well. Consider silver diversification for wealth protection along with gold as we move into further uncertainty.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Arizona Authorizes Gold as Legal Tender as Alternate to Fiat Currency

Read Here

The Yield Curve Could Point Towards Recession

Read Here

Geopolitical Worries Are Still a Key Market Driver

Read Here

Silver Is Oversold Right Now

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Shanghai Stock Exchange

China Downgrade Worrying Investors This Week and Gold Looks Resilient

Gold Market Discussion

China Downgrade Worrying Investors As the Country’s Financial Strength in Question

Gold had another strong week, and looks like it is moving out of its recent sluggishness. With Moody’s China downgrade worrying investors this week, the dollar continuing to show weakness, and a possible rate hike, gold is looking attractive and shows signs that it will go up from here.

The China downgrade worrying investors is Moody’s Investment Services’ decision this week to downgrade China’s sovereign debt a notch. China – the world’s second largest economy – has been touting the narrative that its economy is robust. It’s massive, ballooning debt, which led to this downgrade, says otherwise. Government-led stimulus spending in the way of overly ambitious infrastructure projects is one reason for the country’s current struggles. China’s central bank has also pumped such a supply of money into the economy that it makes U.S. and European central banks look restrained in comparison. Furthermore, the speed at which China has accumulated so much debt is perhaps even more troubling.

What this means for investors: The global system will certainly feel the repercussions of China’s monetary experiment. Their system is awash with excess cash. China is also one of the largest global consumers of gold. It is no surprise that the Chinese central bank is currently the largest buyer of gold given their fragile economic state.

Gold Appears to be Coming Out of Slump 

Gold Eagles- BullionLast week gold broke over the  $1,250 again, and this week it continues to show positive signs of resiliency. The dollar index’s strength was weakening last week, and continues to show pull back this week. Traditionally a weak dollar and gold prices are inversely correlated, meaning this is a strong indicator that gold is going to continue to make gains. This week’s gains pushed gold’s 50-day moving average price above the price average of the last 200 days. This is also generally a strong technical indicator that the asset is expected to continue to perform well.

What this means for investors: Gold was over $1,260 going into the three day weekend. Take advantage of the bullish signals gold is sending to protect your wealth now. Investors who bought a few weeks ago on the pull back are especially glad they did now, given the growing uncertainty going forward.

Secretary Treasury Mnuchin Petitions Congress to Raise Debt Limit

Mnuchin swears in
Secretary Mnuchin Swears In

Steve Mnuchin urged Congress this week to vote to raise the debt ceiling before recessing for the summer. This means that the $19.8 trillion limit on the debt is still not sufficient to cap the extraordinary spending by the Federal government.

I’ve brought up this potential debt crisis in past Gold Market Discussions. The U.S. is already over $14 trillion in debt, and paid $500 billion in interest alone servicing this debt last year.

What this means for investors: A country cannot sustain itself forever on such a massive deficit created through fiat money. Gold will always be a safe fall back when the money manipulation becomes reaches its breaking point.

Federal Reserve Looking Cautiously at Rate Hike

This week, the Federal Reserve released the minutes of this month’s earlier meeting. They indicated that there will be a June rate hike, but have taken a more cautious tone than they have recently. Gold prices got a boost immediately following the news, as the Fed’s more dovish tone stemmed from the recent economic slowdown.

What this means for investors: Traditionally, higher interest rates should mean lower gold, as it is not an interest bearing asset. However the prospective hike is giving the markets shivers. If the Fed’s reservations about the economy’s strength are founded, expect gold to continue to climb.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

China Downgrade Worrying Investors As the Country’s Financial Strength in Question

Read Here

Gold Appears to be Coming out of Slump

Read Here

Secretary Treasury Mnuchin Petitions Congress to Raise Debt Limit

Read Here

Federal Reserve Looking Cautiously at Rate Hike

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold Is Looking Bullish after a Week of Volatility

Gold Market Discussion

Volatility Rocks the Markets and Gold is Looking Bullish

Dollar Index, May 2017

After a turbulent week, gold is looking bullish, and investors are flocking back to precious metals. Volatility rocked the markets stemming from political controversy in Washington. This was the controversy surrounding the President’s dismissal of FBI director Comey and his meeting with Russian state officials. The controversy prompted a sharp sell-off on stocks, and the dollar index plummeted. As this chart indicates, the dollar lows could be around to stay.

However, it is not solely due to political fall out that investors are moving back to gold. Gold is looking bullish for several reasons. The weakening of the dollar index is playing a big role in boosting gold prices. Analysts – and even the President – have been saying for some time that the dollar is too strong. Its strength certainly weighed down gold prices last year, and it also makes U.S. exports less desirable. If we finally see some lasting weakness in the index, gold prices could have some support for some time.

What this means for investors: Gold prices have fallen back the past couple of weeks, but this week’s trading shows that the markets are easily spooked. It appears also that in this political climate, things will get stormier from here. On Wednesday, gold made its biggest gain since last summer trading over $1250. Prices still have room to push higher though. Investors are taking advantage now of relatively low prices to avoid scrambling for a safe haven when the need is more dire.

Stocks Stage Comeback, but Market Still Looks Sloppy

Stock Markets are sloppyStocks saw a major sell-off on Wednesday. In one trading day, the Nasdaq, S & P, and Dow all lost nearly all of their gains from this year. It was the biggest loss since September of last year.

The stock markets recovered some of their losses through Thursday and Friday, but the market is not as confident as it was. Analysts are worried about the Trump rally losing steam, as insider stock selling is outpacing buying.

What this means for investors: Despite the positive stock trading at the end of the week, gold didn’t reverse its direction. Gold continued to trade in the green, as uncertainty was by no means diminished. Furthermore, central banks could be a bigger threat to the stock market than the political landscape. The Fed is saying it is going to raise rates, and many analysts believe the economy is too mediocre to handle it.

Why Silver Might be the Right Buy 

silver moneySilver experienced a rally along with gold this week posting 3% gains for the week. The metal is moving along with gold on risk aversion against the unstable outlook in politics and the markets. Silver is still cheap right now, however. It is experiencing some resistance currently around the $17 mark.

What this means for investors: Ultimately, silver is going to follow gold, and we are seeing bullish signs from gold. Watch for price dips in silver and take advantage of cheap prices as it battles resistance for now. Silver had a stellar run last year outperforming gold much of the year.

Market-Impacting Events to Watch For

Trump signs Executive OrdersAmidst the swirling controversy around closed door conversations with the Russians, Comey’s firing, and the FBI investigation, President Trump embarked Friday for his first foreign trip as President. The first stop is Saudi Arabia, and the tour includes Israel, Vatican City, and Brussels. There could be important geopolitical impact from the tour that would impact markets, however tax reform is the Washington policy move that investors are paying more attention to. But with the political fallout the White House is wading through right now, some are starting to worry that we won’t see tax reform anytime soon.

The Federal Reserve seems on pace to hike rates in June, but one Fed president thinks it could be the wrong move. The economy is showing slowing signs, and a rate hike would be disruptive to growth. Soft retail sales are just one sign of a slowing economy.

What this means for investors: Washington policy, geopolitical tension, interest rates, central banks, and the dollar index are the things to watch in the coming weeks. In addition to these indicators, the markets seem to be especially wary of black swan events. The scare of 2008 still looms over investors who don’t want to lose out again from overplaying a hot stock market. Wealth security in assets like gold is becoming increasingly attractive.

 


Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Volatility Rocks the Markets, and Gold Is Looking Bullish

Read Here

Stocks Stage Comeback, but Market Still Looks Sloppy

Read Here

Why Silver Might Be the Right Buy

Read Here

Market Impacting Events to Watch For

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Has This Gold Market Run Out of Steam? Gold Recovers Some Gains After Tough Week

Gold Market Discussion

Has this Gold Market Run Out of Steam For Now?

Are investors worried that this gold market has run out of steam? With gold and silver kicking off the week continuing the pull back from last week, some investors are. What are the reasons for the pull back, and what does it mean going forward?

The most significant reason is that these past couple of weeks investors have been come less risk adverse. This is a fairly major reversal from the start of the year. Some of the reasons traders started flocking to safe havens were events in Syria, North Korean missile tests, tension between the U.S. and its trade partners, and interest rate hikes. Furthermore, there was considerable hype around European elections – notably France’s – that increased uncertainty levels. With Emmanuel Macron’s clinching of the French presidency, risk in the markets fell.

What this means for investors: There haven’t been as many majorly impactful events the past couple weeks as in the beginning of the year, so it’s not unexpected that the markets are entering a risk-on mode. Do you wait to buy or take advantage of low prices? For those looking for the ultimate security, buy now while prices are “on sale” and wider demand is in the equity market. Gold is always going to have value regardless of what unexpected events rock the markets.

Gold Made Back Some Gains Thursday, Friday

Gold Market MayMetals initially continued last week’s pull back, but by Thursday, however, gold started to make back some gains as risk entered the markets again. The upwards climb continued through Friday. The dollar pulled back some as the euro rallied against it. Some risk and fear entered the markets again as well over rhetoric China, North Korea, and the South China Sea. Demand in Asia overall was up, which could be another reason for gold’s end of the week boost. Stocks also retreated some at the end of the week.

What this means for investors: The technicals in the market are still giving some support to gold and silver. Buying gold is long-term security. It very likely won’t make you money overnight, so look at long-term trends when deciding on a gold investment. It brings tangible security that other investments can’t ensure long-term.

Figures about the Economy that Tell a Different Story

There is some troubling data that underlies the rosy picture that the stock market’s Trump rally is telling. There are positive economic indicators such as unemployment numbers and GDP growth, but the numbers that pundits aren’t talking about are also telling.

  • U.S. reaches $500 billion interest payments on debt for one year. Last week, the U.S. hit a new milestone. For last year, interest payments alone on U.S. debt hit $500 billion. This does not include the principal. It is a staggering number for an economy already in debt $14.3 trillion.
  • Inverted Chinese yield curveThe Chinese yield curve went inverted this week. This means that 5 year bonds are yielding higher than 10 year. Economically, this makes no sense and indicates a move towards recession.
  • The average American’s bank savings. 34% of Americans have 0 savings. 35% have less than $1,000.
  • Labor participation rate. interested in participatingThe labor force participation rate measures how many Americans over the age of 16 who are in the labor force have a job. It’s currently sitting around 60%. That means that nearly 40% of Americans who want a job do not have one, despite the dropping unemployment rate.

What this means for investors: There are shaky fundamentals in the system that could undermine the recent upswings we have been seeing. Mainstream pundits are skirting some of these warning signs, but with such a gnawing away at the system, it’s only a matter of time before the structural pillars collapse. Gold will certainly be the most attractive option for investors when this happens.

Things To Look at Going Forward

There are events and trends to watch in addition to those above. Some of these are:

President Trump’s upcoming tax plan. Analysts are divided so far on whether it will grow the middle class or simply help the top percent.

Interest rates. The Federal Reserve has promised a few more for the year.

Geopolitical developments. Volatility will always send safe haven demand up, and there is significant tension around the world between major powers.

What this means for investors: Now is more important than ever to stay attuned to the markets. And don’t forget that gold always has value more than spot.


Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Has this Gold Market Run Out of Steam For Now?

Read Here

Gold Made Back Small Gains Thursday, Friday

Read Here

Figures about the Economy that Tell a Different Story

Read Here

Things To Look at Going Forward

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

silver to gold ratio May 2017

Current Silver to Gold Ratio Represents Prime Buying Opportunity as Metals Pull Back

Gold Market Discussion

Current Silver to Gold Ratio Represents Prime Buying Opportunity

silver to gold ratio

The current silver to gold ratio represents a prime buying opportunity. The silver to gold ratio represents the amount of ounces of silver that equates in price to an ounce of gold. It normally sits around 80 to 1, but is at 75 to 1 right now. This is historically an extremely high ratio. The last time the ratio was this high was last year before silver leaped from $16 to $21. Furthermore, previously when the ratio got this skewed was in 2015 as the market bottomed out before rallying last year. We could be headed towards such a rally again now.

What this means for investors: Gold and silver both pulled back this week, which is a reason for this skewing. However opportunities like this should be thought as if precious metals are “on sale.” Prices are low, with the technicals pointing towards a rally, and gold is among the most highly effective long-term investments. Some investment analysts are predicting that even without the “fear factor” that has been heavily driving metals, despite this dip, there are global demand factors to consider for gold’s long-term rally. By Friday, gold reversed and made some small gains to close out the week in the green.


Geopolitical Uncertainty Quieter This Week

Macron
France President-Elect Emmanuel Macron

Lately, gold has been getting a significant boost from uncertainty and fear in the geopolitical sphere. From airstrikes in Syria, ballistic missile tests in North Korea, and diplomatic tension, investors have been looking for safety. This week, however, was quieter on this front (at least in in the mainstream media) with none of the unanticipated events of the previous weeks headlining market impact. In addition, Emmanuel Macron has won in a decisive victory over right wing populist Marine le Pen in the French presidential race. Macron’s more globalist, pro-EU stance has some investors less concerned on volatility.

Instead, some of the most significant market events revolved around the Federal Reserve and Congress. Congress voted to repeal Obamacare, so now the administration has said it will move on to tax reform. Both of these will impact the markets.

Meanwhile the Federal reserve announced this week that it would not raise interest rates, as the economy is showing some weak signs. Previously, the Fed has indicated that there will be a few rate hikes this year. It seems, at least for now, that the warning signs some analysts caution against are halting the Fed. The announcement extended gold’s losses this week.

What this means for investors: Even though there were no major geopolitical events that sparked investor fear as in previous weeks, this does not mean there are not ample reasons to protect wealth with gold now. The elements that have been driving gold are still present. Investors with concerns about how these play out are taking advantage of this week’s dip.

Ron Paul, on Why Fed Action Will Bring Correction

Ron Paul, former presidential candidate, cautioned the current market euphoria on how Fed action, overspending, and constraining monetary policy could bring about a sharp market correction.

What this means for investors: Although there are still enthusiastic investors buying into the stock market rally, as the former Congressman warned, this euphoria cannot last. This is further indication of the opportunity that the gold market dip this week affords for investors.

Oil Tumbles Alongside Gold

oil falling

Gold’s six-week low this week correlated somewhat to oil’s nine-month low this week. There is a saying that as the crude oil market goes, so do most commodities go. Hence, it is not wholly unexpected that the oil slump would weigh on gold prices. OPEC (Organization for Petroleum Exporting Countries) is in talks about production cuts to rebalance the markets, but a consensus has not yet been agreed upon.

What this means for investors: Along with this strain on gold prices, a stronger dollar index this week, and signals of an Emmanuel Macron victory in France also weighed on gold. By Friday, the oil slump, rather than holding back gold, actually pushed up some safe haven demand as uncertainty increased in the markets.


Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Current Silver to Gold Ratio Represents Prime Buying Opportunity

Read Here

Geopolitical Uncertainty Quieter This Week

Read Here

Ron Paul, on Why Fed Action Will Bring Correction

Read Here

Oil Tumbles Alongside Gold

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold and silver

Not Losing Its Luster Yet: Market Rallying Events to Watch for Gold and Silver

Gold Market Discussion

As Metals Continue to Perform, These Are the Market Rallying Events to Watch for Gold

Gold and Silver Maple LeafPrecious metals continued their winning streak this week, and there are several market rallying events to watch for gold over the next year. Gold rose above $1,290 an ounce this week before pulling back slightly towards the end of the week. This pull back was in part due to some profit taking and the dollar going up some points.

Gold is moving in a similar way to how it did at this time last year. However, while last year had some unexpected events that caused it to jump initially (notably Brexit and Trump’s election), this year is heralding even more uncertainty in the economy.

What this means for investors: Investors are looking for stability for their savings, and with gold up 10% this year, it is looking like the safest right now. The wild ride that the stock market has been on is coming to an end as investors are growing more risk adverse. Strategists are seeing that now is the time to take earnings and move it into safe havens before the next major market moving event occurs.

Geopolitical Power Plays and European Elections

Marine Le Pen
Marie Le Pen, President of the National Front, a French Political Party

Some of the possible market rallying events for gold are going to come from how the situations in Syria and North Korea play out. Increasingly hawkish rhetoric out of the White House and State Department has been triggering price movement in gold. Words have been translating into action with U.S. aircraft carriers re-directing to the Korean peninsula and airstrikes rocking Syria.

The rise of populism and anti-establishment sentiment in Europe (as well as the U.S.) is spooking investors. Marine Le Pen’s rise to prominence in the French presidential election is proof that the same popular sentiment that shocked the establishment by voting for Brexit and President Trump is persisting.

What this means for investors: The VIX is signaling investor fear as well. The VIX (the CBOE Volatility Index) measures confidence going forward, and the data is showing a lack of it. As it goes up and the dollar strength pulls back, gold will likely go up in correlation.

Trump-o-nomics at Work

President Trump campaigned on promises of defense and infrastructure spending increases. Former Fed Chairman Alan Greenspan is warning that the U.S. can’t afford Trump’s spending plan, however. He warns that there is no way to pay for it with the amount of debt the government holds, and yet Trumps proposal would add $1 trillion to updating infrastructure.

What this means for investors: Inflation will skyrocket as spending floods the markets with fiat money to pay for the projects. Watch more here.

Don’t Forget Silver As It Poises to Rally

Silver bugs are getting excited watching their metal climb too. The market rallying events to watch for gold will certainly boost silver as well. Silver has already risen 14.3% in the first quarter of 2017. It had a similar trajectory through the first half of 2016 (outperforming gold for the year), but this year has even more bullish elements in place.

What this means for investors: Three key indicators are in appearing to fall into place that historically have preceded significant silver price runs. These are a bottoming of interest rates, a peak in the stock market, and significant monetary change or collapse. In the past, these events were spread out a little over a decade before silver’s big take-off in 1941. They could be happening right now in a more concentrated manner though. The stock market is showing worrying jitters that it’s bull run is about to sharply correct. Interest rates and inflation are rising. See the correlation between these macro trends and silver here.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Gold not Losing Its Luster Yet: Market Rallying Events to Watch for Gold

Read Here

Geopolitical Power Plays and European Elections

Read Here

Trump-o-nomics at Work

Read Here

Don’t Forget Silver As It Poises to Rally

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

gold bars as investments

Geopolitics Spark Flight to Safety and Gold

Gold Market Discussion

Gold Posts 10% Gains, 5-month High as Geopolitics Spark Flight to Safety and Gold

syria in crisis

Developments in geopolitics spark flight to safety and gold by investors this week. Gold has posted 10% gains for the year now. It broke out Tuesday over $1,270, and by Wednesday, it had hit a 5-month high. It continued these gains through the end of the week.

U.S. airstrikes in Syria last week boosted the gold market’s rally this year, and this week prices climbed further as uncertainty levels increased. Silver also saw gains. The white metal hit a six-week high on global unrest, and continues to be an effective safe haven bet.

What this means for investors: Safe haven demand amidst global, geopolitical unrest is the key element driving this rally right now. Not only in Syria, but uncertainty around Brexit, European elections, and North Korea are making significant impact. Gold and silver are safety nets for wealth preservation during war and economic downturn. Because of the tangibility and universal value, it’s the investment of choice during uncertainty.

However geopolitical uncertainty is not the only factor impacting the markets. The dollar’s recent strength is finally faltering, which is boosting precious metals prices. Trade, interest rates, and the winding down of the Trump rally in the stock markets are also favoring gold demand right now.

 

White House Warnings to Syria and Russian Relations Increase Market Unrest

Nikki Haley
Nikki Haley, U.S. ambassador to the U.N.

Escalation of hawkish rhetoric on Syria is at the root of heightened fear in the markets. Both Nikki Haley – U.S. ambassador to the U.N. – and President Trump said this week that more airstrikes are not out of the question. The U.S. also asserted that Russia (the chief ally of President Bashar al-Assad) knew of the alleged chemical attack by Assad’s forces on the rebel-held village last week. On the other hand, Russian foreign minister Sergey Lavrov strongly denied this, and questioned the U.S. motivation behind the strikes. Russia and Syrian ally Iran also ominously warned the U.S. of retaliation if “red lines are crossed again.”

Against this backdrop, Secretary of State Rex Tillerson met with his Russian counterpart and Vladimir Putin in Moscow this week. The two statesmen acknowledged that U.S. – Russian relations are currently “very weak.” The tension between the two states over Syria is too volatile right now. Russia also accused the U.S. of attempting to disrupt the peace talks that Russia is brokering in Astana, Kazakstan between the Syrian government and some of the rebels.

What this means for investors: In addition to gold hitting a 5-month high on safe haven demand, oil also rallied, while currencies (the dollar, ruble, euro, pound sterling) fell. It is worth recalling President Trump’s campaign promises to increase defense spending. Escalating military action in Syria and other parts of the Middle East would likely necessitate higher spending increases than initially anticipated. With government spending will come inflation, and gold could be in for an unprecedented run.

On Thursday the Dow plunged again when the U.S. dropped the largest non-nuclear bomb ever used in combat on an ISIS stronghold in Afghanistan. The markets are interpreting this as even further uncertainty and conflict ahead.

Trade with China and the North Korea Crisis

North Korea

Last week President Trump met with Chinese President Xi about trade, currency manipulation, and the North Korea crisis. The talks seemed to have policy effects on both nations. Trump labeled China a “currency manipulator” on the campaign trail, and lambasted China recently on Twitter for not solving the North Korea crisis. China appeared to be readying its economy for the intense summit ahead of time based on Trump’s positions. The trade deficit also fell in February with fewer Chinese imports.

Trump admitted after the summit that the relationship between China and North Korea was much more complex than he had anticipated. Subsequently, the U.S.-China relationship seems to be strategically shifting. On the Chinese side, the People’s Liberation Army deployed 150,000 troops to the border with North Korea. The U.S., meanwhile, is sending ships towards the Korean coast, while North Korea purports to be preparing more ballistic missile tests.

What this means for investors: It is difficult to gauge the direction the U.S. – China relationship is going to take. There is an elaborate geopolitical theater happening between the two right now, and at the centerpiece is the rogue, unpredictable North Korea. Relations between the two superpowers heavily influence the markets. If Trump continues to pursue the protectionist trade policies he has been touting since the campaign, it will be to the detriment of China and economic growth. On the other hand, if he scales back his aggressive rhetoric in favor of compromise to secure Chinese assistance in halting North Korean nuclear expansion, volatility around military conflict could impact the markets. There is potential either way for safe haven demand to go up.

Trump Says Dollar Is Too Strong, Favors Low Interest Rate Policy

Donald Trumps Says Dollar is WeakNot only did geopolitics spark flight to safety and gold this week, but comments from President Trump to the Wall Street Journal also helped spur the rally. Trump claimed that the dollar is too strong – in part due to over-confidence in him – and that it will be detrimental long term for growth. It is not the first time that he has made this claim. He also said this week that he favors a low interest rate policy. With the Fed promising a couple more rate hikes this year, this could lead to clashes between the central bank and White House.

What this means for investors: A weaker dollar will break some of the resistance gold prices have been experiencing. Likewise, lower interest rates benefit gold in general and could help rein in the greenback. Analysts are also saying that the “Trump Rally” in the stock markets could be on its last legs. These are all economic conditions in which gold and silver could rally for a while.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Gold Posts 10% Gains, 5-month High as Geopolitics Spark Flight to Safety and Gold

Read Here

White House Warnings to Syria and Russian Relations Increase Market Unrest

Read Here

Trade with China and North Korea

Read Here

Trump Says Dollar Is Too Strong, Favors Low Interest Rate Policy

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Trade War with China

Gold Surges after Airstrikes in Syria: What’s Next?

Gold Market Discussion

Gold Surges after Airstrikes in Syria by the U.S.

Gold surges after airstrikes in Syria on Thursday night to end the week hitting the $1,270 mark on Friday. In retaliation for an alleged Syrian chemical attack on civilians last week near Idlib, the U.S. fired 59 Tomahawk cruise missiles at Shayrat Air Base late Thursday night. The international community had mixed sentiment. Some key U.S. allies (including Turkey, the U.K., Germany and others) praised the military action saying that Syrian president Bashar Al-Assad brought this strike upon himself by dropping sarin gas on a rebel-held village that resulted in women and children casualties. However, Assad has denied government responsibility for the attack.

Russia, on the other hand, quickly condemned the U.S. strike against a foreign power. Russia has committed air support and troops to the Syrian government, and cautioned the U.S. against engaging militarily against Assad’s forces. Warning was given to Russia of the impending missiles in a short window before they struck to ensure Russian men and equipment would not be attacked.

By Friday afternoon, gold pulled back some of its gains, but still settled above $1,256.

What this means for investors: As many investors moved into gold for its safe haven aspects, some investors did some profit taking during the week, which could have depressed prices somewhat.

The amount of geopolitical tension this situation has augmented is not to be underestimated even though the markets appeared to be holding for now, waiting for a sign  of what actions are next from Syria and Russia. Secretary of State Rex Tillerson and President Trump have been definitive that further military action could be taken. Russia, meanwhile, has sent a warship towards the two U.S. destroyers in the Mediterranean that fired the cruise missiles. Russia also suspended two key military agreements designed to reign in potential Russia-U.S. conflict in Syria.

President Trump Meets with Chinese President Xi

President Xi Jinping

In more news of heightened geopolitical tension, President Trump hosted Chinese President Xi Jinping at Mar-a-Lago in a two-day summit. The aim of the summit was to alleviate some of the tension between the world leaders. Some of these tensions revolve around Trump’s accusations of unfair Chinese trade policy, Chinese military build up in the South China Sea, and “One China” policy.

The hot issue, though, between the two countries that got (it seems) less attention was that of North Korea. In the wake of more ballistic missile tests from North Korea, Trump has taken to Twitter to call our China for not “reigning in” the rogue nation and announce that the U.S. will deal with it alone, if need be.

What this means for investors: Gold was up ahead of the Trump-Xi summit as investors saw risk and uncertainty for the markets. Stocks pulled back. It is no coincidence that North Korea’s latest ballistic test was timed so close to the Chinese summit. It is probably also no coincidence that Trump’s show of force against Syria was made more impactful by the timing of the summit. Regardless, expect fear in the markets over heightened tension in these regions.

Markets Spooked By the Federal Reserve Last Week

Federal Reserve Building

 

Gold also got a boost from the news of the Federal Reserve’s release of the minutes from the latest FOMC meeting. The minutes indicate that there will be another quarter point rate hike, but also that the Fed is getting nervous that the market is overvalued. The Fed wants to reign in reign in their policy of re-investing in Treasury bills and mortgage backed securities soon. After the financial crisis, the Fed bought these to keep interest rates low in an effort to boost economic growth. Now they want to reduce that balance sheet.

What this means for investors: Jamie Dimon and Larry FinkIf the Fed is trying to get an overvalued stock market to correct, gold demand is going to go up. Many analysts have been saying for sometime that equity market is overvalued. Two of the most influential financial CEOs – say the economy is flashing ominous signs of slowing, despite the stellar rallies that extended into the beginning of 2017. Now is the time to prepare your portfolio for this potential downturn.

Jobs Data Report Misses Expectations

US Jobs and Labor ForceThe Labor Department released its jobs data report for March on Friday. The numbers fell short of expectations, which caused stocks and the dollar to pull back. 98,000 jobs were added, but economists had been projecting 180,000. It came as something of a shock, given the robust figures for January and February. Perhaps the outlook for business growth is not as promising as it appeared at the start of the year.

What this means for investors: Investors are starting to fear that the Trump rally could be coming to an end. The unemployment rate fell marginally despite the weak growth, but earnings were also down. The weaker dollar that accompanied the report’s outlook gave a boost to gold and silver.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Gold Surges after Airstrikes in Syria

Read Here

President Trump’s Meeting with Chinese President Xi

Read Here

Markets Spooked By the Federal Reserve Last Week

Read Here

Jobs Data Report Misses Expectations

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

gold bar on grains

3 Things That Will Fuel Gold Rally Are Here

Gold Market Discussion

3 Things That Will Fuel Gold Rally

There are 3 things that will fuel gold rally that are abundantly transparent in the markets already. This week, gold continued its upward climb touching above $1,250.  Take a look at what’s driving this rally.

Euros

1. Inflation

Some analysts are predicting gold to soar to $1,500 soon as inflation continues to creep up.Lately the dollar has been over strengthened as many analysts and decision makers – including President Trump – have stated. Some of this strength is slipping and as it corrects, gold is reaping the benefits.

2. Market Uncertainty

Along with inflation, market uncertainty is undermining the Trump rally we saw in the stock market and dollar after Donald Trump was elected President. These uncertainty factors are due as much to geopolitical factors as to monetary and fiscal decisions. Potential developments in the French elections, trade relations with China, and unpredictable black swan events could lift metals. Keep an eye on developments with the U.S. debt ceiling as well as President Trump’s proposed spending increases become more likely even as the ceiling hits its limit.

3. The Euro

Europe is gearing up for significant volatility thanks to Britain (see more about that below). This week the euro was  at a five week low due to Brexit news and dove-ish tones coming out of the European Central Bank. Safe haven demand is going up. But data is also showing that inflation is picking up in the European markets as well, which is a further boost for gold.

What this means for investors: For more on how inflation and the euro could drive the gold rally to $1,500, see the below video. Alan Knuckman also predicts stronger technicals for silver to rally.

 

Brexit Makes a Case for Gold. Here’s Why

 

On Wednesday last week, Prime Minister Theresa May performed the formal and official motion for the U.K. to leave the European Union. May signed Article 50 of the Lisbon Treaty, which gives provision to member nations to leave, and the official letter was delivered to the EU heads in Brussels.

The EU response from European Council President Donald Tusk was, “We already miss you. Thank you and good bye.” Later Tusk stated that the EU would not attempt to punish Britain in the negotiations, since Brexit was “punishment enough.” The EU also was emphatic that exit terms will come before trade deal terms in negotiations.

Great Britain was rocked by further volatility on Friday when First Minister Nicola Sturgeon formally requested May to allow for a second Scottish referendum on independence from Britain. Scotland voted against Brexit due primarily to a desire to remain in the EU.

What this means for investors: The British pound is probably going to get hit hard for a while. After the referendum in June last year, it fell to 30 year lows. Furthermore, Brexit could mean the departure of many financial firms and multinationals headquarters from London to the continent. Gold will be a safer alternative to the week pound and reprise its role as a hedge against currency inflation. As currencies weaken, gold, which is both a commodity and currency alternative, becomes a better store of value (as illustrated by charts here).

Remember When We Called the Bottom for Gold Prices? We Aren’t the Only Ones

Certified Investment Grade Coins

In January I called the bottom for gold prices. At the time, gold was trading at around $1,151. In only a couple months, it is now flirting with a break out point over $1,250. The metal is up about 8% for the year now, and has been extending rallies for a couple weeks now.

Other analysts are calling the lows of last December as a bottom as well and seeing conditions as only favorable for gold and silver prices to go up.

What this means for investors: Gold sank towards the end of 2016 during the height of the Trump rally in the stock market and after a Federal Reserve interest rate hike. Charts and figures are suggesting this year’s upswing could continue though. We are seeing similar rallies in silver as well as it catches the tail winds of gold.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

3 Things That Will Fuel Gold Rally

Read Here

Here

And Here

Brexit Makes a Case for Gold. Here’s Why.

Read Here

Remember When We Called the Bottom for Gold Prices? We Aren’t the Only Ones

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

gold in the news

Gold Rally Continues on Safe Haven Demand – Should Investors Be Preparing for Black Swan Events?

Gold Market Discussion

Gold Rally Continues from Last Week’s Jump

Gold coins saved

Last week’s gold rally continues this week with gold toying with the $1,250 mark. Gold is now up 8.5% this year. On Tuesday, the Dow had its worst day yet in 2017. It experienced some shakiness after the Fed announcement last week, and volatility rocked stocks this week. Fear is entering the markets right now, and investors are looking for safer options. Silver is moving in conjunction right now, and some analysts think it is poised for a rally as well.

What this means for investors: A couple things were giving the markets jitters this week. Congress was locked in a feud over President Trump’s health care bill with opposition on both sides of the aisle. Notably, the vote was originally scheduled for Thursday and got postponed with concerns that it could not pass. Hence, on Friday, the markets plunged prior to the schedule vote. Finally though, the bill was pulled Friday afternoon, which triggered a stocks rebound. The President has indicated that the next step for the administration will be tax reform rather than health care.

Furthermore, Britain announced officially that March 29th would be the date (as suspected) of triggering the process to begin Brexit. EU Commission chief Jean-Claude Juncker anticipates that the exit from the union will cost Great Britian $50 billion.

There are some factors that could hold back precious metals prices in the near term. Crude oil prices are in a slump, and these tend to have a negative pull on gold. While the gold rally continues, some investors are also profit-taking this week. However, long term, there are enough uncertainty factors that safe haven demand for gold and silver is going to continue, and we expect a volatile climate in which the gold rally continues.

Black Swan Events that Could Shake the Markets

black swan events

Black swans are events that are unforeseen and deviate from what is expected. While the events impacting the markets this week (health care bill, Brexit vote, etc.) are not unpredictable enough to be dubbed “black swans”, they are helping to further an air of uncertainty in the markets that is putting the fear of black swans into some investors.

Events in history that are more aptly described as black swans would be the financial crash during the housing market crisis of 2008 or the 2001 dot-com bubble. These were events that impacted investors on a massive scale due as much to their unexpectedness as their fundamental disruption to the markets.

What this means for investors: Non-financial black swans can also influence the markets. Events like the lone wolf terror attack in London this week and upset elections cause market volatility. Since the nature of black swans is, obviously, that they occur unexpectedly, it is impossible to ever plan perfectly for them. However, a portfolio diversified into gold ahead of time (even if there is no immediate fear of a crash) sets many investors at ease.

G20 Finance Ministers Reverse Position on Trade Protectionism

G20

The finance ministers of the G20 nations met this week. The statement – usually unremarkable – that came out of the summit caused a stir. The ministers historically dropped a decades long pledge that rejected protectionism. The bloc of nations has always ended these summits with a statement that rejects any tariffs or rules that favor one country’s economy over another, but that was missing this time around. This was due to pressure from the U.S. Secretary Treasury Steve Mnuchin strongly indicated that the U.S. full intends to forward with the trade policy campaign promises from Donald Trump that could possibly include border taxes and import tariffs in an effort to spur U.S. manufacturing.

What this means for investors: While the promise of reviving U.S. manufacturing is an attractive one, some of the proposed trade policies may not necessarily achieve this goal. Looking back at history – particularly President Hoover’s administration – there are some important lessons to learn about protectionism and trade wars. Read more about the impact on the economy and markets.

OECD Warns about Global Economic Growth Projections

OECD Conference Centre in Paris
OECD Conference Centre in Paris

The Organization for Economic Cooperation and Development (OECD) is not optimistic about global growth projections. Every year the organization (comprised of 35 member nations that focus on stimulating economic progress and world trade) releases a report on a general global growth outlook. The report this year was more optimistic than last year’s, yet it still anticipated slower than ideal growth prospects.

What this means for investors: Political instability is a major factor that could undermine growth, according to the report. It also pointed to some shaky fundamentals in the markets and protectionist trade policy. It is most significant that although the report was not warning of crisis-level threats, there is a real concern of swift derailment of the modest pick-up in growth.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Gold Rally Continues from Last Week’s Jump

Read Here

Black Swan Events that Could Shake the Markets

Read Here

G20 Finance Ministers Reverse Position on Trade Protectionism

Read Here

OECD Warns about Global Economic Growth Projections

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Interest Rates are Going Up in 2017

Metals Rally This Week as Gold Reacted to the Fed Announcement on Interest Rates

Gold Market Discussion

Gold Reacted to the Fed Announcement on Interest Rates with Rally

Fed Rate Hike Coming?

On Wednesday, gold reacted to the Fed announcement with a rally that broke over the $1220 mark by Friday. Janet Yellen announced – in a rather positive communiqué – that rates would go up a quarter point, and that we could anticipate a couple more hikes this year.

It may seem counter-intuitive that gold went up after a rate hike announcement. However gold reacted to the Fed Announcement with a “buy the fact” move. Generally, higher interest rates means lower gold (and other commodities) as interest-bearing assets become more attractive. For example, last week, gold moved lower in anticipation of an announcement on an interest rate hike. But inflationary pressures and underlying implications in Yellen’s more dove-ish language proved to be favorable to gold and silver.

What this means for investors: Yellen had a dearth of positive economic indicators to call on when arguing for the rate hike, but there are also significant factors countering them.. Employment numbers are better, the stock market is hitting highs, and inflation is on track to rise. However, investors expected a more hawkish tone on GDP growth. The lack of significant signs of economic growth acceleration was underlying the announcement. Furthermore, as inflationary pressures rise (as expected), gold will get even more of a boost. Silver also got a boost this week for the same reasons and factors as gold.

Dollar Strength Down after Rate Hike

Weak DollarWhile gold reacted to the Fed announcement with a rally, the dollar did the opposite. The dollar was at a five-week low on Thursday while bond yields rose. Analysts are projecting the dollar strength to come off even more by mid-year. Investors are watching the G20 finance minister meeting taking place this week for further indications on how currencies are going to move.

What this means for investors: Many investors (as well as President Trump) have been saying for some time now that the dollar is too strong. It resilience the past few months have been holding back gold prices, which usually correlate inversely to it. If inflation creeps higher and the dollar’s strength ebbs, expect precious metals to see a lift.

 

President Trump Releases Budget Blueprint As U.S. Hits Debt Ceiling

Budget Blueprint

On Thursday, the U.S. debt limit was restored after being suspended. This sets a legal limit on how much the U.S. can borrow. Astoundingly, there was barely a mention of it from the mainstream media.

The national debt is over $19 trillion. Lawmakers will have to raise the debt ceiling by sometime this autumn to avoid defaulting on essential payments to service this debt. Already it is shaping up to be a vicious, partisan political battle. Speaker Paul Ryan guessed that it won’t be a “clean debt ceiling hike” and Secretary Treasury Steve Mnuchin stated that it will require “extraordinary measures.”

President Trump’s budget blueprint made bigger headlines. The proposed blueprint made some significant – and controversial – cuts, but also added a $54 billion defense spending increase. The plan also did not cover the 70% portion of the budget that is non-discretionary spending.

What this means for investors: The past couple Gold Market Discussions have spent some time on this looming issue of the potential debt ceiling crisis. It seems unlikely that spending is going to get cut back in an impactful enough way to prevent rocketing inflation, despite the President’s proposed cuts. First of all, he will have a tough political battle to even pass some of these. Secondly, the proposed increases will likely exceed the cuts. Finally, with a deficit already over $19 trillion, nothing short of drastic measures will chip away at this balance. As some of these inevitabilities come closer to being realized, investors will start choosing gold for larger parts of their portfolios for its long-term protection value.

By Royal Assent, Article 50 for Brexit Can Now Be Officially Triggered

Brett or Bregret

Queen Elizabeth gave royal assent this week to the Brexit bill. This means that Prime Minister Theresa May can now officially begin negotiations with the European Union to leave the economic union. The House of Lords attempted to pass an amendment that would prolong the process to trigger Article 50 of the Lisbon Treaty, but the Queen’s assent nixed it. It is expected that May will begin the process sometime after March 29th.

In other news out of Europe this week, right wing populist Geert Wilders lost the Dutch Prime Minister election, but his party gained parliamentary seats. The Netherlands and Turkey also traded diplomatic jibes and rhetoric over the Dutch forbade a Turkish minister from campaigning among the many immigrants living there for a Turkish referendum that would expand presidential power.

What this means for investors: There are high levels of uncertainty coming out of Europe right now. It is important for investors to bear in mind that events in the European markets significantly impact precious metals as well. Some of these uncertainty factors were also responsible this week for gold’s rally. Furthermore, as uncertainty increases, safe haven demand will continue to rise.

 

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 Here are some articles from the web discussing the topics in this week’s post:

Gold Reacted to the Fed Announcement on Interest Rates with Rally

Read Here

Dollar Strength Down after Rate Hike

Read Here

President Trump Releases Budget Blueprint As U.S. Hits Debt Ceiling

Read Here

By Royal Assent, Article 50 for Brexit Can Now Be Officially Triggered

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

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This Week Gold Lower on Upcoming Rate Hike – Fed Behind the Curve?

Gold Market Discussion

Gold Lower on Upcoming Rate Hike and Animal Spirits, but is the Fed Behind the Curve?

John Maynard Keynes
John Maynard Keynes, Economist who coined the term “Animal Sprits” in 1936

Gold prices were weighed down heavily this week mostly due to the upcoming rate hike.. The dollar is maintaining its strength right now, which is pushing down gold prices. Moreover, strong indications that the Federal Reserve will hike rates a quarter point next week were also negative for gold for now. Finally, the animal spirits are strong right now with the stock market showing positive trends. Investors are still hoping for some steam, as the stock market appears to be continuing its bull run for now.

Charts are showing that the Fed may be behind the curve with this rate hike though. The rate is not where it should be for inflation levels. The last time this happened was in 1977. See more in this video.

What this means for investors: Probability of a rate hike is at nearly 100% now, and investors are reacting as expected. They are moving into interest-bearing assets right now rather than precious metals, and the lower demand is depressing the price. It is an expected pattern for gold in these circumstances.

There is a rat among the animal spirits though. Gold is still up 7% for the year, which indicates that all is not optimistic looking ahead. Investors are still buying up gold as a safe haven against uncertainty. Furthermore, these physical gold acquisitions are in significant part by central banks (notably Russia, China, and Germany) as well as private individuals. When gold goes “on sale” during these dips, it is a prime opportunity to protect against the future.

Falling Crude Oil Prices Weigh on Metals

Crude oil pricesoil falling plunged this week and pulled the whole commodity sector along. This also contributed to the pull back from gold and silver. Oil and gold prices often show correlation, so it is not surprising gold pulled back with some bear-ish signs from oil.

What this means for investors: There is an oversupply of crude oil right now. This is due in part to a spike of U.S. shale production and additionally, reduced demand.

Weak oil price is just one of many factors sending ripples through the gold market, though. There are still strong indications that inflation and correction are approaching. The gold market could remain in this holding pattern in the near-term, but certainly not forever. There are too many fiscal policy risks and political unknowns around the globe.

 

Following on Last Week’s Debt Ceiling Discussion…


As anticipated in last week’s post, treasury Secretary Steve Mnuchin started the conversation last Thursday about Congressional approval to lift the debt ceiling. The deadline is fast approaching, and the debt limit will have to be raised to accommodate President Trump’s spending plans.

What this means for investors: See last week’s analysis on what a debt limit crisis could mean here.

Market Uncertainty Ahead with Brexit Deadline and Dutch Elections

Uncertainty could be rattling the markets next week with events coming out of Europe. Great Britain is approaching its deadline to trigger Article 50 (in order to leave the European Union as decided by the Brexit referendum last year), and is still running into legislative hold ups. The EU looks like it will be keen to demand a hefty fine for the divorce.

Eyes are on the Netherlands as well to see if the country follows the current sociopolitical, populist trend that events like Brexit and Trump’s election are indicative of. Geert Wilders is a right wing, anti-EU, anti-immigration, populist candidate that is taking a lead in the race. His election would probably be another beat of doom for the EU. More significantly (because it was a founding EU member and one of the largest economies), France faces a similar upcoming presidential race soon.

What this means for investors: There might be a spike in precious metals prices next week if this demand for security from volatility happens in Europe. The fact that two founding members of the EU – not to mention the populist, right wing resurgence in multiple other EU members – are so dissatisfied with the EU after approximately 50 some years speaks to the massive global shift that is occurring right now.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Gold Lower on Upcoming Rate Hike and Animal Spirits, but is the Fed Behind the Curve?

Read Here

Falling Crude Oil Prices Weigh on Metals

Watch Here

Last Week’s Debt Ceiling Discussion

Read Here

Market Uncertainty Ahead with Brexit Deadline and Dutch Elections

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

debt black hole

Is the U.S. Approaching Its Worst Debt Crisis In History?

Gold Market Discussion

The U.S. is on the Brink of a Major Debt Crisis

US Debt trap

With a $20 trillion national debt, it sure appears the U.S. is approaching a debt crisis. This past week President Trump addressed Congress with a pro-jobs and growth message that prompted a stock market rally the next day. As a result, gold saw some push back.

However despite this optimism, there are some longer term aspects of the President’s fiscal policy that will probably be deleterious long term. Notably, that this administration will significantly add to the national debt with increased spending as well as tax cuts.

When President Trump took office, there was $382 billion cash in the treasury. It’s now at $178 billion. In In addition, the U.S. is fast approaching its debt ceiling. In 2015, Congress and President Obama suspended it until March 15, 2017. The debt ceiling is set at $20 trillion, so the only solution will likely be to raise the ceiling again. However this is probably going to turn into a heavily politicized vote with both parties becoming even more bipartisan. Consequently, delay in reaching a budget and debt ceiling decision could lead to another government shut down.

What this means for investors: Sovereign debt crises can lead to financial collapse and volatility. Furthermore, inability or delay to reach a debt ceiling solution will lead to safe haven demand for gold picking up. Watch below as David Stockman (President Reagan’s budget chief) discusses what he is reading for an approaching debt crisis.

David Stockman, Budget Chief to Ronald Reagan, on Debt Crisis – Watch Here

Trouble Seeing Video? You can also click here to watch

“There is going to be a debt ceiling crisis like never before this summer, and that’s what people don’t realize” – David Stockman on Fox Business Network with Neil Cavuto

5 Notable Debt Crises in Modern History

debt ball and chain
1.) 1980s Latin America

In the 1970s, the governments of Mexico, Brazil, and Argentina had borrowed heavily to fund industrialization. By the 80s, the region was over 50% debt to GDP and couldn’t pay back loans. The 300% rise in oil prices certainly worsened the crisis. Growth slowed, and currencies depreciated.

2.) 2008 – 2009 Europe

The collapse of financial institutions triggered the European sovereign debt crisis. These collapses are attributed to high levels of government debt and rapidly rising bond yields. The crisis started in Iceland and spread rapidly to Greece, Portugal, and Ireland (the hardest hit countries).  In addition to these three, Cyprus and Spain were unable to pay off or re-finance their debt without ample assistance from the ECB and IMF. The bailed out countries have been forced to utilize austerity measures while the EU attempts to use quantitative easing to promote some economic growth. Growth is still rather sluggish, and the crisis caused a lack of confidence in governments.

3.) 2013 U.S.

This was more of a debt ceiling crisis rather than debt crisis. As the U.S. approached its debt ceiling, there was fierce debate on whether House Republicans would vote to raise the ceiling. In the past, votes to raise the debt ceiling usually passed without questions. However in 2013, Republicans demanded a reduction in spending in exchange for a vote to lift the ceiling. It led to a sequester and government shut down before the budget was resolved. It brought up the dangers of government over-spending, but it seems many politicians have already forgotten their principles.

4.) 2015 – 2017 Greece

Greece has never really recovered from its sovereign debt crisis. In fact, its outlook is looking dire again. The government cannot pay off its loans from the ECB and IMF. Germany is heavily opposed to bank rolling more loans, but in fact might need to to keep the Eurozone together. The IMF does not want to fund more bail out, and Greece is refusing more austerity cuts. Furthermore, Europe is a highly politically volatile region right now, and this debt crisis will trigger significantly more uncertainty.

5.) 2016 China

China’s debt in 2016 reached more than 250% of GDP. In 2009, China launched a $600 billion economic stimulus that has rather proving to stymie growth now. China missed growth projections for last year, and it seems like it also could his year as well.  This would probably trigger a significant financial crash.

Gold Pulls Back this Week, 2-Year Bond Yields Climb

gold barsGold closed the week with some price pull back. Some of the reasons were a stronger dollar, high chance of an interest rate hike this month, and a solid week for the stock market. The dollar and stock market also got boosts from the President’s address to Congress this week. Silver is more or less tracking gold right now.

The U.S. dollar was at an 8-week high this week. This was anticipation of a rate hike coming this month. On Friday, Yellen confirmed that the case for a rate hike had strengthened, and that we would possibly see a couple more before the end of the year.

What this means for investors: Some investors used the dip as a prime buying opportunity. Precious metals are following their standard pattern of moving inversely to the dollar. As David Stockman and many other analysts have pointed out though, there is a long-term trend in effect in this market and fiscal plan that will eventually lead to crisis.

 

 

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 Here are some articles from the web discussing the topics in this week’s post:

The U.S. is on the Brink of Debt Crisis

Read Here

Budget Chief David Stockman Video

Watch Here

5 Notable Debt Crises in Modern History

Read Here

Gold Pulls Back this Week, 2-Year Bond Yields Climb

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Overvalued Stock Market

The Stock Market Is Overvalued – When Is It Going to Blow?

Gold Market Discussion

11 Straight Record Closes, But This Market is Overvalued

Stock Market BubbleDespite 11 straight record closes, investors are starting to worry the market is overvalued. Investor pessimism is rising as they start to fear a correction is coming.

Friday marked the first record 11-day win streak for the Dow Jones since 1987. In 1987, the Dow Jones posted a 13-day streak of record closes before abruptly and chaotically crashing in October. This past Friday did see some pull back from stocks early in the session, but as the trading day winded down, the Dow rose enough to achieve the landmark close.

It’s not just the Dow. Gold and bonds are also showing similar patterns to those before the 1987 crash. Gold prices and bond yields are both rising.

What this means for investors: The 1987 Crash saw $500 billion lost in a single day. Many investors are preparing now with gold in case this market experiences a similar crash. Growing pessimism and gold’s 8% rally this year indicates that there is a growing, tangible fear among investors that a sharp correction – if not crash – is imminent.

Gold Breaks $1,250 on Friday and Silver Follows Trend

Gold and silverGold is up 8% this year compared to the 4% roaring rally that the stock market is experiencing. On Friday gold spot price pushed above $1,250 while silver eked out gains to close just over $18. It is no surprise that there is an upswing in safe haven investing as pessimism in the stock market’s rally becomes more apparent.

On Wednesday the Federal Reserve announced that there could be a rate hike next month amid rising inflation pressure. Gold only pulled back modestly following the announcement. Generally, such an announcement would prompt more of a pull back because gold is a non-interest bearing asset.

What this means for investors: Alan Greenspan, former Federal Reserve chairman, issued a caution to investors this week to start buying gold now. Silver looks poised to follow a similar bullish rally. Both metals are off to an optimistic start for the year, and rising inflation and safe haven investing will likely spur them further.

Treasury Secretary Mnuchin Scales Back Growth Projections Moderately Amid Rising Inflation

Secretary of Treasury Steven Mnuchin
Secretary of Treasury Steven Mnuchin

Comments by Treasury Secretary Steven Mnuchin this week pushed the dollar down slightly. In interviews with Fox Business News and CNBC, he stated that tax reform was a priority and sounded markedly less protectionist on trade and border tax than the White House.

The Treasury Secretary also scaled back economic growth projections from what the Administration has been hoping for. Mnuchin stated that 3% growth will take longer than initially expected.

What this means for investors: President Trump and other prominent figures have been saying that the dollar is too strong for some time now. A strong dollar tends to hold back gold prices, which is why gold saw a boost from Mnuchin’s comments. The data is showing that inflation is rising. When the dollar’s current strength breaks down, demand will increase for precious metals.

Russia Increasing Gold Holdings Again

Russian President Vladimir Putin Meets Head of Russian Central Bank Elvira Nabiullina
Russian President Vladimir Putin Meets Head of Russian Central Bank Elvira Nabiullina

Russia has started buying up significant quantities of gold on the price dip at the end of 2016. The Russian Central Bank bought 6.4 million troy ounces of gold in 2016, and has already bought over a million troy ounces in 2017. Russia is fortunate that it can mine and refine gold within its vast borders, which aids in part with its gold reserve holdings.

This report by economic think tank OMFIF states that central banks around the world are upping their gold reserve holdings, and that this trend will continue. The central banks of Russia, China, and Kazakhstan led the way in buying gold in 2016, but they are certainly not the only ones. Germany, for example, has been making vigorous efforts to repatriate all of its overseas gold back to Frankfurt.

What this means for investors: Are central banks finally coming to terms with the array of pitfalls of fiat currency? Gold and silver backed money is the most assured way of ensuring value to currency. The monetary experiments of this decade have served to temporarily plug holes of a broken, global financial system, but there is growing fear – among governments, banks, and individuals – that the levy is going to break.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

10 Straight Record Closes, But This Market is Overvalued

Read Here

Gold Breaks $1,250 on Friday and Silver Follows Trend

Read Here

Treasury Secretary Mnuchin Scales Back Growth Projections Moderately Amid Rising Inflation

Read Here

Russia Increasing Gold Holdings Again

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

inflation chart

Rising Inflation Will Boost Gold Prices Down the Road

Gold Market Discussion

Rising Inflation Will Boost Gold and Silver

Rising Inflation

The current economic outlook is anticipating inflation in the not-so-distant future, and rising inflation will boost gold and silver prices. Consumer prices are up 0.6% in January and 2.5% over the last year. Price seem to be rising at the fastest pace in about six years.

Rising inflation is to be expected over the near future. Current fiscal policy of President Trump has all the indicators to spur inflation. He has promised government spending increases on infrastructure and defense with, so far, not significant budget cut backs. This will add to the already skyrocketing budget deficit.

What this means for investors: The markets are currently seeing an exceptionally rare event where gold is rising despite a strong dollar. This is a sign that the markets and investors are anticipating rising inflation. Investors are buying gold now while prices are still relatively low. Silver is moving in tandem with gold, and can likewise be a lucrative investment for many.

Germany Is Bringing Back Its Gold Held Overseas

German gold holdings

Germany has started to repatriate much of its gold. During the Cold War when the Soviets occupied much of central and Eastern Europe, West Germany sent much of its gold out of the country to protect it in case the Soviets invaded.

There is over 3,000 tonnes of German gold out of the country. They have moved nearly 600 tonnes of it back to Frankfurt from Paris and New York, and plan to have half of the total amount repatriated by the end of the year.

What this means for investors: Germany is repatriating its gold because of instability fears surrounding the Euro. In fact, there is a significant amount of political uncertainty around the future of the EU and Europe in general. There are those who argue in Germany that they need their gold bullion within German borders to back the Deutsche mark in the event of a Euro currency collapse.

Janet Yellen on Capitol Hill This Week

Janet Yellen Capital Hill

Janet Yellen attended congressional hearings this week to discuss the economy and the possibility of future rate hikes. The Fed chair gave a hawkish impression for future monetary policy stating that the economy seemed strong enough for three rate hikes this year.

Yellen’s speech raised trader expectations of a rate hike to come in March this year. Republicans on the House Financial Services Committee sparred with Yellen over the extent of financial recovery that the Fed’s monetary policy experiment actually brought about.

What this means for investors: Gold pulled back following Yellen’s comments on a potential interest rate hike. This was to be expected because it is a non-interest bearing asset. However, it went up again during the week and finished the week just shy of $1,240.


Gold Hedge against Geopolitical Conflict

BlackRock HQ
BlackRock Headquarters

One analyst at top money management firm BlackRock Inc. is predicting that trading is not reflective enough of the geopolitical risk in the markets right now. Stocks are still riding the Trump rally, and just posted the longest rally in three years this week. This is happening though while global uncertainty gauges this year have climbed to the highest level on record.

What this means for investors: Some of these uncertainty levels are being driven by unknowns around what Brexit terms will look like, a looming debt crisis in Greece, potential collapse of the Euro, and political uncertainty in the U.S. around foreign policy. The stock rally is partially based on hope of tax cuts, deregulation, and fiscal stimulus coming out of the Trump administration. There is still much uncertainty about timing and levels though. Meanwhile gold has rallied 8% this year so far, and is expected to rise further due to rising inflation and safe haven demand.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Rising Inflation Will Boost Gold and Silver

Read Here

Germany Is Bringing Back Its Gold Held Overseas

Read Here

Janet Yellen on Capitol Hill This Week

Read Here

Gold Hedge against Geopolitical Risk

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

the EU

Increasing European Political Uncertainty Will Be a Driver for Gold

Gold Market Discussion

Increasing European Political Uncertainty and Populism Will Fuel Safe Haven Demand

Plummeting levels of confidence in national governments (and even more so in the EU) is leading to increasing European political uncertainty. This is true in the U.S. as well. Donald Trump’s election and the Brexit vote are indicators of rising populism and uncertainty.

Other prominent indicators are upcoming elections in France and furthering issues with Greek debt. In France, right wing leader Marine Le Pen could be the first Front National (FN) candidate elected President. She is topping the polls and gathering working class, traditional socialists who are dissatisfied with the establishment. Industrial regions in France are stagnating and job prospects are dismal. Le Pen, an outspoken EU critic, has also spoken out about France holding its own Brexit-style referendum on membership.

Greece’s debt problem – which has never been resolved, merely stymied by bail out funds – has reared its head again to haunt the EU. Greek debt is at 175% of GDP and payment deadlines to the IMF and EU for previous bail outs are approaching. The IMF is unwilling to lend more due to its pessimistic outlook, and Germany is reluctant to continue to prop up Greece without IMF assistance as well. Greece declares it is politically impossible to meet EU deadlines. This is because it has already endured eight years of austerity with little growth resulting.

What this means for investors: Euroskepticism is pervading the EU, and France and Britain are leading the way. Experts and analysts are predicting populism, rather than monetary policy, could be the biggest market driver in the near future. Populist movements tend to spark volatility in the markets, which will be beneficial to gold and silver. Furthermore, as resistance to the establishment and elites grows, people will feel safer holding their investment in hard, tangible form.

EU Commission Publishes “War on Cash” Roadmap

In further EU news, recently, the EU Commission (the most powerful branch of the organization) published a roadmap to limit – and eventually do away with – cash transactions. The reasoning behind it is that terrorists and criminals conduct transactions with cash. The likes of Ken Rogoff and Joseph Stiglitz are advising the Commission in this blatant attempt to move to a cashless society, disregarding the vast number of EU citizens who use it for peaceful business means.

There are numerous regulations at place at national levels to limit cash transactions. Moreover, any harmonious EU-level directive is going to inevitably hurt the smaller, less wealthy EU economies. This plan is more than likely an attempt to solidify greater control in the hands of the EU.

What this means for investors: With increasing European political uncertainty, this is an ominous sign. Perhaps this is further attempt to maintain establishment authority and crack down on populist resistance to the EU.

Cash in the bank is never 100% safe. Financial and economic collapse can wipe away savings in the blink of an eye. Furthermore, you do not always have access or control over it once you have trusted it to a bank. Having some gold and cash outside the control of banking institutions is the only way to guarantee your direct control.

Trump Bullish for Gold? Watch the Signals from Gold and Bonds

There is a strong case for buying gold in a Trump economy. The bullish case for metals is getting stronger, and more investors are changing their tune on buying precious metals now. The initial stock market rally after the election pushed gold prices down, but prices have been mostly rising through 2017 on uncertainty and protectionism.

Gold prices pulled back Friday, but had climbed to just over $1,240 during the week, which was a 2.5 month high. Now gold and bonds are flashing signals similar to those that preceded the 1929 and 1987 financial collapses. Bond yields are rising too with gold. Rising yields and rising gold signal inflation.

What this means for investors: Rising inflation will lift gold prices. Not only will gold become a more attractive investment than other assets for its rising value, but it will also be a safe haven. If the historic parallels for bond yields and gold hold true again, the economy could be steered towards a painful correction. Use opportunities like Friday’s pull back to protect your wealth with gold and silver.

Iran Rejects the Dollar for Basket Currencies as Reserves

iran Market volatility can be triggered by geopolitical events. There is likely going to be increasing volatility coming from Iran as tensions escalate. Recently, Iran ditched the U.S. dollar for its official financial reporting. They have said that they will use either a basket of currencies or pin their currency against that of their closest trading partner (likely the Euro). The shift from the dollar by Iran came in ‘retaliation’ for the immigration ban issued by President Trump against seven countries, which included Iran.

What this means for investors: The dollar is used as a global standard, so there is often high demand for the dollar. This contributes significantly in strengthening the dollar. Its strength (which has been at raging highs lately) will take a hit if demand for it as a common gauge goes down. This also highlights the scaling tension between the U.S. and Iran.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Increasing European Political Uncertainty and Populism Will Fuel Safe Haven Demand

Read Here

EU Commission Publishes “War on Cash” Roadmap

Read Here

Trump Bullish for Gold?

Read Here

Iran Rejects the Dollar for Basket Currencies as Reserves

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Dodd-Frank Act Repealed

President Trump Repeals Dodd Frank Regulations; Gold Breaks Above $1,200 Again

Gold Market Discussion

President Trump Repeals Dodd Frank Regulations Triggering Stock Market Rally

President Donald J Trump Official PortraitThe Dow closed 187 points up on Friday settling just over 20,000. Investor confidence got a boost as President Trump repeals Dodd Frank regulations. Goldman Sachs and other banking institutions were once again the big winners (unsurprisingly).

The boost came Friday afternoon after President Trump signed an executive order halting some of the regulations of the Wall Street Reform and Consumer Protection Act (better known as the Dodd Frank Act). The executive order will allow banks to leverage more with fewer regulations inhibiting lending and trading.

What this means for investors: For now, the order is a temporary suspension to assess which components of the act will be repealed and replaced. The act was designed to prevent another financial crisis akin to 2008 by putting checks on financial institutions. Some argue that the act did not go far enough or that its regulations actually benefited bigger institutions while hurting small, community banks. Regardless, a repeal is going to raise uncertainty in the markets and ultimately benefits Wall Street.

Gold Breaks Above $1,200 Mark after Pull-Back Last Week

After a modest pull-back on price at last week’s close, this week the spot price of gold broke above $1,200 again. Silver was trading up slightly as well. Many of the same factors affect both metals. dollar and gold unorthodox correlationSome of the events that gave metals a boost include a weaker dollar, safe haven demand in the U.K. and U.S., and the Federal Reserve decision not to raise interest rates.

Gold demand in the U.K. spiked this week. British Parliament voted overwhelmingly to approve the triggering of Article 50 to begin the process of leaving the EU. Investors in the U.K. are seeing gold as protection against the volatility this will bring to the pound. Last year after the Brexit referendum vote, metals prices got a massive boost.

What this means for investors: The Dow climbed back to 20,000 on Friday. It initially broke the historic mark last week, but struggled to maintain it until Friday. Gold prices were also up on Friday, so the stock market strength appears to not be adversely affecting metals at this time.

Why Are President Trump and Bill Gross Predicting the Dollar Is Too Strong?

The US Economic Growth?As gold breaks above $1,200 this week, weakness from the dollar spurred gold’s rise in part. Lately, the dollar has been showing considerable strength, which generally weighs negatively on gold prices. A weaker dollar may become the new norm though.

President Donald Trump made comments to the Wall Street Journal this week that the dollar is too strong. Billionaire investors Bill Gross echoed these sentiments this week, saying that a strong dollar is a threat to growth. A strong dollar makes U.S. goods and exports less attractive to foreign buyers.

What this means for investors: Weakening the dollar will drive long-term growth overall by making products cheaper, and hence more will be sold overseas. For gold and precious metals, a weaker dollar means prices will go up. The dollar also showed considerable strength last year, but uncertainty has been driving gold. We have already called the low for gold prices for 2017, and this trend could be an important factor in driving a gold rally.

The Federal Reserve Decides to Keep Interest Rates Low

The Federal Reserve left interest rates unchanged on Thursday following their meeting in Washington. Janet Yellen noted that there were increasing levels of optimism among investors and Federal Reserve Buildingconsumers, but not enough for a rate hike.

What this means for investors: Low interest rates are favorable to gold. The Fed appears to be maintaining a similar, dove-ish position as last year where Yellen talks ambiguously of improvement to the economy, but displays hesitancy towards lifting rates.

Fiscal policy rather than central banks’ monetary policy is becoming increasingly heftier in terms of effect on the economy though. The focus is shifting to Trump’s economic policy rather than central banking activity.

 

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 Here are some articles from the web discussing the topics in this week’s post:

President Trump Repeals Dodd Frank Regulations Triggering Stock Market Rally

Read Here

Gold Breaks Above $1,200 Mark after Pull-Back Last Week

Read Here

Why Are President Trump and Bill Gross Predicting the Dollar Is Too Strong?

Read Here

The Federal Reserve Decides to Keep Interest Rates Low

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Hoover and the Soup Kitchens

History Repeating Itself? Lessons from Hoover on Trade Policy

Gold Market Discussion

Lessons from Hoover on Trade Policy: The Smoot-Hawley Tariff Act

Smoot-Hawley
Smoot and Hawley on April_11,_1929

As the Trump administration starts enacting new policy, history can illuminate some valuable lessons from Hoover on trade policy and its implications. These implications could have especially relevant repercussions today.

Trade has been an cornerstone of Trump’s campaign. This week he signed an executive order canceling the Trans Pacific Partnership Treaty. Furthermore, with a focus on securing and bringing back U.S. jobs (particularly manufacturing) to our shores, the new President is floating ideas of imposing tariffs on imported goods. This likely would ensure more goods are made and bought domestically rather than abroad.

Yet President Herbert Hoover attempted a similar policy in 1930 with opposite results. He signed the Smoot-Hawley Tariff Act that raised tariffs on over 20,000 goods coming into the U.S. In theory, this was to protect U.S. manufacturing jobs. In reality, U.S. trading partners counter-imposed tariffs on U.S. goods and prices rose deepening the Depression.

What this means for investors: Most economic historians view Smoot-Hawley catastrophic. It ended up hurting a multitude of sectors of the economy including agriculture (to a significant degree) and manufacturing. In the 1930s it prolonged the Depression. Nowadays similar tariffs could stymy the recovery most Americans are expecting.

How Do Tariffs Affect the Economy?

Herbert Hoover
Herbert Hoover

Tariff wars are the result of protectionist policy like the Smoot-Hawley Act. If one country raises tariffs on another, then that country will be forced to raise its prices to maintain revenue. In retaliation – such as what happened in 1930 after Smoot-Hawley – the country now burdened by tariffs will put into place its own tariffs.

Furthermore, tariff wars lead to trade wars. Trade wars can begin in one sector and spill over into others and result in the warring countries’ other partners being affected by higher prices and declining output.

What this means for investors: It seems likely that these kinds of protectionist measures could further inflation. As prices go up, the dollar (or other currency) loses its purchasing power. In a rising inflation environment, gold prices will also go up. Silver would probably also increase in tandem with gold.

Dow Jones Hits 20,000

Dow Jones 20,000

This week the Dow Jones hit the important 20,000 milestone. It has been toying with hitting the mark since December, and it finally reached it on Wednesday. Investors are calling this the “Trump Rally” after the market’s run-up following the election. The market, however, had been performing strong for months before after making a remarkable recovery in the fall.

The market hit the 20k mark following news from the White House on trade negotiations and the re-instatement of construction of the Dakota Access Pipeline project. One of the greatest contributors to the milestone though was Goldman Sachs. The Wall Street juggernaut’s bank stock has risen 30% since the election and accounted for more than 20% of the Dow’s rise.

What this means for investors: Some analysts are predicting that a correction is imminent in the markets. Even traditionally bullish analysts are warning that this market is overbought and therefore in an environment ripe for a drop. When the market does drop, demand will likely shift to safe havens such as gold and silver.

Gold Prices Could Be Set for a Rebound Despite Some Pull-Back

Gold prices pulled back this week dipping below the $1,200 mark. A pull back like this is more or less expected during a week like this with a historic stock market high. In addition the dollar saw some strengthening following some of the Trump executive actions this week.

Precious metals could be set for a rebound though. A report from UBS scaled back investor optimism that has been fueling the Trump rally. Market uncertainty, particularly around fiscal and economic policy, is increasing and this will fuel gold and metals.

What this means for investors: A few weeks ago we called the low for gold prices in 2017. The macro trends that will lift prices are falling into place. These include government spending fueled inflation, protectionism in trade, and deficit spending. Price dips like this are usually an optimal time to hedge against the future with gold or silver.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Lessons from Hoover on Trade Policy: The Smoot-Hawley Tariff Act

Read Here and Read More Here

How Do Tariffs Affect the Economy?

Read Here

Dow Jones Hits 20,000

Read Here

Gold Prices Could Be Set for a Rebound Despite Some Pull-Back

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Ray Dialo Fund Manager

How Populism Will Be Biggest Driver of Markets in the Future

Gold Market Discussion

Why Populism Will Be Biggest Driver of Markets According to the Largest Hedge Fund’s Manager

Ray Dalio
Bridgewater Associates Fund Manager Ray Dalio

Ray Dalio, founder of Bridgewater Associates (considered the world’s largest hedge fund), believes that populism will be biggest driver of markets and money in the future. Populism will be even more influential than monetary policy from the Federal Reserve and other central banks. Dalio was speaking at a debate panel with International Monetary Fund chief Christine Lagarde and Harvard professor Larry Summers (among others).

The billionaire hedge fund manager emphatically stated that populism “scares him”. He went on to say that it is now the most important global issue. Populism scares him, in his words, because of its “extremism” (in both the right and left wings) and could lead to attacks against the top 1%. He compared the increasing wealth gap now to the increasing wealth gap in the 1930s. He correlated the rise of populist government and sentiment in the 1930s to that of today. Dalio equated populism to protectionism and nationalism

What this means for investors: Events like Trump’s election, the Brexit referendum, and elections of other populist leaders around the globe prove Dalio’s point. Societies and governments are experiencing a shift away from Establishment norms. That shift is rapidly increasing in pace. Dalio’s fears underly the threat to his elitist position in the finance world from populist disenchantment. There are countless geopolitical unknowns on the horizon that this shift is bringing. These will surely increase demand for safe haven metals.

 

Gold Hits 2-Month High this Week While Global Leaders Meet at Davos for World Economic Forum

The headline news of the week was, of course, Donald Trump’s inauguration as the 45th President of the United States. The markets and precious metals were both up Friday morning as he took the oath of office and delivered a staunchly patriotic and populist address.

In other news, the global elite ascended to the mountain resort in Davos, Switzerland this past week for the annual World Economic Forum (WEF) discussing macro trends such as how populism will be biggest driver of markets and other macro trends.

Meanwhile gold rallied to a 2-month high breaking over $1,210 this week. Silver experienced a similar boost hitting a 1-month high of $17. Both metals pulled back slightly on Thursday on hawkish comments from Fed chair Janet Yellen.

What this means for investors: Last week we called the price bottom for gold. This sentiment is echoed by other analysts such as Dennis Gartman, who sees positive long-term prospects for gold. Investors are starting to worry about rising inflation under some of Donald Trump’s economic plans for increased spending and tax cuts and avoiding too much risk while increasing precious metals holdings.

 Theresa May States that Brexit will be a “Hard Brexit” from the European Single Market

Britain Prime Minister Teresa May
Britain Prime Minister Teresa May

On the subject of populism, in a highly anticipated speech Tuesday, U.K. Prime Minister Theresa May stated that the U.K.’s “exit” from the EU will be a “hard Brexit” with Britain leaving the free trade market, which is the foundation of the organization. May also indicated that the final Brexit legislation will go before Parliament to be ratified, which means perhaps the break will not be so severe in the end after all.

May outlined demands for the negotiations that would include an amenable, visa-free solution for British citizens living in the EU and vice versa. She also expressed hope that positive trade agreements could be realized between Britain and its European trading partners. Reaction from Europe was mixed. Some saw it as too “take” and not enough “give” and found it over confident on European concessions.

What this means for investors: The British pound posted its largest gain since 1998 after the speech, while the FTSE 100 index fell (as did the Euro). Many investors had anticipated a downward move from the pound. Instead the markets seemed reassured by the specifics of May’s speech. As Britain prepares to trigger Article 50 and officially commence negotiations, expect more volatility. Precious metals were up Wednesday following the speech.

Chinese President Xi Jinping at Davos on Globalization, Trade War, and Trump

Xi Jinping
Chinese President Xi Jinping

Davos saw a first this year as President Xi Jinping of China addressed the World Economic Forum. It was the first time the Chinese President has attended, and he gave the keynote address.

In sharp contrast to the overarching question of rising populism that permeated Davos, Xi praised globalization. Without directly naming Trump, Xi criticized the “protectionist” trend towards trade policy that is associated with the new President’s platform.

What this means for investors: China is worried about the approach that the U.S. is turning towards in regard to free trade. Trump’s emphasis on “America first” in regards to domestic manufacturing will weigh heavily on an already sluggish Chinese economy. Overall, the sentiment among the elite in Davos was strongly indicative of unease by the populist departure from the globalization that has empowered them.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Why Populism Will Be Biggest Driver of Markets According to the Largest Hedge Fund’s Manager

Read Here

Gold Hits 2-Month High this Week While Global Leaders Meet at Davos for World Economic Forum

Read Here

Theresa May States that Brexit will be a “Hard Brexit” from the European Single Market

Read Here

Chinese President Xi Jinping at Davos on Globalization, Trade War, and Trump

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold Market May Bull

Gold Has Hit the Low for 2017 and Climbs This Week on Uncertainty

Gold Market Discussion

Gold Has Hit the Low for 2017 and Is Set to Climb

Gold Market MayIn December 2015, RME called the gold price bottom, and 2016 followed with a rally in metals.  Once again, we are calling that gold has hit the low for 2017 already. In 2015 the price bottomed at $1,055. On January 3rd this year, gold was at $1,151.

Gold was up 4% overall for 2016. Earlier in 2016 it was up over 20% before pulling back. Investors were predicting a new bull market last year, and the signs are becoming even more apparent now that we can expect this gold bull market to run for a while.

What this means for investors: Buy gold and silver now while prices are still low against a strong dollar. When gold prices dipped last fall on a strong dollar and stock market rally, gold “went on sale.” When inflation hits, dollars will have less purchasing power, so gold will increase in value against the dollar.

Gold Prices Rally This Week on Global Uncertainty, Hitting 6-Week Highs

Global Risk

This past week gold was trading at 6-week highs breaking through the $1,200 mark. It got its boost in part from signs of weakness from the dollar, which slipped from some of its recent strength.

Gold is also rising on investor confidence. Investors are starting to fear the imminent burst of an overvalued stock market. After coming within a few points of 20,000 in the past couple weeks, the dow retreated over 100 points this week, and has yet to reach that milestone.

Uncertainty around President-Elect Trump and his first term fueled safe haven metals buying as well. The stock and bond markets showed signs of increased volatility during his press conference. When these markets get jittery, gold prices gain. Regardless of whether you are pro-Trump or anti-Trump, Democrat or Republican, there are many unknowns ahead as geopolitical tensions shift and morph. Just this week, the U.S. has deployed an armored tank division into Poland as part of the ongoing Operation Atlantic Resolve. Fear around these global trends is going to boost safe haven buying.

What this means for investors: Investors around the globe are preparing to hedge against uncertainty. With renewed demand in India and China and sell-off starting to pick up pace in the stock and bond markets, gold will become more desirable.

Gold at a Historic Breakout?

Gold just achieved a rare break out. It is indicated by a crossing over of the 50-WMA above the 200-WMA in a bullish break out. The last time the markets saw such a break out was in 2002, and it was the beginning of the last major bull market. These charts illustrate exactly what this has meant historically for gold prices, and what it could mean for the future bull market.

What this means for investors: The last time this breakout occurred, gold prices rose 429% over the course of nine years. Gold has shown time and again that it the most reliable long-term investment, and as we prepare to move into a new bull market, metals will prove their historic worth once again.

Silver is Poised to Rally Again

stacked silver barsSilver made headlines throughout 2016 for its – at times – 30% gains. The white metal pulled back with gold in the fall, but still closed out the year with 17% gains. Silver, like gold, is positioned for a bull market this year. Analysts say that silver will fall only if investment demand does, and so far, it appears investment demand is positioned to increase in the long term. Silver also has more industrial uses that factor into its spot price, and these uses are not likely to decrease anytime soon.

What this means for investors: Silver is perfect for investors who cannot afford a gold portfolio. It is also useful for diversifying a gold portfolio to hedge with different options. Gold has hit the low for 2017, and silver could have as well.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Gold Has Hit the Low for 2017 and Is Set to Climb

Read Here

Gold Prices Rally This Week on Uncertainty, Hitting 6-Week Highs

Read Here

Gold at a Historic Breakout?

Read Here

Silver Is Poised to Rally Again

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

trump wins election

The 5 Biggest Stories for Gold and the Markets in 2016

Gold Market Discussion

This week we will take a look back over the 5 biggest stories for gold and the markets in 2016 and how they impacted investors.

Donald Trump Wins the Election

trump-wins-election-gold

The election of Donald Trump was, of course, the pivotal story of 2016. His shock win took most of the world by surprise and contradicted many analysts’ predictions of how it would affect the markets. Strategists had been adamant that a Trump win would tank stocks and boost gold due to uncertainty factors. The opposite happened. Gold initially spiked, but by November 9th prices pulled back and the stock market rallied.

What this means for investors: The markets have been riding the “Trump Rally” since the election. Yields on bonds jumped with massive sell off by investors. Metals took a hard blow with confidence in the dollar and markets high. With Trump’s spending plans expected to increase the deficit though, inflation is going to reverse these trends.

Dollar at 14-Year High While Global Currencies Falter

dollars gauging volatility

The dollar had a strong year. The effects of the Brexit vote and quantitative easing in Europe and Japan contributed to strengthening the dollar in an inverse correlation to these currencies. Trump’s economic promises of spending and tax cuts boosted the dollar even further. Continued devaluation of the Chinese yuan and a slow Chinese economy also played a part.

The dollar’s strength is a significant reason that gold and silver prices pulled back in November and December. The dollar and metals tend to be inversely correlated.

The stock market has also been performing at new highs. The Dow came within a few points of hitting 20,000 before the new year.

What this means for investors: The dollar is at 14-year highs, but it cannot hold this strength forever. When “Trumpflation” hits, the dollar will go down, lifting gold prices. Safe haven gold buying outside of the United States is increasing, particularly in China.

 

Britain Votes to Leave EU in “Brexit” Referendum

The Brexit

The June Brexit vote came as an equal shock as the U.S. presidential election. Most had expected the U.K. to vote to remain in the EU. In the aftermath of the referendum, the pound fell to a 30-year low and gold prices jumped. There was a surge in safe haven gold buying in the U.K.

After a couple months the stock market had recovered, although the pound and euro still faltered. The process to leave, however, will be a complicated and arduous one. The full economic impact of the vote has yet to be realized.

What this means for investors: The Brexit referendum was an example of how uncertainty can throw the markets into chaos. The volatility around major geopolitical events is always favorable to gold.

More significantly, the referendum showed a widening gap between the populace and the governing elites in the same manner as Trump’s win did in the U.S. This trend is growing around the world, and we can expect more uncertainty as society and politics shifts.

Gold and Silver Start New Bull Run

Gold was up 10% overall for 2016. During the first half of the year, the metals made spectacular bull runs. Silver was up 30% and performing better than gold going into the summer. Investors and hedge fund managers were moving into physical gold and silver and warning about an impending stock bubble burst.

What this means for investors: Gold still has a ways to go in the bull market in 2017. Many are taking advantage of the current price dip to buy now. Investors and strategists are warning that the stock bubble is going to burst any time, and when it does, investors will flock to gold.

 Federal Reserve Raises Interest Rates

Fed Rate Hike Coming?At the end of 2015, the Fed raised interest rates for the first time in x years and promised four hikes in 2016. The economy never showed strong enough signs to actually follow through with these hikes, however. The Fed gave mostly vague statements about a “rate hike soon” until December. In December they lifted rates a quarter point.

What this means for investors: Low interest rates make gold an attractive investment as metals are a non-interest bearing asset. The lack of a rate hike earlier in 2016 helped the gold bull run. In an economic climate that is not strong enough for higher rates, gold will be more effective for preserving wealth.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Donald Trump Wins the Election

Read Here

Dollar at 14-Year High While Global Currencies Falter

Read Here

Britain Votes to Leave EU in “Brexit” Referendum

Read Here

Gold Starts a New Bull Run

Read Here

Federal Reserve Raises Interest Rates

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold Hit as Dollar Reaches 14-Year High and Interest Rates Hike

Gold Market Discussion

DOLLAR REACHES 14-YEAR HIGH AND FED RAISES RATES

dollar-14-year-highGold was hit hard this week as the dollar hit 14-year highs and the Federal Reserve raised interest rates a quarter point. Janet Yellen – Chair of the Fed – also announced that we can expect one more hike in the first half of 2017 and three in the latter half. In a rising interest rate environment, gold tends to pull back as a non-interest bearing asset. The strength of the dollar is also holding back gold prices.

U.S. stocks rose Thursday in anticipation of the rate hike, and the Dow nearly reaching 20,000. The markets, however, pulled back some when Yellen’s announcement finished as she cautioned against over-stimulative fiscal policy in the coming months – a direct jab at some of the policies President-Elect Trump has pledged for his term.


What this means for investors:
 The markets and analysts have been anticipating an interest rate hike for sometime now, and had mostly adjusted accordingly for the hike already. However, the strength of the stock market rally is beginning to trigger fear that it is overvalued and vulnerable to a burst soon. The U.S. market strength is also beginning to raise fear of a negative effect on company earnings with too much overseas exposure.

CHINESE BOND MARKET CLOSES THURSDAY TO AVOID PANIK SELLING

chinese-bond-market-closesThis week the Chinese bond market plunged so spectacularly that it was forced to close during the trading day on Thursday. This followed after the Federal Reserve rate hike announcement that same day. The 10-year Chinese treasury yield experienced its steepest drop off in history. There was massive sell off with yields jumping to 3.45%. Yields and prices move inversely to each other, so a rise in yields means the bonds are undesirable and investors are selling.

After the beating that the bond market took, Chinese firms were forced to cancel over $7 billion worth of debt issuance. They cited unfavorable market conditions, higher borrowing costs, and expected inflation as the reasons. Afterwards, premiums on physical gold in Shanghai spiked. A further indicator of the constraints was the yuan hitting its lowest level against the dollar since 2008.

What this means for investors: The Chinese economy is becoming increasingly vulnerable. The Chinese central bank is running out of monetary options, and if the Fed does follow through on its promises to hike rates next year, Chinese bonds will continue to feel the pain.

China is currently the world’s largest gold market. If the economy continues to decline, expect demand for safe haven metals to go up if their economy continues to trigger panic.

News out of China gave gold a slight lift on Friday. China captured a U.S. unmanned underwater vehicle in the South China Sea causing some geopolitical tension. However, the latest out of the Pentagon indicates that the UUV will be returned.

CURRENCY INFLATION IN EMERGING MARKETS REACTS TO STRONG DOLLAR, LIFTS GOLD

dollar-strong-emerging-marketsChina was not alone among the emerging markets to take a dire blow from the surging dollar. Across the board – from South Africa to India to South Korea – emerging market currencies felt the shockwaves. Demand for physical gold in these markets went up and helped to shore up prices on Friday.

Turkey is one of the emerging market countries and an important geopolitical player in its region. Recently, it has recently gone as far as indicating it would welcome a gold backed economy. Turks have increased their gold holdings in recent months. They are favoring the metal over both lira and dollars. President Recep Tayyip Erdogan called on Turkey to embrace gold to combat “economic sabotage” that the global financial system is playing. The Turkish lira took a hit this week, but not as drastically as some of the other currencies.

What this means for investors: The emerging currency markets are already seeing inflation creeping in. Premiums for gold were higher in many of these markets than they were in the U.S. because of safe haven demand. The dollar is likely going to retain its strength for sometime. This will weigh on gold prices. As Turkey’s example indicates though, countries (particularly emerging markets) are beginning to look at alternatives to the dollar as reserve currency.

VIDEO:WILL GOLD RALLY UNDER A PROTECTIONIST TRADE POLICY?


The head of FX strategy at HSBC, Daragh Maher, spoke about the decline of gold and the direction it will take under Trump protectionism. Problem loading video? Click Here to View.

What this means for investors: Maher believes gold will rally again after sometime under a Trump presidency. Right now the dollar and markets are responding to promises of tax cuts and infrastructure spending. Some of the protectionist policies Trump has pledged will eventually drive a gold rally though, in Maher’s assessment.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Dollar Reaches 14-Year High and Fed Raises Rates

Read Here

Chinese Bond Market Closes Thursday to Avoid Panic Selling

Read Here

Currency Inflation in Emerging Markets Reacts to Strong Dollar, Lifts Gold

Read Here

Will Gold Rally Under a Protectionist Trade Policy?

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

The Gold Market Discussion

Gold Continues to Pull Back as Stock Market Continues Climb – Is This Sustainable?

Gold Market Discussion

Gold Continues to Pull Back, but Has Positive Long Term Prospects

Gold American Eagles at RME
Gold American Eagles at RME

Gold prices continued to show retreat this week. The stock market has been hitting “lifetime highs” for the past couple weeks with the Dow at nearly 20,000. The stock market experienced a sharp upswing after the election and has been hitting new highs every week since.

Some Wall Street analysts are warning now that the market is overvalued and heading towards a reverse. Part of the overvaluation is coming from investors who had anticipated a low rate environment for longer. The markets are heading into the later stages of an 8 year business cycle, but the market is performing as if coming out of a recession. No matter how business-friendly Trump’s economic policies are going to be, a market reversal is likely inevitable at this stage.

What this means for investors: The market rally is negatively impacting gold and silver. Gold is still up over 10% for the year, however. For investors who want gold for its long term value preservation, this is a perfect buying opportunity. Gold, in a sense, is “on sale” when prices dip like this. When gold was over $1,900 in 2011, buyers flocked to metals, and are now waiting for prices to climb back up. Buying when prices are low is strategically a better value. Investors are going to start fleeing from stocks and equity to cash and gold as the current market rally begins to top out.

Monetary Policy from the U.S. and Europe Hitting Gold This Week

European National BankThe Federal Reserve is most likely preparing to raise interest rates next week to a target range of 0.5 – 0.75 %. The last time the Fed raised rates was almost exactly a year ago to the day. The Fed’s inflation target of 2% is still not quite there, and with the prospect of Congress cutting taxes next year and increasing monetary stimulus, it is likely inflation is going to increase significantly. Fed chair Janet Yellen has been consistently saying since June that low interest rates are only “moderately juicing the economy.”

Across the Atlantic, the European Central Bank announced a continuation of quantitative easing, but at a gradually slower pace. The euro fell in strength against the dollar, and the dollar’s strength in turn had a negative impact on gold.

Italy’s referendum over the weekend could play a significant role on the strength of the Eurozone in the future and lead to more economic crisis in the EU. It was an overwhelming “No” result, and seen as a vote against the establishment. Prime Minister Matteo Renzi is resigning, as he promised he would in the event his referendum failed. The upcoming snap election might likely lead to a rise in the anti-Establishment Five Star movement, and recent talk of an Italian referendum on EU membership could be realized.

What this means for investors: Gold is retreating right now due to the strength of the dollar. A prospective rate increase is also subduing prices, since gold is a non-interest bearing asset. If the Euro heads for another political and economic crisis like Brexit earlier this year, safe haven demand will boost metals.

Gold and the New Fiscal Policy

Trump nominates Steve MnuchinTrump promised drastic change if elected, and certainly in fiscal policy that is the course he is setting. Steve Mnuchin, the Secretary of Treasury pick, stated this week that Americans can expect the “largest tax change since Reagan” with tax slashes to corporate, income, and estate tax. Trump has also pledged a Keynesian style $1 trillion stimulus on infrastructure spending. Some analysts whether such a stimulus is prudent after a 7-year recovery cycle has already been playing out. The greater concern, however, is how a government already nearly $20 trillion in debt can afford such a spending spree without serious repercussions. Regardless of the stimulating effect, inflation rates will soar.

Oil prices are worth paying attention to as well. Oil prices have been up 14% in recent weeks. Higher oil prices can also contribute to boosting inflation. They can also restrict economic growth, however, which would turn investors back to safe haven precious metals.

What this means for investors: Nearly all the charts had gold set to skyrocket if Trump was elected. The opposite happened, however, in the weeks after the election. This is going to be a short-term price retreat. Expect prices to go climb when the new administration’s fiscal policy sets in and stokes inflation.

New Market for Gold Opens Up in Islamic Finance and Expected to Spur Demand

AAOIFI

Gold is going to experience a surge in demand from a new source. This week the Accounting and Auditing Organization for Islamic Financial Institutions and the World Gold Council approved a new gold standard specifically designed for compliance with Shariah Law (law derived from the Koran). The CEO of the World Gold Council announced it was “groundbreaking,” since the world of Islamic finance has had little to no exposure to precious metals previously. There has been lack of clarity up until now about how gold investing complied with Islamic rules on investing.

What this means for investors: The world of Islamic finance is valued at over a $2 trillion industry. Demand for gold is going to go up in a global financial sector where it was previously almost nonexistent. This will give prices a boost.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Gold Continues to Pull Back, but Has Positive Long Term Prospects

Read Here

Monetary Policy from the U.S. and Europe Hitting Gold This Week

Read Here

Gold and the New Fiscal Policy

Read Here

New Market for Gold Opens Up in Islamic Finance and Expected to Spur Demand

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold Bull Market Coming

Re-thinking Gold Buying Opportunities and the Current Price Dip

Gold Market Discussion

RE-THINKING GOLD BUYING OPPORTUNITIES & TAKING ADVANTAGE OF CURRENT PRICE DIP

Gold Bars

Gold prices have been falling since Donald Trump’s election win, and as price dips, it is an optimal time for strategically re-thinking gold buying opportunities of the wealth preserving asset.

Most analysts predicted that a Trump win would be positive for gold due to the uncertainty factor that his presidency would mean. However instead, the appetite for risk has increased rather than decreased and the stock market has been hitting new record highs. Treasury yields have rallied as well, which has been negative for gold as treasuries are considered as an alternate safe haven investment. Yields on treasuries have reacted to Trump’s economic proposals for increased spending and tax cuts and upcoming “Trumpflation”.

What this means for investors: During the gold peak in 2012, demand surged and buyers were queuing up to buy. In the past couple years, it has not yet reached these levels again. Those who bought when gold prices were low, however, saw a fantastic return on their investment. Buying during price dips is strategically sounder than during price peaks, yet most investors do the opposite.

Long term, massive government spending during the Trump administration is going to lead to even greater levels of national debt than what we have currently. With it will come inflation and dollar devaluation. This will boost gold prices, and demand will shift back to the safe haven metal.

It is a strategic time to buy silver as well. The same economic factors that affect gold affect silver. The white metal is another way to hedge against inflation.

GOLD REACTS TO JOBS REPORT DATA 

December Jobs Report

The U.S. Department of Labor released its monthly jobs report for November this week. The data gave gold its first upward push this week back into positive movement. Jobs were added to the economy, but the data indicates that growth is slowing. The labor participation rate is still lower than average with 95 million Americans not in the labor force and the participation rate of workers aged 25-54 below the 25 year average. Most of the jobs added were part time as well.

The fact there was some positive growth, however, will likely strengthen the Federal Reserve’s case to raise rates, which is something gold has been reacting to this week as well. With only a few weeks left until the end of the year, will the Fed finally push for a rate raise? Last year they promised four in 2016 and there has yet to be one. Analysts have been predicting one for December with greater fervor since the November 8th election.

What this means for investors: A lack of sufficient growth is what has been preventing the Fed all year from raising rates. When they do finally raise, gold will take a hit in the short term as investors will look for interest bearing assets that will have a higher return with higher rates. It will be optimal buying opportunities of both silver and gold to protect against a devalued dollar in the future.

Gold prices rose on Friday on the jobs data release. The dollar receded from some of its recent strength.

STRATEGIC GOLD BUYING FROM FOREIGN GOVERNMENTS

foreign government currencies

India’s decision to demonetize its currency has weighed on gold prices this week. In a bold move by the government, India, which is one of the largest markets for gold, did away with its 500 and 1000 rupee notes – essentially declaring them worthless – in an effort to crack down on corruption, laundering, and counterfeiting. In the immediate aftermath, demand for gold skyrocketed. Metals preserve wealth when paper currency is worthless.

Russia and China are two of the other major buyers of gold on the world stage, and they are continuing their gold buying sprees. In October, Russia bought its biggest allocation since 1998. The Russian ruble is relatively strong at the moment, which makes gold cheaper, and it appears Russia is taking advantage to shore up its reserves.

China ended November by buying the most gold in months. Physical demand is strong in China for metals, as indicated by premiums that are above the global average. China will likely remain bullish for sometime on gold.

What this means for investors: Foreign governments buy gold for the same reason as private investors. It is the surest guarantee against political and economic crises. The biggest buyers – China and Russia – are continuing to protect their economies with gold.

UPCOMING GEOPOLITICAL EVENTS FOR GOLD INVESTORS TO MONITOR

geopolitical eventsItaly is about to vote on a referendum that will alter its constitution. This result is be significant for a number of reasons. Italy has been ravaged by economic turmoil since the financial crisis hit in 2008. Youth unemployment is at 36%, the country is mired in debt, a fragile banking system, and the middle class has been stagnant for over a decade.

The constitutional reform spearheaded by Prime Minister Matteo Renzi is intended to break some of the legislative deadlock that is characteristic of the Italian government and to reinvigorate the economy by a political restructuring. After World War II, the government was designed to keep any one party from having too much power, but it has resulted in being too restrictive to get anything done. The referendum would break up some of these deadlocks. Renzi campaigned on a promise of change and reform, and has implied he would resign if the referendum does not pass.

The referendum is ultimately a referendum on the establishment and could lead to a vote on EU membership, which some in Italy have already been calling for.

What this means for investors: This could be Italy’s “Brexit” moment. The Brexit vote and Trump’s election went against the establishment and came as shocks to many. The Italian referendum could be another defining political turning this year.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Re-Thinking Gold Buying Opportunities

Read Here

Gold Reacts to Jobs Report Data

Read Here

Strategic Gold Buying from Foreign Governments

Read Here

Upcoming Geopolitical Events for Gold Investors to Monitor

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

dollars gauging volatility

Does the VIX Still Accurately Measure Fear?

Gold Market Discussion

DOES THE VIX STILL ACCURATELY MEASURE FEAR? OR IS IT NOW THE DOLLAR?

Is the US Dollar now the volatility indicator?
Is the US Dollar now the volatility indicator?

The VIX does not seem to accurately measure fear anymore. The VIX – or volatility index – shows the markets’ 30-day forecast for volatility. It describes implied volatilities, is constructed partly from both calls and puts, is forward-looking, and referred to as a “fear gauge” used by investors to anticipate risk. Quantitative easing as monetary policy is partly to blame. It has caused a break down in the relationship between the VIX index and implied volatility in equity markets and banks’ willingness to use leverage.

The dollar seems to be the new measuring index of market volatility risk. It hit a 14-year high this week. The last time it was this high was April of 2003 in the wake of the U.S.-led invasion of Iraq. The dollar’s rising strength is accompanied by a rise of interest rates. A rise in rates is correlated to a rise in risk.

What this means for investors: The reason for the dollar’s surge in the wake of Trump’s election is in large part due to anticipation of stimulus spending that will drive demand and inflation. Gold took a hard hit this week due to the strength of the dollar. But inflation and massive spending are on the rise under President Trump. When inflation goes up, gold will act as a powerful hedge. Its recent price drop-off is a buying opportunity to protect against future inflation. Silver has pulled back as well on the same economic indicators as gold.

BILL GROSS ON TRUMP AND THE BOND SELL OFF

Bill Gross, the "King of Bonds" and Janus Capital Fund Manager
Bill Gross, Janus Capital Fund Manager

Janus Capital manager Bill Gross, is seeing ominous signs from the bond sell-off. The “Bond King” spoke out negatively this week about the economic growth potential during the Donald Trump era. He does not believe it will hit the 3-5% target that Trump has suggested.

The key feature of Trump’s economic plan is to increase spending on defense and infrastructure and cut taxes. Analysts estimate this will add to the national debt to a massive degree. Some see these tax cuts as a long-term economic boost that will drive corporate profit and in turn job and GDP growth.

Gross believes that lower tax revenue accompanied by higher government spending will push budget deficits higher and ultimately spur interest rates and prices. Although Gross is known as the Bond King, he is bearish on bonds given the massive sell-off. Since November 8th, there has been a $1 trillion loss in global bonds.

What this means for investors: Gross does not anticipate a new bull market in the wake of the election, despite the stellar rally in the stock market. He advised caution to investors. Lower taxes and higher inflation and interest rate have the potential to lower earnings and the price/earnings ratio. “Trumpflation” – a soaring deficit provoked by increased spending and tax cuts – will likely characterize the soaring inflation rate in the coming years.

FEDERAL RESERVE SPEAKS OUT ON RATE HIKES

Janet Yellen Rate Hikes

The Federal Reserve chair Janet Yellen spoke out this week on a December interest rate hike and the effects of the election. Yellen claimed that the election had not altered the Fed’s assessment that the case has bee strengthening for a December hike. She claimed that a hike would be appropriate “relatively soon” and that the outcome had no impact on their decision.

During the campaign, Donald Trump had at times some harsh words for Janet Yellen. He stated that she was too political and was purposely keeping rates low for longer than necessary to create a false economy that helped the democrats. He said he would replace her with a Republican in 2018 when her term as board chair expires. She insisted that this was not the case and vowed to finish her term.

What this means for investors: Fed funds futures showed a 91% chance of a rate rise in December. Last year, the Fed anticipated four rate hikes for 2016. If the December one happens, it will be the first due to economic data not being robust enough yet in the Fed’s estimate. In the short term, a rate hike will affect gold negatively. However in the long term, it will contribute to the inflationary trend that will drive gold prices up.

THE GLOBAL ECONOMY AFTER TRUMP ELECTION AND POSSIBILITY OF “TRUMPFLATION”

Trumpflation will mean higher interest ratesUnlike the  Federal Reserve, the European Central Bank will likely not raise rates and rather continue their quantitative easing program. Political uncertainty in the Eurozone – including, but not limited to issues around Brexit – are one concerning factor. Upcoming election and referenda in Germany, France, Italy, and the Netherlands are also an issue. The EU has been struggling to meet GDP growth goals through its monetary policy thus far. Mario Draghi of the ECB has been attempting to make borrowing cheaper with low rates and push banks to lend. However ultimately it has been undercutting banks’ earnings and they are instead focusing on building capital.

The bond market sell-off has presented difficulties for the Bank of Japan. The BOJ had set a goal to keep government bond yields hovering around zero by buying up the 10-year bonds. However as treasuries sold off, the Japanese sell-off drove yields into positive territory. Higher yields would have a tightening rather than growing effect on the Japanese economy.

What this means for investors: Sluggish global growth will be favorable for gold and silver. During economic uncertainty, the metals become more attractive as safe havens. The state of the global economy still makes a strong argument for owning gold and coming “Trumpflation” in the U.S. from a rising budget deficit and spending will spur inflation and lower purchasing power of the dollar.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Does the VIX Still Accurately Measure Fear?

Read Here

Bill Gross on Trump and the Bond Sell-Off

Read Here

Federal Reserve Speaks Out on Rates

Read Here

Global Economy after Trump Election and Possibility of “Trumpflation”

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Trumpflation and Gold

“Trumpflation” and What it Means for Gold

“TRUMPFLATION” AND WHAT IT WILL MEAN FOR GOLD IN THE TRUMP ERA

Trumpflation

What does a Trump presidency mean for inflation, the markets, and your financial future? From what history tells and the President Elect has promised in his policy outlines, it will be debt, inflation, market collapse, and a potential trade war. While Mr. Trump promises to build new roads and bridges that are “second to none”, he also promises to lower your taxes. Welcome to Trumpflation… where three things are poised to rise: the national debt, interest rates, and gold.

In the immediate aftermath of Donald Trump’s upset win, gold prices skyrocketed due to volatility. Shortly after they pulled back. Long-term, however, they will be buoyed by several different economic trends that are stirring the markets.

A TRUMP PRESIDENCY MEANS INFLATION AND DEBT

Trump will mean more debt

You think the Obama administration contributed to our national debt problem? You would be right. But wait until you see what levels the national debt will soar to under a Trump presidency. The self-proclaimed “King of Debt” is going to increase spending, and he has not been shy about saying so. He has pledged increased spending particularly in defense and infrastructure.

Donald Trump has also promised tax cuts. In theory these tax cuts will stimulate business and create more jobs. However this does not happen instantly and takes time for these effects to be felt. In the short term it means reduction in tax revenue. Greater spending with less revenue could mean adding up to 50% to the national debt in Trump’s first term alone. This equates to massive inflation.

The Federal Reserve has been eyeing raising interest rates all year. Each meeting they argue that the case is “strengthening” and that a hike before the year is over must happen. When rates do finally go up, this will drive inflation and push inflation rates higher than we have seen since the 1970s.

Gold is a hedge against rising inflation. Inflation means dollar devaluation. As the dollar goes down, gold will go up. Gold always preserves purchasing power, unlike the dollar, which is subject to inflationary and deflationary trends.

THE STOCK MARKET IS PERFORMING AT ALL-TIME HIGHS… BUT FOR HOW LONG?

The Stock Market is Up

The stock market has been hitting highs on a nearly daily basis the past couple weeks. How long will it continue after higher interest rates and “Trumpflation” hit?

The stock market is approaching a bubble burst. It is in an inflationary trend and higher interest rates could be the trigger for it bursting. Some analysts are warning that the stock market is already overpriced, and its current rally could come back to bite investors. Furthermore, the direction that the bond market is moving does not bode well for Wall Street.

Gold price has been suppressed the past couple weeks as the stock market hit record high after record high. When the bubble bursts, however, investors will flood back to safe haven metals.

WHY YOU SHOULD BE WATCHING THE BOND MARKET

Watch the Bond MarketThe yield on the 10-year government bond has experienced a sharp increase since November 8th shooting up 40 basis points. The yield is going up because prices are falling. In the week after the election, 10-year bond prices plunged 1.4%. They are being sold off rapidly in anticipation of Trump’s spending stimulus. Holders of U.S. treasuries are anticipating dollar devaluation and selling off their bonds now.

As the yield percentage increases, so do interest payments on the obligation of the bonds. Many U.S. mortgage rates are tied to 10-year bond yields, meaning higher borrowing costs for companies. 30-year fixed mortgage rates plummeted 9% in the election’s wake.

In the short term, the dollar is enjoying a 14-year high. In the long run, this will all increase the national debt subjecting the dollar to further devaluation. Rounds of quantitative easing will follow. All of this will bode well for the gold investor, and, more importantly, strengthens the argument for gold as a natural hedge against the markets. The last time the dollar was this strong, gold was $300 per ounce. Gold is now trading over $1,200 an ounce. Gold is an alternative to the dollar, particularly during inflation and devaluation.

TRADE POLICY AND DOLLAR DEVALUATION

Dollar Devaluation Ahead
Massive inflation would diminish the purchasing power of the dollar

Increased government spending on defense and infrastructure is intended to stimulate the economy through job creation. With national debt levels as high as they are, it is “artificial”, government-created dollars that are going to be spent.

Some analysts warn there will be stagflation instead though. The economic growth that this spending will drive could be halted by some of Trump’s proposed trade barriers. These could keep the proposed tax and regulation cuts from reaching the intended stimulating effect. This will mean rising prices, but little growth to go along with them. The global economy is already experiencing sluggish growth, and protectionist trade policy will slow it further.

The bottom line: The message has been the same all along: Gold is an alternative to the dollar. Gold is real money. When the dollar loses its value (and can buy less), gold will preserve your wealth (and maintain your purchasing power).

President-Elect Trump

Markets Rally, but Trump Win Will Mean Inflation and Debt Down the Road

Gold Market Discussion

Stock Market Rally in Aftermath of Stunning Trump Win

Trump means debt and rate hikesDonald Trump’s win Tuesday is seen as a victory over the political establishment and a return to conservatism. The news also triggered a triggered a massive stock market rally. In the long run though, the Trump win will likely mean inflation and debt down the road.

As the votes came in on Tuesday night, gold jumped and the stock market plunged. The shock and surprise as the GOP candidate took the lead sent ripples of uncertainty through the markets. They shook from volatility as Hilary Clinton had been significantly favored to win. However when the markets opened Wednesday, stocks soared. On Thursday, the stock market hit an all time high, and by Friday’s close they set another all time high. Gold, meanwhile, which generally moves in opposition, has made a significant pull back falling approximately $100 from its Tuesday night high to Friday morning.

What this means for investors: Short term, gold prices will likely remain subdued. Many analysts were predicting that gold prices would jump with a Trump win due to the volatility factor. However many of these same analysts were expecting a Clinton victory anyway.

Stocks are up because of Trump’s promises of economic growth, de-regulation, tax cuts, and job growth. With the Federal Reserve already making a case for an interest rate hike next month, don’t be surprised if we finally see the long anticipated hike. Stocks are on an inflationary trajectory, and a rate hike could send the inflated market crashing.

Inflation and Debt Levels are Going to Soar Long Term

Trump Building Wall Street
The Trump Building located at 40 Wall Street, NYC

Trump’s “outsider” and populist status undoubtedly is a thorn in the side of Wall Street and the political establishment. Voting stats have shown the economy, more so than his traditionally conservative social policy, was the impetus for his rise. His economic plan, however, is far from from being conservative in the traditional sense. With the massive spending plan he has promised, the skyrocketing national debt is going to balloon even further and we will see a spike in inflation.

Trump has pledged increased spending in defense and infrastructure. This will undoubtedly add to the debt. At the same time he has proposed tax cuts. In the long run these tax cuts will help stimulate business and hiring. However, short term it will mean loss of tax revenue to finance the spending increases.

What this means for investors: If Trump’s projected spending passes, it will be be the harbinger of inflation. Gold and silver protect against inflation. When the top finally blows on the stock market, gold is going to be the safest net for preserving wealth. Buying gold while prices are low will best protect against the future. Right now gold is down to its June levels. Gold will also benefit long term due to uncertainty around Trump’s proposed trade tariffs.

Watch the Bond Market – China Selling off Treasuries

10-year-government-bond-october-2016
10-Year Government Bond Chart January 2015-October 2016, with rates on the rise again.

The bond market tells a lot about what to expect from the economy. Since Tuesday, 10-year yield bonds made a 30% jump in yield to its highest yield all year.. A rise in yield means bonds are cheaper and being sold. Investors are selling them off at an alarming rate. China, on the heels of devaluing the yuan, has been selling trillions of dollars worth of treasuries.

What this means for investors: The strength that the dollar has been enjoying this year is going to pull back. Dollars are looking less attractive to investors and bond holders. Inflation will devalue the purchasing power of the dollar. When the dollar goes down, gold goes up.

How the World Reacted to Trump Win

The world reactsWorld leaders immediately started phoning and tweeting reactions to Trump’s wins. Some subtly voiced reservations, but the overall sentiment was congratulatory and optimistic.

A major concern of Trump opponents is that he would be unable to cooperate with other world leaders. On foreign policy, the President Elect has stressed the need to re-define an image of a tough America that its allies can rely on.

What this means for investors: Geopolitical events have a significant impact on gold and the markets. Having no political foreign policy experience and few policy specifics expressed thus far, it is still uncertain how Trump’s presidency will impact the world and foreign affairs at large. The reservation that some world leaders still have indicates there could yet be an increase of uncertainty in the markets that would drive gold prices.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Stock Market Rally in Aftermath of Stunning Trump Win

Read Here

Inflation and Debt Levels are Going to Soar

Read Here

Watch the Bond Market – China Selling off Treasuries

Read Here

How the World Reacted to Trump Win

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold and Silver Maple Leaf

Correction Over? Gold Breaks $1300 This Week and Silver Rallies

Gold Market Discussion

Is the Correction Over? Gold Breaks $1300 This Week

gold liberty 1866

Gold prices broke through to $1300 this week for the first time in nearly a month signaling that the correction of the last few weeks could be over. It closed the week at a four week high after starting the current rally the previous week.

The announcement following a Federal Reserve meeting was an important trigger for gold’s movement on Thursday, however, earlier in the week gold had already started its upward move. The Fed announced – unsurprisingly – that there would not be an immediate interest rate hike. No one expected them to hike rates immediately before the election. Yellen did, however, say that there is a stronger case for a rate hike now in December. Last year, the Fed promised four rate hikes this year. So far there have been zero. The fear now is that they missed their window of opportunity for hiking rates without dire repercussions.

What this means for investors: The Fed’s reluctance to move on raising rates speaks to the weak fundamentals of the current economic climate. The fear is that the stock market is too inflated and could not sustain raised rates. Precious metals are more desirable in a low interest rate environment because of a lower yield on interest bearing assets.

Why Are Investors Protecting Now with Gold?

hold physical goldThere are a number of other reasons investors are increasingly moving into gold. Election fears certainly are playing a significant role at the moment. Analysts predict that either candidate’s economic plan is going to create an environment where gold will thrive. Both have pledged increased spending when the U.S. is already running a budget deficit of over $400 billion. Gold jumped last week immediately following the announcement of the FBI re-opening the Clinton e-mail investigation.

On Friday the U.S. Labor Department released its monthly jobs data report. The data was neutral. It neither missed nor exceeded expectations, though expectations have fallen slightly recently. It impacted gold at first pushing down the price a small margin, but gold prices re-gained later in the day.

Another major source of the surge in gold demand is from foreign governments buying up greater reserves of physical gold. Russia aims to double its gold trade in the next three years. China has also increased buying this year and moved into the slot of number one buyer in the world.

What this means for investors: Gold demand will increase through the next year. Investors are increasing gold holdings now as protection for the future.

Silver – The “Common Man’s Gold” – Rallies with Gold This Week

Silver Rally November 2016

Silver rallied with gold this week as it often does. Its prices are moving from some prior resistance into support. The metal moves much more sporadically than gold despite being influenced by many of the same factors.

The fundamentals are in place to take silver higher. Central banking monetary policy, the prospects of the U.S. election, and slowing economic growth are all conditions which will drive safe haven demand and lift silver prices. Silver may experience some more resistance in the short term before breaking out further, but conditions are in place for gold and silver to experience massive rallies.

What this means for investors: Price corrections are the time to buy. Many investors wait until metals prices take off – buying high, and selling low – instead of taking advantage of price pull backs to protect against the future. Gold and silver have both had stellar rallies all year and moved into new bull markets. As this week showed, price pull backs can quickly shift into rallies. Regardless of when you buy however, gold and silver will always be valuable long term investments.

High Court Rules that Britain Cannot Start Leave Negotiations Yet

Prime Minister Theresa MayNews on the Brexit negotiations shook the markets on Thursday. Prime Minister Theresa May has promised that Britain will enact Article 50 of the Lisbon Treaty by March next year, thereby kicking off exit talks for the country to leave the European Union. However on Thursday, the UK High Court ruled that Britain could not trigger Article 50 without Parliamentary approval.

Those who voted to leave the EU reacted indignantly given that the referendum was approved by Parliament. Many “Leave” campaigners are speaking out against the usurpation of the peoples’ will by the courts. The fear is that not enough members of Parliament will be willing to vote to uphold the popular vote, and that the June referendum will be null.

What this means for investors: The post-Brexit fears of uncertainty caused the markets to plunge along with the Euro and pound sterling. The dollar’s recent strength was buoyed by some of this currency aftermath reaction. The Thursday announcement however gave the pound a modest boost after it has been sitting at 31 year lows.

The worry now for investors in regards to Brexit is that discussions will be dragged into a political quagmire extending uncertainty for some time. Theresa May acknowledges that the problems of what was to be a long, complicated process are now compounded by the High Court ruling. After the referendum, Britons and Europeans flocked to safe haven gold investing, and it seems likely the shift to gold will continue as Brexit talks extend.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


 Here are some articles from the web discussing the topics in this week’s post:

Is  the Correction Over? Gold Breaks $1300 This Week

Read Here

Why Are Investors Protecting Now with Gold?

Read Here

Silver – the “Common Man’s Gold” – Rallies with Gold This Week

Read Here

High Court Rules that Britain Cannot Start Leave Negotiations Yet

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

gold bars

Gold Set to Continue Gains in 2017 as U.S. Data Keeps Prices High

Gold Market Discussion

Gold Set to Continue Gains in 2017

Precious metals have made tremendous moves this year, and gold is set to continue its gains in 2017. Even if the Federal Reserve decides to hike rates in December, the conditions are set to be favorable to gold.

Gold prices have rallied over 19% this year. Global economic slowdown, low and negative rates around the world, Brexit fear, and future uncertainty are driving safe haven demand. Strategist and investor Mark Mobius predicts gold will climb over $1,370 in 2017 even with a Federal Reserve rate hike. Rate hikes tend to decrease demand for gold, but in the long run, in his assessment, it will weaken the dollar, which would make gold more attractive. The London Bullion Market Association had their annual meeting this week as well, and participants predicted gold to hit $1,347 next year.

Another condition that will drive the price of gold is the fact that there is currently a market surplus of physical gold. Global gold supply just experienced its largest quarterly surplus since the last quarter of 2005. A report by Reuters estimated that with such an oversupply of the metal, it is unlikely the price will fall below $1,240 and could go high enough to average $1400.

What this means for investors: An oversupply of anything will keep prices low for a time. When demand increases to match the supply, however, the price will eventually soar. It might not be an immediate move, but the market will adjust eventually. Investors should take advantage of price dips now.

Disappointing U.S. Domestic Data Keeps Gold High

The US Data ReportGold inched higher this week after a couple fairly quiet weeks. Prices remained positive this week despite little movement. U.S. durable goods order numbers for September were weaker than expected. Weakness in the manufacturing and transportation sector indicates a worrying slowdown in the economy.

The stock market and dollar are enjoying relative strength right now against the rest of the world’s major economies. It is a calm before the storm that is lacking in strong, economic fundamentals to underpin the strength we are seeing. The U.S. budget deficit is up 17% in the past year, $10 trillion in global government bonds are yielding negative returns, credit and stock market bubbles are expanding, and the U.S. is about to have an election between two of the most unpopular candidates in history.

What this means for investors: When these bubbles burst, gold and silver prices will soar. If the Federal Reserve decides to raise interest rates in December, this will likely give stocks and interest-bearing assets a boost for some time, but eventually markets will have to experience a massive correction. The warning signs are flashing now for many investors to start moving their money into safe haven gold and silver.

Gold Closes at 4 Week Highs Following FBI Probe on Clinton Emails

Clinton Email Scandal
The markets received an unexpected shockwave on Friday afternoon when the FBI announced it was re-opening its investigation into Hilary Clinton’s email server scandal. During an investigation on former New York Congressman Anthony Weiner’s (former husband of top Clinton aide Huma Abedin) illicit text messages, emails were found on his phone that gave FBI director Comey reason to re-open the Clinton email investigation.

Gold jumped to its highest price in 4 weeks after the news broke early Friday afternoon. The markets pulled back slightly.

What this means for investors: Volatility and uncertainty are what gave gold its boost. As the frontrunner in the race, Clinton’s lack of judgment and mishandling of classified information raised fears about the prospect of her potential presidency.

The Current Case for Silver

Silver Bars Silver has been making a strong case all year with a stronger performance than gold for much of 2016. Silver has pulled back slightly in recent weeks along with gold. However, there is still a strong case to be made for the metal. Last week Deutsche Bank made the news for attempting price fixing on silver to manipulate the price to be lower. Although it is difficult to say just how much this affected overall prices. Silver prices are also influenced to a greater extent by industrial demand than gold prices are, which can make it move more sporadically. Silver ended the week in the green having been boosted by the same market forces as gold.

What this means for investors: This case for silver is still strong. Silver protects wealth and is cheaper to buy than gold, making it an ideal investment for a wider range of investors than gold. If gold rallies through the next year as strategists are predicting, silver will certainly ride the rally with it.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Here are some articles from the web discussing the topics in this week’s post:

Gold Set to Continue Gains in 2017

Read Here

Disappointing U.S. Domestic Data Keeps Gold High

Read Here

Gold Closes at 4 Week High Following FBI Clinton Email Probe

Read Here

The Current Case for Silver

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold Bull Room to Run 2016

Why the Gold Bull Market Has Room to Run and the Election’s Impact

Gold Market Discussion

Why the Gold Bull Market Has Room to Run Yet

gold bear marketThe gold bull market is not over yet. It still has some room to run. Gold price climbed slowly, but steadily this week after pulling back last week. Gold and silver both have been keeping rather quiet the past two weeks, but this week they edged higher.

Earlier this year, gold entered a bull market, according to many analysts. Some of the more gold-wary strategists are still skeptical whether it will continue. However the gold bull market is certainly far from over. The physical gold market is going to get a boost from greater demand in India, China, and Russia. It will also become more desirable as uncertainty increases and geopolitical tensions in South East Asia and the Middle East increase.

More apparent though is the structural weakness underpinning the U.S. and global economies. Stocks are caught up in a bubble and government bonds – once considered the safest investment – are trading at disturbing lows thanks to central banking monetary policy. U.S. debt tripled in the last fiscal year. Unemployment rates are not recovering as well as hoped, and GDP growth is sluggish. Even the IMF and OECD are warning about global downturn. It is only thanks to the utter weakness of foreign currencies that the U.S. dollar is still relatively strong.

What this means for investors: Gold and silver prices have both found support. It presents a prime buying opportunity. For investors looking for safe haven investing who cannot buy gold, silver is an attractive alternative. Silver has been rallying this year as well due in large part to safe haven demand.

How is the Presidential Election Going to Impact Gold?

Trump and Clinton Presidential electionThe prospect of either of the U.S. presidential candidates in the White House makes a strong case for buying gold. It is an election unlike any other with the two most polarizing candidates from the GOP and Democrat Party to ever run. Analysts speaking to Market Watch this week stated that a Trump presidency would likely see a sustained rise in gold price. A Clinton would cause an immediate rise, then some slowing, but a greater rise in the long run.

A Trump presidency comes with many unknowns given his lack of political experience to look to. Many of his promises will disrupt trade agreements, banks, and other established elements that will create some chaos for at least the short term as the economy adjusts. Gold will be attractive for its stability. There is also an anticipation of political volatility around his presidency that would spur some safe haven buying.

With tax increases and greater spending, a Clinton presidency would likely be inflationary. Gold prices rise with inflation, as gold is a hedge against it. Clinton’s hawkish foreign policy legacy could lead to more conflict and nation disruption in other parts of the globe causing investors to flock to safe haven gold as protection.

What this means for investors: There has rarely been such a climate of fear and uncertainty around a U.S. presidential election. Hedge fund managers, strategists, and top investors have been buying up gold all year, and buying is not slowing as November looms closer. Often investors buy gold when price is high and sell out of nervousness when it starts to fall. However, buying when the price pulls back is better protection against rising inflation and future uncertainty. There could be some more pull back in the near term as metals prices remained quiet and mostly stationary this week, but economic fundamentals point towards a resurgence in demand before the year’s end.

Europe Continues Negative Interest Rates and Easing

European negative interest ratesThis week the European Central Bank decided to keep interest rates at current low and negative levels causing the euro to hit four-month lows. The ECB will continue buying 80 billion euros in government bonds per month until at least March 2017. Many of these bonds are trading at negative yields. With this easing policy, the ECB policy makers are hoping to stimulate growth, and yet they have missed target inflation rates for three years straight.

The ECB is continuing on its policy path that has been proving for years to be ineffective. This shows they are out of options. There are too many structural and cyclical problems in national economies and the EU at large. The Eurozone is going to remain mired in this stagnant climate until something triggers the system collapse. A few weeks ago Deutsche Bank sent a rumbling through the system. Chinese and Gulf investors are now preparing to buy up 25% of the bank, which has lifted its stock price again for the time being.

What this means for investors: Immediately after Mario Draghi’s announcement, gold climbed higher. The dollar also gained against the weak Euro and Pound, however, which eased back gold prices slightly. Generally, gold does better in a low interest rate environment, so low interest rates are favorable to metals. When Europe finally emerges from this limbo it is stuck in though, gold will surge as the fundamental problems of today’s fiat currencies are realized.

Deutsche Bank to Pay $38 Million for Silver Price Fixing

Deutsche Bank
Deutsche Bank has been notorious in the news lately due to its stock plunge a couple weeks ago. This week it found itself in hot water again. The German bank was forced to pay $38 million to settle U.S. litigation over allegations that it had violated U.S. antitrust laws. It was found to be fixing silver price at the expense of investors. The bank was attempting to manipulate prices to keep them lower than they should be.

What this means for investors: The settlement is a small amount for a bank as massive as Deutsche Bank. This is an important step though in pulling back the curtain on the price and currency manipulations that goes on in these “too big to fail” banks. It also gives credence to those gold and silver investors that have been saying banking manipulation is glazing over structural problems in the system.

 

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Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Why the Gold Bull Market Has Room to Run Yet

Read Here

How Is the Presidential Election Going to Impact Gold

Read Here

Europe Continues Negative Interest Rates and Easing

Watch Here

Deutsche Bank to Pay $38 Million for Silver Price Fixing

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Asian Economic Slowdown

Gold Demand in Asia and Russia Signals Now Is Time to Buy

Gold Market Discussion

Economic Slowdown in Asia Signals More Gold Buying

Economic slowdown in AsiaGold demand in the Asian markets is picking up after a slowdown last week when Chinese markets closed for a week of holidays. Markets are indicating that now may be the perfect time to buy gold. Demand for gold in Asia is on the rise, which will contribute to driving the price higher.

Asian – and particularly Chinese – demand for gold is on the rise because of general global and national economic slow down. The Chinese economy has been showing worrying signs of lagging for some time. Exports fell more steeply in September than expected.

Lack of exports from China means there is a lack of demand for products around the world. China’s slowing economy is a symptom of global uncertainty. Sales are down with consumers not buying as many things as they used to.

Russia has also been buying up significant quantities of gold. Central banks have boosted their holdings in gold by over 10% since the financial crisis, and Russia and China lead the pack in increasing their gold reserves.

What this means for investors: Gold price’s pull back is a prime opportunity to buy. Gold performs best as a long term investment. Even Bank of America is projecting a recession to come. Their data and analysis projects it to hit next year.

U.S. Jobs and Labor Force Participation – What It Says about the Economy

US Jobs and Labor Force The unemployment rate is reportedly at 5%, but realistically it is probably in fact higher. The unemployment rate rose in September with fewer than expected jobs added to the work force. The labor force participation rate is also falling. This is partly due to baby boomers retiring, but also due to workers feeling discouraged and not actively seeking work.

Many of the jobs added are also part time employment, and many of those workers would prefer full time jobs. There has also been an increase in temp positions, which skews the employment figures a little as well.

What this means for investors: The state of the labor force can tell a lot about a country’s economy and outlook. Even with baby boomers retiring, the opportunity for younger workers to fill jobs that they once held is simply not there. One analyst blamed demographics in part for the reason that the recovery from the Great Recession is not happening as hoped. In addition, a paper by a San Fransisco economist stated that we may find the Fed’s dovish monetary policy will be contractionary rather than stimulative in the long run. Quantitate easing has been a feature of central banks around the globe, so this effect will be felt worldwide. Shrinking economies will mean even less employment and lower wages. In this economic climate, gold and silver safe haven demand will increase.

The Fed Continues to Weigh Rate Hike

Fed Rate Hike Coming?Fed Chair Janet Yellen gave another speech lacking in clarity or direction this week about a possible interest rate hike. On Thursday the minutes from the last meeting were also released, which took a September rate hike off the table. Three member had voted for an immediate hike in September, but it was voted down. Initially the minutes release was positive for gold prices.

Yellen’s speech helped to bolster the U.S. dollar while bonds fell. She gave no absolute direction to when we can expect a hike, but most analysts are anticipating December. Central banks around the world have been pursuing negative interest rates for so long, that some worry the Fed is approaching a point where they will miss the window of opportunity for a hike to do any good.

What this means for investors: A rate hike too soon will be positive for gold, but it will create shock waves through the economy. The last hike was December of last year, and the economy was not able to handle it. The Fed is playing with smoke and mirrors with its current monetary policy with the dollar experiencing strength at the moment relative to other currencies, but lack of strong economic growth and employment data contradicts it.

The pound sterling’s weakness from last week continues to be at play in strengthening the dollar as well, which is weighing on gold prices.

A Short History of the London Gold Market

London Gold MarketLondon is the most influential of the gold trading markets. Other important trading centers are in New York, Hong Kong, Zurich, Shanghai, and Sydney, but London exerts the most pull. Gold prices changes constantly but twice a day, the price is fixed in London. These price fixes are determined by supply and demand as well as speculation around monetary policy, short selling, jewelry and industrial demand, safe have demand, war, and other geopolitical events.

The Shanghai price fix that was introduced earlier this year is now exerting a great deal of influence as well. China wants to have more control over gold prices, as it is the largest gold mining and buying country in the world.

An article from Bloomberg laid out a timeline of the key events in the London gold market stretching back to the 17th century. It shows the longevity of gold as a preserver of wealth.

What this means for investors: Governments and central banks still place significant value on gold today. Although it is not exchanged as every day currency anymore, it is real money, retains value, and has for hundreds of years.

 

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Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Economic Slowdown in Asia Signals More Gold Buying

Read Here

U.S. Jobs and Labor Force Participation – What It Says about the Economy

Read Here

The Fed Continues to Weigh Rate Hike

Read Here

Short History of the London Gold Market

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

100 trillion Zimbabwean Dollars

No One Is Talking about the 1.4 Trillion Dollar Budget Deficit for 2016

Gold Market Discussion

$1.4 Trillion Dollar Deficit That No One Is Talking about

100 trillion Zimbabwean Dollars
It’s too bad we can’t pay down the debt with Zimbabwean currency.

In the 2016 fiscal year, the U.S. hit a 1.4 trillion dollar budget deficit, and no one is talking about it. October marked the start of a new fiscal year, and 2016 closed with a deficit three times larger than the previous year. It is the third largest increase budget deficit ever. The two times the budget deficit increase was greater was in 2007 and 2008 as the financial crisis and Great Recession hit. In comparison to those years with massive bank bail outs by the federal government, this year has been relatively normal for the federal government. So why has the deficit become so out of control?

Even the U.S. presidential candidates are not talking much about the budget deficit. Both are calling for increased spending initiatives. Although they differ on tax plans where the spending would increase, analysts mostly agree that both candidates would add further to the deficit.

What this means for investors: Budget deficits are dangerous. Some of the factors that contribute to budget deficits are slow economic growth, high unemployment, and high government spending. A deficit can be telling about the health of an economy. The budget deficit is at an unsustainable level now. It will be virtually impossible to pay back. Eventually, debt default might be the only option.

Brexit Talks and The British Pound’s Flash Crash

The Brexit aftermathPound sterling hit 31 year lows this week in a flash crash. On Friday it was lower than the Euro (which also fell). The weak EU currencies shored up the dollar to have a strong week, which contributed to some of gold’s pull back this week.

The pound’s fall was du to Prime Minister Theresa May’s announcement that the United Kingdom would trigger Article 50 of the Lisbon Treaty by March 2017. Article 50 is the protocol to begin the process of an EU member nation leaving the union. May hinted that the exit would be a “hard exit”, with the U.K. losing access to the single European market.

Other theories about the flash crash are that there were a “fat finger” error or a lack of liquidity. A “fat finger” error is when an investor accidentally trades more of a currency or stock than he or she intended. Lack of liquidity means that there is not enough cash being traded on the market.

What this means for investors: Regardless whether there was a “fat finger” error, the pound’s flash crash shows that Brexit politics will still weigh heavily on the currency. The Bank of England has been devaluing their currency since June by pumping cash into the system and cutting interest rates to record lows. When currencies devalue, gold becomes more desirable as a stable measure of wealth.

Gold Dips During Slow Week, Chinese Markets Closed

China Golden Week

Gold had a slow week and receded from some of its recent gains. One reason was that the Chinese markets, one of the biggest buyers of gold, were closed all week for the Golden Week holidays. The lack of trade in the Chinese markets weighed heavily on metals across the board.

Silver fell with gold, as it generally does. Next week when the Chinese markets open again, it is likely they will use the price dip as a prime opportunity to start buying it up again, as they generally do. In addition to China increasing gold holdings, Russia is also using this opportunity to shore up gold reserves.

What this means for investors: As the Chinese yuan and Russian ruble devalue, the governments are holding more gold to safeguard against crisis. Price dips in this uncertain economy are lucrative buying opportunities.

What Employment Numbers are Telling about the Economy

Employment Application

In the latest jobs report from the Department of Labor, data showed that unemployment crept slightly higher to 5%, and the U.S. had added 156,000 jobs. The labor force participation rate is just over 50%. The data was fell short of expectations, however. All in all, it was a mixed report. It was likely not negative enough to scare the Federal Reserve away from a December rate hike, but it was not solid enough to impart any real confidence to investors about the state of the economy.

What this means for investors: The labor market has recently been one of the few positive forces in the economy with some solid numbers in July and August following dismal figures in the spring. It is sending mixed messages, however, and has been all year. Precious metals are a key way to protect against such market uncertainty.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

$1.4 Trillion Dollar Deficit That No One Is Talking about

Read Here

Brexit Talks and The British Pound’s Flash Crash 

Read Here

Gold Dips During Slow Week with Chinese Markets Closed

Read Here

What Employment Numbers are Telling about the Economy

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Deutsche Bank Failing

Deutsche Bank’s Instability Revives Fears of 2008

Gold Market Discussion

Deutsche Bank Strikes Fears of Lehman Brothers Repeat

Lehman Brothers Collapse

Deutsche Bank sent liquidity fears through the markets on Thursday reminiscent of the lead-up to the 2008 crash. The bank’s stock fell to all-time lows on Thursday on liquidity concerns as large funds began to withdraw excess cash and positions at Deutsche Bank. The bank, which is Germany’s biggest lender, was already suffering after the U.S. Department of Justice requested $14 billion a couple of weeks ago to settle an investigation into mortgage backed securities.

This is dangerous for the entire global financial network. Deutsche Bank is at the center of the European financial system and is heavily interconnected to banks across the world. Collapse would be systemic.

The bank has 42 trillion Euros in derivative exposure, which is more than double the entire EU GDP. Eventually the bank will have to do something. A “do nothing” scenario is no longer an option.

Initially, gold and silver rallied as fear and uncertainty set in among investors. On Friday, with talk of a possible DOJ deal and assurances (at the behest of Angela Merkel) from bank CEO John Cryan, stocks rallied again. Gold and silver held modest gains.

What this means for investors: A few weeks ago, Deutsche Bank made the news for another nefarious reason. The bank refused delivery of promised physical gold to investors.  Mainstream news sources flashed headlines about stocks closing the financial quarter on highs, despite the S&P and Dow having their worst month since January. Deutsche Bank is down 49% YTD, and a significant number of other banks in the U.S. and Europe have performed nearly as poorly.

Banks cannot guarantee your money is safe. When the algorithms fail, money disappears. Assets like gold and silver, however, do not disappear.

What Strategists are Saying about Deutsche Bank

Deutsche Bank CrisisMost investment strategists are in agreement about the danger of Deutsche Bank’s situation. Jeff Gundlach of DoubleLine Capital is advising investors to “stay away from Deutsche Bank.”Gundlach named “bizarre monetary policy” as the main reason for the dismal financial sector performance this year. He believes a government bail out could still be a possibility. By EU regulation, member states are not allowed to bail out banksAnother strategist ,Paul Gambles at MBMG International, predicted in 2013 that the bank was approaching collapse, and only government intervention will save it now.

A bail out of Deutsche Bank would be political suicide for Angela Merkel though. Bank bail-outs in the EU are forbidden at least in theory to protect the average, tax-paying citizen. Merkel would lose faith with the German people if a Deutsche Bank bail out happened on her watch. Her center-right party, the Christian Democrats, recently lost in Berlin elections, and Merkel cannot afford to lose more faith with her constituents.

Stefan Muller, the CEO of a Frankfurt-based research company, believes government intervention is necessary. In his estimate, “something serious needs to happen.” The bank’s CEO, John Cryan, seems at a loss of what to do, despite his assurances that the bank has some cushion and is not in trouble. The financial and monetary systems have become deadlocked, and at this point, the bankers are merely prolonging the inevitable.

What this means for investors: How long can such a broken system stay propped up by bankers’ assurances that things are alright? Gundlach said the system is beyond analyzing anymore because of unprecedented policy and regulation. Deutsche Bank is extremely interconnected and has a huge derivatives book. If it does collapse, the contagion spread would be systematic. Gold will soar as a safe haven when the system does collapse.

 Silver Holds Prices to Close out Quarter

silverbars

Silver closed out the quarter in the green. The metal spiked on the last couple trading days of the quarter. The Deutsche Bank concerns buoyed silver prices as well as gold. While gold pulled back slightly Friday though, silver stayed just under $20.

Silver did experience some choppiness as well during the week as investors adjusted ahead of the quarter end. High energy prices and volatility contributed to silver’s price support, however.

What this means for investors: Silver’s shining performance this year has not dimmed yet. Widespread economic uncertainty and volatility will continue to support the price. Silver is a cheaper alternative to gold for protecting wealth against banking crises, and is up more than 26% YTD.

OPEC Deal Could Help Gold

DOHA Oil

Oil prices settled higher on Friday after a tentative deal among OPEC partners to cut production. There has been much dispute particularly between Iran and Saudi Arabia about production numbers. With sanctions lifted, Iran has been producing more, and Saudi Arabia – in an effort to maintain market share – also increased output. Crude prices have been dwindling because of output and inability of the OPEC countries to reach an amiable deal, but prices were shored up by the possibility of an accord this week.

What this means for investors: HSBC analysts think that the deal could help gold. Gold and oil often move in correlation, though it has been less so this year as gold emerged into a bull market.. More rallies in oil could lead to rallies across other commodities, including gold and silver.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Deutsche Bank’s Instability Revives Fears of 2008

Read Here

What Strategists Are Saying about Deutsche Bank

Read Here

Silver Holds Price to Close Out Quarter

Read Here

OPEC Deal Could Help Gold

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Janet Yellen and Fed Do Not Raise Rates

Fed Fears Keep Rates Low, Gold and Silver Rally

Gold Market Discussion

Gold Has Shining Week After Fed Decision Not to Hike Rates

Federal Reserve BuildingGold and silver both ended the week on highs after the Fed announced its decision not to raise interest rates. The metals had their greatest weekly advance since July. Stocks and bonds initially rallied after the Thursday announcement as well, before they experienced pull back on Friday.

The announcement was remarkable in that the Fed’s language continues to be unremarkable. The past couple Fed announcements have been slightly more hawkish, but remain vague about rate hike timing. Janet Yellen, the Fed chair, claims to be data driven in her decisions, however she picks and chooses and will which data to follow. GDP growth is sluggish, but positive labor figures in August seem to be warranting more notice from Yellen.

There are those who believe the Federal Reserve is politically motivated in its decision. When asked at the press conference by a reporter, Yellen assured them that they were not motivated by politics, but there are still those who wonder. A rate hike could send the stock market into disarray, which would be difficult for the incumbent Democratic Party a month away from a Presidential election. Some analysts also associate a great deal of market risk with a Trump presidency.

The Fed governors are very divided over the rate hike. They fell just short of a majority vote for a hike. Boston Fed governor Eric Rosengren, worry that the low rates are creating market dislocations with investors pursuing riskier assets on the hunt for returns.

The Bank of Japan also had a monetary policy announcement this week. It announced more quantitative and qualitative easing with more “yield curve control.” Gold and silver also reacted with upward movement to the BOJ announcement.

What this means for investors: The Fed decision came as something of a surprise to many investors, who have been expecting a hike announcement for months. Many are now saying that the Fed probably missed its chance to hike months ago. Strategist Charles Dumas said that the Fed is putting market sentiment before the real economy, and it is provoking a stock bubble that will burst with dire consequences.

It is increasingly clear that people are losing confidence in central banks. If 2017 is the bear market that many fear, gold and silver will be among the safest assets for investors.

The Economy Is Approaching an Event Horizon

Global EconomyGlobal debt is approaching $230 trillion. How long can the global economy sustain such a burden? One strategist turned to astrophysics to explain what happens next. When a star’s life ends, its gases begin to expand into its core. The core becomes so heavy that the star cannot withstand its own gravity. The star becomes larger and denser, eventually turning into a supernova, exploding, and collapsing upon itself. After the star explodes, a black hole exists where the star once was.

Central banking policy of unprecedented quantitative easing and zero and negative interest rates led to this debt expansion. Interest rates have been falling for 35 years into negative rates. Bond investors want them to move lower in order to ensure a return. As sovereign debt increases though, the money supply is falling.

Even the stock market highs this summer have not merited the celebration they should in another economic climate. Stock buyers are buying for their dividend and lack of options in this low interest rate world. The stock market is giving a distorted view of the economic reality.

What this means for investors: This is why fiat currency is dangerous. The money supply is too easily manipulated by numbers and ineffective policies. Gold and silver are real, hard, physical assets. They have value when the money supply runs out. More and more investors are recognizing the gravity of the “event horizon” – or black hole’s edge – that QE and negative interest rates are pulling the economy towards.

Silver Prices Post-Fed Announcement

stacked silver bars

The cheaper metal experienced two-week highs after the BOJ’s and Fed’s announcements this week. It pulled back some on Friday, but still made a relatively large gain for the week at 7%, following a 4% pull back the previous week.

Other factors influencing the price gains for both silver and gold were a slowdown of European economic growth and stocks falling on Friday. The U.S. dollar also experienced some pressure on Friday.

What this means for investors: Investors who bought the previous week when there was some pull back on price were encouraged to see the metals bull market has not finished its course. Both silver and gold have been extraordinary performers in 2016, and with an ominous and uncertain economic outlook, they have not finished their run yet.

Trump Vs. the Federal Reserve

Trump vs the Federal Reserve

Republican presidential candidate Donald Trump and Janet Yellen have been trading jabs the past two weeks. First, Trump accused the Fed of political bias. Trump has even gone as far as to say Yellen should be ashamed of what she is doing. He essentially said that the Fed is not hiking rates because they want Obama’s legacy to end on an economic positive. At an address at the Economic Club of New York, he predicted the rate hike would come in January as the next President prepares to take office.

Following the FOMC meeting this week Yellen fired back that the Fed is absolutely not political, and politics are not discussed in the Fed meetings. One strategist believes Yellen is afraid of Donald Trump, however. As a political outsider, he has a level of unpredictability not seen in a U.S. election before.

What this means for investors: Politicians in the past have called for an audit of the Fed. Could a Trump presidency see one happen? The Fed has amassed far too much power over the U.S. (and global) economy, and political theorists and philosophers as far back as the late 18th century have warned of an all-powerful, central banking system.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Fed’s Decision Could Be Leading to 2017 Bear Market

Read Here

The Economy Is Approaching an Event Horizon

Read Here

Silver Prices Post-Fed Announcement

Read Here

Trump Vs. the Federal Reserve 

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Boris Johnson Brexit

Boris Johnson Says Britain Will Begin Brexit Talks Soon

Gold Market Discussion

Boris Johnson: Brexit Negotiations Could Begin Early 2017

Boris Johnson
Boris Johnson, British Secretary of State for Foreign and Commonwealth Affairs

Boris Johnson says Britain will begin Brexit talks soon. Johnson, the British Foreign Secretary and staunch “Leave” vote advocate told the Italian prime minister this week that Brexit talks could begin as soon as early 2017. Boris Johnson, the former mayor of London, campaigned heavily for Great Britain to leave the European Union, which was voted for by referendum in June this year.

The aftermath of the Brexit referendum saw a massive downturn in the global markets and most world currencies fell.  The U.S. dollar strengthened as did gold and silver as demand surged for safe haven, wealth-preserving assets. Within a few weeks, however, much of the investor fear had subsided, and the political will to move forward seemed to fizzle out as the British government changed hands after David Cameron’s resignation as Prime Minister.

Under the legality of the Lisbon Treaty, the next step to leave the EU is for Britain to initiate two years negotiations with the EU as to how the separation would happen. The Treaty’s Article 50 allows for a member nation to leave, though it has never been done before.

Johnson’s comments this week to his Italian counterpart Paolo Gentiloni are significant because new PM Theresa May is so far seeming to procrastinate on starting the process. President of the European Commission Jean-Claude Juncker, French president Francois Hollande, and UKIP leader Nigel Farage have all said that the process should begin as soon as possible.

What this means for investors: Demand for gold and silver surged after the initial referendum. Many investors in Britain and the Eurozone began to buy gold for the first time as they watched their currencies’ value plummet. When Britain does sever its EU membership, the pound and sterling will take another significant hit, which will drive precious metals prices.

The post-Brexit flight to gold illustrated how the value of gold is not denominated merely in spot price. It is a hard, valued asset that survives when currencies collapse.

 

Gold Pulls Back Waiting for Interest Rate Guidance

Gold and interest rates

Gold prices closed out the week on a pullback as markets wait for announcements next week from the Federal Reserve and Bank of Japan about where interest rates are going next. The Asian markets – including China, which is currently the world’s largest gold buyer, Taiwan, and South Korea – were closed Friday for a holiday, which also contributed to the Friday pull back.

In the case of the Bank of Japan, investors are waiting to see if the government will inject more stimulus. Some believe interest rates in Japan could be slashed even further. On the U.S. side, there is mixed expectation of whether the U.S. will raise rates.

What this means for investors: Central banks do not know what to do anymore. Former Fed Chair Alan Greenspan warned this week that ‘crazies are running the system.’ With central banks in Europe, the U.S., Japan, and Great Britain running out of options on monetary policy, gold will become a highly desired asset in the future. Gold has been moving in a bull market all year, and price pullbacks like this are a prime buying opportunity.

 

A Perfect Storm of a Correction is Coming

financial perfect storm

A sharp stock market pullback may be imminent, according to economist and strategist David Rosenberg. Last Friday the stock market took a resounding hit when a Fed official hinted at an interest rate hike to come. Prominent investors and strategists have been warning of an impending stock market bubble burst for some time.

Stocks fell the previous week after a Fed official hinted at raising rates. Rosenberg’s analysis was not merely based on Fed policy however. He also cited an overvalued stock market, investor complacency, and sluggish economic growth. Overall global economic growth is even slower than in the U.S.

What this means for investors:  Although an interest rate hike would initially shake gold prices, when the stock market undergoes such a sharp correction, investors will start shifting demand to gold as a safe haven asset. CNBC’s Delivering Alpha conference this week featured chief hedge fund managers, investors, and strategists whose analysis of the economic outlook was, for the most part, uncertainty and gloom. Nearly all have been moving more holdings into gold as protection against global uncertainty.

Have We Entered a Recession? 

post financial crisis monetary easing
Chart showing the Fed’s implemented monetary easing post financial crisis

A series of graphs in this article illustrate that the U.S. could be on the brink of another recession. The four policy drivers of the economy are monetary policy from central banks, fiscal policy from the government, and microeconomic policy from corporations.

On the monetary policy, as already discussed, central banks are unsure what direction to take anymore. Stimulus, negative interest rates, and helicopter money has not been fixing problems, merely providing a means to ignore them for a little longer. Fiscal policy from elected officials is wrought by partisanship and ineffectiveness. Corporations are guilty of misallocating capital. Ineffective – and dangerous – policies from these three frameworks would result in the ‘perfect storm’ of a market correction, which leads to recession.

What this means for investors: Gold protects wealth during recession. Silver can similarly protect your portfolio in a weak economy. Many first-time metals investors are finding silver is a good starting point towards diversifying their portfolio. It’s a cheaper option than gold, follows most of the same market trends, and is up more than 25% this year.

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Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Boris Johnson Tells Italian Prime Minister Brexit Negotiations Could Begin Early 2017

Read Here

Gold Pulls Back Waiting for Interest Rate Guidance

Read Here

A Perfect Storm of a Correction is Coming

Read Here

Have We Entered a Recession? 

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Massive stock and bond selloff

Friday Fed Announcement Triggers Biggest Stock Loss in Months

Gold Market Discussion

Massive Stock and Bond Sell Off Shake Markets on Interest Rate Prospect

stockbrokers selloff

On Friday, the Dow and Nasdaq had their worst day since Brexit. The Dow was down nearly 400 points and had its third worst week overall year to date. An unexpected announcement from the Federal Reserve that hinted at an imminent interest rate hikes was the catalyst. Eric Rosengren – President of the Boston Fed – said Friday that “low interest rates are increasing the chance of overheating the U.S. economy.” He commented that there needs to be a tightening of monetary policy in order to maintain full employment.

In the past several weeks, the stock market has been hitting record highs, so it was a shock to many investors. Gold also took a hit after spot price had been moving up above $1,350 the previous day. European stocks also had a dismal day after the news with their worst day in over a month. The U.S. dollar and short-term government bond yields moved higher.

The European Central Bank announced this week that they would not deviate from their course of stimulus. Mario Draghi encouraged national governments to increase spending, but it is becoming increasingly clear from both the ECB and Federal Reserve that the central banks are out of options on monetary policy.

What this means for investors: Gold also fell Friday, which is not surprising. When interest rates are higher, demand shifts from non-interest yielding assets like gold. If this stock market bubble finally bursts though – which it is dangerously close to doing – investors will start moving back to safe haven assets like gold and silver.

 

Markets are Frozen by Uncertainty Fears

frozen markets

Central banking policies have been at the root of the markets’ gains, and they will be a catalyst for when it crashes. The Fed has been mostly hesitant and vague for the whole year in a climate where the slightest word from a spokesperson shakes the markets. The current state of affairs for the global economy can be summed up by uncertainty – so much so that it is becoming increasingly clear that central bankers are even uncertain what course to take. The features of this uncertainty are:

  • A Federal Reserve preparing to hike rates as global growth is slowing.
  • An ECB that is paralyzed with inability to move forward and tries to shift responsibility (and blame) to national governments.
  • The Bank of Japan continuing an aggressive negative rate policy.
  • $13 trillion of sovereign debt at negative yield.
  • Brexit uncertainties are still rampant, as Britain is preparing to face an economic recession.
  • A U.S. presidential election unlike any other.
  • Apple – which accounts for 7% of the S&P 500 – ordered by the European Commission to pay 3 billion euros in back taxes to the Irish government, which Apple and Ireland have both appealed against.
  • Geopolitical instability in the Middle East, South China Sea, and North Korea.

What this means for investors: Precious metals will be the asset that investors will flee to when the system breaks down. It has happened before, and it can happen again. The banks can only prop up a broken system for so long, and the warning signs are numerous that the world is approaching another brink of economic collapse.

Former Anti-Gold Wall Street Investor Changes Course, Recommends Buying Metals

buy gold bars

Richard Bernstein
Richard Bernstein

Richard Bernstein, a notoriously anti-gold investor, is buying gold for his clients’ portfolio for the first time over inflation concerns and market uncertainty. When Bernstein – a former investment strategist at Morgan Stanley – taught at New York University’s School of Business, he was notable for telling his students that there was no difference between gold and “wampum,” the glass beads that the Eastern Woodlands tribes of Native Americans used to exchange as currency.

In his opinion, gold was only an asset because of some “romantic value” assigned to it. Just as wampum was only valued because of an agreed upon value, gold only means something because society has decided so. It could easily become nothing more than glass beads one day.

What Bernstein’s analogy is missing however is that gold and silver have been valued as currency by most societies for thousands of years. The example of Native Americans exchanging wampum is representative of a small fraction of human history.

What this means for investors: If Richard Bernstein is seeing enough danger in the markets to buy gold, investors should take note. Another important factor to consider is inflation. Precious metals are an effective way to hedge a portfolio against inflation, which is one of Bernstein’s chief motivations. Gold is also real money. It has been valued for thousands of years, and it does not lose value, unlike paper trades, fiat currency, and “wampum.”

 

Buy Gold on Rebound Rally

Buy Gold on the rebound rally

The pull back on gold price Friday presented a prime buying opportunity. This graph illustrates the Comex gold weekly trends for the past couple years. This week gold met resistance at $1,360 and pulled back some.

On the silver side, in last week’s Gold Market Discussion, we looked at why the cheaper metal’s price would continue to run.

What this means for investors: The primary point to take away from this graph is that the current retreat is a lucrative buying opportunity before the uptrend continuation to $1,360 and beyond. Gold is in a new, strong bull market, so any price retreat is a prime opportunity to take advantage.

 

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Massive Stock and Bond Sell Off on Interest Rate Prospect

Read Here

Markets are Frozen by Uncertainty Fears

Read Here

Formerly Anti-Gold Wall Street Investor Changes Course, Recommends Buying Metals

Read Here

Buy Gold on Rebound Rally

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Deutsche Bank Backing out on Promised Delivery

Deutsche Bank Backing out on Promised Delivery of Gold

Gold Market Discussion

Why is the Deutsche Bank Backing out on Promised Delivery of Gold? Is Gold Approaching a Short Squeeze?

Deutsche Bank

This week German gold buyers discovered that they could not receive delivery of the metals they had paid for. The bank in question – Deutsche Bank – is the chief bank of Germany. Investors had bought through the gold exchange traded commodity Xetra-Gold. This is a gold investment service that is essentially more of a paper trade than actual physical gold, as many investors do not choose to exchange the warranty for physical delivery and instead treat it more as an ETF. However, the contract states that a buyer can redeem their contract for physical gold at the designated Deutsche Bank.

When an investor attempted to take the guaranteed delivery of their physical gold this week the bank was unable to produce it. Later – after being questioned – the bank issued a formulaic response stating only that the bank was in fact the designated supplier of physical gold despite its inability to deliver. The bank is the guarantor of the physical gold backing the warranty, thus it seems Deutsche Bank rather than Xetra-Gold is at fault here.

What this means for investors: The question to consider here is whether Deutsche Bank was unwilling or unable to deliver the gold. Each prospect is equally worrying. If the bank is unwilling to make good on the warranty, what is their impetus for wishing to keep possession of their gold? If the bank is unable, then where is the gold that is supposed to be backing these trades?

This is one of several signs that gold could be approaching a short squeeze. For every 542 ounces of gold traded on the Comex in ETFs, only one ounce of physical gold is sitting in a warehouse for physical delivery. This means that the price of gold can become exaggerated. If every holder of one of these paper gold certificates attempted to cash them in, there would not be enough physical metal to meet the requests. The price of gold would skyrocket, although many investors would be left high and dry. Eventually these imbalances will need to undergo some degree of correction.

This is a significant reason that owning physical gold is safer than gold ETFs. Physical gold investors can be confident that they have their investment safe in their own hands.

 

Gold and Silver Prices Ends Week with a Jump after August Jobs Report

fine-gold-close-up

On Thursday gold and silver saw dips in anticipation of the U.S. jobs data report for August. However both re-bounded Friday after some worse-than-expected data. Gold saw its biggest gain in a month when the data failed to hit estimates.

In July, the jobs report was better than expected which caused gold to take a hit, despite weak numbers in May and June. According to some analysts, far too much credibility is being placed in the jobs data, however, as GDP growth is still more sluggish than could be desired. The Federal Reserve keeps looking for positive economic indicators for a rate hike, and the July jobs report had significant bearing in a slightly more hawkish tone from Janet Yellen last week on a possible rate hike this month.

Silver saw a significant price jump as well. On CNBC’s Fast Money Friday, one analyst even said he preferred the white metal to gold in this market.
What this means for investors: The metals jumped due to demand for safe haven. The jobs data indicates a slowing economy and uncertainty, which both boost gold and silver demand. Precious metals also are desirable in the low interest rate world that we are currently living in.

Gartman on Gold vs. Bonds in Unorthodox Market

gartman gold vs bonds

Dennis Gartman, editor and publisher at The Gartman Letter, talked this week about some unusual trends in the past few months between the bonds and gold markets. Historically the two have always moved in opposition to each other. However as Gartman pointed out on CNBC, “…since June, as went gold, so went the bond market.” The absolute prices of both have rallied and fallen alongside each other in the past quarter, which is an anomaly.

Both investments are seen as safe havens during times of economic turbulence and uncertainty, which accounts for the rallies this year. They move in opposition as investors shift between the two deciding on the safest investment. Both saw significant gains following the post-Brexit volatility.

What this means for investors: There is huge demand or safe haven investments right now. The primary reason for this is uncertainty. With monetary policy experiments, contradictory U.S. economic data, negative ECB interest rates, the U.S. presidential election, and still some Brexit volatility, no one is certain of what is to come.

Silver Forecasted to Stay Strong [VIDEO]

What this means for investors: Silver rallied Friday after falling slightly over the past few weeks. Its rally shows it is still a strong performer – in fact performing better than gold this year – and set to gain even more in both short and long term. The current correction makes now an optimal buying time.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Deutsche Bank Refuses Delivery of Gold
Read Here

Gold Rallies after Jobs Data 
Read Here

Gartman on Bonds and Gold
Read Here

Silver Rallies Friday – Investors Predict Higher Gains
Watch Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Economic Indicators About Trump vs. Clinton

What Economic Indicators Are Saying About Trump vs. Clinton

Gold Market Discussion

The Markets’ Take on a Trump Presidency

What would Trump mean for Gold?

Presidential elections in the U.S. have significant impact on market movements. Even the anticipation of (before the candidate is even elected) what a candidate might do is impactful.

According to some hedge fund managers, there is a correlation right now happening between investors wanting to hedge against a market drop in the event of a Donald Trump presidency. The CBOE Volatility Index – or VIX – gauges volatility expectations and right now its projections are moving in line with Trump’s polling numbers according to CNBC analysis.

What this means for investors: The VIX can be indicative of what traders expect for the rest of the year. It is not an infallible predictor, however. Although some traders are expecting volatility, it does not necessarily mean a long-term negative for the markets

 


Economic Data Forecaster of Clinton’s Chances

What would Clinton mean for Gold?

The economic data around Hillary Clinton’s chances is also worth noting. Some forecaster models are frighteningly accurate at predicting the outcome of U.S. presidential elections by taking into account unemployment, GDP growth, and inflation.

An economist at Yale – Ray Fair – analyzed the current race with his model based on these factors. The model has correctly predicted all but two presidential elections in the past hundred years. His results were emphatically in favor of a Trump victory. According to the assessment, a Clinton victory is impossible without 4% GDP growth. Growth is currently trudging at 1.2%.

What this means for investors: Of course, modeling data is not perfect. It is difficult to account for every variable, and this election is particularly volatile. A rate increase could be detrimental to the Clinton campaign based on the Yale model, but that doesn’t mean it still won’t happen. Regardless of victory, demand for safe haven investments like gold and silver will likely go up in the wake of the election if the economic data and slow growth continues.


Gold Advances after Fed Announcement from Yellen on Friday

The Fed says they might raise rates...again

On Friday the much-anticipated Fed announcement on interest rates drove gold higher. Gold had retreated earlier in the week in anticipation of the Federal Reserve meeting in Jackson Hole, Wyoming. The previous announcement from Fed chair Janet Yellen had hinted at a rate increase happening soon, so many had thought that Friday’s announcement might finally give a concrete timeline for that hike to occur.

The analysis of Yellen’s speech, however, did not reveal anything new in Fed policy strategy. Yellen did reiterate that a rate hike soon would be appropriate, but did not give a certain date or further details. Rather, she said it would be “gradual” and “over time.” According to Fed Funds data, odds of a rate increase happening in September fell slightly to 28% from 32%. Given the Fed’s tone recently, a rate increase in September is certainly not off the table though. One analyst believes it would more likely happen in December rather than September.

The chief factors that the Fed took into consideration are unemployment rates, GDP growth and global economic uncertainty. While the data is not robust enough for the Fed to take a definitive move from its doveish stance, Yellen did state that the economy was nearing employment and growth goals.

It is also worth noting that on Monday, the Libor – London Interbank Offer Rate – hit a 7-year high even as interest rates have been falling. The last time time it experienced such a spike was prior to the 2008 crash. Most loans are linked to the Libor, and this could be a sign of system stress, as the Fed acknowledged in the most recent FOMC minutes. A rising Libor in these conditions could make the Fed more reluctant to raise rates.

What this means for investors: The markets had a mixed reaction. Generally gold goes up when interest rates are low because they are seen as a safe haven. The Fed board does not seem able to make up their minds at the moment and are continuing to stall on an interest rate hike. A hike too soon in a volatile economy could send the stock market crashing, which would eventually support gold. It is an unusual time in monetary policy and well worth following.


Markets Still Adjusting to Impact of Brexit on the U.S.

What will Brexit mean for the US?

Brexit uncertainty still looms large in the minds of investors, bankers, and policy makers. In the initial fall out from the UK vote to leave the EU, the pound, euro, and most other world currencies plunged along with the stock market while the dollar and gold gained strength.

The initial frenzy soon died out, however. Stocks recovered and were hitting record highs within a month of the post-Brexit fall. The dollar and gold both remained robust as well though. The UK looks to be poised on the brink of recession now with the prospect of a long, arduous road of negotiations ahead to decide the nature of the UK – EU relationship.

What this means for investors: Economic uncertainty is at the forefront of monetary policy decision makers’ minds right now. Although the markets are not experiencing dramatic movement from Brexit right now, investors are still cautious about implications to come concerning Brexit. The economic data has still to be realized and analyzed, and until that point – and likely for a while after – the economic uncertainty will support gold prices.

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

The Markets’ Take on a Trump Presidency
Read Here

Economic Data Forecaster of Clinton’s Chances
Read Here

Gold Advances after Fed Announcement from Yellen on Friday
Read Here

Markets Still Adjusting to Impact of Brexit on the U.S.
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Nixon Closes the Gold Standard

45-Year Anniversary of Fiat Currency Replacing Gold

Gold Market Discussion

Just Over 45 Years Ago the U.S. Left the Gold Standard – What Has Happened Since?

President Richard Nixon closed the Gold Standard 45 years ago in 1971
President Richard Nixon closed the Gold Standard 45 years ago in 1971

We just passed the 45-year anniversary of fiat currency replacing gold. 45 years ago – August 15, 1971 – President Nixon declared the end of the United States’s decades long, gold backed monetary system and replaced it with the current fiat system. The gold standard had ensured that something valued and physical – gold – was giving value to the dollar rather than paper, government promise, and digital manipulation. At the time gold was $35 an ounce. Today it is $1,350 an ounce.

Nixon’s strategy was originally designed to be a temporary measure. He claimed it was to combat nefarious “international money lenders” who were waging war against the U.S. dollar. In reality U.S. spending on the Vietnam War was creating a massive budget deficit and soaring inflation. Both foreign governments and private investors saw the potential for dollar devaluation and immediately began flocking to gold.

What this means for investors: Nixon’s promise that the dollar would not decline was proved false. The dollar plunged. Within nine years of leaving the Gold Standard, gold had climbed from $35 to $850. Since 1971, there have been market upheavals, economic crises, and currency collapses around the globe due to speculation and manipulation of fiat money. Gold has real value, and that value will always protect wealth during uncertainty and crisis when printed paper becomes worthless.


The Fed’s Announcement and How It Affects the Gold Bull Market

Janet Yellen illustration by DonkeyHotey on Flickr

This week the Federal Reserve’s minutes were released from their latest meeting. Many investors were hoping the Fed would at last turn hawkish and announce an interest rate hike. However, the announcement was much more timid than these investors would have liked. The announcement was rather that an increase might be appropriate soon with no indication of specific date. Gold initially fell after the Wednesday announcement, but rose again Thursday on the uncertain nature of the announcement. Peter Grandich, the self-styled “Wall Street whiz kid”, later wrote that gold is in the early stages of its biggest bull market ever.

Silver is also likely going to ride the same bull market run as gold. The ratio between gold and silver is narrowing. It’s up more than gold so far for the year and could still have a ways to run.

What this means for investors: Many strategists have been saying for months that gold and silver are entering new bull markets. The summer is historically a slower period for precious metals, and as we enter autumn, prices could start to see more movement. Gold and silver are both up over 26% for the year, and have a ways to climb still. Price dips after announcements like the one last week are an optimal time to diversify an investment portfolio with both gold and silver.


Lord Rothschild Is the Latest Elite Banker to Increase Gold Holdings

Lord Jacob Rothschild
Lord Jacob Rothschild

The Rothschild name has been synonymous with speculative banking and furtive, elitist power for well over a century. This week Lord Rothschild called the current monetary policy of central banks around the world the “greatest experiment in monetary policy in the history of the world” as they attempt to force stimulus into economies through low and negative interest rates.

In his half-yearly financial report for his fund, RIT Capital Partners, Rothschild outlined the impending global risks. These risks were primarily the UK vote to leave the EU, the sluggish economic growth in China, tensions in the South China Sea, conflicts in the Middle East, the U.S. presidential election, and recent terrorist attacks in Germany, France, Belgium, and the U.S.

Along with outlining geopolitical and economic risks, the banker stated that he was increasing his gold holdings due partly to the increase in declining yields. He reduced pound sterling holdings due to the pound’s post-Brexit crash, and was also somewhat reducing U.S. dollar holdings.

What this means for investors: Many hedge fund managers and bankers are increasing gold holdings in their portfolios and preparing for a future of uncertainty and crisis. Gold protects wealth when fiat currencies fail. It could be an ominous sign when the world’s most powerful and influential are turning to gold.


Is the Stock Market Approaching a Stall? Why One Expert Thinks So

Art Cashin
Art Cashin, Director of USB Floor Operations at the NYSE

Art Cashin, director of UBS floor operations at the New York stock exchange, warned this week that even as stocks are hitting new highs, the market could be about to stall. At first look it might seem contradictory. Cashin thinks that it is possible people have simply not realized the stall approaching yet because of the gradual nature it has arisen.

The markets are also still awaiting economic data from the UK to see how hard it was impacted by the Brexit vote in June. Currently the British 30-year bond is yielding less than the U.S. 10-year after the Bank of England cut interest rates last year.

What this means for investors: When the stock market bubble finally bursts, investors will start flocking to gold. The current trend the markets are in are unusual in that the stock market is hitting highs even as gold continues to make gains. Gold will be a safe haven for investors when the market finally stalls, as Cashin predicts it will soon.

 

Subscribe Now to Get the Gold Market Discussion Delivered Direct to Your Inbox


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

45 Years Ago This Week the U.S. Left the Gold Standard – What Has Happened Since?
Read Here

The Fed’s Announcement and How It Affects the Gold Bull Market
Read Here

Lord Rothschild Is the Latest Elite Banker to Increase Gold Holdings
Read Here

Is the Stock Market Approaching a Stall? Why One Expert Thinks So
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Ben Bernanke Predicts

Ben Bernanke’s Forecast for Interest Rates, and a Look at the Global Economy

Gold Market Discussion

Ben Bernanke Predicts Fed Won’t Raise Rates

 

Ben BernakeFor months now investors have been expecting the Federal Reserve to raise interest rates. Events such as the May jobs report data, the June Brexit vote, and a lack of economic growth in Q2 have forced the Fed to continue to delay hiking rates. There is much speculation that September could finally be the right moment for the Fed.

However Ben Bernanke, former chairman of the Federal Reserve from 2006 to 2014, said this week that his successor, Janet Yellen, would be reluctant to raise rates for a while yet. Partly this is due to the Fed making incorrect predictions over the past several years, and thus being overly cautious lest it blunder again. In addition there is conflicting economic data, which adds a strong air of uncertainty to any decision making that the central bank takes.

December 2015 marked the first rate hike in nine years, and at the time the Fed forecasted four more to happen in 2016. So far there has been zero, and it is not our of the realm of possibilities that none will come in 2016.

What this means for investors: If interest rates stay low, gold will continue to climb. However what is more noteworthy is the lack of hard data to support a strong economy. The Fed’s reluctance to raise rates indicates that the U.S. economy cannot support higher rates. With such weakness, demand for gold and silver will continue to rise with safe haven demand.


China and Germany’s Warning Signs

China and Germany, the world’s second and fourth largest economies respectively, are showing dangerous signs of weakness. Chinese economic growth rate fell to a twenty-five year low last year, and the hard data indicates that the slowdown will continue. For one, both Chinese imports and exports fell more than expected for the month of July. In addition, retail sales are not hitting expectations, and fixed asset investment is down. The International Monetary Fund projects Chinese economic growth to fall below 6% by 2020. According to a UBS assessment, China has also begun to bail out its banks.

Germany’s economy accounts for one fifth of the Eurozone’s GDP, and a flailing Germany economy could easily infect every other country in the 28 country trading bloc of the EU. European Central Bank interest rates are still at negative as they attempt to pump stimulus into the economy. German bonds are trading at negative yield. Germany industrial, energy, and construction sectors all shrank in quarter 2, and high inflation was a hit on real incomes. HSBC economist Rainer Sartoris said this data does not even account for the impact of Brexit. The impact of this data will be seen later in the year.

What this means for investors: Japan, the world’s third largest economy, is in even more dire straits than China and Germany. While U.S. stocks rally and some interpret this as economic robustness, with such international strains on the global economy coming from these economic powerhouses, the system has dark clouds looming ominously over it. The global system is too far integrated for everyone not to eventually buckle under the continued pressure of stagnant economies.


Britain’s Exit from the EU Could Mean 4% Shrink in GDP

Brett or Bregret

The Brexit vote by Britain to leave the European Union in June this year wreaked havoc on the markets before the initial fervor fizzled out a few weeks later. British politics underwent a re-structuring with Theresa May taking over as Prime Minister from David Cameron and forming a new cabinet. The opposition Labour Party debated changing leadership from far left populist Jeremy Corbyn – who fiercely opposed Brexit – but without effect. May, like Cameron, is opposed to the British exit, however maintains she will uphold the “Yes” vote and enact Article 50 of the Lisbon Treaty, which would begin the two year process of negotiations around the mechanics of how an EU member state would leave.

After the Brexit vote, the British pound fell to its lowest in over thirty years. The Bank of England has also recently lowered interest rates in an effort to stave off recession. A recent study is indicating that the British economy will further contract if it loses access to the European single market.

The EU was originally designed as an economic union where countries could engage in free trade and movement of goods and services. If Britain leaves, this would have a dire impact on many businesses that depend on this access to sell products and services to a wider customer base. Because of Great Britain’s significant financial sector, some even predict lack of EU market access could shrink the British economy by 7%.

What this means for investors: The Brexit vote spurred record demand in Britain for gold and safe haven investing. Gold prices spiked after the Brexit vote due to fear and uncertainty. The outlook for Britain continues to be uncertain. It’s yet to be seen whether the nation will actually leave the European Union, but if it does, there will be significant impact that will stifle economic growth in Great Britain and the Eurozone for some time.


Gold and Silver Close the Week with a Rally

Gold was up Friday snapping back from a losing streak earlier in the week, maintaining its 28% climb for the year and closing out the week just over $1,350. Earlier in the week stocks had enjoyed a solid run as gold pulled back. Gold closed in the green even as the Nasdaq still managed to close Friday at a record high. This was due in part to retail sales for July doing less than expected and wholesale prices plunged the most in the year.

These are worrying signs the economy is not as strong as the stock market and the labor data report from July seem to indicate. Economic growth is not as robust as many have anticipated.

Silver was also up on Friday at just over $20. The white metal continues to perform for the year and is up 30%.

What this means for investors: There has been an unexpected correlation in recent weeks where the U.S. dollar and gold are both gaining. Historically the two are inversely related. Many experts are saying that gold still has a ways to run in this bull market, and data like this would seem to support that projection.


Watch: Silver is on the Rise

Watch this latest video with Arizona Sports host and RME Endorser Ron Wolfley

Here are some articles from the web discussing the topics in this week’s post:

Ben Bernanke Predicts Fed Won’t Raise Rates
Read Here

China and Germany’s Warning Signs
Read Here

Britain’s Exit from the EU Could Mean 4% Shrink in GDP
Read Here

Gold and Silver Close the Week with a Rally
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Precious Metals Bull Market

More Global Financial Risk; What Is Silver Saying about the Precious Metals Bull Market?

Gold Market Discussion

What the Gold Market Is Saying about Global Risk, Bank of England Rate Cuts, Japanese Stimulus

Global Risk

Michael Preiss of Taurus Wealth Advisors believes the global economic outlook is recession and stagnation. In his analysis on CNBC he stated that the gold market can reveal much about the state of the economy. He points out that gold is the best performing asset class of 2016 and has outperformed the S&P by 19%. Much of the world’s sovereign debt is seeing low and negative yields.

watch this video from Yahoo Finance UKWatch the video here from Yahoo Finance UK.

What this means for investors: Financial stress is becoming more apparent in the global system. If the recession that Preiss believes to be inevitable does occur, gold and silver will see more gains.

 


Silver’s Performance for the Year Optimistic for Precious Metals Bull Market

Silver has been a top performer so far for 2016. Silver often outperforms gold in a bull market for precious metals, which most strategists are agreeing is where the market currently is. The white metal is up more than gold overall for the year with both over 26% in the green for 2016. Georgette Boole – commodities and currency analyst at ABN Amro Bank – believes that silver will continue to outperform gold into 2017. An ounce of gold right now is able to buy the least amount of silver since 2014. The ratio was at its lowest in three decades during the record prices that we saw in 2011. This is an indicator that the bull market has a way to go yet.

Both metals gained early and mid-week after the Federal Reserve announced no interest rate hike and the Bank of England cut interest rates.

What this means for investors: Both metals have a bright outlook through 2017. Silver is driven by many of the same economic factors as gold, but its price is also dictated by industrial demand. It can also move more sporadically than gold. With an increase in usage in things like solar panels, touch screens, and RFI chips, the metal is seeing increased demand, which has lifted the price. Silver is a lucrative way to diversify a precious metals – or any investment – portfolio, and many first time silver investors are taking advantage of the price now to buy.


The Bond King: “I Don’t like Stocks, BONDS or Equity…gold and land are favored asset classes.”

Gross on CNBC August 2016

This week in his August letter to investors, Bill Gross, portfolio manager at Janus Capital, issued a warning against investing in stocks and bonds and advised investors to move into gold, land and other real assets.

The reason for his dour prediction is central banks’ monetary policies of low and negative interest rates and other foreboding signs of a weakening financial system. Low interest rates raise asset prices, but impede savings and business investment. He also stated that capitalism cannot function properly with interest rates at zero and negatives, and that global monetary policies will not succeed without nominal growth, which we are not seeing.

Bill Gross manages the $1.5 billion Janus Global Unrestrained Bond fund, which is up 3.93% for the year. He has also written acclaimed books on investing. Gross is the latest to join the swelling ranks of fund managers and investors who have gone bullish on gold. Stanley Druckenmiller, Paul Singer, Jeff Gundlach, and George Soros are just some of the other prominent names that have recently recommended gold to investors and cautioned against stocks in the current economic climate.

We sent out a mid-week blog post about this on Thursday Aug 4th which you can check out here.

What this means for investors: In times of market turbulence and volatility, gold becomes a more attractive investment. Demand increases, as investors become more risk adverse. Economic growth around the globe is slowing due to central banking stimulus policy, and without growth, high yields on stocks and bonds will become more difficult to find. Gold both preserves wealth during economic downturn and offers a return. The metal is up 26% for the year with many strategists projecting it to climb as high as $1400 by the end of the year.


Gold and Silver React to July Jobs Report

July Jobs report gold reaction

After gaining all week, gold and silver both fell Friday following the release of the July jobs report. The data was better than expected – especially after the dismal May numbers – with 255,000 new jobs added last month. Unemployment held steady at 4.9% as well. Targets had been 4.8%. It was a positive for the U.S. economy after the weak GDP growth from the second quarter. Stocks responded by rallying and precious metals fell as the dollar strengthened. Earlier in the week the case had been the opposite with stocks falling and gold gaining following European volatility and the Fed’s low interest rate policy.

Despite the robust numbers however, some analysts are still worried about the labor force participation rate, which is lower than what some targets call for. Corporate earnings for the second quarter are lagging in some sectors, causing concern over how strong the business cycle actually is.

What this means for investors: The jobs data gave stocks a much-needed boost on Friday after being down all week, as investors became more risk adverse. Friday’s slump for metals could likely be a short-term event, however, as the economic data is more indicative of economic slowdown ahead. The Federal Reserve may read the labor data as a sign to finally raise interest rates if they believe the economy is strong enough.


Here are some articles from the web discussing the topics in this week’s post:

What the Gold Market Is Saying about Global Risk, Bank of England Rate Cuts, Japanese Stimulus
Watch Video Here

Silver’s Performance for the Year Optimistic for Current Bull Market
Read Here

“I Don’t like Stocks, Bonds or Equity…gold and land are favored asset classes.”
Read Here

Gold and Silver React to July Jobs Report
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Bonds

When Bond King Bill Gross “Doesn’t Like” Stocks or BONDS, Perhaps We Should Listen

Watch: Bill Gross Doesn’t Like Stocks or Bonds!


Trouble viewing video? Click here. Bond King Bill Gross “Doesn’t Like” Stocks or BONDS. Bonds! This is the former head of Pimco, where he managed the largest Bond fund to the tune of oh… $270 billion. After all, the man’s nickname literally is “The Bond King”. So what does he like?

 

Bill Gross: “I don’t like stocks, I don’t like bonds, I don’t like private equity…real assets such as land, gold…are favored asset categories.”

 

Yesterday in his August letter to investors, Bill Gross, portfolio manager at Janus Capital, issued a warning against investing in stocks and bonds and advised investors to move into gold, land and other real assets.

stocks and bonds warning from Bill Gross
Should investors be concerned about stocks and bonds?

The reason for his dour prediction is central banks’ monetary policies of low and negative interest rates and other foreboding signs of a weakening financial system. Low interest rates raise asset prices, but impede savings and business investment. He also stated that capitalism cannot function properly with interest rates at zero and negatives, and that global monetary policies will not succeed without nominal growth, which we are not seeing.

What this means for investors: In times of market turbulence and volatility, gold becomes a more attractive investment. Demand increases, as investors become more risk adverse. Economic growth around the globe is slowing due to central banking stimulus policy, and without growth, high yields on stocks and bonds will become more difficult to find. Gold both preserves wealth during economic downturn and offers a return. The metal is up 26% for the year with many strategists projecting it to climb as high as $1400 by the end of the year.


Bill Gross, Janus Capital Group
Bill Gross, Janus Capital Group

Who is Bill Gross?

William “Bill”  Gross is the founder and former Bond Manager of PIMCO, where he managed as much as $293 billion in assets. His understanding of the bond markets earned him the nickname “The Bond King”. In 2014, After 43 years, Gross left PIMCO to join Janus Capital Group, where he currently manages the $1.5 billion Janus Global Unrestrained Bond fund, which is up 3.93% for the year. He has also written acclaimed books on investing, “Everything You’ve Heard About Investing is Wrong” and “Bill Gross on Investing“. Gross is the latest to join the swelling ranks of fund managers and investors who have gone bullish on gold. Stanley Druckenmiller, Paul Singer, Jeff Gundlach, and George Soros are just some of the other prominent names that have recently recommended gold to investors and cautioned against stocks in the current economic climate.


The Gold Market Discussion with Jim Clark

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wall street

What’s Ahead for Gold and Silver after the Summer?

Gold Market Discussion

Gold Prices End the Week High on U.S. Economy Growth Concerns and European Bank Stress Test Results

The US Economic Growth?

Gold closed out July hitting two-week highs and seeing gains through Thursday and Friday to settle at $1350 by Friday close. The metal has entered a new bull market and is now up 26% for the year.

There were several factors influencing its run this week. The first was the Federal Reserve decision not to raise interest rates. The economic and labor market data is still not strong enough to predicate raising rates. Expectations of more Brexit induced stagnation and a continuation of central banks in Europe and Japan pursuing monetary easing are also significant factors. Crude oil is also plunging, and U.S. durable-goods orders fell ahead of the Fed meeting.

Growth in the U.S. economy for the second quarter was also lower than analysts predicted. This follows on a weaker than expected start to the beginning of the year. GDP for the second quarter rose 1.2% up slightly from 0.8%, but still short of the median expected growth among analysts of 2.5%.

On Friday the results of a stress test on Europe’s leading banks were released, and their weak results further gave gold prices a positive push. The oldest bank in the world, Italian Banca Monte dei Paschi di Siena, fared the worst out of the fifty-one banks tested, but most of the banks tested had worrying results. There is around 1 trillion euros of non-performing loans plaguing the European banking system. The stress test did not include a test for Brexit volatility and continued negative interest rates.

What this means for investors: The U.S. economy is not as stagnant as those in Europe and Asia, but it still not as strong as many peoples’ expectations and with the global economy becoming increasingly inter-dependent, this will put a strain on the world system at large. It is worth noting that the European bank stress test did not include the Brexit and negative interest rate factors, which are two of the direst indicators of the lagging economy. As economic uncertainty looms ahead for 2016, gold and silver could see significant further runs.


The November Election and Other Reasons Gold Could Still Run

Trump and Clinton

Major events, particularly political and geopolitical, impact gold and silver significantly. This year’s U.S. Presidential election is quickly becoming one of the most theatric and ugly elections and could its outcome – regardless of victor – could create a great deal of global volatility as elections often do. Some analysts have even gone as far as to cast a possible Donald Trump win as one of the biggest threat to global stability due to the unpredictability of what a Trump administration might look like. Regardless of whether this is a viable assessment or not, an unpredictable future tends to drive gold demand.

Gold demand is steadily rising in Great Britain and Japan on economic uncertainty fears. Although for most the Brexit economic fears were not fully realized, there is still a sense of fear as to what it will mean long-term if Britain leaves, and there has been a sharp upswing of British citizens buying gold (many for the first time). On the other side of the globe, there is a similar spike in gold buying as Japanese citizens see the BoJ’s monetary policy lagging, and government bonds fall below zero. Over $11 trillion of government debt around the world is currently at negative yield, and that kind of global strain can only hold for so long before there are dire repercussions.

Gold has been putting in a strong performance this year (up 26%), but it is currently playing second violin to a particularly strong equities market. Many investors agree, however, that gold is in a new bull market, and when the stock market enters an inevitable correction, gold prices will jump further.

What this means for investors: Many experts are predicting that gold will close the year at $1400. If that is the case, now is a prime buying opportunity. Safe haven buying around the world will also continue to drive gold prices. Silver has been moving in line with gold, making it an attractive investment as well.


The Federal Reserve Doesn’t Seem to Know What to Do

Federal Reserve Building

Gold prices lifted significantly mid-week after the Federal Reserve meeting where the Fed made the decision to postpone lifting interest rates yet again. Many have been expecting the rate increase to happen for the past couple months, but there is still no clear indication of when it might happen.

On Thursday the Fed announced that it would keep rates low and gold and silver prices responded accordingly by rising, which lasted through Friday. Danielle DiMartino Booth, a former advisor to the Dallas Fed, was on CNBC to give some analysis on the Fed’s current monetary policy. In Booth’s opinion, the central bank missed its opportunity for a rate hike some time ago. One of the methods of measurement of the robustness of the economy’s job market is the labor market conditions index, which has been negative now for six straight months. Other strategists also think they should have raised rates some time ago, and that this extended period of low rates will become a major problem long-term. Many are expecting a rate hike to finally happen in September, but it is still uncertain.

What this means for investors: If the Fed does eventually raise rates, gold will fall at first. However if these analysts are correct in their assessment that the Fed has missed its window of opportunity, rates could stay low for some time yet. There is still a palpable sense of fear as to just how strong the U.S. economy is and whether it can handle a rate hike right now.


Strategist Predicts Stock Market Rally Will End with the Summer


Last week U.S. stocks hit new all-time highs. However, investment experts are warning that the stock market’s current rally is approaching its end. One strategist compared it to a summer fling, calling it a “summer camp romance rally” and predicts that like a fling, it will fizzle out when summer turns into autumn. Another market expert also predicted that the stock market could see a significant correction before much longer.

One reason for the stock market’s attractive performance is that global government bond yield is at record lows. Instead, investors are moving towards stocks with more attractive relative valuations.

What this means for investors: The summer months are historically slower for gold, but gold has still made some gains through the summer months even as the stock market hit its highs. Post-Brexit fear sent gold and silver prices soaring, but price pullback through mid-July made this month a prime buying opportunity. Gold is ending July in the green, settling around $1350 by Friday afternoon.


Here are some articles from the web discussing the topics in this week’s post:

Gold Prices End the Week High on U.S. Economy Growth Concerns and European Bank Stress Test Results
Read Here

The November Election and Other Reasons Gold Could Still Run
Read Here

The Federal Reserve Doesn’t Seem to Know What to Do
Read Here

Strategist Predicts Stock Market Rally Will End with the Summer
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

dollar and gold correlation

The Dollar and Gold Currently in an Unorthodox Trend; Why the ECB could Boost Gold Further

Gold Market Discussion

The Dollar and Gold in a Complicated Relationship

dollar and gold unorthodox correlation

Traditionally gold and the dollar have an inverse relationship. When the dollar is strong, gold is weaker. Alternatively, gold rises on a weak dollar. However, we are currently seeing a dollar enjoying relative strength while gold prices are simultaneously over 25% into the green for the year. This trend defies history and is worth paying attention to.

Gold is priced in U.S. dollars, so one reason a strong dollar makes gold prices lower is because it becomes more expensive for foreign buyers. However central banking policy run wild around the world has many foreign investors seeking out safe haven investments like gold. Geopolitical turmoil and market volatility has increased the amount of economic uncertainty as well, raising gold demand. Non-government organizations like the IMF and OECD have recently issued warning reports of more global growth stagnation still to come.

Analysts at Citi believe that this dollar – gold correlation is a signal for more volatility ahead. Assets are becoming more interconnected as global financial markets become more intertwined, and the outcome is difficult for analysts to predict at this time.

What this means for gold investors: Gold’s slump from the last two years is over. Prices are at the highest they have been in two and a half years, and it is no anomaly. Silver is likewise performing strongly this year and has gained more than gold overall for the year.


More Stimulus from ECB and Bank of Japan and What It Could Mean for Gold

Bank of Japan main offices
Bank of Japan Head Office in Chuo-City, Tokyo, Japan

Gold prices lifted on Wednesday in anticipation of an announcement from the European Central Bank that they would increase stimulus funding in the floundering Eurozone. The monetary easing policies that the ECB has already been engaging in essentially weaken paper currencies, which makes gold stronger as it becomes more attractive than holding the devalued fiat money.

The Bank of Japan last week also announced it would pursue such a policy of “helicopter money” to attempt to stimulate economic stagnation. Central banks around the world have been embarking on these monetary experiments, which has sent some into the negative interest rate territory.

What this means for investors: Some of the world’s largest economies are in a slump that they cannot seem to get out of. The U.S. dollar and markets are relatively strong in comparison, but the integrated global financial system cannot withstand the strain forever of monetary easing policy. The central banks are attempting to prolong an inevitable major downturn. Investing in gold and silver is a way to hedge against this financial risk.


Britain’s Stagnant Post-Brexit Economy

England's currency

The pound, euro, and global stock markets all plummeted when Britain voted to leave the EU. Yet within a month they seemed to have regained at least some of the loss according to many media outlets that had backed the Brexit.

Yet the reality of the British economy is that it is shrinking and investors and policy makers are losing confidence. A couple months ago, the International Monetary Fund had reported that global economic growth overall was weak. After the Brexit vote, they cut projections even further.

The Bank of England could pursue monetary easing to attempt to stave off the slowdown. If Britain does leave the EU, they will possibly lose access to the single European market, which would hurt business across the board. One of Britain’s economic growth drivers – the service industry – was impacted particularly harshly by the Brexit vote.

What this means for investors: Demand for gold around the world is on the rise. More EU countries are now talking about having referenda to leave the EU. It is a foreboding sign that our current global financial structure could splinter. No one can predict the outcome, but it is certain that demand for gold will increase with the unknown.


Some Investment Analysts Predict Gold to $1500

Analysts predict $1500 gold

Many commodity and investment experts have agreed that gold has entered a new bull market. DBS Group Holdings Ltd., a Singapore-based bank, predicted the current rally well in advance and ahead of most. Low and negative interest rates are keeping demand strong, and with no rate hikes expected in the U.S. (and likely longer in other countries) until at least the end of the year, the rally is on track to continue.

Foreign exchange strategist Benjamin Wong stated this week that gold has had four major bull markets since 1970, and that this is another one. He also added that the markets have not dealt with the uncertainty of the U.S. presidential elections this year, and that could be a gold driver as well.

What this means for investors: DBS Holdings is advising investors to buy gold now. Their projections expect gold to climb to $1500 during this rally. Gold’s price dips this week made this week a prime buying opportunity.


Here are some articles from the web discussing the topics in this week’s post:

The Dollar and Gold in a Complicated Relationship
Read Here

More Stimulus from ECB and Bank of Japan and What It Could Mean for Gold
Read Here

Britain’s Stagnant Post-Brexit Economy
Read Here

Some Investment Analysts Predict Gold to $1500
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Why the Post-Brexit Stock Rebound Could Be in Trouble; Silver Continues to Build on its Gains for the Year

Gold Market Discussion

The Post-Brexit Stock Rebound: The Market Rally Has a Lurking Problem

watching the stock market

In the Brexit aftermath, the stock market plunged so low that it lost all of its 2016 gains. However within a few weeks it has been hitting some historic highs to the confusion of many.

There is a darker side to the stocks rally though. Only 16% of the S&P 500 stocks are hitting the 52-week highs while more than a quarter are down at least 20% from their highs. The Down Jones is over 18,000, but the NYSE Composite measures a majority of stocks to be below their highs of last year. According to Bank of America Merrill Lynch, only 18% of active investment managers are outperforming their benchmark, making it one of the worst years on record. Even as the stock market is making its historic gains, there is also a significant amount of trade happening in safe haven investments such as gold, U.S. treasury bonds, and utility stocks. This suggests that there is still much uncertainty about how long this rally will last.

What this means for investors: Many on Wall Street are ignoring alarming economic data, weakness in the oil market, increasing levels of negative yield government debt, and U.S. corporate earnings recession. Gold and silver prices have been rising for the year as well even as the stock market rallies. The U.S. stock market is the only one of the world’s developed economies that has not buckled under economic uncertainty and pressure yet. The levels of volatility and uncertainty will likely increase and continue to drive gold prices as these problems with the stock market gain more exposure.


Silver Out Performs Gold Again

silver rally continues

Silver’s significant performance this year continues to be an important theme. Gold prices saw some pull back earlier in the week, but prices went up again mid-week and closed slightly down for the week on Friday. Silver was trading in the green for most of the week. Over the weekend an attempted military coup in Turkey drove prices back up as geopolitical upheavals often do.

Silver is now up over 45% for the year. The white metal is being driven by safe haven demand (like gold) and industrial demand.

What this means for investors: Many analysts are saying that the precious metals market is in a new bull market. The price dip this week makes now a prime buying opportunity as the markets correct. Gold and silver have been gaining for six weeks straight and are up significantly for the year.


Negative Yield German Bonds Selling at Auction

German bonds go negative

This week Germany became the first country in the Eurozone to sell at auction 10-year government bonds at negative yield. Investors are guaranteed to lose money over the life of these bonds. Germany is by no means the only European country with negative yield bonds, however. Irish bonds hit record lows, and Dutch bonds have just gone negative among others. Even positive yield bonds are still at record lows. Yields on the 10-year German bonds, which have been negative since June, are the benchmark for the Eurozone.

The economic repercussions of Britain leaving the EU are still a significant driver for the negative yield on German bonds. Europe is only barely recovering from the last financial crisis, and a British exit would slow growth even more. Britain’s new prime minister Theresa May has promised on her appointment this week that she will start the Brexit process. The European Central Bank has been slashing interest rates to negative and printing money as a means of buying bonds and trying to ease slowing. This is putting pressure on bond rates around the globe, however. Government bonds are usually considered a safe haven investment, but currently $11.7 trillion of debt is trading at negative yield.

What this means for investors: The Eurozone is grinding to a halt as monetary policy runs amok. Government debt – usually a low risk, safe haven investment – is at dangerous lows. Investors will start looking to other safe haven investments as they continue to lose money. The global financial system was not designed to be run on negative interest rates for this long, so there is much uncertainty from policy makers and analysts about what this means for the future. As investors continue to lose money on bonds, they will move to other safe havens such as gold and silver.


Japan Buying Up Gold

Japan flag

Rising Japanese demand for gold as economic uncertainty around Japanese monetary policy increases is a notable positive factor for global gold prices. Earlier this year the Bank of Japan lowered interest rates to the negative territory sending investors flocking to gold as a safe haven. It is looking likely now that Prime Minister Shinzo Abe, being advised by former Federal Reserve chair Ben Bernanke, will opt for “helicopter money” policy and start printing money for a $100 billion stimulus. One of Japan’s largest bullion dealers has said that in the past several weeks, sales have doubled and are up 30% for the year.

What this means for investors: This is a prime example of how during economic upheaval, investors see gold as the best storage of wealth. The sale of safes in Japan for storage of gold and cash are also up significantly. Japan has been through numerous rounds recently of monetary easing and stimulus and failed to make the Yen competitive again or hit inflation marks.


Here are some articles from the web discussing the topics in this week’s post:

The Stock Market Rally Has a Lurking Problem
Read Here

Silver Out Performs Gold Again
Read Here

Negative Yield German Bonds Selling at Auction
Read Here

Japan Buying Up Gold
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold bars and coins stacked

Why Gold and Silver Will Be the Most Secure Currencies

Gold Market Discussion

Why Gold and Silver Will Be the Most Secure Currencies

silver overtakes gold

Many eminent investors consider gold and silver as currencies. Peter Boockvar considers precious metals an “anti-fiat money” currency. Because gold is a tangible, finite resource, its value cannot be as easily manipulated or created electronically through central banking monetary policy as fiat currencies can.

Central banking policies – particularly in Europe and Japan – of negative interest rates has resulted in nearly $11 trillion worth of negative yield government bonds. These polices are also hurting the return prospects of pension funds and savers, threatening the existence of insurance companies, and straining the banking systems. In Boockvar’s words, “We are living in a world of monetary mayhem where monetary policy has embarked on an experiment that is now going haywire.” As central banks lose their grip on the policies they’ve embarked upon, the global economy is slowly grinding to a barely creeping pace.

What this means for investors: The warning signs that the global economy is in trouble are increasing. Many of these dangerous macro trends are prompting investors to move into gold and silver now. Boockvar believes gold and silver will be the last currencies standing when the current monetary regime inevitably falls apart.


WATCH: Why Gold Investors Should Also Be Watching Silver


Silver hit two-year highs on Monday as it climbed to $21 an ounce. Part of the price climb is still driven by post-Brexit safe haven demand. Some analysts are saying an increase in demand for silver’s industrial uses – particularly in solar panels – is also spurring the price climb. Silver still has a long way to go to hit its 2011 highs of $49. This suggests that prices could continue to rise. The French bank Societe General raised its long and short-term price forecast this week for both gold and silver.

What this means for investors: Silver has two strong drivers right now. Because of its lower price relative to gold, it can be more erratic in movement, but generally rides on gold’s wake. The white metal is so far performing better overall than gold for the year, however. While part of that is due to industrial remind, when analyzed in conjunction with gold price movement, signs indicate that safe haven investing is the strongest factor as investors diversify against increasing risk in the market.


WATCH: More Leading Analysts Flocking to Gold in New Bull Market


Investment strategists have been saying for a couple months that gold has entered a new bull market. Prices bottomed out at the end of 2015 and gold is up nearly 29% this year. At the start of the week, the metal reached $1,377, which was its highest level since March 2014.

An increasing amount of financial risk is in great part the catalyst for gold’s climb. Central banks around the world are pursuing low and negative interest rates as the U.S. Federal Reserve struggles to raise them. The economic indicators, however, have not been strong enough thus far to justify a hike. Divergent and unconventional monetary policies across the board along with a stock market that could be topping out are making many investors uneasy about the future.

What this means for investors: Gold prices rallied for twelve years until they peaked in 2011 and fell. It appears, as predicted, that the price truly did bottom in 2015. This new bull market could last a long time with the amount of volatility and future uncertainty for the global economy.


Federal Reserve June Meeting Minutes a “Non-Event” for Gold

The Federal Reserve released the minutes of its June meeting on Wednesday. Even following the tumultuous Brexit week’s volatility, there was little new information about the markets and direction for the economy. For the gold market, it amounted to a non-event and did not seem to impact gold price movement. The minutes acknowledged however that weak employment and payroll data for May was of concern, and that a July interest rate hike is now off the table.

What this means for investors: The stock market saw some gains after the minutes were released, but gold was not impacted. Generally gold moves in opposition with the stock market, so the fact that it made little movement suggests there is much uncertainty about the positive outlook that the Fed continues to attempt to project for the U.S. economy. The lack of growth in the labor force is sending warning signs despite the stock market’s positive movement. Some strategists are doubting whether a rate hike – first planned and postponed for June, and now for July as well – will even happen this year.


 

Here are some articles from the web discussing the topics in this week’s post:

Why Gold Investors Should Also Be Watching Silver
Read Here

More Leading Analysts Flocking to Gold in New Bull Market
Read Here

Federal Reserve June Meeting Minutes a “Non-Event” for Gold
Read Here

Why Gold and Silver Will Be Most Secure Currencies
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold and Silver March

Silver Hits 2 Year Highs and Gold Poised for Further Rally; Why Brexit Volatility Will Continue

Gold Market Discussion

Silver Hits 21 Month High This Week As Gold Lifts

silver is on the rise

Silver prices soared along with gold through the week. By Thursday silver was at $18.76 hitting its highest mark in almost two years.

During the last half of the week, the stock market recovered some of its losses. Both global stocks and U.S. stock indexes were trading higher from Wednesday. On one hand this seems to indicate that investors overreacted initially to the Brexit referendum. However as Dennis Gartman pointed out on CNBC’s “Fast Money” on Wednesday, if not for the U.S. and Brazil markets performing, the global stock market as a whole would be down 20% for the year. More importantly, the German 10 year bund, which is the benchmark European government bond, is currently seeing negative yields. This seems to suggest that many Europeans are still seeing a threat to the survival of the EU in its current form. The Deutsche Bank – the euro’s power source – was the hardest hit by the Brexit “Leave” vote.

What this means for investors: Silver has outperformed gold this year. Silver typically rides gold’s coattails, but it is also influenced by industrial markets. Its strong performance this year suggests, however, that it is equally valuable as a safe haven against global uncertainty. If the stock market’s correction this week is temporary as many signs indicate, silver could be a lucrative, cheaper option for protecting one’s wealth.


UK & EU S&P Credit Ratings Downgraded to AA after Brexit
Standard and Poor's Building

Gold prices have firmly held above $1,300 after getting a significant lift following the “Leave” vote on the British referendum on EU membership last week. The pound has fallen to 31-year lows with the euro taking a hit as well. Meanwhile the dollar strengthened on the plunging world currencies.

Standard & Poor’s cut the United Kingdom’s credit rating from AAA to AA this week after last Friday’s market upheaval. On Thursday they downgraded the European Union’s to AA as well down from AA+. They warned that the UK could face another slashing, since the vote means that there is “a less predictable, stable, and effective policy framework in the UK.”

What this means for investors: Analysts don’t know what to expect for Britain’s economic and political future. Many in Britain are still fighting to remain in the EU. Meanwhile British Prime Minister David Cameron has announced his resignation sparking vigorous debate and conjecture for who will take over the Tory leadership. The Opposition Labour Party is also wrought with inner-party turmoil and disagreement. Even if the Brexit does not go ahead, this uncertainty on the domestic political scene will make it difficult for the pound to bounce back from the hit it took. Gold will increasingly be seen as a safe haven.


What’s Next for Gold Bull Market after Brexit

UK cuts from the EU after Brexit

The Brexit vote was the beginning of what could be a mass upheaval of political and economic systems. It was a vote against the largest trading bloc in the world and the governance system that has arisen from it. Experts are saying that this is just the beginning of gold’s move. Scotland and Northern Ireland are increasingly showing signs that if the United Kingdom severs its EU ties, they will seek to sever their own ties with the UK and re-integrate with the EU. Former Federal Reserve Chairman Alan Greenspan said that if this continues to play out this way, we could expect a major bull market for gold.

Banks have also raised their gold bullion forecasts. Morgan Stanley and Goldman Sachs Group Inc. have both raised their predictions for the metal echoing the flight to safe haven that many other investors have already taken.

What this means for investors: This could be the calm before the storm. There are still many major and historic decisions to be decided about the future of the European Union and the nations that comprise the United Kingdom. Global markets will continue to waver under the strain of the uncertain future. The Brexit vote was a collective message of anger at a multinational governance system and that anger extends to the national government. It is not unique to Britain either. As populaces continue to question their government political systems (for better or worse), volatility will increase.


More Reasons Gold and Silver Will Continue to Go Up


What other factors are influencing gold and the markets? The Brexit is the hot topic, but there are other macroeconomic trends worth paying attention to as well. The high levels of uncertainty about the future of the European economic union are being ignored at the moment before UK – EU negotiations kick off more aggressively and Great Britain decides on its political leadership.

There is a real recession fear among central banks. The Bank of England, Federal Reserve, and European Central Bank have promised to provide liquidity in the market when needed, which would mean lower interest rates for longer. The ECB is already in negative interest rate territory. The central banks have precious few options left though to provide this kind of liquidity they have promised. The devaluation of currencies is another major reason for precious metals prices to lift. Gold’s initial spike after the Brexit vote was to be expected after such a historic geopolitical event, but its sustained growth will be tied to the loss in value of the pound, euro, and other world currencies. The Shanghai Gold Exchange has indicated that Chinese demand for gold is rising again. China is one of the world’s largest gold consumers, and is currently facing a currency crisis of a devalued Yuan and lagging economic growth.

What this means for investors: Investors are seeing many indicators that gold prices will continue to rise post-Brexit. Central banks are scrambling to find solutions to stave off crisis and global economic slowdown and running out of ammunition. As many in leadership and the media attempt to assuage concern about the effects of the British exit or even the possibility of it even happening, it is imperative to remain aware of the other threats to the global financial system.


Here are some articles from the web discussing the topics in this week’s post:

Silver Hits 21 Month High This Week As Gold Lifts
Read Here

UK & EU S&P Credit Ratings Downgraded to AA after Brexit
Read Here

What’s Next for Gold Bull Market after Brexit
Read Here

More Reasons Gold and Silver Will Continue to Go Up
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

The Brexit Aftermath

The Brexit Aftermath

Gold Market Discussion

What the Brexit Vote Means for Gold, Stocks, Currencies, and Banks

Vote is to leave the EU
On Thursday, Britain voted by 51.9% majority to leave the European Union. By Friday morning, the global markets – mostly poised for a “Remain” vote – were in chaos as the Brexit spurred a massive sell-off. This is a monumental event of which the significance cannot be stressed enough. It will be a catalyst for major global economic and political changes.

The Brexit aftermath: How the markets reacted:

  • Gold: Gold prices skyrocketed hitting 20-month highs. The gold price had its greatest one-day move in 7 years as investors flocked to the safe haven metal. After the official announcement, gold rose as much as $100. Gold was up 13% against the pound and more than 6% against the euro and Swiss franc.
  • The Dollar: The dollar strengthened as the pound and euro collapsed. Gold and the dollar generally move in opposition to one another: when one goes up, the other comes down. Yet both gained against the collapsing European currencies as many saw gold as a safer alternative.
  • Pound Sterling: The British Pound fell 8% as gold rose 8%. Pound sterling was at a 30 year low. Before polls had even closed, British citizens were lining up to exchange their pounds for gold, euro, or dollars. The pound was down 700 base points after Sky News called the results.
  • The Euro fell nearly 3%. The Norwegian krone, Swedish krona and Australian dollar fell even steeper.
  • Banks were the hardest hit sector. Many were down nearly 10% with Deutsche Bank experiencing the hardest losses. The Bank of England said it would pump billions into the financial system, and the European Central Bank said it will give banks all the funding they require.
  • Dow Jones and S&P 500: Both saw all of their 2016 gains wiped out. The Dow dropped 600 points and had one of its worst trading days ever.
  • The Nasdaq had its worst day since in five years.
  • Stoxx Europe 600 plummeted 7%, having the worst day since the height of the financial crisis.
  • Crude oil was down 5%.

What this means for investors:

Gold has not hit its peak yet. We are already seeing a massive flight to safety in gold, and as the global markets continue to reel, gold prices will continue to climb. These moves were a reaction to only one day after one vote. As the effects of these events continue to rock the markets, gold will move higher.

Experts like Dennis Gartman expect gold will keep rising. Those who bought in the past couple weeks when prices dropped back are now seeing great returns, but this is still a prime buying opportunity.


More Market Chaos and Volatility to Come; “Tip of the Iceberg” According to Alan Greenspan


The former Federal Reserve Chair said Friday on CNBC that this is the worst financial period he can recall – worse even than 1987’s Black Monday when the Dow dropped 23%. Greenspan also said that the euro currency is an “immediate problem,” and shows that the Eurozone and EU political integration has failed.

What this means for investors: Ultimately the Brexit vote was a political vote more than economic vote. It was a vote against European integration. Established systems in Europe are crumbling, and with such major disruption, the global economy is poised for an even worse crisis than the previous. The collapse of the euro is not just the collapse of one country’s currency; it is the collapse of nineteen countries’ currencies. Demand for gold will rise against such global uncertainty


The Domino Effect of the Future of the EU

EU Domino Effect
Several EU countries have already voiced a desire to hold their own referenda on leaving the EU as well. Leaders in the Netherlands, Italy, and France have called for national referenda. These are especially significant because these are three of the original six members of the EU’s precursory organization and all use the euro. In Austria – a country receiving a large influx of immigrants and with a strong right wing party – 40% want a referendum held. Polls have also indicated that the Czech Republic, Hungary, Denmark, and Sweden could likely vote to leave in a referendum.

What this means for investors: The EU’s future is dire. Alan Greenspan also said Friday on CNBC that despite its efforts to prop up banks, the European Central Bank is limited in what it can do, due to the economic stagnation in the Eurozone. The Southern Eurozone is funded by the ECB and Northern zone, which is a fundamental problem without a clear or easy solution. The “Brexit” is like the first major leak in a dam, and it will spread and set off others until the dam finally bursts. Gold’s post-referendum spike is just the first upward move that will inevitably accompany this crisis.


Here are some articles from the web discussing the topics in this week’s post:

What the Brexit Vote Means for Gold, Stocks, Currencies, and Banks
Read Here

More Market Chaos and Volatility to Come; “Tip of the Iceberg” According to Alan Greenspan
Read Here

The Domino Effect of the Future of the EU
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

What Today’s Brexit Vote Means to Investors

What the Brexit Vote Means for the European Union and the Future

Britain holds a historic vote this Thursday – June 23rd – to determine whether they will remain in or leave the European Union. The question will be determined by referendum – a yes or no question decided by popular vote. What does it mean for Great Britain, Europe, and the globe if Britain exits the EU? We will break down questions you may have about the EU, Britain’s role, the referendum, and its future implications. Let’s look into what tomorrow’s Brexit vote means to investors…

Why Does Britain Want to Leave?

The Brexit BattleCurrent British Prime Minister David Cameron campaigned on the promise that he would hold the referendum if elected in 2015. His promise was in large part due to mounting pressure from Conservative Members of Parliament and the UK Independence Party (UKIP).

The “Leave” campaign argues that the EU has become too powerful and over-bearing and started to erode nations’ sovereignty in favor of a federal Europe. They believe it has too much control in peoples’ daily lives while operating with too much secrecy. It’s processes and institutions are unlike any other organization making it both too empowered and too distant. Many are also opposed to the influx of immigrants from other EU states that are enabled by the visa free moment, living and working rights of people across borders. The proposed “resettlement quota” proposed by the EU for Syrian refugees in each EU nation further fueled many of these sentiments.

Those arguing for a “Remain” vote see improvements to their daily lives and opportunities from EU membership. Many also like the strong commitment the EU pledges to workers’ rights and education opportunities. They also see a “Leave” vote as causing innumerable economic and logistical burdens for:

  • British citizens living elsewhere in the EU who will now require visas and work permits or be forced to move back to the UK, and vice versa Europeans living in the UK
  • Small businesses who avail of the single market to expand business opportunities
  • Countries like Ireland whose largest trading partner is the UK

What is the Purpose of the EU?

The EU flags

The EU is a complex, bureaucratic organization that many people – including EU citizens – struggle to fully understand. Knowing how the EU arose and how it operates is useful in understanding both the “Leave” and “Remain” campaigns.

The European Union was founded as an economic union on the principles:

  • Free Movement of goods – free trade across borders to create a single European market as if it were basically one country
  • Free Movement of People – visa free travel, living, and work for all EU citizens in all EU member countries

It was based on the idea that if countries were economically dependent on one another and enjoyed this freedom of movement across borders, future conflict could be avoided. It has become an increasingly political organization as well with a foreign affairs branch and leadership having significant weight on the global diplomatic stage.

Timeline of the EU:

  • Post World War II: During the economic rebuilding of war torn Europe, the European Coal and Steel Community (ECSC) is founded in 1951 with a treaty designed to keep countries from mobilizing troops against each other due to integrated dependence on one another for coal and steel.
  • 1958: Creation of the European Economic Community (EEC) and European Atomic Energy Community (Euratom) by six countries – Belgium, Germany, France, Italy, Luxembourg, and the Netherlands. First step towards future EU.
  • 1967: Brussels Merger Treaty streamlines organization by combining EEC, ECSC, and Euratom into one and establishes Commission and Council – replaced by Treaty of Amsterdam in 1997
  • 1973: Denmark, Ireland, and United Kingdom join EU
  • 1981: Greece Joins
  • 1986: Spain and Portugal join
  • 1989 – 1990: Collapse of the Soviet Union
  • 1992: Maastricht Treaty – Establishes European Monetary Union in preparation for the euro, introduces elements of a political union (citizenship, common internal and foreign affairs policy)
  • 1995: Austria, Finland, and Sweden join
  • 2001: The Euro is introduced – is now used by 19 of 28 countries
  • 2004: Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia join
  • 2007: Bulgaria and Romania join
  • 2013: Croatia (newest member country) joins bringing total member countries to 28

How the EU Works

The four chief institutions of the complicated structure are briefly explained in this video from BBC.


How the EU operates and legislates is far more complicated. It is the murkiness around the working process that alienates and disillusions many of its citizens.

EU Politcal System Explained
Click Chart Image to Enlarge

GO: What Happens if the Referendum Passes?

  • No one really knows for sure all of the implications of a “Leave” vote.
  • Treaties and trade agreements would have to be re-negotiated.
  • Twenty-seven countries must decide the legal procedure for numerous UK citizens settled within their borders.
  • Multi-national corporations and large banking institutions would have to re-structure and sift through countless red tape.
  • Both the pound sterling and euro would plunge as the single European market loses the ninth largest economy in the world from its bloc. The stock market would experience heavy losses and gold prices would lift as a safe haven investment.

STAY: Why Britain Could Vote “Remain”

  • It is likely that the fear of such an unknown future might be enough to scare enough voters into wanting to remain in the EU. For many a “Leave” vote carries personal risk to their daily lives and livelihood.
  • The immediate economic crisis that would occur would damage an already stagnant EU economy further in a zone where a large number of EU citizens have still not recovered from the 2008 global crisis.
  • Many of the UK citizens living abroad are retired or have families and will not want to uproot their lifestyles.
  • Younger voters tend to align ideologically with the EU for its political commitment to the advancement of human rights and open borders and opportunities for travel, higher education, and work opportunities in other countries.

What the Referendum Means for the Future of the EU

 Whether the referendum passes or not, it presents important questions for the future of the EU. “Euroskepticism” is on the rise in many more member countries. If Britain does leave, many predict there will be a domino effect of member countries holding referenda. If it doesn’t leave, Britain’s example could still prompt other nations to hold referenda and cause exits of other nations until the organization finally unravels.

Alternately however, a British “Remain” vote could be interpreted as a vote of confidence in the EU. Regardless, the aftermath of the June 23rd referendum will be worth following and will have significant historic and economic repercussions.

3 Reasons Why Gold Prices Have Bright Outlook

Gold Market Discussion

3 Reasons Why Gold Prices Have Bright Outlook

gold-bars-close-up

  1. The “Brexit”
  2. The Federal Reserve’s decision on interest rates
  3. German and Japanese negative interest rates

Right now, the potential Brexit and the Federal Reserve’s interest rate decision (see next section below) are two of the key drivers for gold’s rising price. A third, more long-term driver continues to be the negative yield on government bonds. A significant number of governments’ debt is selling at negative yield. The Japanese government bonds for with two year, five year, and ten year maturities all have negative yields. Two and five year German bonds are likewise yielding negative returns, and the German ten-year bond is close to a negative yield as well. This means that investors who hold these bonds to maturity are definitely going to lose money. Germany and Japan are two of the most significant economies experiencing this lack of growth given their size, but they are certainly not the only ones.

What this means for investors: As they continue to lose money, investors are going to start forgoing bonds in favor of assets like gold that store value. It’s also worthwhile to remember that the gold market is relatively small when contrasted to the bond or stock markets, so a relatively small amount of money diverting to precious metals investing could cause prices to soar.


Gold’s Mid-Week Price Jump Following Fed Announcement

gold set to resume rally
The biggest news of the week for the economy was Wednesday’s Federal Reserve announcement that the June interest rates hike proposed a few weeks ago would not go ahead after all. Recent jobs data from the Bureau of Labor showed alarming figures about lack employment growth and called into question whether the economy was strong enough for a rates hike. Gold and silver were both making gains earlier in the week and got an additional hefty boost following Fed chair Janet Yellen’s announcement with gold hitting 6 week highs and coming just short of $1,300. Stocks took a hit.

What this means for investors: This has two implications for investors. The first is that the economy is showing signs that it is not as strong as the optimistic projections of we have been hearing from the Fed. When the economy is suffering any kind of sluggishness, investors flock to gold as a safe haven against crisis. The second implication is that this is a prime buying opportunity for both silver and gold before prices surge higher.


Experts Say “Gold Will Soar” if Britain Votes Leave on EU Referendum

Is Britain in or out of the EU?
Should I stay or should I go?3

The possible “Brexit” – which will be voted on next week – was also an important discussion topic in the Fed meeting. The staunchest “Remain” contingent in Britain has said a “Leave” vote would be “economic suicide” for Britain. Whether this is an exaggeration or not remains to be seen, but it is certain that the euro and pound sterling would suffer a hard blow regardless and the global economy would suffer massive amounts of uncertainty and volatility. European investors have been heavily buying gold in the weeks leading to the vote.

HSBC Bank estimated gold would rally 10% to around $1400 if the leave vote wins out. In the past week, polls have tipped from “remain” to “leave” with some at as much as a 40/47 split.

What this means for investors: If the Brexit happens, investors here and in Europe who did not buy gold will be kicking themselves. All 28 countries in the EU bloc will find their economies reeling as they negotiate what the exit of one of their most influential partners means for trade deals. If there Brexit does not happen, there is still enough volatility in the Eurozone  and global economy at large that gold would likely not be adversely affected by the “Remain” vote. Although the Brexit has taken the spotlight for now, Greece’s recent financial collapse and debt default is also still weighing heavily on the Eurozone and will certainly continue to wreak havoc on the markets.


$10,000 Gold – Why One Commodities Expert Says It’s Possible

gold-bars
An impending global economic meltdown will drive gold’s price to historic highs, according to one of Wall Street’s most closely followed commodities traders, Jim Rickards. Rickards was on CNBC saying that gold is on the verge of a rally unlike it’s ever experienced before. The author of numerous New York Times bestsellers, he cautioned that the world is on the brink of another, ten-year cyclical financial collapse. He advised that gold is the ultimate safe haven in times of volatility such as will come in the next couple years.

What this means for investors: Rickards estimation tracks a cycle that’s been occurring for decades where every ten years the global economy experiences a massive disruption. He thinks 2018 is going to be the next such disruption and will likely be triggered by the U.S. government itself. Central banks will need a bail out as other banking institutions did in 2008, and the International Monetary Fund (IMF) is the only global source left with the funds necessary to do so. War and conflict in the Middle East or South China Sea would exacerbate this meltdown. As the money supply is disrupted, investors will flock to risk-off investment in gold and silver as the only safe protection of their wealth.


Here are some articles from the web discussing the topics in this week’s post:

3 Reasons Why Gold Prices Have a Bright Outlook
Read Here

Gold’s Mid-Week Price Jump Following Fed Announcement
Read Here

Experts Say “Gold Will Soar” if Britain Votes Leave on EU Referendum
Read Here

$10,000 Gold – Why One Commodities Expert Says It’s Possible
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Golden Bull Market fights the bear

Gold Prices Rise and Stocks Fall with Increased Concern Over Global Economy

Gold Market Discussion

Gold and Silver Prices Strong This Week, Stocks Vulnerable

gold provides security
Gold and silver prices continued rise this week following its strong close the previous Friday. Ominous signs about the stability of the U.S. economy started to become apparent after a much weaker than expected jobs data report last week. A few days prior, Janet Yellen, chair of the Federal Reserve, had called for raising interest rates saying the economy was strong enough to handle it. The jobs data though said otherwise, probably taking the rise off the table for now.

What this means for investors: The strength of the U.S. dollar appears to be ebbing. Increasing volatility in the stock market will be favorable to gold prices and drive investors toward safe haven investing. Both gold and silver continue to perform well this year with silver seeing a slightly greater percentage increase.


Influential Investors Saying Now Is the Time to Hoard Gold


Hedge fund managers and banking analysts are moving funds into gold in greater numbers. Just a couple of these recently have been George Soros, who has been buying up gold, and Stanley Druckenmiller, who told investors to get out of stocks altogether and into gold. Adding to the gold advocates this week were chief commodities analyst at HSBC Jim Steel, who believes there is sufficient geopolitical and economic instability to keep gold prices rising, and DoubleLine Capital CEO Jeff Gundlach who thinks gold could go to $1400.

Veteran industry trader Jim Bouroudijan believes the recent movements in the gold market are a red flag of an upcoming market adjustment that will favor gold.

What this means for investors: Some top investors and investment advisors are foreseeing much global economic instability, and protecting their wealth against it with gold. With a recent price dip a couple weeks ago, now is a prime buying opportunity. Gold is up almost 20% this year


Is the EU on the Brink of Collapse?

Brexit from the EU

The “Brexit” (British exit from the European Union) referendum coming up on the 23rd continues to play as a dark horse in the markets. Polls saw a rise in the past couple days in support of the “Leave” campaign. If Britain does choose to leave, the EU’s disintegration could ensue. If it doesn’t, the Union’s seams are under severe stress regardless. The biggest specters of doom hanging over the EU are the Greek debt crisis and the inability among member states to agree on a solution the refugee crisis. The past several years have seen a rapid rise in “Euro-skepticism” and dissatisfaction with what many see as a supranational organization that is chiseling away at member nations’ sovereignty.

What this means for investors: If the “Brexit” does happen, the pound and euro will plunge. If the EU collapses, this effect will be even more severe. Those who have not already safeguarded against currency collapses with safe haven investing like gold will certainly flock to it then as prices soar.


What Other Macroeconomic Forces Are Driving Gold?

china flag

The “Brexit” vote and the question of whether the Federal Reserve will raise interest rates are the influencers in the forefront right now for most investors. Another significant concern is the potential collapse of China’s economy. The second largest economy in the world, it has seen sluggish growth this year marked by a depletion of foreign currency reserves and flight of capital. In addition, Chinese political leadership is experiencing internal strife, which will make it more difficult to recover from their economic issues.

There has also been a growing lack of confidence in central banks around the world, which historically has been favorable for gold and is continuing to hold true. Government bond yields fell around the globe this week in Europe, Asia, Australia, and Europe.

What this means for investors: The falling bond yields are indicative of increasing levels of trepidation among investors and traders about central banks’ monetary policy and its ability to push their economies out of slow economic growth. Currently, the strongest macroeconomic and geopolitical trends favor a continuation of this year’s rise in gold prices.


Here are some articles from the web discussing the topics in this week’s post:

Gold and Silver Prices Strong This Week, Stocks Vulnerable
Read Here

Influential Investors Saying Now Is the Time to Hoard Gold
Read Here

Is the EU on the Brink of Collapse?
Read Here

What Other Macroeconomic Forces Are Driving Gold?
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

How to Store Gold Safely

How to Store Gold Safely

Where Should I Store My Gold Safely? 

Best place to store gold?

How to store gold safely is one of the most common questions we hear from clients who are purchasing gold for the first time.

As we researched the different methods adopted by investors, we wanted to share some of these options and list the pros and cons of each. Many factors need to be considered, but the first most investors consider is accessibility. How will you ensure your gold or silver is safe, secure, and accessible when you need it? After all, we own physical, private gold so that we can always keep our money within arms reach. With that said, let’s dive in…

The most common methods for storage are:

  • At home (in a safe, or at least well hidden)
  • In a bank’s safe deposit vault
  • In a private depository

There are pros and cons to each that should be considered, but generally home storage or a private depository box are the safest options.

Additionally, you should consider the size of the gold and silver you want to store, and if you expect to significantly increase your holdings. Bullion coins are small, and with only a few coins you can easily hold thousands of dollars worth of wealth. Graded and certified coins have plastic holders that make them slightly bulkier. Gold kilo bars and 100 oz. silver bars require even more space.


Storing Gold and Silver at Home: Things to Consider

It is difficult to estimate what percent of investors choose to keep their gold at home. This is primarily because most are wise enough to only let one or two trusted family members know.

In the event of crisis or catastrophe, you may need immediate access to your gold. For example, in 1975 during the Vietnam War, when Saigon fell, its citizens were given immediate notice that they must evacuate. Going to a bank to withdraw money was out of the question. Luckily, many had gold at home that they carried with them and used to set up new lives elsewhere.

  • PRO: You know the status of your gold and can access it virtually anytime.
  • PRO: Privacy of ownership is a big incentive for many investors, so it is logical to want to keep gold at home to maintain that privacy.
  • CON: Home thefts occur more frequently than bank or depository thefts. If it becomes widely known you have gold at home, your house may become a target.

Where you store your gold on your property also has considerable weight on the security factor. What security mechanisms (home alarm system, firearms, surveillance cameras, etc.) do you have in place on your property? These have an impact on the safety of home storage as well as the storage method.

In no particular order, here are the most common home storage options:

1. Burying Outside

bury your gold
It is highly unlikely a typical home burglar would know where to dig in your yard to discover buried gold. If you decide to bury it, you also want to be assured you or an appointed trustee can dig it back up. Would age, injury, or infirmary be an obstacle to retrieving it?

Although gold and silver are resilient metals, you would also want to make sure they are protected from the elements by purchasing an air and water-tight lock box (with a locking mechanism for extra security).

  • PRO: Out of sight. Burglars might know where to search the house for hiding spots, or see a safe (if you have one) and get it open. 
  • CON: Potential difficulty unburying. It can also be time consuming if you need them in a hurry.
  • CON: Susceptible to elements, natural disasters, etc.
  • PRO/CON: Consider the size. It is relatively easy to bury if it is a small amount, however, it is difficult if it is large amount or if you want to add to it later.

2. Upright Safes

upright safe for gold storage
Safes and floor safes are the preferred method for home storage. They come in numerous sizes and specifications with options for dial locks, keypad locks, key locks, and combinations of multiple locking mechanisms. Large, upright safes are heavy to move and can be utilized for storing other valuables. Smaller safes can be tucked away in nooks and crannies.

  • PRO: Large, upright safes are heavy and cumbersome for a burglar to move. They can also be utilized for storing other valuables.
  • PRO: They are equipped to withstand fire and water damage (to certain degrees).
  • CON: Large safes can be easily spotted.
  • CON: Small safes, if found, can be easily carried away.
  • CONSIDER: If you go for the safe option, buy a couple different safes and split your gold between them. Then if one is stolen, you have still got at least some of your stash left. One could also serve as a “dummy” safe and trick thieves into taking it, not knowing your most precious assets are hidden elsewhere.

For those shopping for safe purchases and installation in the Phoenix area, a popular choice is Arizona Lock and Safe.

2. Floor Safes

 

Floor safe
Floor safes are perhaps more secure than upright safes. They are much more easily concealed, and like upright safes, are equipped to withstand fire and water damage. They also have different options for locking mechanisms. In most cases you will need a lock and safe technician to install it.

  • PRO: The most easily concealed and secure safe.
  • PRO/CON: Immobile. Choose the placement carefully. This can be an advantage if it’s discovered. If you want to change the location, however, you will likely need a technician.
  • CON: Large safes can be easily spotted.
  • CONSIDER: Install two floor safes and split your assets between the two in the event that one is discovered.

2. Unsecured Hiding Place

strore gold in plain sight?
Examples of unsecured hiding places are under the mattress, in an old coffee can, or behind a loose floorboard. This storage method is not recommended. Some might think of it as “hiding in plain sight” and secure in that it is “too obvious”, but this is not the case. It is extremely risky and the surest way to lose your valuable coins.

  • CON: You or someone else could accidentally throw them out, forgetting they are there.
  • CON: Easily stolen.

Storing Gold and Silver Off-Site: Things to Consider

1. Bank Deposit Box

Bank Deposit Box

Chase Bank letterBank deposit boxes have an array of risks associated with it. For one, your access to your gold is limited to the bank’s opening hours. But more nefariously, you could be denied access all together. Banks like JP Morgan Chase have been known to send letters to their clients expressly forbidding storage of gold bullion (and cash) in their deposit boxes. A scan of the letter that Chase sent to deposit box owners is on this page, but you can click here to download the entire letter as a PDF.

  • CONSIDER: In 1933, gold was confiscated by executive order. Having gold in a bank deposit box made seizure easier.
  • PRO: It takes away the home risk of self-storage.
  • CON: There’s a chance you may have it confiscated. It happened once, it can happen again. The Chase example is further proof.
  • CON: Deposit boxes are not FDIC insured.
  • CON: Financial institutions could collapse.
  • CON: Storage cost.

2. Private Depository

store gold in a private depository

If you are (justly) wary of the banking system and don’t want the risk of home storage, a compromise might be a private depository. They are not subject to the institutional risks of banks and many provide 24/7 access.

  • PRO: Less personal risk than home storage.
  • PRO: Not subject to unsavory banking institutional regulations.
  • PRO/CON: You will pay a storage fee, but these are generally at a reasonable cost.
  • PRO: Your box is insured, and the location is well secured.
  • CON: Though you may have 24/7 access, it might be difficult to access immediately during a crisis depending on how far away it is or how much demand there is for access.

…And the Winner is?

Ultimately, it is up to the investor to decide which option is best suited to his or her lifestyle and needs. Most investors, however, shy away from the bank option because of the risk of confiscation and a mistrust of the current financial institutional system. Home storage can be the most secure if it is done wisely, but many find the private depository option affords the most peace of mind.

When choosing your storage option, it is a good idea to remember some primary reasons we own gold in the first place: privacy, liquidity, and tangibility. Considering those three values is important when deciding which means of storage is best for you.

Ask yourself:

  1. How important is it to you to have 24/7 access to your gold?
  2. How confident are you in securing your investment in your own hands?

If you said #1 is important to you and you are confident securing it yourself, we would always recommend self-storage of precious metals. Having your gold within arms reach is critical in times of crisis or disaster, but most importantly, you are in control of your own investment- with literally zero counter-party risk.

Again… privacyliquidity, and tangibility… isn’t that why we own gold in the first place?

Jobs Data is weak

Gold Rallies Friday on Bleak Economic Jobs Data While Dollar and Stocks Fall

Stronger Dollar-Eurozone Fears

Bleak Economic Jobs Data: U.S. Labor Force Adds Fewest Workers in Six Years

bleak economic jobs data
The jobs data was more negative than even the most pessimistic growth projections, according to Bloomberg analysts. Average estimates put the number of jobs added to the U.S. labor force for May at 150,000. The reality was shockingly short at only 38,000 jobs added. The weak job growth was across all industries, but was particularly felt in factory, manufacturing, and those vulnerable to weak overseas markets. The number of part-time employees who want full-time work rose nearly 500,000 from April. The unemployment rate is now at 4.9%.

Why this matters to precious metals investors:
Much of the slowly returning confidence in the economy is misplaced, as data like this indicates. A weak labor market is indicative of a struggling economy. Gold prices have seen some pull back the past couple weeks, but the rally this week shows it has potential to rise higher if the economy continues to slow. It is a prime buying opportunity before prices rise again.


Dollar Plunges Lowest Since December and Stocks Fall While Gold Soars – Will The Fed Change Policy?

dollar-plumets-chart
Gold closed $30 up on Friday while stocks and the dollar fell. The reason for this was primarily due to the weak job growth that the U.S. Bureau of Labor released on Friday with only 38,000 jobs added in May – the lowest since November 2010. This data shook the markets and made many question the strength of the economy and labor market. Confidence in the economy has been tentatively returning, but as this new data shows, much of that was likely based on false flags and hopeful thinking. One currency strategist has said that the dollar correction is over and that it has a weak future.

It also has many wondering if the U.S. economy is strong enough for the interest rates hike that the Fed chair Janet Yellen announced for June. Some analysts are advising to scale it back and warning that it would strain the economy too much.

European Central Bank officials met this week to discuss interest rates and Greece. A decision on diverting more funds to Greece was postponed, but they decided to maintain negative interest rates.

Why this matters to precious metals investors:
The indicators are pointing towards a slowing economy. Demand for safe haven gold will continue to go up, as it has been in 2016. Gold prices will rise in tandem against the plunging dollar. Silver prices were also up as silver continues its stellar performance this year.


G-7 Annual Summit Meeting Discuses Slow Global Economy and Refugee Crisis

G7 2016 Summit Leaders
The annual two-day summit took place in Japan this week, bringing together leaders from the United States, Japan, Canada, Italy, France, Germany, and the United Kingdom, as well as two of the heads of EU institutions. The main topics for discussion were concerns over the state of the world economy, the refugee crisis, and cyber and maritime security.

Japanese Prime Minister Shinzo Abe compared the current global economic conditions to those of the 2008 financial collapse. Emerging economies are struggling, and their sluggish growth may last some time yet, according to Japan’s cabinet chief. Economic slowdown in China is impacting many nations’ economies and oil prices and commodities have been falling. Abe called for fiscal stimulus and flexible monetary policy from world leaders, but has been meeting resistance from the U.K. and Germany.

Why this matters to precious metals investors:
The U.S. job data and weakening economy are not the only thing that are impacting gold’s rally this year. The malaise is impacting all of the world’s economies and grinding growth to a near halt. Countries like China that are seeing significant downturn are increasing their gold holdings to stave off potential crisis.


We Are in a No-Growth Global Economy, Says OECD Secretary-General

OECD Logo
The Organization for Economic Cooperation and Development is an inter-governmental, global institution that strives to “improve the economic and social-well being of people around the world” by advising governments on monetary and social policy. The OECD’s macroeconomic assessment this week revealed the economy’s recovery from the 2008 financial crisis to be disappointingly weak. The International Monetary Fund (IMF) published a similar report in its quarterly World Economic Outlook.

Why this matters to precious metals investors:
The OECD’s and IMF’s assessments are in opposition to what Federal Reserve chair Janet Yellen and ECB chair Mario Draghi have been saying about improving economies. However, Yellen and Draghi are the chiefs of central banks with control over interest rates and policy decisions. The statements put out by them have more impact on the economy than reports from independent agencies like the OECD, but because they have their own policy agendas, they must be taken with a grain of salt. The OECD assessment echoes the concerns from the G-7 Summit leaders and points towards an ominous future.


Here are some articles from the web discussing the topics in this week’s post:

Bleak Economic Jobs Data: U.S. Labor Force Adds Fewest Workers in Six Years
Read Here

Dollar Plunges Lowest Since December and Stocks Fall While Gold Soars – Will The Fed Change Policy?
Read Here

G-7 Annual Summit Meeting Discuses Slow Global Economy and Refugee Crisis
Read Here

We Are in a No-Growth Global Economy, Says OECD Secretary-General
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Memorial Day 2016

Gold is in the Beginning of a New Bull Market- What Analysts and Banks See Ahead for Gold

Stronger Dollar-Eurozone Fears

[VIDEO] Leading Wall Street Analyst: Gold Will Hit $1900; Get In Now


Market Analyst Peter Boockvar was interviewed on CNBC this week saying that gold is in the beginning of a new bull market. He believes many are reading the market wrong and that gold and silver still have a ways to climb. Boockvar said the 2011 highs of $1900 are reachable and possibly passable. Here is his interview discussing Fed rate hikes and the future move on gold.

Why this matters to precious metals investors:
Boockvar’s assessment is that the current dip in prices is a perfect time to get into the gold market. Gold has been down the past couple weeks, but is still up 17% overall this year.


What Are the Potential Fed Interest Rate Hikes Doing to Gold and Stocks?

Janet Yellen
Janet Yellen, Chair of the Board of Governors of the Federal Reserve System

On Friday, Janet Yellen – chair of the Federal Reserve – announced that cautious rate hikes over the next few months are appropriate due to positive economic indicators. In anticipation of an announcement of a rate hike, gold has been down this week with a mixed performance in stocks.

However, this flies in the face of previous experience with rate hikes. The last time the Fed raised rates in December, the stock market practically collapsed. The positive economic indicators that the Fed is citing to justify the hikes are also likely exaggerated. Policy speculation alone has immediate repercussions in the market, so it could be that this speculation is accomplishing what the Fed wants to happen in the markets.

Why this matters to precious metals investors:
It is likely that the Fed is predicting a future downturn, and with rates currently so low, they would not be able to further lower them again without first having raised them. This indicates a lack of confidence in the economic recovery. The hike could have a negative equity impact like it did in December and gold would be the last asset-class standing.


Global Economic Trends Impacting Gold Right Now

Global Economic Trends Impacting Gold Right Now
Gold prices are caught in a tug of war of macroeconomic trends right now. Brexit fears are positive for price, while possible interest rate increases are holding it back. Demand is increasing in China on fear of economic uncertainty and the November presidential election will further market volatility. Central banks around the world are adopting negative interest rates, which implies economic weakness. Hedge funds are increasingly moving into increasing gold in their portfolios.

Why this matters to precious metals investors:
Despite its price dip this week, gold still has strong support. Indicators of a global economic slowdown are increasing and investors are protecting their funds with gold ahead of it.


Gold Setback Temporary? What Some Banks See Ahead for Gold

Gold is in the Beginning of a New Bull Market
In the past couple weeks, banks like JP Morgan Chase and Goldman Sachs have moved into a more bullish stance on gold, despite prospective interest rate hikes and recent price dip. Dutch bank ABN Amro is the latest to join the gold ranks. Their precious metals and FX strategy division reported that the current strength that the U.S. dollar is enjoying – contributing to the gold price pullback – is transient and a blip in the markets. Their projections are for increased inflation, and that there will be many other factors come into play on gold price other than the dollar.

Why this matters to precious metals investors:
Gold prices rise on a weak dollar, so if the current dollar strength is headed for a crash as many analysts are predicting, gold would see strong support. There is much global volatility, which will buoy up gold prices and hurt interest-bearing investments.


Here are some articles from the web discussing the topics in this week’s post:

Leading Wall Street Analyst: Gold Will Hit $1900; Get In Now
Read Here

What Are the Potential Fed Interest Rate Hikes Doing to Gold and Stocks?
Read Here

Global Economic Trends Impacting Gold Right Now
Read Here

Gold Setback Temporary? What Some Banks See Ahead for Gold
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

The Brexit

Gold Lifts as “Brexit” Fears Shake the Markets

Stronger Dollar-Eurozone Fears

The “Brexit” Politics and Their Impact on the Markets

Will England Exit the EU?

A few weeks ago we touched on the possibility of Great Britain voting to leave the European Union and what the impact of this move would be on gold and the markets. The referendum for the British exit – known most commonly as the “Brexit” – is fast approaching; it is set to take place on June 23rd and will be decided by popular vote. Many investors are anticipating a move to gold ahead of the referendum.

The European Union is, at its core, an economic union founded on the principles of free movement of people, goods, and services across borders. As one of the economic powerhouses of the EU, if Britain severs these ties, the shock waves will be intense as markets and businesses struggle to stabilize.

Initially, the dollar would likely do well if the referendum passes, as the euro and pound struggle, but the future of the EU project would be called sharply into question as other EU countries debate following Britain’s lead. The central and eastern European bloc – particularly Czech Republic and Poland – are already debating hosting a similar referendum.

Why this matters to precious metals investors:
Expect gold prices to rise ahead of the referendum. If the referendum passes, gold will likely rise again on market uncertainty and euro volatility. Investors – especially in Europe – will start fleeing to the safe haven investment.


Why is China Buying a $90 Billion Gold Vault in London?

China Buying English Gold

China is once again upping its gold consumption. This time it is putting its holdings overseas. In a secret location in London, China just bought a vault that will hold around $90 billion in gold. The Chinese economy’s sluggish growth has numerous investors worried. China is now consuming forty percent of the gold that comes out of the earth every year, making it the world’s top consumer. As an impending economic collapse in China looks more likely, gold is becoming more desirable as a safe haven net.

China has also been selling off massive amounts of U.S. Treasury bonds in an effort to fight the economic slowdown. It is the fastest sell off of U.S. debt by central banks since 1978.

Why this matters to precious metals investors:
China has the second largest economy in the world. An economic meltdown would have dire repercussions for global markets at large. Turmoil and volatility in the market is positive for gold prices, which is why China is becoming increasingly desperate for a large gold reserve.


George Soros Betting for Gold, Against Stocks; Will Gold Keep Rising?

George Soros is now in gold
Billionaire investor and business magnate George Soros

Formerly a vocal enemy of gold, billionaire George Soros is now moving a massive amount of funds into gold in a move that demonstrates lack of faith in stocks. He has said he believes the collapse of China is imminent. Despite some pull back on gold this week following a Fed discussion on an interest rate rise earlier than initially expected, gold has still made tremendous gains since the start of the year. Gold seemed to perform well in the Asian markets on Friday.

Why this matters to precious metals investors:
Despite its price dip this week, gold still has strong support. Indicators of a global economic slowdown are increasing and investors are protecting their funds with gold ahead of it.


Is Now the Time to Buy Silver?

silver bars and coins

There has been a lot of buzz around silver given its extraordinary performance this year. In a rising gold market, silver may have just beaten gold as the top metal performer. Some analysts are projecting silver still has a ways to go in outperforming gold.

Silver was still up on Friday while gold was down following the Fed meeting minute’s release.

Why this matters to precious metals investors:
Both silver and gold are up 20% this year with silver up marginally more than gold. Both metals respond to many of the same market factors, but silver has a greater number of industrial uses that can move the price as well.


Here are some articles from the web discussing the topics in this week’s post:

The “Brexit” and Politics and Their Impact on the Markets
Read Here

Why is China Buying a $90 Billion Gold Vault in London?
Read Here

George Soros Betting for Gold, Against Stocks; Will Gold Keep Rising?
Read Here

Is Now the Time to Buy Silver?
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

What is 1 oz of Gold Worth?

What is 1 oz. of Gold Worth?

The Price vs. the Value of Gold… What is the Difference?

Price of gold vs the value of gold
When investing in gold, price and value are not created equal.

The value of gold is measured beyond the daily spot price. Right now, as you read this post, the live spot price of gold is 1558.12 +1.73 . You may have just calculated your gains or losses based on when you purchased your gold. While the price of gold is important to understanding gold investments, you will find that it is gold’s long-term intrinsic value that has stood the test of time. While you read this post try to think about the longevity of your financial future. Let’s not consider today’s price of gold, rather how it has retained its value over time.

Buying gold is considered a safe haven against economic downturns and market uncertainty. Gold has the ability to preserve its purchasing power in ways that other investments do not. Gold’s worth is in its security and high quality performance over time as a preserver of wealth.

While market forces, inflation and economic trends influence the daily price of gold, gold retains purchasing power regardless of price. In the 1920s, one ounce of gold was worth $20. A $20 gold piece could buy a man a fine suit and night out on the town while today a $20 bill could not cover a fraction of those costs. However, the cost of an ounce of gold today could still buy those same goods as it did in the 1920s.

You may recall a national news story from 2014  when a California couple discovered over 1,400 twenty-dollar gold pieces buried in their yard. The stash, now referred to as the “Saddle Ridge Hoard“, was determined to be loot from a 19th century bank robbery, was worth over $11 million. If someone were to find 1,400 twenty-dollar bills, they would be priced at their face value (worth $28,000) which is worth much less than the gold today.

Over time, both the content of the gold and the demand for the coin, now a rare, historical piece far exceeded the monetary equivalent of its $20 face value. This is how gold preserves your future purchasing power. Holding gold for the long term will hedge against inflation. When you are ready to “cash in” or liquidate to the currency in use- you will find that it will be convertible to a fair value… unlike the box of paper money in the floor safe.

Take a look at the chart below which displays the increase in major purchases, goods, and commodities since 1971- the year the United States came off of the gold standard. Other than gold far outperforming the other data points, the most eye-opening number should be the average income in the United States- which has grossly under-performed against the other data points. You know the old saying “the dollar doesn’t buy what it used to”? Simply put: The dollar has been losing it’s purchasing power.

How gold protects and preserves your purchasing power
While all the goods and major purchases increase around us, our income has not kept up with the pace.

Is Your Money Safe in the Bank?

You may not have the money you think you do in your bank account. New banking regulations are making it more difficult to withdraw large amounts of cash due to banks being unable to keep sufficient cash reserves on hand. Imagine you walked into your bank and asked for a $1,500 withdrawal – knowing you had $10,000 in your account – just to be told that they could not give it to you.

Countries that have used bail-in with private citizen fundsUnlike the money in your bank account, gold is a tangible asset and not just a number in a computer system. It is a private and secure way that you can hold your hard earned wealth outside the dangers of a fragile banking system. When you don’t have access to your “money”, having a private, tangible asset like gold makes its value, well, very valuable.

This scenario may seem like a far-fetched and extreme circumstance, but in fact this has recently been a reality in some recent European countries such as Greece, France, Poland, Hungary, and Cyprus. Citizens of these countries were denied access to their money with daily limits for withdrawals, and in some cases, were the victim of nationalized “bail-in” programs.

The bail-in is a policy much like the “bail-outs” we saw here following the 2008 financial crisis. The difference? The banks needed to be “bailed out” by the government. In the case of the “bail-in”, the government is the one in need of financial help. Where does the money come from? You guessed it- you the taxpayer. Whether the funds come from pensions, taxes, or in some cases- private retirement accounts- the government could have full power and authority to seize the private assets from it’s citizens. Private gold is the line of defense you will want on your side in an economic environment such as this.

Dangers of Fiat Currency

Dollar delving and losing purchasing power

Fiat currency – denoted in the paper bills we use today – is only worth as much as the government printing it can guarantee it for. Its worth is subject to many risks and uncertainties. Physical gold does not have the same ambiguity attached to it. It is a commodity with intrinsic value that has stood the test of time against currencies that have risen and fallen.
If today’s currencies collapsed under the strain of government spending and borrowing, war, and further economic meltdowns, gold would be a safe haven: universally valued, a trade-able commodity, and a benchmark of wealth.

The Dollar and the Gold Standard: A Timeline

Understanding the history of gold and money in the United States is important in understanding gold’s worth. From its beginning, the U.S. dollar was backed by or convertible into gold.

  • 1787: An early clause in the Constitution prohibited states from making anything but gold and silver as payment tender.
  • 1900: The Gold Standard was adopted that stated, “…gold…shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard.” The Gold Standard guaranteed the dollar was worth 1.5 g of gold at that time.
  • World War I: the Gold Standard was suspended (but eventually restored) as foreign entities liquidated their debts in gold. The Federal Reserve System was introduced and the U.S. Treasury issued emergency currency to assure debts to creditors.
  • 1929: The Great Depression hit, Wall Street collapsed, and speculators began to demand gold in exchange for what was now almost worthless paper currency. Eventually nearly all of the world’s major currencies abandoned the gold standard in favor of fiat currency: essentially a piece of paper with a government promise of value attached to it.
  • 1933: President Roosevelt passed the Gold Reserve Act banning private ownership of gold except for foreign exchange and revoking gold as a universal legal tender for debts. Roosevelt also raised the official price of gold to $35 per ounce, making the dollar more attractive to foreign buyers and foreign currencies more expensive for dollar holders. This led to more conversion of gold into dollars and allowed the U.S. to effectively corner the gold market.
  • 1944: The Bretton Woods Conference takes place to set up a new, international monetary system.
  • 1971: Nixon axed the Gold Standard completely. Dollars were no longer guaranteed by gold and the American economy suffered a devastating blow.

How Much Longer Will the Dollar Remain as World Reserve Currency?

The U.S. dollar has been the world reserve currency for over seventy years since the Bretton Woods Conference. When the Bretton Woods system was introduced, the dollar was still backed by gold. The dollar had replaced the British pound sterling as the world reserve currency.

Now over twenty countries peg their currencies against the dollar and conduct trade in the dollar rather than their various currencies. Inflation and trade deficits have led to such devaluation of the dollar that the future of the dollar’s status as the world reserve currency is now murky.

The World Reserve Currency chart
Nothing lasts forever– Here is the limited reign of the last five world reserve currencies previous to the US dollar.

Gold Is a Safe Haven Investment

Protecting your money with gold is similar to owning a house. When you buy a house, it is more than just an investment. The house becomes your home. It has utility that extends beyond getting a return on your money. It provides shelter and stability. Unless you are a hedge fund or a billionaire, day trading gold is not advisable.what is 1 oz. of gold worth?

Think of gold as insurance for your retirement account. In fact, it is even possible to own physical gold directly within an IRA, to reap the rewards of both the hedge value and the tax benefits at the same time.  Historically, gold has always defied inflation, posted profits, and most importantly- been in global demand. For certain, the same cannot be said for Enron or Blockbuster shareholders who purchased stocks, giving control to outside institutions. Ask yourself this: if you plan to retire in 15 years- will your money be there for you? As investors, we own gold for the future, not for tomorrow or next month.

In summary, as you look toward your financial future, keep in mind that the price of gold today is not the sole determinant for investors looking to secure their long term finances. It is what the value will be when you need it most 5, 10, or even 20 years from now.  As Economist Oakley R. Bramble wrote “Gold bears the confidence of the world’s millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history.” By taking control over your physical assets you eliminate the chances of your investments being subject to unpredictable actions by the government and other institutions. With the national debt at an all-time high, and government finances in turmoil, the need to preserve and secure wealth is ever more present.

Gold Market May Bull

Gold Enters a Bull Market with 30-Year Record High Demand; Rally Likely to Continue, Say Experts

Stronger Dollar-Eurozone Fears

Gold Enters a Bull Market, According to JP Morgan

Gold Enters a New Bull Market

One of Wall Street’s largest institutions, JP Morgan Private Bank, is betting on the gold rally to continue. Solita Marcelli, the bank’s head of fixed incomes, commodities and currencies, holds the view that gold could hit at least $1400 per ounce by the end of the year. Gold’s retreat on prices this week is, in her assessment, a healthy market correction before its next climb. Gold ended Friday on a positive note, recovering some of the gains from the previous days. JP Morgan is one of many financial institutions recommending their clients position for a new and very long gold bull market.

Why this matters to precious metals investors:
These projections are positive for both gold and silver. Both precious metals are sensitive to the same market factors. Silver has already been out-performing gold this year, so it is safe to assume both metals have entered this bull market.


What Jobs Report Data and Fed Policy Means for Gold Market Rally

jobless claims definition
Gold climbed a substantial amount last Friday after the Bureau of Labor Services reported much fewer jobs created in April than had been anticipated. This is a sign that the economy is not doing as well as hoped. Banks like Merrill Lynch and Goldman Sachs (among others) are changing their projections for interest rate hikes happening because of the negative economic data. A policy of negative interest rates – which is what the Federal Reserve is currently pursuing – is favorable to gold. Many investors were hoping for a policy reversal and interest rate hikes by June, and are now finally adjusting to the reality that it isn’t likely to happen.

Why this matters to precious metals investors:
When the economy is weak, gold is strong. Unemployment rates are on the rise and the dollar is losing steam. Investors in all financial sectors are starting to realize this and adjust expectations accordingly. Investing in gold now is a safe way to stave off risk with the rise of these negative economic indicators.


Central Banks’ Policy Direction Points Leading Hedge Fund Managers to Gold

Paul Singer
Paul Singer of Elliott Management Corporation (ECM)

Investment experts continue to push gold as the safest investment in this environment. Gold just had its best quarter in thirty years and is on the rebound. Global investors are becoming increasingly uneasy about the unprecedented monetary easing policies from the world’s central banks and its ramifications for inflation. Several eminent hedge fund managers are making gold their largest currency allocation. Investor confidence in central banks is weakening by the day leading to a revitalized demand for gold. Even Goldman Sachs, whose outlook for gold bullion has been more conservative than others, bumped up its gold forecast this week. Billionaire hedge fund manager Paul Singer recently said in an April 28th letter to his clients:

“It makes a great deal of sense to own gold. Other investors may be finally starting to agree. Investors have increasingly started processing the fact that the world’s central bankers are completely focused on debasing their currencies.”

Why this matters to precious metals investors:
Some of these hedge fund managers flocking to gold are among the most successful in their field. The stock and equity market volatility has become too dangerous for many investors. If inflation continues to rise, gold will become even more attractive as a safe haven against a weak dollar. Buying now will stave off these risks later.


Q1 of 2016 Sees Highest Demand for Gold in a First Quarter Ever

Q1 2016 Sees Highest Demand
Concern over China’s debt problem, volatility in the equity market, and the Federal Reserve’s negative interest rate policy drove gold into its best quarter in thirty years. Demand soared to the second highest level on record. The metal attracted private investors and some of the world’s largest hedge funds alike. Stanley Druckenmiller, founder of Duquesne Capital Management, believes the equity bull market is “exhausted” and gold is now the company’s largest currency allocation.

Why this matters to precious metals investors:
With this kind of data, the run on gold that we’ve been seeing the past couple weeks has some definite support. It is not just a short-term fluke in the market. Demand and price are directly correlated, and as demand continues to rise, so will price. Demand at levels like this is not likely to quickly reverse, so gold has nothing but bright prospects for this year.


Here are some articles from the web discussing the topics in this week’s post:

Gold Has Entered a Bull Market, According to JP Morgan
Read Here

What Jobs Report Data and Fed Policy Means for Gold Market Rally
Read Here

Central Banks’ Policy Direction Points Leading Hedge Fund Managers to Gold
Read Here

Q1 of 2016 Sees Highest Demand for Gold in a First Quarter Ever
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold Market May

Gold Price Hits $1,300 – Could it be Moving Towards $1,500? Dollar Slump Continues to Drive Price While Stock Market Reels from Crushing Week

Stronger Dollar-Eurozone Fears

Gold Price Hits $1,300

gold bull market 2016
On Monday, gold spot price passed the $1300 mark for the first time in over a year. Gold is up now 22 percent for the year and is crushing stocks, bonds, and most other asset classes. Gold’s performance this year has been driven by a few different factors. The first was the stock market’s dismal performance at the start of the year. This drove investors to the safety of gold. As the stock market picked up, gold calmed down until recently, when the dollar began to take massive hits. The dollar’s strength of the last couple years is starting to fail, and a weak dollar means gains for gold

Why this matters to precious metals investors:
This interview from Bloomberg this week on the dollar dilemma succinctly describes the relationship between gold and the dollar and why now is an optimal time to buy gold. Some market experts are projecting that gold is on the path to $1500 before year’s end.


Leading Analysts Predict Gold to Keep Rising and Advise Buying Now

Stanley Druckenmiller says get into gold
Billionaire hedge fund manager Stanley Druckenmiller advises to get out of the stock market and get into gold

Renowned billionaire and hedge fund manager Stanley Druckenmiller advised investors this week to get out of the stock market, sell off equities, and head towards gold. He pointed towards Fed recklessness in borrowing from future consumption and slowing cash flow in U.S. corporations as foreboding signs for the dollar’s future.

Dennis Gartman, on CNBC’s “Fast Money” on Monday, predicted gold could end the year 10 or 15 percent above current levels. He argued that fundamental principles were in place that favored precious metals due to central banks’ policies. Many of the world’s central banks are favoring an easy monetary policy with low interest rates that is making their currencies less valuable. As currency weakens, precious metals become more attractive as a safe haven investment.

Why this matters to precious metals investors:
These market experts are seeing recklessness and uncertainty lying on the horizon for the U.S. dollar (and the global economy at large). These are indicators that gold is going to start becoming more attractive as a safe haven investment, which will drive the price. Gold has moved past the bear market it has been stuck in and its projections for this year are bright.


Stock Market Experiences Worst Week Since February

stock slip worst since February 2016
The stock market closed out April with its worst losses since February. This caused even more unease among investors because of the market’s weak performance at the start of the year. Power players like Apple, Google, Microsoft, and Chevron all suffered major losses. The effect of the Bank of Japan’s shock decision to keep negative interest rates also is impacting the stock market and hitting the dollar and yen.

Why this matters to precious metals investors:
The stock market’s volatility this year is making investors wary and risk-adverse. If this trend continues, demand for precious metals will soar even higher, pushing prices up. Monetary policies from the world’s central banks are also indicating future scenarios where safe haven precious metals will thrive.


Silver Eases Back This Week, But is Expected to Rise Again

silver is on the rise
Silver’s stellar performance over the last few weeks eased back slightly this week. The corrective move will likely be temporary, as U.S. economic data, monetary policy, and increased demand in China will continue spurring the metal’s gains. So far this year, silver is up more than 23 percent and has hit highs not seen in over a year. The dollar dilemma driving gold is also driving silver, and the Fed’s policy and weak stock performance will also drive silver price.

Why this matters to precious metals investors:
Unemployment in the U.S. is rising and economic growth is slowing, according to data coming out this week. These signs are pointing ominously towards a declining dollar. Despite some resistance this week, silver is still the strongest performing investment of 2016 so far. Take advantage of the pull back now to invest.


Here are some articles from the web discussing the topics in this week’s post:

Gold Price hits $1,300
Read Here

Leading Analysts Predict Gold to Keep Rising and Advise Buying Now
Read Here

Stock Market Expereinces Worst Week Since February
Read Here

Silver Eases Back This Week, But is Expected to Rise Again
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

gold and silver bars split

Gold & Silver Prices Hit 15-Month Highs and Continue Rally Against Weak Dollar and Sluggish GDP Growth

Stronger Dollar-Eurozone Fears

Gold and Silver Prices Hit Highs Vs. Weak Dollar

gold vs the weak dollar

Gold hit a 15-month high on Friday as the dollar got crushed. Gold opened with its fourth consecutive day of gains and climbed as high as $1,292 per ounce. The shiny yellow metal is now up 20% since the first trading session in January and silver is advancing with equal (if not greater) steam. A weak dollar and an economy that is barely growing are contributing to the precious metals’ impressive runs, and coin sales in the U.S. are on the rise. The Bank of Japan’s decision this week to keep interest rates low and the Federal Reserve’s continued policy on low rates also gave gold a boost this week.

Why this matters to precious metals investors:
A couple of months ago analysts were projecting gold to hit $1,300 by the end of this year. It is already fast approaching that mark. Some are now even saying it could hit $1,400 by next month. Unexpected and negative projections for the dollar’s future are accelerating gold’s move making now a ripe opportunity for buying.


Rocketing Silver Set for Best Month Since 2013 as Gold Climbs

Silver is the Star

Silver was at a one year high this week and up 15% this month thanks to the dollar’s slump and rise in industrial demand. A stabilizing Chinese economy with increasing demand for precious metals is also partially responsible. All precious metals were up this week because of worse-than-anticipated economic growth this quarter that lowered the prospects of higher interest rates. Low interest rates makes non-interest yielding assets like gold and silver more appealing.

Why this matters to precious metals investors:
Precious metals are on the move. After three years of falling prices, all signs are now pointing towards positive growth trends for both gold and silver through this year. This Bloomberg graph shows the sustained upward climb of gold and silver against a steady decline of the dollar. The dollar value and precious metals value move in opposition to one another, and with a bleak outlook for the dollar this year, gold and silver have every reason to continue their march.


Weak GDP Growth in Q1 Weakens Dollar

Dollars down the drain

Lackluster economic data coming out this week on U.S. GDP growth is expected to keep the dollar on its downward spiral. In the first quarter this year, real GDP grew only 0.5%. This was the third consecutive quarter of growth slowdown.

Why this matters to precious metals investors:
Gold and silver become increasingly attractive as a safe haven investment as the economy slows. During times of recession and a shrinking economy, gold has had some of its highest price runs. The warning signs of a potential economic downturn are increasing. Buying now will protect against these future uncertainties.


Gold Price Climbs After Fed and Bank of Japan Decisions to Stand Pat on Policy

Bank of Japan and Federal Reserve Logos

The Bank of Japan’s decision to maintain a tight monetary policy this week came as a surprise to many analysts, who were expecting a stimulus, and sent shockwaves into the markets this week. Similarly, investors looking for the Fed to change course from recent cautionary policy instead got more of the same following a Federal Reserve meeting that confirmed that it was in no rush to raise interest rates anytime soon. Both of these events helped to boost gold prices. The dollar fell sharply against the yen and a basket of currencies following the news. On the U.S. monetary front, expectation that a Federal Reserve rate hike would happen before September is dwindling and traders’ expectations for such a hike occurring fell over five percentage points this week.

Why this matters to precious metals investors:
The monetary policy course that the Federal Reserve has set out on will continue to boost the price of gold as well this year if it stays on course. Analysts are also now saying gold has finally found its price floor after the past few years, which can only be positive for gold’s future. The pieces are in motion to see gold make great gains this year.


Here are some articles from the web discussing the topics in this week’s post:

Gold and Silver Prices Hit Highs Vs. Weak Dollar
Read Here

Rocketing Silver Set for Best Month Since 2013 as Gold Climbs
Read Here

Weak GDP Growth in Q1 Weakens Dollar
Read Here

Gold Price Climbs after Fed and Bank of Japan Decisions to Stand Pat on Policy
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

DOHA Oil

Doha Oil Negotiations and Domestic Data Reports Boost Gold; Silver Continues Strong Performance

Stronger Dollar-Eurozone Fears

Gold Price Rises as Oil Price Falls after Doha Oil Negotiations Derail on Iranian-Saudi Tension

Doha Oil Rig

The oil market endured a tense week as OPEC countries met for negotiations in Doha that ultimately broke down, causing oil prices to plummet. Rising tensions between regional rivals Saudi Arabia and Iran over output levels led to the demise of the talks in Qatar’s capital city. Iran, who has been increasing output since lifted sanctions in January, refused to sign up for the output-freeze that was proposed for all OPEC countries. After the Iranian refusal to play along, Saudi Arabia, the world’s leading oil producer, stated that they would likely increase output in conjunction with the Iranians as the freeze would only be effective if everyone signed up to it. Investors had been betting on an oil deal being reached, so when the crude oil price fell nearly 5%, demand for safe haven gold went up, lifting gold prices.

Why this matters to precious metals investors:
Iran and Saudi Arabia’s rivalry extends far past oil. The two countries’ religious-political feud derives from a centuries-old ideological division that still influences diplomacy in the region. These recent negotiation breakdowns are one of many indicators of increased volatility in the Gulf States. This kind of instability can be a strong driver for gold prices. As oil prices fell on Tuesday, investors shifted their focus towards gold as the metal offers more security. Gold, unlike oil, has intrinsic value that makes it more desirable in the face of regional threats to global security.


 

Silver Hits 11 Month High; Up More Than Gold in 2016

Silver Hits 11 month High

Silver has been building on its gains from last week and shot up 4.5% on Tuesday. So far this year silver is up 22% while gold is up 18%. Some of the reasons for silver’s rally are the same monetary policies driving gold and a Chinese economy that is gaining back some of its strength and putting increased demand on the metal. Silver is sometimes called “the poor man’s gold” for its relatively cheap price, but performances like this prove it can stand apart as a sound, and sometimes more lucrative, investment. Some experts are calling the white metal the best investment so far of 2016.

Why this matters to precious metals investors:
Silver generally trades against gold at 60 ounces to 1. Before it went through this corrective rally, it had seen disparity as great as 80 to 1 and is now returning to its historic parity. Silver’s strong performance all year is proving its returned stability. Now is a prime time to diversify a precious metals portfolio with silver as it continues its upward climb.


Precious Metals Soar as Dollar Slumps After U.S. Data

Weaker Dollar after US Data

This week’s release of U.S. economic and employment data was less than positive, which helped drive price increases in gold and silver. The U.S. housing market was hit harder than expected and the dollar slumped against other basket currencies while silver hit a 10-month high, gold rose 2% and platinum reached a 6-month high Tuesday. With a cautions Fed policy on interest rates, analysts predict the precious metals market to hold onto its gains into the next quarter.

Why this matters to precious metals investors:
The U.S. economy is becoming sluggish and interest-bearing assets are suffering, which is lifting the price of gold. The dollar is performing at its lowest in over six months. Investors are flocking to safe haven metals rather than a risky stock market.


China Starts Gold Fixing in Bid to Expand Global Market Sway

China Starts Gold Fixing

China is continuing to send ripples through the gold market. The world’s second largest economy is showing a proclivity towards having a large holding in gold. China is now the world’s largest consumer of gold and purchase of coins and bars is on the rise. The Chinese central bank is increasing its bullion holdings as it moves to diversify its foreign-exchange reserves. On Tuesday China began a twice-daily price fixing in a bid to increase its sway in the global market and establish a regional benchmark that could potentially rival the benchmark set in London twice a day. Having more sway in the gold market would help a Chinese strategy to establish the yuan’s expanded international use. Experts are saying this is an important development to watch as it could mean the start of increased use of gold in the Chinese monetary system and China becoming a key player in the gold market.

Why this matters to precious metals investors:
Over the next decade as China’s economy expands, it will likely overtake the U.S. as the world’s largest economy. The ascendant power’s focus on gold shows the metal’s long-term value and desirability. The Asian superpower has decided to prioritize the bullion market as an international market to have significant sway over. Because gold safeguards wealth against economic turmoil and global instability, having such a stake would ensure Chinese economic power in the future.


Here are some articles from the web discussing the topics in this week’s post:

Gold Price Rises as Oil Price Falls after Doha Negotiations Derail on Iranian-Saudi Tension
Read Here

Precious Metals Soar as Dollar Slumps after U.S. Data
Read Here

Silver Hits 11 Month High; Up More than Gold in 2016
Read Here

China Starts Gold Fixing in Bid to Expand Global Market Sway
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Chinese Market and Gold

What the Chinese Market Could Mean for Gold Price; Silver Price Rallies, Outstrips Gold This Week on Performance for First Time in Four Years

Stronger Dollar-Eurozone Fears

Is China Becoming an Even Bigger Player in the World’s Gold Market?

China is buying gold...again.

Despite the price dip in gold this week, other market trends point towards future increases in demand that could drive prices up. China, with the world’s second largest economy, is already an important power player in the gold market, and is set to increase precious metals acquisition even further. China is the largest producer and consumer of gold in the world with its 1,000 tons annual production and 540 tons annual consumption. Chinese production accounts for around 30 percent of the world’s demand. With recent low gold prices, China has started buying up even more international gold assets, and its leading gold companies have said they will expand acquisition even further.

Why this matters to precious metals investors:
China holds a large portion the U.S. debt, but has recently been moving towards dumping it due to its unstable nature. Gold is a more attractive and value-assured holder of wealth than bonds. Global security risks including economic downturn, cyber espionage and terrorist threats are drivers for government demand for safe haven investment. If Chinese demand continues to increase, this could boost future gold price rallies.


 

Stronger Dollar and Profit Taking Hits Gold This Week; Silver Price Pushes Higher Still

Strong Dollar Tug of War

Gold prices saw some push back this week against a stronger dollar and stock market as U.S. monetary policy uncertainty increased volatility. Some market analysts think this is due in part to unwillingness from traders to accept that the Fed would not be raising interest rates, despite recent assurances from the Fed that they would not. Were the Fed to reverse this policy, strategists believe it would not be sooner than end of the year. Some of the pullback on gold was also due to investors’ profit taking on Wednesday and a surge in risk appetite in the market.

Despite gold’s price dip this week though, silver performed well and hit nearly a six-month high this week.

Why this matters to precious metals investors:
This could likely be a short term set back for gold. If the recent, cautionary Fed policy holds, trader expectations will eventually reset in line with the market realities. Silver prices are influenced by many of the same factors as gold, so its strong week shows positivity for the precious metals market.


 

Silver Overtakes Gold as Best Precious Metal on China Confidence

silver price overtakes gold

Silver’s performance this week has made it the slightly stronger performing metal this year over gold. This week’s silver rally has given it a 17 percent increase this year with gold at 16 percent for 2016 so far. This is the first time since 2012 that silver has seen a better performance than gold. Silver’s rally was in part due to positive economic data coming from China this week regarding industrial and trade output. In March, Chinese exports rose for the first time in nine months and imports were not as low as anticipated. Like gold, silver benefits from low interest rates and a weakened dollar. However, it also has a greater number of industrial applications that can drive demand, so the Chinese economic data this week has benefited the metal.

Why this matters to precious metals investors:
Like gold, silver is valued as a safe haven investment against turbulent times, which is part of the reason for its rise in performance this year. Silver’s wider range of uses in industry also factors into global supply and demand, so silver can see more movement at times than gold. The industrial market factors and Fed policy indicate positivity for the metal over the year, making now an optimal time to diversify with silver.


Gold’s Resurgence: Who’s Buying Gold and Why?

who is buying gold and why?

An article published this week in the British Telegraph succinctly outlined some of the various factors that are driving gold this year. A notable trend is that central banks have been increasing their purchasing of the metal since the financial crisis, and this purchasing accelerated during the latter part of 2015. A variety of economic and geopolitical factors are increasing global uncertainty this year, which makes safe haven investment in gold more desirable than riskier asset or stock options. Cautionary monetary policy is becoming the trend; while the Fed promises low interest rates in the U.S., banks in Europe and Japan also pursue caution and negative interest rates.

Why this matters to precious metals investors:
The Telegraph article also highlighted an increase in U.S. Mint production of gold bullion as demand surges and the rise in numbers of British investors seeking to diversify with physical gold. This shows the universality of gold’s appeal as a wealth preservation investment. As the world becomes more volatile and the future more precarious, governments, central banks, and average individuals alike are seeking out gold as economic protection.


Here are some articles from the web discussing the topics in this week’s post:

Is China Becoming an Even Bigger Player in the World’s Gold Market?
Read Here

Stronger Dollar and Profit Taking Hits Gold This Week; Silver Pushes Even Higher Still
Read Here

Silver Overtakes Gold as Best Precious Metal on China Confidence
Read Here

Gold’s Resurgence: Who’s Buying Gold and Why?
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

The Brexit and What it Means

The “Brexit” and What it Could Mean for Gold and Silver

Stronger Dollar-Eurozone Fears
The Brexit, Concern Over EU Stability, and Trade Deals Increases Safe Haven Gold Investing

Brexit from the EU
Economic uncertainty in the European Union continues to drive safe haven gold investment in Europe after a failed referendum on EU-Ukraine trade relations. Concern over Great Britain’s upcoming referendum on EU membership (set to take place in June) is also straining the markets. If the Brexit were to occur, it would likely spell the eventual demise of the European Union as an institution and set a prerogative for further member state exits. The Fed announced that the implications of a Brexit would be discussed at length in its next meeting. You may have already heard about the Brexit, but if you have not, now you have. This should continue to build momentum in the news as we approach June 23rd. This date is significant because it is the day the referendum will be held to vote whether Great Britain stays or exits the EU, hence the portmanteau “Brexit”.

Why this matters to gold investors: The risks and uncertainty driving concerned Europeans towards gold are not exclusive to Europe and will have global repercussions. As a predominantly economic union, an EU where member states begin severing ties would have a plethora of dire ramifications. For thousands of years gold has been intrinsically valued as an indicator of wealth, and as this rush to safe haven gold shows, now is no different. Investing now is a guaranteed way of ensuring wealth preservation in a turbulent future. Britain leaving the EU would create quite a ripple effect, and the haven from that wave will be and always has been gold and silver hedges. I encourage clients and prospective investors to speak to our guys about this. There is so much brewing in the global economy that we all need to be aware of. This was covered at our latest seminar at KTAR studios, and really opened many eyes in the room. There is a great manipulation going on in the bond markets that will eventual lead us all running to obtain gold, but if the Brexit occurs, it would most certainly accelerate the tailspin of the EU’s stability. This event would propel both the demand and price of gold significantly. Take a few minutes to find out more by calling your broker here at 602.955.6500.


Gold Gains Most in a Week on Fed Caution

Gold Gains on Fed Caution

On Wednesday, gold saw the most gains this week following the release of the minutes from the Fed meeting in March to discuss lowering interest rates. The question of whether the Fed would pursue a cautionary monetary policy has been much discussed in previous weeks, so this release was significant in solidifying the Fed’s dovish outlook.  The cautionary policy discussed and decision to keep interest rates low was positive for gold’s competitiveness against interest-bearing assets. Global economic risks and uncertainty were the key factors that influenced Fed caution.

Why this matters to gold investors: Gold has climbed 17 percent this year as the dollar declined. In March gold went through a corrective phase, which it appears to have now broken through and will continue to do through the year. Gold historically performs well when interest rates fall, as the Fed as reported they will.


Gold Looks Poised to Resume Rally

After Thursday’s rally, gold dipped slightly on Friday as world stock markets were stronger and oil prices rose higher. However, indicators point to gold having broken through its recent short-term corrective trend to continue its upward trajectory. The dollar’s volatility will continue to influence gold’s direction, and the dollar has been showing growing instability. The dollar has also been falling against the Euro and will likely continue to do so under the European Central Bank’s monetary precautions.

Why this matters to gold investors: With such positive projections on the horizon for gold, now is an optimal time to take of advantage of the recent market correction and invest. The correction has lent stability to gold prices, which are likely to continue to rally through the year.


Here are some articles from the web discussing the topics in this week’s post:

Gold Rallies During the Week after More News from the Fed
Read Here

Concern over European Union Stability and Trade Deals Increases Safe Haven Gold Investing
Read Here

Gold Looks Poised to Resume Rally
Read Here

Investopedia “Brexit” Page
Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

Gold in Q1

Q1-2016 Closes as Gold’s Best Gaining Period Since 1986

Stronger Dollar-Eurozone Fears

Gold’s Best Gaining Period Since 1986- Q1 Closes with Strong Gold Outlook

source: bloomberg.com

As the stock market and dollar retreated this week, gold prices edged higher, finishing the quarter with a 16 percent rise. Despite some slowing from market correcting through March, we witnessed gold’s best gaining period since 1986. On March 29, The Fed Chair, Janet Yellen, announced caution against raising U.S. interest rates, which, accompanied by a lagging in overall global economic growth, contributed to gold’s rallying.

Why this matters to gold investors: With Yellen announcing cautionary monetary policy, the dollar will weaken further against gold. Uncertainty in the financial markets is generally a buoy for gold prices, and worries over China and an expected rise in inflation will further contribute to a rise in gold prices. These are prime market conditions for investing in gold ahead of further expected gains.


Gold Mint at Europe’s Heart Says Sub-Zero Rates Buoy Sales

European Central Bank negative interest rates

Negative interest rates in Europe are driving gold prices as well. A spokesperson for the Austrian mint spoke this week about demand continuing to rise throughout 2016. With the Euro zone still recovering from recent financial turmoil, high unemployment in some EU countries, the negative interest rates and the psychological impact of the refugee crisis and recent terror attacks, gold is seen as a safe haven investment. The Austrian mint has seen a 45 percent rise in gold and silver coin sales since last year.

Why this matters to gold investors: A weakening euro, like the dollar, will lead to a strengthening of gold. The European Union’s very existence is under dire pressure as it grapples with imminent economic and security threats with the chances of amicable, effective resolutions among its member states becoming difficult to realize. If demand for gold as a precaution against future threats in Europe continues to rise, this will spur the price higher around the globe.


Besides the Fed, What is Driving Gold?

In this Bloomberg interview below, precious metals analyst Suki Cooper describes the rise of gold, Fed policy, market correction and the Chinese market:

Why this matters to gold investors: Cooper (along with other analysts) believes gold could hit $1,300 this year. The market has been correcting even as monetary policy and other economic factors have been driving the prices up this quarter, which is positive for sustained further growth. Without these market dips, the gold rise would have the potential of developing the “weak lungs” Cooper describes.  With such positive projections for gold this year, investors should take advantage of recent market corrections to invest in gold now.


Here are some articles from the web discussing the topics in this week’s post:

Gold’s Best Gaining Period Since 1986- Q1 Closes with Strong Gold Outlook
http://www.reuters.com/article/global-precious-idUSL3N17352H

Gold Mint at Europe’s Heart Says Sub-Zero Rates Buoy Sales
http://www.bloomberg.com/news/articles/2016-04-01/europeans-concerned-about-future-buy-gold-austrian-mint-says

Besides the Fed, What is Driving Gold?
http://www.bloomberg.com/news/videos/2016-03-29/besides-fed-policy-what-else-is-driving-gold


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

jim-sign

The EU dominoes

Gold Up After Brussels Attacks, Pulls Back with Stronger Dollar-Eurozone Fears

Stronger Dollar-Eurozone Fears
Gold Up After Brussels Attacks, Pulls Back with Stronger Dollar and Eurozone Fears

Global markets were sluggish this week anticipating the three-day Easter holiday weekend. Gold saw a rally this week following the terrorist attacks in Brussels at Zavantem Airport and Maelbeek metro station in the city’s EU institutions district. It eased back when the dollar began gaining strength over fears of Eurozone and Euro security. Gold generally sees price surges following major disasters. With a looming spectre of fear of more such attacks being likely, gold prices could increase again as it becomes more desired as a safe haven. Gold prices are still up nearly 18% year-to-date despite some market slowing this month.

Earlier this week, Marko Kolanovik, a chief commodities forecaster at JP Morgan Chase- anticipated gold going higher this year against a weakened dollar and stock market. He also predicted a likelihood of pressure being placed on the dollar later in the year if tariffs are imposed on import of Chinese goods. Here is a clip of Mr. Kolanovik on CNBC:

The World According to Marko chart from cnbc
source: cnbc.com

Lower physical demand from India and China this month has also contributed to the short-term negativity. The long term prospects are seen more favorably with some analysts forecasting the gold market as currently going through an anticipated price correction before it embarks on a more meaningful rise later this year. Some strategists are still predicting gold to go to over $1,370 by the end of the year.


If you listen to the airwaves in the Phoenix area, you most likely hear our commericals for RME on the local stations like KTAR News, Arizona Sports, KFYI, and iHeart Radio. We thought it would be fun to utilize the talents of Ben Campbell from iHeart Radio. Ben has a distinct talent- he impersonates a particular presedential candidate in a comedic fashion. We had a lot of fun cutting this latest ad- if you havent heard it running on KFYI/iHeart Radio yet- you can have a listen here: